Cenvat credit - Travelling agent services

[Vijay Chitte]

'A' (Travel agent) availed service from 'B' (Other travel agency)for providing service to his client 'C'. 'B' (other travel agency)raised the bill to 'A' for Rs.10490/- [10000 + 490 (S.T. 4.9%)]. 'B' paid this bill in time. Now 'A' raise the said bill to 'C' including his profit margine Rs.1000 e.i Rs.11000 (10000+ +1000). My question is: Can 'B' charge the service tax @4.9%(After taking abatment)OR @12.24%? If, he can charge the service tax @4.9%, Can he take the CENVAT credit which aviled from 'B'?

AI Summary

Travel Agents: No Simultaneous Abatement and CENVAT Credit Claim Under Notification No. 1/2006. A travel agent, 'A,' availed services from another travel agency, 'B,' to serve client 'C.' 'B' billed 'A' Rs. 10,490, including a 4.9% service tax. 'A' then billed 'C' Rs. 11,000, adding a profit margin. The query was whether 'B' could charge a 4.9% service tax and if 'A' could claim CENVAT credit from 'B.' The response clarified that under notification no. 1/2006, one cannot simultaneously avail abatement and claim CENVAT credit. Therefore, if opting for a concessional tax rate, CENVAT credit is not available.