Cenvat Credit on Hotel Bills

[Mathurthi RamKumar]

Dear All,

Greetings of the day. We are a kraft paper manufacturing unit and our CMD and Exe.Directors-Sales will visits clients (old and new )for business promotions purpose. I want to know can we avail s.tax input paid to hotels at the time of business tours?

Kindly clarify me.

Thanks is advance.

Regards

M.RamKumar

[Mahir S]

CENVAT credit can be claimed for the traveling expenses, provided if it can be proved that such input services are having nexus with the manufacturing activity and falls under sales promotion/business promotion activity. However, as the hotel bills does not show any such details such as purpose and reason for stay, hence Excise Audit may disallow such credit.

If any business seminar or any exhibition is attended and same can be proved from other relevant documents such date and city of such seminar/exhibition as well as invitation letter for attending business tours etc.; then credit may be availed, after due guidance from your consultant.

[PAWAN KUMAR]

Dear Sir,

As per my view, the bills of hotels for stay of your CMD and Executive Directors-Sales will not be admissible as input service as per rule 2(l)(ii)(C), as per which if service is consumed on an employee. Therefore as my view, It is not eligible input service.

[YAGAY and SUN]

Dear M Ram Kumar,

No CENVAT credit would be allowed on such activities as these are specifically disallowed in the definition of the the Input Services under the CENVAT credit Rules, 2004 as amended from time to time.

Regards,

YAGAY and SUN

(Management, Business, and Indirect Tax Consultants)

AI Summary

Cenvat credit on hotel bills may be denied unless business nexus and documentary proof substantiate travel purpose.
Cenvat credit on hotel accommodation for executive business travel may be claimed if a clear nexus to manufacturing and sales promotion is proved with supporting documents, but generic hotel bills lacking purpose risk disallowance; other views treat such accommodation as consumed by employees and therefore excluded under the input service definition, creating audit and compliance risk for claims.