Input nexus for manufacturing credit supports tax credit on architecture services for rain water harvesting system.

Architecture services used to establish a rain water harvesting system were treated as eligible for service tax credit because the system had a direct and integral nexus with manufacture. The reasoning was that water was an important input for producing aerated waters and carbonated beverages, so services connected with securing that input were sufficiently linked to the business activity. The credit was therefore admissible and the denial of credit was set aside in favour of the assessee.

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Issues: Whether service tax credit on architecture services used for putting in place a rain water harvesting system was admissible as having nexus with the manufacture of aerated waters and carbonated beverages.

Analysis: The architecture services were used to create a rain water harvesting system, and water was an important input for the manufacture of the appellant's products. The services were therefore treated as having a direct and integral connection with the appellant's business activity of manufacture.

Conclusion: The credit was held admissible and the denial of credit was set aside in favour of the assessee.

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