Availment of service tax credit

[Guest]

company A has input service tax credit of Rs. 2 crores in month of april and may 09 it has parked this amount in the clearing account the company has substantial credit of capital goods queries is it required to avail the service tax credit by posting from clearing account to availment account and then is it required to utilise this credit in financial year 2009-10 itself or it can carry it forward for utilisation in FY 2010-11 is there any time limt for availment and utilisation of service tax credit or once credit is availed (when the payment for input services has been made) it can be utilised at any time thereafter say after 3 years

[Mukesh Kumar]

Once you avail the cenvat credit, there is no time limit for utilizing the same as long as you continue to provide taxable output services or manufacture excisable goods. However, on the issue of period of limitation for availing cenvat credit on input services, there are divergent views. As per rule 4(7) you can take the credit on or after making payment for input services. But, as per ratios of some judicial pronouncement, it is safe to say that you should take credit within one year from the date of payment towards input services.

AI Summary

Service tax credit availment: utilisation unrestricted while taxable outputs continue; availing after payment, judicial view suggests one-year window. Once cenvat credit on input services is availed, utilisation is not time limited while taxable output services or manufacture of excisable goods continue. Credit may be taken on or after payment for input services, but judicial pronouncements suggest it is prudent to avail credit within one year of payment to avoid limitation disputes.