Outdoor catering for a statutory factory canteen qualifies as input service for CENVAT credit, subject to employee recovery limits.

Outdoor catering services used to operate a statutorily required factory canteen were held to have sufficient nexus with manufacture and the business of the assessee, so they qualified as input services for CENVAT credit under the Cenvat Credit Rules, 2004. The Court applied the settled broad definition of input service, covering services used directly or indirectly in relation to manufacture and those integrally connected with business operations. Credit was, however, not available to the extent the service tax burden was recovered from employees, but that issue had already been reversed and called for no further interference.

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Issues: Whether outdoor catering services used in the factory canteen for employees qualify as input service for CENVAT credit under the Cenvat Credit Rules, 2004.

Analysis: The Court followed the settled view that the definition of input service is wide and covers services used directly or indirectly in relation to manufacture as well as services having a direct nexus with or being integrally connected to the business of manufacturing the final product. It held that providing canteen facilities through outdoor caterers, where such facility is statutorily required for the factory workforce, has sufficient nexus with the business of manufacture to fall within the ambit of input service. The Court also noted that credit is not available to the extent the service tax burden is recovered from employees, but that aspect had already been reversed and required no further interference in the present appeal.

Conclusion: Outdoor catering services were eligible input services and the assessee was entitled to CENVAT credit; the Revenue's challenge failed.

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