Cenvat credit of Service Tax

[Guest]

Whether Cenvat credit can be claimed on Service Tax paid on rent towards Guest House maintained by the Company in different Cities?

[Nash Industries I Pvt Ltd]

Credit of service tax paid on rent of guest houses not eligible as it is neither used in or in relation to manufacture of excisable goods or provision of output services.

[Ganeshan Kalyani]

The nexus of input credit with the output tax is absent and hence credit is not eligible. Thanks.

[YAGAY andSUN]

Earlier it was available. However, w.e.f. 01-04-2011 it is doubtful and such availment is prone to litigation. Nexus must be established as mentioned above.

[Himansu Sekhar]

Moreover when the word 'business' was removed from the ambit of rule 2(l) of CCR 2004

[YAGAY andSUN]

If high stakes are involved then there is no harm to seek an Advance Ruling or a representation may be submitted to CBEC and TRU.

AI Summary

Cenvat credit eligibility for service tax on guest house rent is doubtful due to lack of nexus with output. Cenvat credit on service tax for rent of company guest houses is not claimable because the rent is not used in or in relation to manufacture of excisable goods or provision of output services, so the requisite input-output nexus is absent; prior availability has become doubtful after statutory scope changes, and taxpayers with substantial exposure are advised to seek an advance ruling or submit a representation to tax authorities.