Input service credit for factory canteen catering upheld where canteen is business-related and linked to manufacture.

Service tax paid on outdoor catering used to run an in-factory canteen for workers was treated as eligible Cenvat credit as an input service. The definition of input service was read as containing both a specific and an inclusive limb, with the words "in relation to" given a wide meaning and the phrase "such as" treated as illustrative, not exhaustive. Because the canteen was maintained within the factory as a business-related facility connected with manufacture, and statutory requirements also supported the obligation, the credit was held admissible under Rule 2(l) of the Cenvat Credit Rules, 2004.

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Issues: Whether service tax paid on outdoor catering services used for providing canteen facilities to factory workers is admissible as Cenvat credit as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The definition of input service contains both a specific part and an inclusive part. The inclusive part extends credit to services used directly or indirectly in relation to manufacture and to activities relating to business. The expression "such as" in the definition is illustrative and not exhaustive, and the phrase "in relation to" must receive a wide meaning. A canteen facility maintained within the factory for employees was treated as a business-related activity connected with manufacture, especially where statutory provisions also required provision of a canteen for workers.

Conclusion: The credit of service tax paid on outdoor catering and canteen services is admissible as input service under Rule 2(l) of the Cenvat Credit Rules, 2004, in favour of the assessee.

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