Input service credit for share placement finance was allowed where capital raising supported a manufacturing project.

Service tax paid on professional and brokerage services used for private placement of shares to raise finance for a manufacturing project was treated as eligible input service credit under Rule 2(l) of the Cenvat Credit Rules, 2004. The input service definition was applied broadly to cover business-related services connected with manufacture, not only services directly used in production. On that basis, financial services used to raise capital for the business were held to fall within the wider ambit of input service, and the credit was held admissible to the assessee.

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Issues: Whether service tax paid on services availed for private placement of shares to raise finance for a manufacturing project is admissible as input service credit under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The credit was claimed in respect of professional and brokerage services used for raising capital through private placement of shares for implementing a new manufacturing project. The definition of input service was held not to be confined only to services directly linked to manufacture, but to extend to services relating to business activities connected with manufacture. Financial services used to raise capital for the business were treated as falling within that wider ambit.

Conclusion: The service of private placement of shares for raising capital was held to be an input service, and the credit was held admissible in favour of the assessee.

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