Input service credit under the wider pre-2011 definition was allowed where business-related services supported output services.

For the period before 01.04.2011, the definition of input service under the Cenvat Credit Rules, 2004 was broad and covered services used in relation to business activities. Credit was admissible where the services were used for providing output services, and the disputed services, including business support, renting of immovable property, courier, telecommunication, supply of tangible goods, rent-a-cab, air travel, management consultancy, maintenance, security, insurance and manpower recruitment, were treated as connected with the business and essential to rendering output services. Denial of credit for alleged lack of nexus was therefore not justified, and the disallowance was set aside.

---

---

Issues: Whether CENVAT credit on the disputed input services was admissible for the period prior to 01.04.2011 when the definition of input service had a wide ambit including activities relating to business, and whether the disallowance of credit was sustainable for alleged lack of nexus with output services.

Analysis: For the relevant period, the definition of input service under the Cenvat Credit Rules, 2004 was expansive and covered services used in relation to business activities. Credit is admissible where the services are used for providing output services. The disputed services, including business support services, renting of immovable property, courier, telecommunication, supply of tangible goods, rent-a-cab, air travel, management consultancy, maintenance, security, insurance and manpower recruitment, were found to be connected with the business and essential to the rendering of output services. The absence of such services would materially affect the provision of output services, and the denial of credit on the ground of lack of nexus was not justified.

Conclusion: The disallowance of CENVAT credit was set aside and the appeal was allowed.

---