Broad input service test allows Cenvat credit for employee-related catering, transport and health insurance services.

The Cenvat Credit Rules, 2004 treat input service broadly and include services used directly or indirectly in manufacture, as well as services connected with business activities. Outdoor catering was treated as a statutory and business-related obligation under the Factories Act and part of the cost of production. Rent-a-cab transport was linked to employee access to the factory and supported manufacturing and business operations. Group health insurance was also treated as connected with employment and business obligations. On that basis, these employee-related services qualified as input services, and service tax paid on them was admissible as Cenvat credit.

---

---

Issues: Whether outdoor catering, rent-a-cab transportation and group health insurance services used for employees qualified as "input service" under the Cenvat Credit Rules, 2004, and whether service tax paid on those services was admissible as Cenvat credit.

Analysis: The definition of input service is inclusive and covers not only services used directly or indirectly in or in relation to manufacture, but also services used in relation to activities relating to business. Services need not be expressly enumerated if they satisfy either test. Outdoor catering was treated as a statutory and business-related obligation under the Factories Act, and the expense formed part of the cost of production. Rent-a-cab transportation enabled employees to reach the factory in time and had a direct bearing on manufacturing as well as business operations. Group health insurance was linked to statutory and employment-related obligations and likewise formed part of business activity and cost structure. Since these services were used in relation to manufacture or business, the credit could not be denied merely because they were not specifically named in the definition.

Conclusion: The services in question constituted input services and the assessee was entitled to Cenvat credit on the service tax paid thereon. The revenue's challenge failed.

---