Service tax credit prior to production

[madhavvan n]

Can a company accumulate the service tax credit on different services utilized in the period prior to its commencement of production? Is it required to be registered in Excise for the accumulation of Service tax credit or whenever it gets registered in Excise at that time it can claim the credit of accumulated service tax?

[Rama Krishana]

It depends upon various factors. The main factor is that you are intended to pay central excise duty or service tax as the case may be from the first clearance or billing or collection etc. as applicable. As per the law, there is no mandatory requirement for obtaining registration before you start your production or providing taxable services. But, to avoid controversies and unnecessary litigation, it is always better that registration should be obtained once the duty paying documents are received and intended to avail cenvat credit. Department would also favor this.

AI Summary

Service tax credit accumulation depends on intention to pay excise; timely registration advised to secure pre production credit.
Accumulation of service tax credit before production depends on the company's intention to pay central excise duty or service tax from first clearance, billing or collection; registration is not statutorily required before starting production, but obtaining registration once duty paying documents are received and the entity intends to avail Cenvat credit is advisable to avoid disputes.