2008 (1) TMI 29 - AT - Service Tax

Catering services provided in the factory of respondents can t be considered as input services for the purpose of cenvat credit as not used for the purpose of manufacturing or provision of any taxable services

Summary

Issues Involved:
Interpretation of input services under the CENVAT Credit Rules for catering services provided in a factory.

Analysis:
The judgment revolves around the interpretation of input services under the CENVAT Credit Rules concerning catering services provided in a factory. The Revenue contested the Commissioner (Appeals) finding that the catering services qualify as input services eligible for credit. The definition of input services was crucial in this case, which includes services used directly or indirectly in the manufacture of final products or in relation to business activities. The Tribunal analyzed the definition and concluded that catering/canteen services do not fall under activities related to business, such as accounting or auditing, which are typically connected with the business of manufacture. Even if providing a canteen is mandatory under the Factories Act, it does not automatically classify catering services as business-related. The Tribunal emphasized that catering services are more of a welfare activity than a business-related activity. Consequently, the Tribunal set aside the Commissioner (Appeals) finding and allowed the appeals filed by the Revenue.

The judgment highlights the distinction between activities directly related to business, like accounting or financing, and welfare activities like catering services. The Tribunal's analysis focused on the nature of catering services provided in a factory and concluded that they do not qualify as input services under the CENVAT Credit Rules. The Tribunal's decision was based on a strict interpretation of the definition of input services and emphasized the importance of activities directly connected to the business of manufacture for claiming credit. The judgment serves as a precedent for cases involving the classification of services as input services for the purpose of availing credits under the CENVAT Credit Rules.