Judgment 1. The revenue as well as the assessee have preferred the appeal against the order passed by the Tribunal. 2. The assessee availed input service tax credit among other things for the function arranged for Kannada Rajyostava Day and colour photography expenses in respect of the inaugural function of Kengeri Police Station. The expenses incurred in respect of Catering service and Mediclaim Insurance for the said function has been accepted. But they have rejected the input service tax credit on Shamiyana services and photography services. 3. The assessee contends that any input service used directly or in relation to manufacturing activity is eligible for input service tax credit. The term ‘activities relating to business’ has been amplified with the word “such as” auditing, accounting, financing, recruitment, and quality control, coaching and training, computer networking, credit rating share registry and security etc., It is not exhaustive and therefore expenses such as providing Shamiyana services, furniture at the time of celebration of Kannada Rajyostava, spending money for colour photography and expenses incurred for inaugural function of kengeri police Station would come within meaning of the activities of business and therefore they were eligible to avail input tax credit for these two items and there was no intention to evade duty as it has already been held in terms of the several Judgments of the Apex Court that such expenses do come within the meaning of business expenses. Therefore they sent a reply to the show cause notice justifying the action. However, the assessing authority did not accept the said contention. He issued the demand for a sum of Rs.54,216/- towards the bill of Shimiyana and photography services and claimed an equal amount of penalty and interest. Aggrieved by the said order the assessee preferred an appeal which came to be dismissed. The Tribunal upheld the findings of the lower authorities by observing that on the said duty paid, the assessee is not entitled to CENVAT credit as it would not fall within the word activities relating to business. However, it held that there is no willful suppression or intention to evade duty and therefore is no willful suppression or intention to evade duty and therefore the claim made is barred by time and set aside the demand. Aggrieved by that portion of the order which is against their interest both of them have preferred these appeals. 4. However, it held that there is no willful suppression or intention to evade duty and therefore is no willful suppression or intention to evade duty and therefore the claim made is barred by time and set aside the demand. Aggrieved by that portion of the order which is against their interest both of them have preferred these appeals. 4. At the time of admitting the appeal filed by the revenue in CEA No.100/2009 the following substantial questions of law were framed for consideration on 7-1-2009. “1) Whether the Tribunal is right in considering the bonafide of the assessee as a valid ground to set aside the allegation of intention to evade duty and willful suppression given in the facts and circumstances of the case to attract proviso to Section 11A of the Central Excise Act, 1944? 2) Whether the Tribunal is right in concluding that the allegation of “intention to evade duty and willful suppression of facts” had not been brought out in the show cause notice when the show cause notice alleged the said suppression of facts in the light of Hon’ble Apex court judgment in the case of Continental Foundation Joint Venture Vs. Commissioner of Central Excise, Chandigarh-I ?” CEA-47/2009 filed by the assessee was admitted on 30-6-2009. 5. The learned counsel appearing for the assessee submitted that in the State of Karnataka, November 1st is celebrated as a Karnataka Rajyotava day. That is the day on which the present State of Karnataka was formed integrating the five regions where Kannada speaking people are in a majority. It is treated as a Stated Festival and a holiday is declared. Most of the employees working in the assessee’s factory are Kannada speaking people. It is in this context as a welfare measure in order to protect and preserve the culture of the State of Karnataka and also to maintain industrial peace, they have been taking effective steps to celebrate Karnataka Rajyostava in the premises of the factory in a big way. On such occasions to prevent unworthy things happening they requested the jurisdictional police to participate in the said function and infact the police also celebrate this function. The assessee bears the entire expenses in regard to Shamiyana, photography services and other incidental expenses. He pays the service tax for the services so rendered. All these activities carried-on-are activities relating to business. The assessee bears the entire expenses in regard to Shamiyana, photography services and other incidental expenses. He pays the service tax for the services so rendered. All these activities carried-on-are activities relating to business. In fat one such advantage which the assessee derives by such a function is that the security of the entire establishment is protected. It also involves safety of the workmen. Therefore it is incorrect to say that these expenses do not fall within the definition of activities relating to business. The authorities have taken a very narrow meaning of the definition of input service and the inclusive definition includes these expenses. 6. Per contra, the learned counsel appearing for the revenue submitted that as rightly pointed out by the Tribunal, social functions to entertain the employees, Rajyostava function and inauguration of police station cannot be brought within the ambit of activities relating to business and therefore the order passed by the Tribunal is legal and valid and does not call for interference on this ground. However he assails the remaining portion of the order where the Tribunal has held that the demand is unsustainable as there was no intention to evade duty and willful suppression of facts. 7. The answer to the question involves on the interpretation to be placed on the input service as defined in the CENVAT Rules, 2004 Rule 2(1) defines input service as under:- “input service” means any service,- (i) used by a provider of taxable service for providing an input service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and (clearance of final products upto the place of removal) and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation of inputs or capital goods and outward transportation upto- the place of removal.” 8. In the definition of the word “input service”, the legislature has used both the words ‘means’ as well as ‘includes’ but not ‘means and includes’. In the definition of the word “input service”, the legislature has used both the words ‘means’ as well as ‘includes’ but not ‘means and includes’. Therefore, in so far as clauses (i) and (ii) of the definition is concerned, the word used is ‘means’ and therefore, it is exhaustive. It is thereafter the legislature has consciously used the word ‘and includes’ which is extensive. Therefore, after specifically referring to the output service and input service rendered directly or indirectly in the manufacture of final products and clearance of final products, the inclusive definition sets out various services and further enlarge the scope by saying that all activities relating to business constitutes input service. One such activity relating to business which is specifically provided for, is the security of the establishment. The said inclusive definition is not exhaustive. It includes accounting, auditing, financing, credit rating, share registry etc. These are in no way connected with manufacturing but have been treated as input service. Security has various dimensions. Preventing any unruly incident is also one such aspect. The State Government has declared November, 1st as Karnataka Rajyosthava day. It is on that day the present Karnataka State came into existence after re-organization of States on linguistic basis. The said day is declared as a holiday. The people of Karnataka are duty bound to celebrate Karnataka Rajyostava day as a fundamental duty, to protect and preserve the culture of Kannadigas. It is not uncommon that when such local functions are not conducted, there will be trouble not only inside the factory premises but also outside. Various organisations have come up in the state which whip up the feelings of the people and attack institutions which will not fall in line. Some times, Government is helpless in these matters. They act only after the damage. It results in serious law and order problem and security concerns. The best way to protect the establishment is to extend financial help to the employees in celebrating such functions and also rope in police authorities. It service the interests of the industry. The money spent on such functions is negligible. All that is done in these functions is to put up a shamiana, provide some food and snacks, take photographs and entertainment. The underlying idea behind organizing such function as far as the employer is concerned, is the security of the establishment. It service the interests of the industry. The money spent on such functions is negligible. All that is done in these functions is to put up a shamiana, provide some food and snacks, take photographs and entertainment. The underlying idea behind organizing such function as far as the employer is concerned, is the security of the establishment. It will go a long way in preserving peace in the establishment, and security of the establishment is well protected. 9. Therefore it cannot be said that the expenses incurred in this connection and claimed as CENVAT credit is not in connection with activities relating to business. The assessee is in no way personally benefited by any of these expenses as there is no personal interest involved. On the contrary it shows they are concerned with the culture of the State, the welfare of its employees and a celebration of such a momentous occasion will go a long way in preserving the peace in the locality. Therefore in our view those expenses incurred towards putting up Shamiyana, photography services, etc, do fall within the activities relating to business and consequently input service and the service tax paid on such service could be availed as CENVAT credit by the assessee. 10. The learned counsel for the revenue relied on a Judgment of the Bombay High Court in the case of COMMISSIONER OF C.EX.NAGAPUR vs. ULTRATECH CEMENT LTD., reported in 2010 (20) STR 577 (Bom.) at para 31 reads under:- “31. In our opinion the ratio laid down by the Apex Court in the case in MARUTI SUZUKI LTD., (supra) in the context of definition of ‘input’ in Rules 2(k) of 2004 Rules would equally apply when interpreting the expressing “activities relating to business” in Rule 2 (1) of 2004 Rules, No doubt, that the inclusive part of the definition of “input” is restricted to the inputs used in or in relation to the manufacture of final products, whereas the inclusive part of the definition of input service extends to services used prior to/during the course of/after the manufacture of the final products. The fact that the definition of “input service” is wider than the definition of “input” would make no difference in applying the ratio laid down in the case of MARUTHI SUZUKI LTD., (supra) while interpreting the scope of ‘input service’. The fact that the definition of “input service” is wider than the definition of “input” would make no difference in applying the ratio laid down in the case of MARUTHI SUZUKI LTD., (supra) while interpreting the scope of ‘input service’. Accordingly in the light of the Judgment of the Apex Court in the case of MARUTHI SUZUKI LTD., (supra), we hold that services having nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product would qualify to be input service under Rule 2 (1) of 2004 Rules.” 11. There cannot be any quarrel regarding the said proposition of law. As stated therein, the definition of input service is more exhaustive than input. Whether it is input or input service there should be nexus or an integral connection with the manufacture of final products as well as the business activity. At the same time, because of the exhaustive definition of input service, the scope of nexus or integral connection is also explained and infact is specifically provided. Therefore to find out whether there is a nexus or integral connection with the manufacturer of final products. We have to keep in mind the exhaustive definition contained in input service and then the word used therein, that is, the activities relating to business and then decide whether any particular service would constitute input service. The real test is, whether there is a nexus or integral connection with the manufacture of final products as well as the business of manufacture of final product. In the case of the business of manufacture of final products, providing catering services and providing other facilities to the workmen is treated as input service. The State function arranged once in a year, for the welfare of the employees of the industry and in order to protect and preserve the culture of the State and said function cannot be separated from the business of manufacture of final product. In order to run the industry without any problem from the insiders or from outsiders, incurring of such expenses has unfortunately become a part of running the establishment. In order to run the industry without any problem from the insiders or from outsiders, incurring of such expenses has unfortunately become a part of running the establishment. If a Multi National Company celebrates the 1st November as a Karnataka Rajosthava Day and spends lavishly for their employees and also sought participation in the said function by the jurisdictional police and on that momentous occasion, the expenses incurred for taking photography or providing Shamiyana service and inaugural of police station it cannot be said that such expenses have no nexus or integral connection with the manufacturer of final product as well as business of manufacture of final products. Keeping in view the sentiments of the particular State the problems which are faced in all these establishment in a Linguistic State and as a reasonable employer if he wants to satisfy the aspirations of the people in a lawful manner, he cannot be found fault with. 12. In that view of the matter, we are satisfied from the material on record that the expenses incurred by the assessee would fall within the definition of input service and they are entitled to CENVAT credit. In the light of the finding on this point it is unnecessary to go into the other question of law which is raised and therefore they are not answered. Hence, the substantial question of law is answered in favour of the assessee and against the revenue and accordingly CEA 47/2009 is allowed and CEA 100/2008 is dismissed.