Cenvat credit on statutory medical facility staffing was admissible where doctors and nurses were supplied for factory welfare obligations.

Manpower supply service used to provide doctors and nursing staff for medical facilities required under the Factories Act and the Mines Act was treated as an input service in relation to manufacture. Service tax paid on such staffing support qualified for cenvat credit because the medical facilities were statutory welfare obligations for factory and mine operations. The contrary authority relied on by Revenue was distinguished as not dealing with services mandated by these factory and mine welfare requirements. On that basis, denial of cenvat credit was held unsustainable and the credit was admissible.

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Issues: Whether cenvat credit was admissible on service tax paid for manpower supply service used for providing doctors and nursing staff to maintain medical facilities in the factory, where such medical facilities were statutorily required under the Factories Act and the Mines Act.

Analysis: Medical facilities for employees in a factory are a statutory requirement under the Factories Act, 1948 and the Mines Act, 1952. Service tax paid on manpower supply for doctors and nursing staff engaged to operate such facilities was therefore treated as an input service used in or in relation to the manufacture of final products. The contrary authority cited for Revenue was distinguished because it did not concern services mandated by the statutory factory and mine welfare obligations.

Conclusion: The denial of cenvat credit was unsustainable and the credit was held admissible in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded on the question of eligibility to cenvat credit for statutory medical facility services.

Ratio Decidendi: Where manpower supply services are used to provide medical facilities that are statutorily mandated for factory or mine operations, the service is treated as used in relation to manufacture and cenvat credit is admissible.

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