Cenvat Credit on Hotel Bills, Service Tax

[Mathurthi RamKumar]

Dear All,

Greetings of the day. We are a kraft paper manufacturing unit and our CMD and Exe.Directors-Sales will visits clients (old and new )for business promotions purpose. I want to know can we avail s.tax input paid to hotels at the time of business tours?

Kindly clarify me.

Thanks is advance.

Regards

M.RamKumar

Posts / Replies

[Naveed S]

CENVAT credit can be claimed for the traveling expenses, provided if it can be proved that such input services are having nexus with the manufacturing activity and falls under sales promotion/business promotion activity. However, as the hotel bills does not show any such details such as purpose and reason for stay, hence Excise Audit may disallow such credit.

If any business seminar or any exhibition is attended and same can be proved from other relevant documents such date and city of such seminar/exhibition as well as invitation letter for attending business tours etc.; then credit may be availed, after due guidance from your consultant.

[PAWAN KUMAR]

Dear Sir,

As per my view, the bills of hotels for stay of your CMD and Executive Directors-Sales will not be admissible as input service as per rule 2(l)(ii)(C), as per which if service is consumed on an employee. Therefore as my view, It is not eligible input service.

[Pradeep Khatri]

Dear M Ram Kumar,

No CENVAT credit would be allowed on such activities as these are specifically disallowed in the definition of the the Input Services under the CENVAT credit Rules, 2004 as amended from time to time.

Regards,

YAGAY and SUN

(Management, Business, and Indirect Tax Consultants)