CENVAT Credit on Factory Canteen Expenses

[Pradeep Jain]

Dear Sir,

 

Our company is a Limited company and  having canteen facilities for Employees . The Contract  for this is given for Canteen service  such as Lunch, Dinner and Tea and Snacks .

My Query is that :-

- Are we entitled to avail CENVAT Credit on the service tax paid thereon?

- If yes then , do we need to reverse the CENVAT Credit on the amount recovered from Employees ?

 

Regards

 

Pradeep Jain

AI Summary

CENVAT credit denial for employee canteen services; recoveries taxable unless canteen lacks AC and liquor licence.
CENVAT credit is not available for employer-provided canteen services used for employees' personal consumption due to the amended Input Services definition. Recoveries from employees for subsidised food may be taxable as the service portion of food supply, unless the canteen both lacks air conditioning/central heating throughout the year and does not hold a licence to serve alcoholic beverages; if taxable, the employer must discharge service tax and cannot take CENVAT credit for such services.