Factory canteen catering services qualify as input service for CENVAT credit when statutory and indispensable to manufacturing.

Outdoor catering services used in a factory canteen were treated as input service under the Cenvat Credit Rules, 2004 because canteen facilities were a statutory requirement under the Factories Act and were indispensable to running the manufacturing premises. The court read the definition of input service broadly to cover services used directly or indirectly in relation to manufacture, and held that rule 3 did not restrict credit merely because the service was not used in the manufacturing process itself. Following the earlier decision on the same issue, service tax paid on the catering service was held to relate to business and manufacture, and CENVAT credit was admissible.

---

---

Issues: Whether outdoor catering services provided to employees in the canteen of the manufacturing premises qualify as input service under the Cenvat Credit Rules, 2004, so as to entitle the manufacturer to CENVAT credit.

Analysis: Canteen services were treated as a statutory requirement under section 46 of the Factories Act, 1948, and therefore as indispensable for running the factory. The definition of input service was read broadly to include services used directly or indirectly in or in relation to manufacture, and rule 3 of the Cenvat Credit Rules, 2004 was held not to restrict credit by the nature of the input service received. The earlier decision on the same point was followed, and the service tax paid on outdoor catering services was held to be relatable to business and manufacture.

Conclusion: Outdoor catering services used in the factory canteen constitute input service, and CENVAT credit is admissible to the assessee.

Ratio Decidendi: A service that is a statutory and indispensable requirement for running the manufacturing activity, and is used indirectly in relation to manufacture, falls within input service for the purpose of CENVAT credit.

---