Input service credit on catering services was not limited by the 250-worker threshold, and the Revenue's restriction failed.

Catering services were treated as eligible input services, and the disputed restriction that credit was available only where the establishment employed more than 250 workers was rejected. The Tribunal held that no legal provision made entitlement to catering-service credit conditional on crossing the employee threshold under Section 46(1) of the Factories Act, 1948, and the Karnataka HC found no reason to differ. The assessee therefore remained entitled to input tax credit on catering services, with the Revenue's narrower interpretation not accepted.

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Issues: Whether catering services could be treated as eligible input services only when the establishment employed more than 250 workers.

Analysis: Catering services were accepted as eligible input services. The only dispute was whether entitlement was confined to establishments with more than 250 employees on the basis of Section 46(1) of the Factories Act, 1948. The Tribunal had held that there was no legal provision making catering service an input service only when the number of employees exceeded 250, and the Court found no reason to differ from that view.

Conclusion: The restriction suggested by the Revenue was not accepted, and the assessee remained entitled to the benefit of credit on catering services.

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