CBEC’s directions regarding non-transition of CENVAT credit under Section 140 of CGST Act or non-utilization thereof in certain cases

Feb 26, 2018 | by Avantis RegTech Legal Research Team

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The Central Board of Excise and Customs (CBEC), for the purposes of uniformity in implementation of the Central Goods and Services Tax Act, 2017, has directed the following:

Non-utilization of Disputed Credit carried forward:

·         Where in relation to a certain CENVAT credit pertaining to which a show cause notice was issued under rule 14 of the CENVAT Credit Rules, 2004, which has been adjudicated and where in the last adjudication order or the last order-in-appeal, as it existed on 1st July, 2017, it was held that such CENVAT credit is not admissible, then such CENVAT credit (disputed credit), credited to the electronic credit ledger in terms of Section 140 (1), (2), (3), (4), (5) (6) or (8) of the CGST Act, shall not be utilized by a registered taxable person to discharge his tax liability under this Act or under the IGST Act, 2017, till the order-in-original or the last order-in-appeal, as the case may be, holding that disputed credit as inadmissible is in existence.

·         During the period, when the last order-in-original or the last order-in-appeal, as the case may be, holding that disputed credit as inadmissible is in operation, if the said disputed credit is utilised, it shall be recovered from the tax payer, with interest and penalty as per the provisions of the Act.

Non-transition of Blocked Credit:

·         In terms of clause (i) of Section 140 (1) of the CGST Act, a registered person shall not take in his electronic credit ledger, amount of CENVAT credit as is carried forward in the return relating to the period ending with the day immediately preceding the appointed day which is not eligible under the GSCT Act in terms of Section 17(5) (blocked credit), such as, telecommunication towers and pipelines laid outside the factory premises.

·         If the said blocked credit is carried forward and credited to the electronic credit ledger in contravention of Section 140 of the CGST Act, it shall not be utilized by a registered taxable person to discharge his tax liability under this Act or under the IGST Act, 2017, and shall be recovered from the tax payer with interest and penalty as per the provisions of the Act.

In all cases where the disputed credit or blocked credit is higher than Rs. 10 lakhs, the taxpayers shall submit an undertaking to the jurisdictional officer of the Central Government that such credit shall not be utilized or has not been availed as transitional credit, as the case may be. In other cases of transitional credit of an amount lesser than Rs. 10 lakhs, the directions as above shall apply but the need to submit the undertaking shall not apply.

[Circular No. 33/07/2018-GST]

URL: http://www.cbec.gov.in/resources//htdocs-cbec/gst/circularno-33-cgst.pdf


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