CENVAT credit on outdoor catering and limitation plea remanded for fresh factual determination

Outdoor catering service used to supply food through an employee canteen was examined for CENVAT credit eligibility by reference to the statutory obligation to maintain a canteen under the Factories Act and the applicable employee strength during the relevant period. The factual basis needed to apply the governing High Court rulings had not been properly verified, so the credit issue was not finally determined and was remitted for fresh adjudication. The limitation objection raised in the cross-objection was also left open because it had not been independently examined on the correct factual footing. The lower orders were set aside and the matter sent back for de novo decision on both issues.

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Issues: (i) Whether outdoor catering service used for providing food to employees through a canteen facility could qualify as input service for CENVAT credit purposes; (ii) Whether the demand and related liability required fresh consideration on the issue of limitation.

Issue (i): Whether outdoor catering service used for providing food to employees through a canteen facility could qualify as input service for CENVAT credit purposes.

Analysis: The entitlement to credit depended on whether the assessee was under a statutory obligation to provide canteen facilities to its employees under the Factories Act and whether the strength of employees during the relevant period satisfied that condition. The appellate authority had allowed the claim on the footing that outdoor catering was an input service, but the factual foundation necessary to apply the governing High Court rulings had not been verified by the original authority.

Conclusion: The issue was not finally decided and was remitted for fresh determination by the original authority.

Issue (ii): Whether the demand and related liability required fresh consideration on the issue of limitation.

Analysis: The limitation plea had been raised in the cross-objection, but the original authority had not examined the matter in the proper factual setting, and the appellate authority had disposed of the case without addressing it independently. Fresh adjudication was therefore necessary along with the substantive issue.

Conclusion: The issue was not finally decided and was remitted for fresh consideration.

Final Conclusion: The orders of the lower authorities were set aside and the matter was sent back for a de novo decision on both the substantive entitlement to credit and the limitation objection, in accordance with law and natural justice.

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