Canteen services are eligible input service for availment of CENVAT credit even if there is no statutory requirement of provision of food to workers in the factory

CENVAT credit on outdoor catering services relating to provision of food to less than 250 factory employees is disallowed. The Larger Bench’s decision in the case of CCE vs. GTC Industries Ltd. 2008 (12) STR 468 (Tri.-LB) is not followed on the ground that the assessee was not under a statutory obligation (more than 250 workers) to provide canteen services and therefore, CENVAT credit is denied.

Held

On perusal of the Larger Bench decision in the case of GTC Industries Ltd. (supra), the following points were observed: Though the number of workers was one of the criteria for eligibility of CENVAT credit, distinction cannot be made on the basis of reasoning adopted by the Larger Bench. What has to be seen is the ratio of law and if it is applicable, CENVAT credit is allowable. In the said case, outdoor catering service is held to be eligible input service irrespective of the fact that subsidised food was provided or not or whether the cost of the food was given by the worker or by the factory. Following the decision in the case of GTC Industries Ltd. (supra) and also Karnataka High Court’s decisions in the case of CCE, Bangalore vs. Stanzen Toyotetsu India (P) Ltd. 2011 (23) STR 444 (Kar) and CCE vs. ACE Designers Ltd. (Kar) 2012 (26) STR 193 (Kar) and appellant’s own case Paramount Communication Ltd. vs. CCE 2013 (287) ELT 70 (Tri.- Del.), the appeal is allowed.