Input service credit cannot be denied merely because registration followed taxability when registration was timely obtained.

Where a service is newly brought into tax and registration is permitted within the prescribed period, input service credit cannot, prima facie, be denied solely because registration was obtained after taxability commenced. On that reasoning, the tribunal treated the disallowance as fit for interim protection and granted waiver of pre-deposit with stay of recovery pending disposal of the appeal. The note emphasises that the existence of timely registration and the prior refund sanction supported the appellant's claim at the interim stage.

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Issues: Whether the appellant was entitled, at the interim stage, to waiver of pre-deposit and stay of recovery of the amount disallowed on the ground that the credit related to a period prior to registration.

Analysis: The service in question became taxable from 16.05.2008, and the relevant rules permitted registration within 30 days of such introduction. The appellant had registered within that period. In that context, the denial of credit on the sole ground that it was taken before the date of registration was found, prima facie, to be unjustified, particularly when the original authority had already sanctioned refund. On that basis, the recovery sought by the impugned order was treated as fit for interim protection pending disposal of the appeal.

Conclusion: The appellant was granted waiver of pre-deposit and stay of recovery pending disposal of the appeal.

Ratio Decidendi: Where a taxable service is newly brought into the tax net and registration is permitted within a prescribed period, credit on input services cannot, prima facie, be denied merely because registration was obtained after the date from which tax became leviable.

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