Cenvat credit on mobile phones used in business activity is admissible as input service under Rule 2(l).

Service tax paid on mobile phones used in business activity was held admissible as Cenvat credit under Rule 2(l) of the Cenvat Credit Rules, 2004. The definition of input service was applied broadly to cover services used directly or indirectly in or in relation to manufacture, including activities relating to business. As there was no allegation that the mobile phones were outside business use, and an earlier view allowing such credit was followed, the denial of credit was set aside in favour of the assessee.

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Issues: Whether service tax paid on mobile phones used in business activity is admissible as Cenvat credit as input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The definition of input service under Rule 2(l) is broad and includes services used directly or indirectly in or in relation to manufacture, as well as activities relating to business. The record showed no allegation that the mobile phones were not used in the appellant's business activity. The earlier decision recognising credit on mobile phones was followed, and the distinction sought to be drawn on verification of use was not accepted on the facts of this case.

Conclusion: Credit of service tax paid on mobile phones was admissible. The denial of credit was set aside in favour of the assessee.

Ratio Decidendi: Service tax paid on mobile phones is eligible for Cenvat credit where the phones are used in activities relating to business within the scope of input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

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