Input service distributors

[jitendra Gupta]

A copmany/group established since 2000 and having four units. One unit started in 2000, second in 2003 and remaining in the year 2008(exempted unit). The concept of ISD introduced in June 2005 according to which registered office/corporate office has to get registration of ISD for distributing service credit. The registered office registered under ISD from 11/2008 and distributed service tax credit amongs its four unit. The credit od service tax pertaining to the year from 2004-05 to 2008-09. Can registered office distribute credit of service tax prior to its registration or prior to inteoduce ISD concepts? Whether there is any case law pertains to clarrify above situatiion/ position? Please guide me.

[Rama Krishana]

As per the provisions there is no restriction for distribution of the credit prior to the date of obtaining ISD registration number. Further, though there is no restriction of credit for prior period, the distribution of credit for the year 2004-05 to 2008-09 appears to create some difficulties, which you have to show the reasonable cause before adjudication authority / appellate authority.

AI Summary

Input service distributor can allocate past service tax credits, but must justify prior-period distributions to authorities. Statutory provisions do not expressly bar an input service distributor from allocating service tax credit for periods prior to ISD registration, but distribution of prior-period credits can create procedural and evidentiary difficulties; the distributor must be prepared to show reasonable cause before adjudication or appellate authorities to support such allocations.