Goods and Services Tax – GST – By: – CA Venkata prasad Pasupuleti – Dated:- 25-10-2018 Last Replied Date:- 23-1-2019 – On introduction of GST, the credit of taxes under the existing law, predominantly Central Excise, Service Tax and Value Added Tax, was allowed to be carry forwarded vide the transitional provision either as Central Goods and Service Tax (CGST) or State Goods and Service Tax (SGST) as the case may be accordingly taxpayers did carry forwarded the credit by filing transactional credit by filing Form Tran-1. The common observation of the department during the transitional credit verification is that the closing credit balance of the Education Cess, Secondary and higher Education Cess, Krishi Kalyan cess (herein after referred as Cess credit for brevity) is not eligible for the transfer into GST. However, Section 140(1) of CGST Act, 2017 provides that register person shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in
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Cess credit carry forwarded into GST becomes the transfer of irregular credit and requires to be paid back to the Government. The same may be paid back by way of reversal of CGST credit through Table 4(B)(2) of the GSTR – 3B and intimate the department in writing with a dated acknowledgement. In case there is no sufficient credit this gets reflected into to electronic output register and needs to be paid in cash. Interest liability: The consequential interest liability would vary in different scenarios which are discussed below: When CESS credit carry forwarded into GST but not utilized: As far as interest on input tax credit, the reference shall be made to the section 50(3) of CGST Act, 2017 which specifies that interest is required to be paid by a taxable person at 24% if he claims any undue or excess claim of input tax credit under Section 42(10) and Section 43(10). As these sub-section deals with the concept of matching, reversal and reclaim of input tax credit which are not in fo
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of utilization to actual date of reversal. Is there any waiver of the interest liability as the ineligibility was due to retrospective amendment? It Is very important to note that the Cess credit was eligible upto the enactment however it is becoming ineligible from the past date on the date of enactment, so non-payment of the output liability (to the extent of utilization) will be on the date of enactment, which has to be made good by making the payment and hence the question of interest arises. In general, whenever retrospective amendment was made, it was the practice of the Government to give a saving clause in terms of either waiver of the interest liability or specify the cutoff date from which the interest liability would attract. Unfortunately, no such saving clause is found in the present retrospective amendment made in the section 140, ibid. Judicially, the Hon ble Supreme Court in case of Star India Pvt Ltd Vs CCE, Mumbai 2005 (3) TMI 10 – SUPREME COURT held that interest lia
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