Cenvat Credit on Directors personal phone bills

[Mathurthi RamKumar]

Dear All,

Greetings of the day...

Kindly clarify my doubt..can we claim cenvat credit on directors personal phone bills?? (i.e bill in the name of directors name and installed in house)

Thanks in Advance

M.RamKumar

[Mahir S]

Sir,

Pls refer below para of Board's circular no. Circular No. 97/8/2007 dated 23rd August, 2007, regarding Procedural issues in Service Tax-

8.3 ….w.e.f. 10.9.2004, credit of service tax paid in respect of mobile telephone service is admissible, provided the mobile phone is used for providing output service or used in or in relation to manufacture of finished goods.

Even otherwise, Credit may be available if it is a mobile phone as it also be used in office; however it appears to be a landline phone and installed at Director's residential address, then cenvat credit may not be available, as not used for providing output service or used in or in relation to manufacture of finished goods.

[YAGAY andSUN]

Dear Mathurthi RamKumar,

No, CENVAT credit would not be available if phone is being used for personal calls.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Akash Deep]

Dear Sir

The definition of input service as provided under Rules 2(i) of CCR, 2004 specifically excludes those services which is used by employees primarily for personal use or consumption. hence, on credit can be taken on such services. However it may e noted that word "primarily" is of great importance. Where services are being used partially for personal purposes and for provision of out put service, credit can be taken subject to the condition that nature of consumption must not be primarily person.

Akash Deep

AI Summary

Cenvat credit on phone services disallowed when primarily personal; business use permits proportionate credit claims. Cenvat credit on telephone services is allowable only when the service is used for providing output services or in relation to manufacture; services used primarily for personal consumption are excluded. Mobile phone services used for business may qualify, whereas a landline at a director's residence billed in the director's name is unlikely to qualify if not used for output service. For mixed use, the term primarily determines entitlement and proportionate credit may be claimed where business use predominates.