tax alert

Availment of CENVAT credit on input/input services received prior to service tax registration

The doubt whether cenvat credit can be availed on input/input services received prior to service tax registration can be cleared through a recent case of Actis Advisers Pvt. Ltd. Vs. CST. – Delhi (2014).


Brief Facts of the Case:


Actis Advisers Pvt. Ltd. (“the Appellant”) is engaged in providing ‘Management Consultancy Services’ (“output service”) mainly to their overseas clients. Earlier, the Appellant’s Bombay branch had Service tax registration and subsequently when the Delhi branch started operating, they obtained Centralized registration. For some period, there was no separate registration till the Centralized registration was obtained in respect of Delhi branch. The Appellant availed Cenvat credit in respect of various input services used for providing their output service. Since they could not utilize the accumulated Cenvat credit in respect of input services therefore, in accordance with the Provisions of Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated March 14, 2006, they filed claims for cash refund of Rs. 32,54,141/- of the accumulated Cenvat credit for October, 2009 to December, 2009 quarter and another refund claim for an amount of Rs. 12,20,506/- for January, 2010 to March, 2010 quarter –




The Jurisdictional Assistant Commissioner refused both the claims on the ground that Cenvat Credit has been wrongly availed as during the period for which the claim is, the appellant do not have service tax registration and alleged that unless an assessee has service tax or central excise registration, he would not be eligible for cenvat credit in respect input or input services used during the relevant period.




The Appellant relied upon the decision in the case of C. Metric Solution Pvt. Ltd. Vs. CCE, Ahmadabad [2012(28) STR-460 (Tribunal Ahmadabad)], (“The Metric Solution case”) and Well Known Polyesters Ltd. vs CCE [2012(25) STR-411 (Tribunal Ahmadabad)] and pleaded that when there is no dispute about receipt of the input services in respect of which Cenvat credit has been taken, then Cenvat credit cannot be denied merely because the Appellant had not taken Centralized Registration at Delhi for the period when the service were received.




The Hon’ble CESTAT, Delhi also relied upon the decision in the Metric Solution case and held that Cenvat credit in respect of inputs/ input services received by an output service provider during the period prior to his obtaining Service tax registration is admissible and denial of Cenvat credit on this ground is not correct.


In a similar case of Commissioner of Service Tax Chennai Vs. Verizon data services India Pvt. Ltd. (2013 CESTAT 1642) the Tribunal at Chennai held that by not getting registered a person does not cease to become a provider of taxable service if he is actually providing actual service. Even if a service provider is not registered there will be tax liability on him if he is providing taxable service. The benefit of Cenvat Credit has to be seen accordingly.


Further the Hon’ble High Court in case of mPortal India Wireless (P) Ltd. Vs. CST-(STO 2011 KAR 1118) held that there is nothing in Cenvat Credit Rules, 2004 to restrict taking of credit only for services received after the date of registration.




From the above views in can be concluded that Cenvat Credit can be availed for inputs and input services received prior to Service tax or central excise registration.


Prepared by: Bhaskar Thakkar
Assisted by: Prabin Shrestha


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