Input service credit for employee medical welfare upheld where business nexus and inclusion in output value were shown.

Cenvat credit was treated as admissible on service tax paid for employee welfare medical services where the services were connected to business activity and supported discharge of a legal or statutory obligation. The analysis relied on prior decisions recognising that such business-related services can qualify as input service when they have a nexus with output services. A Chartered Accountant's certificate also showed that the medical expenditure had been included in the value of the output services, removing the factual objection raised below. On that basis, the credit was held admissible in favour of the assessee.

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Issues: Whether Cenvat credit was admissible on service tax paid for medical services provided for the welfare of employees, and whether the expenditure had been included in the value of output services so as to satisfy the input service test.

Analysis: The dispute turned on whether the employee welfare medical services qualified as input service by being an activity relating to business. Reliance was placed on prior decisions recognising that services undertaken to discharge a legal or statutory obligation, and services having nexus with business activity, fall within the scope of input service. The Appellant also produced a Chartered Accountant's certificate showing that the medical expenditure had been included in the value of the output services, removing the sole factual objection recorded in the lower order.

Conclusion: Cenvat credit on the medical services was admissible and the issue is answered in favour of the Assessee.

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