Cenvat credit on canteen service tax is admissible when the employer provides the canteen under a statutory obligation.

Outdoor canteen facilities maintained by an employer under the statutory obligation in Section 46 of the Factories Act are treated as part of employees' conditions of service. The expenditure on such facilities is not gratuitous but is a business-linked obligation that enters the cost of the final product. Service tax paid on canteen services is therefore relatable to the assessee's business and qualifies for Cenvat credit. The stated effect is that credit is admissible where the canteen is provided to satisfy a statutory requirement.

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Issues: Whether Cenvat credit of service tax paid on canteen services was admissible where the canteen was maintained pursuant to a statutory obligation.

Analysis: Outdoor canteen facilities provided by an employer in compliance with the statutory obligation under Section 46 of the Factories Act form part of the conditions of service for employees. The expenditure incurred in providing such facilities is not a mere charity or gratuitous benefit, but a legal obligation connected with the business and reflected in the cost of the final product. Service tax paid on such canteen services is therefore relatable to the assessee's business and qualifies for credit.

Conclusion: Cenvat credit on the service tax paid for canteen services is admissible, in favour of the assessee and against the revenue.

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