Service Tax un-utilised credit

Question

Service tax input credit -how long it can be carried forward in the books-and can it be set off against future?

Answer

Usually the value of goods / services sold or rendered will be more than the value of goods / services bought or received. This means that the Excise duty / Service tax payment will be more than the credit availed. As per Rule 3(4) of the Cenvat Credit Rules Service tax credit can be set off against a host of payments listed in sub-clauses (a) to (e) of the above Rules. There is no time limit prescribed for this set off.

However there may be instance of Exports wherein there is no requirement to pay Excise duty or Service tax, in this situation recourse should be taken to Rule 5 of Cenvat Credit Rules which provides for refund of the Excise duty / Service tax credit available in excess due to exports.

There maybe also instances of manufacturers / service providers having dutiable and exempted goods. In that case procedure provided in Rule 6 of Cenvat Credit Rules should be followed.