Statutory factory canteen catering qualifies as an input service, making Cenvat credit admissible under the wider business nexus test.

Outdoor catering service used to run a canteen mandated under the Factories Act, 1948 falls within the wide inclusive definition of input services under the Cenvat Credit Rules, 2004. Because the employer is statutorily required to maintain the canteen and faces penal consequences for non-compliance, the service is treated as integral to the manufacturing business rather than a voluntary welfare expense. On that basis, Cenvat credit on the catering service is admissible and denial of credit is unsustainable.

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Issues: Whether outdoor catering services used for providing canteen facilities mandated by the Factories Act, 1948 qualify as input services for the purpose of Cenvat credit.

Analysis: The definition of input services under the Cenvat Credit Rules, 2004 is of wide amplitude and includes services used directly or indirectly in relation to manufacture and activities relating to business. Where the assessee is statutorily required to maintain a canteen for workers under section 46 of the Factories Act, 1948 and non-compliance attracts penal consequences under section 92, the catering service cannot be regarded as a mere optional welfare expense. It forms an integral part of the manufacturing activity and is sufficiently connected with the business of manufacture to fall within the inclusive scope of input services. The reliance placed on the rule requiring nexus with manufacture does not dislodge the claim, because the service is mandated by law and is not merely incidental costing.

Conclusion: Outdoor catering services used for the statutory canteen are input services, and Cenvat credit is admissible to the assessee.

Final Conclusion: The credit denial was unsustainable and the assessee was entitled to relief by setting aside the lower orders.

Ratio Decidendi: A service mandated by law for the functioning of a factory and integrally connected with the manufacturing business falls within the inclusive scope of input services for Cenvat credit.

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