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Issues: (i) Whether Cenvat credit was admissible on manpower supply services used for maintaining an occupational health centre at the factory under the Rajasthan Factories Rules, 1951; (ii) whether Cenvat credit was admissible on manpower supply services used at the Udaipur project office and Mumbai corporate office as services relating to business.
Issue (i): Whether Cenvat credit was admissible on manpower supply services used for maintaining an occupational health centre at the factory under the Rajasthan Factories Rules, 1951.
Analysis: The factory was engaged in a hazardous process and employed more than the prescribed number of workers, making maintenance of an occupational health centre mandatory under Rule 65T of the Rajasthan Factories Rules, 1951. Compliance with that requirement was necessary for carrying on the manufacturing activity. The manpower supplied for manning the health centre was therefore integrally connected with manufacture and fell within the ambit of input service.
Conclusion: Cenvat credit on the manpower supply service for the occupational health centre was admissible, in favour of the assessee.
Issue (ii): Whether Cenvat credit was admissible on manpower supply services used at the Udaipur project office and Mumbai corporate office as services relating to business.
Analysis: The earlier departmental finding had treated similar manpower supply services at the project and corporate offices as connected with business activities. Such services were covered by the expression activity relating to business in the definition of input service, and the same factual and legal position applied to the disputed period.
Conclusion: Cenvat credit on the manpower supply services used at the Udaipur project office and Mumbai corporate office was admissible, in favour of the assessee.
Final Conclusion: The denial of Cenvat credit was unsustainable because both categories of manpower supply services qualified as input services connected with manufacture or business, and the assessee was entitled to the credit.
Ratio Decidendi: Where manpower supply services are used to satisfy a statutory occupational health requirement essential for continuing manufacture, or are used in business operations covered by activity relating to business, they qualify as input services for Cenvat credit purposes.
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