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.

AI Summary

Can businesses claim Cenvat Credit for mobile phones used by employees? Rule 2004 allows it if proven for business use. A query was raised regarding the eligibility of service tax credit on mobile phones under the Cenvat Credit Rule, 2004, specifically when mobile numbers are registered under employees' names in a corporate plan. The concern was about the difficulty in distinguishing between personal and business calls, particularly when dealing with excisable and exempted commodities. The response indicated that if it can be demonstrated that the telephones are used for business purposes, Cenvat Credit may be claimed. The discussion referenced a case involving Indian Rayon & Industries Ltd. and CCE, Bhavnagar, suggesting that mobile phones could qualify for credit if used for business.