Cenvat credit of service tax in hotel stay bill

[VISHNU PRAKASH SAINI]

How can show the Cenvat credit of input service tax in hotel stay bill in filing of service tax return. Where S.Tax charge after taking the benefit of abatement.and we charge the output service tax as full rate of service tax.i.e. 12.36%

[Rajagopalan Ranganathan]

Sir,

Rule 2 (l) (C) of CENVAT Credit Rules, 2004 stipulates that the definition of 'input service' excludes such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee.

However it is not clear from your query who avails the service. It is whether your employees or your guests, Anyway the department will make objection for availing the credit of service tax paid for services rendered during stay in hotels on the ground that the service are consumed for personal use of your guests/employees. Therefore before taking the credit please get suitable clarification from your Range Officer and/or the Department.

 

[YAGAY and SUN]

Dear Vishu,

Agreed with Rajagopalan Sir's view in this matter. Further, you must go through the Hindustan Coca Cola judgment for knowing about the new developments in such matters.

Regards,

NeelamTaneja- Executive Consultant

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Akash Deep]

agree with the experts.Term "personal use" is of great importance. when such services is used for personal use of the employee, they are excluded from definition of input service. for example an employee who stay in a hotel during a bushiness trip organized by his employer or a trip in discharge of his official functions would qualify as input service. however if same employer decide to sponsor the foreign holiday trip for his best performing employee, hotel services used by employee in that situation would not be treated as input services.

one more suitable example would be group insurance policy taken my employer under ESI Act or other statute, would also be covered under input services. here employer is discharging his own statutory liability rather the giving any benefit to the employees. Though ultimately employees is benefited, but that is nly an indirect effect of the statutory obligation on employer.

make your decision on above line of thughts

AI Summary

Cenvat credit eligibility for hotel services hinges on personal use exclusion; employer funded official stays may qualify as input service.
Cenvat credit for hotel accommodation is excluded when services are used primarily for personal consumption under Rule 2(l)(C) of the CENVAT Credit Rules, 2004. Hotel stays for bona fide business travel or official duties may qualify as input services, while employer sponsored leisure trips do not. Departments may object to credits on grounds of personal use; taxpayers should obtain justification or departmental clarification before claiming credit.