Credit on air tickets and tour

[Ganeshan Kalyani]

Dear Sir,

I would like to discuss that in general course of business the associate of the company travel abroad for business meeting, exhibition etc. The travel agent is doing the booking for air fare and plan for hotels and stay. The travel agent raises bill on the company with service charge and service tax. Whether the service tax on bill can be claimed as cenvat credit. Whether the same can be issued by way of Input Service Distribution (ISD). Kindly through some light in the discussion.

regards,

ganeshan

AI Summary

CENVAT credit on travel agent services may be claimed if nexus with taxable output services exists.
Service tax paid to travel agents on air tickets and related arrangements can be claimed as CENVAT credit only if there is a taxable output service and a proved nexus between the input service and that output. Alternatively, the input tax may be allocated via Input Service Distribution (ISD) in accordance with the procedural requirements of Rule 7 of the CENVAT Credit Rules, with practical allocations sometimes made to the unit with the highest turnover.