Input service credit on outdoor catering was upheld where canteen formed part of manufacturing cost and statutory compliance.

Cenvat credit was held admissible on service tax paid for outdoor catering used in a factory canteen. The court treated the canteen facility, provided in discharge of a statutory obligation under the Factories Act, as part of the cost structure of the final product and as a service used directly or indirectly in or in relation to manufacture and business activities. Because the definition of input service under the Cenvat Credit Rules is inclusive, the service qualified for credit even though outdoor catering was not expressly named. The assessee was therefore entitled to the credit and the appeal failed.

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Issues: Whether cenvat credit of service tax paid on outdoor catering service was admissible to the assessee.

Analysis: The service was treated as an input service where it was used directly or indirectly in or in relation to manufacture or in relation to activities relating to business. Outdoor canteen facilities, provided in discharge of a statutory obligation under the Factories Act, were held to form part of the cost structure of the final product and not to be a mere charitable facility. The definition of input service was treated as inclusive, and the credit mechanism under the Cenvat Credit Rules was applied to services so utilised.

Conclusion: The assessee was entitled to cenvat credit on the service tax paid for outdoor catering service; the appeal failed.

Ratio Decidendi: A service used directly or indirectly in or in relation to manufacture, or in relation to business activities, qualifies as an input service for cenvat credit even if not expressly enumerated, including outdoor catering service provided pursuant to a statutory obligation.

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