Factory canteen catering qualifies as input service when integrally connected with manufacturing business and statutory worker welfare obligations.

Outdoor catering services used for a factory canteen were treated as input service under Rule 2(l) of the Cenvat Credit Rules, 2004 because the canteen obligation arose under the Factories Act, 1948 and had an integral nexus with the manufacturing business. The Tribunal applied the principle that input service covers services relating to the business of manufacture, not only those directly used in production, and held that service tax paid on such canteen catering is eligible for Cenvat credit. Contrary authorities were distinguished on their facts.

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Issues: Whether outdoor catering service availed for a factory canteen qualifies as input service under Rule 2(l) of the Cenvat Credit Rules, 2004, so as to permit Cenvat credit of service tax paid thereon.

Analysis: The service was availed in the context of a canteen requirement under the Factories Act, 1948. The Tribunal applied the principle that services having nexus or integral connection with the business of manufacturing, and not merely those directly used in production, fall within the scope of input service. It treated the requirement to maintain a canteen for workers as an activity relating to manufacturing business and found the cited contrary authorities inapplicable on their facts.

Conclusion: Outdoor catering service used for the factory canteen is an input service, and Cenvat credit of the service tax paid on such service is admissible.

Ratio Decidendi: A service mandated for and integrally connected with the business of manufacture qualifies as input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

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