We have client whose company is in process of construction, they will provide services only after completion of construction. But they have registered the company under Service tax just for availing input credit without having any present Output liability.
The respective expenses are capitalized but service tax part of expense is availed as cenvat credit.
Please advise whether the company can accumulate the input(Cenvat) credit for future output liability.Please advise with reference to any Section/Rule?
18 May 2011
Service tax registration is required only when service rendered by you exceeds aforesaid limit under the service tax act. As it seems from your queries that you have no service tax liability , coz production is yet to start .
As far i think you can't avail service tax credit . But if within the same year you start rendering services and service rendered by you crossed the aforesaid limit , than you may take that credit . however other expert's opinion on this matter must be considered.
CAclubindia
