Service Tax

Bharat Gala (Querist) 25 February 2010 This query is : Resolved
Dear Sir,

1) Can company avail the benefits of the cenvat on the courier charges paid by the comapny?

2) Can company avail the benefits of the cenvat on the service charged by the travel agent on booking of Air Tickets of Directors travelling for business ??

Pls. Advice

Thanks.

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soumitra basu (Expert) 25 February 2010
Both are yes. Service Charges paid for the business expenses is available for cenvat credit.

APARNA NANDAKUMAR (Expert) 25 February 2010
The issue whether courier charges for despatch of final products/freight charges incurred for outward transportation of goods from factory to customers faced a lot of controversy. The Delhi Bench of CESTAT held in Universal Cables Ltd. v.Commissioner 2007(5) S.T.R. 142 that courier service for despatch of final products is an input service and that credit can be availed. The Bangalore Bench of CESTAT has also held similarly in the case of 2008(11) S.T.R. 266- Deloitte tax Services (India) Pvt.Ltd.But there were other decisions to the contrary. Now the issue has been set at rest by the decision of the Larger Bench of CESTAT, B'lore in ABB Limited case 2009 TIOL 830 which has held the benefit of credit on service tax is admissible even for outward transportation of goods to customers. Therefore this is euqally applicable to courier services. The Revenue has gone on an appeal before the Hon'ble Karnataka High Court and has also filed a stay petition which is pending. The CESTAT, Chennai Bench has expressed a different preliminary view and has adjourned the case (2010(17)STR 118 in anticipation of the disposal of stay application by the Hon'ble Karnataka High Court. However, as on date the decision in ABB Ltd. holds good. Hence benefite of cenvat credit on courier charges is admissible.
Regarding the next question, yes credit is admissible in this case also.
For further clarification, email me at nandakumar.aparna2@gmail.com.
Regards,
Aparna Nandakumar,
Advocate & TAx consultant,
Chennai