Service tax credit on mobile phones

[Vijay Chitte]

SUb: Service tax credit on mobile phones As per new  Cenvat Credit Rule, 2004 service tax credit on mobile phones, there is no such restriction on telephone connections, which are installed in the premises, Therefore under the new Cenvat Credit Rule, 2004 mobiles phones is available as credit to service providers of output service and manufacturers also. (M/s. Indian Rayon & Industries Ltd. Vs. CCE, Bhavnagar) Query is: Landline and mobile phones services are not covered in specified sixteen services [As per Cenvat Credit Rule(rule 6 (5)]. Mobile phone numbers are provided in the name of employee under the corporate plan and it is difficulty to segregate the personal calls from the business calls. (How much call used for excisable commodities and exempted commodities?) Should we take this credit, If it is not possible to segregate? Please give your relevant inputs on this particular aspect.

[Guest]

If you are able to prove and satisfy the condition that the telephones in the name of employees are used for the purpose of business, you may be allowed to take Cenvat Credit.

AI Summary

Cenvat credit on mobile phones may be allowable where business use is demonstrable despite corporate plan allocations. Availability of Cenvat credit for mobile phones under the Cenvat Credit Rules, 2004 is recognised for service providers and manufacturers where telephones are used for business purposes; telephone services are not among the specified excluded services. When corporate mobile numbers are issued in employees' names and personal and business calls cannot be segregated, the advisory position is that credit may be allowed if the taxpayer can prove and satisfy that the telephones are used for business purposes.