Service Tax Credit

[Abdul Razack Basha]

Dear Sirs,

Please advise for Service Tax credit eligibility against Canteen Contract Payment and Employee Transport Bill. We are receiving Invoice from the 1) Canteen Contractor and they are charging Service Tax on 60 percent of the value, is it eligible for Credit and 2. Employee transport, we are paying service tax as per recipient rule 40 percent of the value ie. 4.944 percent , is it eligible for Service tax credit. Please clarify.

Thanks & Regards

B. Abdul Razack

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AI Summary

Service tax credit eligibility limited by CENVAT exclusions, though some courts permit credit for canteen and employee transport.
Statutory exclusions under Rule 2(1)(C) of the CENVAT Credit Rules, 2004 exclude outdoor catering from the definition of input service and bar credit for canteen contract payments. Renting of motor vehicles is eligible only when the vehicle is registered in the provider's name and used for specified output services; transporting employees from home to factory ordinarily does not qualify as transportation of passengers for credit. Some judicial decisions have nevertheless allowed credit where a sufficient nexus with manufacture or taxable output services is established.