Question:-
A company is incorporated in 2011 from the date of incorporation the client has only service tax input but no output so he doesn't registered for Service tax and all the service tax input shown in profit & loss as an expense but in current year the company started charging service tax from his customer from June 2012 so he get registered for service tax in the month of June 2012.But question is whether company can take service tax input of the current year i.e., from April 2012 to set off with output or not?
Answer:-
The ‘input service’ means any service used by a provider of output service for providing an output service.
This definition makes it clear that the service provider can take the credit of those services only which is used for providing output service. This is also supported by Rule 6 which says that the credit of input or input services used for exempted product or exempted service will not be allowed.
Further the condition as given under small scale threshold exemption notification no. 33/2012-ST (threshold exemption) is as follows: “The provider of taxable service shall avail the CENVAT credit only on such input or input service received, on or after the date on which the service provider starts paying service tax, and used for the provision of taxable services for which service tax is payable”
As company started charging service tax from customer from June only, hence the above provision will apply. Thus, you can take the credit of services received on or after the date from which company has started charging service tax i.e. in June.
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