Claim of Cenvat Credit

[shyamal roychowdhury]

My client is a professional. He has number of engineers who works in feild . He has also office staffs. The arranbement is that each will have a mobile phone which is own by him ofcouece with the deductable advance from salary & sim card also in his name , the cost of which is also reimburesed by office , The entire monthly bill is paid by office. Now we want to claim cenvate since 100% bill is paid by office . Now the query is .Can my client claim cenvate since the it is an office expence although the bill is in the name of each individuals / We also take a declaration the mobile is used for office , Pl . let me know can we claim cenvate & if yes the notification /circular number & if not the circular/notification no .

[Guest]

I am giving below the case you may refer M/s INDIAN RAYON & INDUSTRIES LTD Vs CCE, BHAVNAGAR Service tax credit available on Mobile phones - Board Circular dated 20.06.2003 cannot be pressed into service in the context of the new Cenvat Credit Rules, 2004 - no stipulation in rule 4(1) or 4(7) expressly prohibiting such credit availment. Hence based on the said judgement, you will be able to take cenvat credit on modbile phone bills paid.

[Guest]

In view of the judgement declared in the case of M/s INDIAN RAYON & INDUSTRIES LTD Vs CCE, BHAVNAGAR, it is very clear the cenvat credit is available on mobile bills paid. Service tax credit available on Mobile phones - Board Circular dated 20.06.2003 cannot be pressed into service in the context of the new Cenvat Credit Rules, 2004 - no stipulation in rule 4(1) or 4(7) expressly prohibiting such credit availment.Sub-rule (7) of Rule 4 of the Cenvat Credit Rules, 2004 merely provides that Cenvat Credit in respect of inputs service shall be allowed on or after the date on which payment is made for the value of input service and the service tax paid or payable in indicated in the invoices, bills or challans.There is no prohbition in the Rules disallowing credit of service tax paid on mobile phones, which in any case is fast replacing fixed line phones in many establishments.

[Bakul Gandhi]

Cenvat credit may not be available as the mobile bill is in the personal name of employee and not in the name of the employer company.

[RAKESH R]

Sub rule (2) of Rule 9 of Cenvat Credit Rules specifically says that "No cenvat credit shall be taken unless all the paraticulars as prescribed under Service Tax Rules, 1994 are contained in the said invoice". One of the requirement as per Rule 4A(1) of the Service Tax Rules is 'the name and address of the person receiving the taxable service' should be mentioned in the invoice. In your case, the input service invoice contains only the name of the employee. Moreover, reimbursement of mobile phone charges is in the nature of 'perks' given to the employee. However, you may seek permission from the Divisional Asst. Commissioner in terms of the proviso to sub rule (2) of Rule 9 of Cenvat Credit Rules, 2004 and based on his permission, you can take credit. You cannot take credit on your own in the present case. S. Gokarnesan Advocate, Chennai

AI Summary

Cenvat credit availability on employer paid mobile bills depends on compliant invoices and possible divisional permission. Whether an employer may avail Cenvat credit on mobile phone service tax paid where bills are paid by the employer but invoices are in employees' names: one view, citing a tribunal decision, finds credit available under the Cenvat Credit Rules, 2004 because no provision expressly prohibits such credit and timing is governed by payment and invoice particulars; another view relies on Rule 9 and Service Tax invoice requirements, noting that invoices naming only employees and reimbursements as perks preclude self credit absent divisional authority permission under the proviso to sub rule (2) of Rule 9.