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Eligibility of Cenvat credit on Catering services

Service Tax - By: - Ravi Bihani - Dated:- 19-12-2015 Last Replied Date:- 1-1-2016 - The definition of input service under Cenvat Credit Rules, 2004 has been amended drastically w.e.f. April 2011 and because of such amendments, majority of interpretations and settled positions have taken U-turn. One of them is CENVAT credit on catering service was allowed prior to April 2011. However, w.e.f. April 2011, there is specific exclusion of catering service from the definition of input service and accor .....

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Home Travel Concession, when such services are used primarily for personal use or consumption of employee; In the definition of input service Government has specifically used the words such as used primarily for personal use or consumption of any employee , and every word has it meaning in the law. The same was also held by Hon ble Supreme Court in the case of Union of India Vs. Hansoli Devi - 2002 (9) TMI 799 - SUPREME COURT, wherein it has observed that the legislature never waste its words or .....

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or catering services used in relation to business activities continuous to be eligible input service even after amendment in the definition of input service w.e.f. April 1, 2011, when the cost is borne by the company not recovered from the employees. In Circular No.943/4/2011-C., dated 29 April 2011 wherein it was clarified that outdoor catering service is per se not an ineligible input service but it is not eligible for credit only when it is used for personal use or consumption of any employee .....

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then in that case, it cannot be treated as such catering service is primarily for personal use or consumption of employee and accordingly, CENVAT credit is allowed. In other words, catering service would be treated as primarily used for consumption of employee only when any cost of catering is recovered from the employees of the company. It should be possible to claim CENVAT credit in respect of all the services which are not primarily meant for personal use or consumption of employee. In other .....

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erted to the mandatory provisions of Section 46 of the Factories Act and took the view that CENVAT credit could not be denied in respect of outdoor catering service as it was their statutory liability to maintain a catering where the number of employees were more than 250. As the catering services are provided by the appellant as a part of its business need and obligation to the employees who are the essential hands of the business and without the said workers/employees, the appellant would not .....

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