Cenvat credit on factory canteen and rent-a-cab services upheld where the services had business nexus and prior precedent applied.

Cenvat credit was held admissible for service tax paid on canteen services received in factory premises, as outdoor catering for a factory canteen was treated as an input service linked to business and part of the cost of production, supported by the mandatory canteen framework under the Factories Act, 1948. Cenvat credit was also held admissible for rent-a-cab service, the dispute being covered by an earlier Tribunal decision applying the same credit-eligibility reasoning. The denial of credit was therefore set aside on both input services.

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Issues: (i) Whether Cenvat credit of Service Tax paid on canteen services was admissible; (ii) Whether Cenvat credit of Service Tax paid on rent-a-cab service was admissible.

Issue (i): Whether Cenvat credit of Service Tax paid on canteen services was admissible.

Analysis: The services were received in the factory premises. The Larger Bench view treated outdoor catering for a factory canteen as an input service relating to business, particularly where canteen provision forms part of the cost of production and is supported by the mandatory canteen framework under the Factories Act, 1948.

Conclusion: Cenvat credit on canteen services was admissible and the issue was in favour of the assessee.

Issue (ii): Whether Cenvat credit of Service Tax paid on rent-a-cab service was admissible.

Analysis: The dispute was covered by the Tribunal's earlier decision directly dealing with rent-a-cab service, and the same reasoning was applied to treat the service as eligible for credit.

Conclusion: Cenvat credit on rent-a-cab service was admissible and the issue was in favour of the assessee.

Final Conclusion: The denial of credit was set aside and the assessee succeeded on both disputed input services.

Ratio Decidendi: Services used in the factory and having a nexus with the business or cost of production can qualify as input services for Cenvat credit where the governing precedent so holds.

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