Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 31-12-2016 – GST DAILY DOSE OF UPDATION BY CA PRADEEP JAIN TRANSITIONAL PROVISIONS-PART-IV 170. Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations This is a new provision added in the act aiming to cover such assessees who are engaged in manufacture of both taxable and exempted goods or are providing both taxable and exempted services. This provision reads as follows: (1) A registered taxable person, who was engaged in the manufacture of non exempted as well as exempted goods under the Central Excise Act, 1944 (1 of 1944) or provision of non-exempted as well as exempted services under Chapter V of Finance Act, 1994 (32 of 1994), shall be entitled to take, in his electronic credit ledger, (a) the amount of Cenvat credit carried forward in a return furnished under the earlier law by him in terms of section 167; and (b) the amount of Cenvat credit of eligible duties in resp
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percentage on value of exempted goods; 3. take the credit on common input or input services and reverse the cenvat credit on proportionate basis. This provision very well covers the first provision i.e. where the manufacturer or service provider has maintained the separate inventory and has taken the credit only inputs used in manufacture of dutiable goods or provision of taxable services . Hence, he will be allowed to take the credit on stock of inputs of exempted final product or exempted service. But this provision does not hold good for the second alternative. If a manufacturer or service provider has already taken the credit on common input then credit cannot be allowed to him second time. Moreover, the credit is reversed at the time of removal of exempted final product or provison of exempted service. This mean that the credit is already contained in his balance for the stock of inputs lying with him. Then this provision will allow him the credit second time on these inputs. Thi
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ted goods should be allowed subject to condition that the credit is not already taken. This provision will solve the problem. The assessee will be allowed to take the credit on stock of those inputs on which credit is not taken by him. But there are many other situations also where the credit is not taken by the assessee. We have come across a situation where the manufacturer has taken the credit only on inputs exclusively used inputs in dutiable final product but has not taken credit on common inputs for dutiable and final product as well as on inputs exclusively used in exempted final product. Hence, the credit should be allowed in such situation also. Similarly many exporter manufacturer are claiming drawback and forgoing Cenvat credit. But they intend to take the credit on input stock as they intend to avail the credit under GST regime. Similar is the situation for textile manufacturers who are exempted from payment of excise duty with the condition that no credit is taken on input
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