Availment of Input credit or apply for refund

[Guest]

My query is regarding Input Credit. A Co. ABC paid service tax in the year 2004-2005. And the same amount were not taken as credit because of mistake. And now the Co. wants to settle down the service tax liablity for the year 2005-2006 , is it possible to take the credit or Co wil have to apply for refund. Thx.

[Surender Gupta]

In our opinion ABC can take the credit of Service Tax on the input services for the year 2004-05 even now, but it must be established and proved that there is a bonafide reason for not availing the credit in the correct preiod, if asked. However, you may not face any difficulty if the time gap is not exceeding one year i.e. for the quarter ending March 2005 you may take credit for the quarter ending Mrach 2006.

[Guest]

Credit should be taken within the reasonable time. Time limit is not defined and according to me the credit canbe taken

AI Summary

Input tax credit can be claimed retroactively if bona fide omission is shown and delay is reasonable. Availability of input credit for a prior service tax period is permitted if the taxpayer can establish a bona fide omission and a reasonable delay; the taxpayer should be prepared to substantiate the explanation with documentation, since temporal limits are not precisely defined and the acceptability of retrospective adjustment is fact sensitive.