Input service distribution

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One of my client is having ISD registration at Mumbai office taking credit of various Input services and same has been distributing to their manufacturing unit located at Silvassa. In Mumbai ISD Account they take credit immediately on receipt / payment of Invoice, but they do not distribute / transfer this credit amount within six months of taking credit. e.g. as under: In ISD Account they have taken credit from Sept 2013 to Jan 2015 and they have raised the Invoice in Feb 2015 for distribution of Input Service tax to our Silvassa unit. Now during EA2000 Audit at Silvassa unit, Auditor has raised query that your ISD Invoice credit taken at Silvassa unit will be disallowed since Invoice raised by ISD Mumbai office is after 6 months from the date of credit taken by Mumbai office. Please advise query is correct or not as per provision of Service tax act ?
Replies (1)

Hi Krupa,

The limitation period of taking credit within one year is not applicable in the case of Input Service Distributor , because the credit availment by ISD is governed by Rule 7 , therefore, the restriction contained in Rule 4 not apply to ISDs.. And there is no such restriction provided in Rule7.

 


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