By TIOL News Service

HYDERABAD, AUG 29, 2016 : THE dispute is about admissibility of CENVAT Credit on outdoor catering service for the period from October 2012 to March 2013. It is the contention of the department that 'outdoor catering services' are specifically mentioned in the exclusion part of the definition and that therefore these services do not qualify as input service. The appellant contended that - what is excluded is services in relation to out-door catering when such services are used primarily for personal use or consumption of any employee. Catering service was provided by appellant within the factory premises to provide food to the employees and labourers as per statutory requirement imposed by Factories Act, 1948 and is therefore eligible for credit.

After hearing both sides, the Tribunal allowed the appeal by holding that:

++ In P. Ramanathan Aiyar's Advanced Law Lexicon 3rd edition, the word primarily is defined as "that which is first in order, rank or importance, anything from which something else arises or is derived." The word means something which is more most proximate or more important. When outdoor catering services, beauty treatment, health services etc. used for personal use or consumption of an employee, it would not qualify as 'input service'. In the instant case, as per Factories Act, 1948, the appellants are compelled to provide food facilities inside the factory. It is more importantly used by the appellant to comply with the mandatory requirement under Factories Act. If they do not comply with such provision of the Factories Act, the appellants will definitely not be able to engage in the production / manufacture of final products. Therefore outdoor catering services are used by appellant in relation to the business of manufacture and not for any personal use or consumption of employee. Disallowance of credit is not legal or proper.

(See 2016-TIOL-2223-CESTAT-HYD)