Cenvat credit requires business nexus; agricultural work qualified as input service, but park, plantation and school toilet work did not.

Service tax credit on agricultural work was treated as admissible input service credit under Rule 2(1) of the Cenvat Credit Rules, 2004, following the Tribunal's view that such activity could fall within the scope of input service. By contrast, credit for levelling a children's park, tree plantations, and construction of toilets in a village school was denied because those activities had no sufficient nexus with the assessee's business and did not qualify as input services. The governing principle stated is that Cenvat credit is available only where the service bears a sufficient business connection; services without such nexus are excluded.

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Issues: (i) Whether service tax credit on agricultural work qualified as input service under Rule 2(1) of the Cenvat Credit Rules, 2004. (ii) Whether service tax credit on levelling of a children's park, tree plantations, and construction of toilets in a village school qualified as input service under Rule 2(1) of the Cenvat Credit Rules, 2004.

Issue (i): Whether service tax credit on agricultural work qualified as input service under Rule 2(1) of the Cenvat Credit Rules, 2004.

Analysis: The service relating to agricultural work was treated as eligible for credit in view of the Tribunal's earlier view that such activity could fall within input service. The credit amount relating to this service was specifically identified and allowed.

Conclusion: Credit of service tax paid on agricultural work was held admissible and the finding was in favour of the assessee.

Issue (ii): Whether service tax credit on levelling of a children's park, tree plantations, and construction of toilets in a village school qualified as input service under Rule 2(1) of the Cenvat Credit Rules, 2004.

Analysis: These services were held to have no nexus with the business of the assessee and were not capable of being treated as input services within the rule.

Conclusion: Credit on these services was disallowed and the finding was in favour of the Revenue.

Final Conclusion: The appeal succeeded only in part, with credit allowed for agricultural work and denied for the remaining services.

Ratio Decidendi: For Cenvat credit, the service must have a sufficient nexus with the business activity; services lacking such nexus do not qualify as input services, while business-linked services may be eligible.

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