Claiming service tax on subsidized services allowed??

[nilesh prithani]

Hi!!

We are a service oriented company in Hyderabad and recently in our annual audit we were disallowed credit for the below service tax we claimed:

1. Restaurant Bills (staff and management reward)

2. Hotel Bills (training session)

3. Transport (for raw materials)

Issue is that the auditor told us that we cannot claim service tax amount on any services where the service tax is not completely 15% on the basic amount.

Please suggest!!

Thanks!!

Nilesh Prithani

AI Summary

Input tax credit entitlement hinges on nexus and invoices addressed to the company, not on full-rate billing.
Credit for service tax depends on establishing a nexus between the input service and the taxable output and on documentary attribution of the bill to the company. Invoices in an individual's name for personal reimbursements do not support credit. Bills billed to the company for conferences, training or business travel, and transport of raw materials linked to output activity, support input tax credit when company records corroborate purpose and use. A blanket disallowance because tax was not charged at a particular rate is not substantiated.