Goods and Services Tax – GST – By: – Sasidharan Gopalakrishnan – Dated:- 9-6-2017 Last Replied Date:- 30-12-1899 – When GST is implemented, the Central Excise Duty (CENVAT) leviable under the Central Excise Act 1944 (CE Act) will get replaced by CGST under the CGST Act 2017 (CGST Act) for all commodities including petroleum products falling under Chapter 27 of HSN, except for the five specified petroleum products, excluded from GST for the time being.. These five petroleum products viz. Petroleum Crude, Motor Spirit commonly known as Petrol, High Speed Diesel, Aviation Turbine Fuel and Natural Gas have temporarily been kept out of GST and GST Council shall decide the date from which they shall be included in GST. (Ref: Q.6 of FAQ on GST (2nd Edition) dated 31.03.2017 ) This is sought to be achieved through the following statutory changes:: Sec 9 of the CGST Act which authorizes the levy & collection of CGST contain the following provisions: QUOTE: 9. (1) Subject to the provisions
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section Sec 3 (vide The Taxation Laws Amendment Act 2017). This new Sec 3 of the CE Act authorizes levy & collection of Duty of Excise (CENVAT) at rates set forth in the Fourth Schedule, The Fourth Schedule which is inserted in CE Act through this amendment, is the extract of the existing First Schedule of Central Excise Tariff Act 1985, but containing only those items for which CENVAT is proposed to be continued. The GST Rate Schedule for Goods, finalized by the GST Council, prescribes the rates of GST for all commodities grouped under Chapter nos 1 to 98 of HSN classification. Out of the five specified petroleum products Petroleum Crude falls under HSN Heading 2709, Petrol,Diesel and ATF fall under HSN Heading 2710 along with other Petroleum Oils & Oils obtained from Bitumenous minerals, AND Natural Gas falls under HSN Heading 2711 along with other Petroleum Gases & other Gasesous Hydrocarbons. In the GST Rate Schedule for Goods, under Chapter 27- Petroleum products, the
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Natural Gas has not been expressly excluded. This indicates a GST liability at prescribed rates for Natural Gas alongwith other gases falling under HSN Heading 2711. Under the newly inserted Fourth Schedule of Central Excise Act 1944, which seeks to prescribe cenvat rates only for items sought to be retained under CENVAT , the following entries appear: 2710 Petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils – Petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, other than those containing biodiesel and other than
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g oil and textile oil Kg. ….. 2710 19 80 Lubricating oil Kg. ….. 2710 19 90 Other Kg. ….. 2711 Petroleum gases and other gaseous hydrocarbons – Liquefied: 2711 11 00 – Natural gas Kg. 14% 2711 12 00 – Propane Kg. ….. 2711 13 00 – Butane Kg. ….. 2711 14 00 – Ethylene, propylene, butylene and butadiene Kg. ….. 2711 19 00 – Other Kg. ….. – In gaseous state: 2711 21 00 – Natural gas Kg. 14% 2711 29 00 – Other Kg. ….. It may be seen that , in the Fourth Schedule , under HSN 2710 12- Light oils & Preparations, all the types of Motor Spirits are listed under a common heading viz. Motor Spirit (commonly known as Petrol). This is not technically correct since all categories of products defined as Motor Spirits as per the Chapter Notes/Supplementary Notes under Chapter 27 are not commonly known as Petrol.t Motor Spirits as per HSN Chapter 27 are of different categories: 2710 12 11 – Special Boiling Spirits: with nominal boiling point
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n this connection that the existence of Motor Spirit under distinct categories other than Petrol, has already been recognized under the Central Excise Tariff by providing for separate rates of Duty for Motor Spirit commonly known as Petrol , Naphtha and SBPS(other than Petrol & Naphtha), the first two vide separate effective rates /exemptions prescribed in notification issued under Sec. 5A and the the last one by the Tariff Entry itself.. Similar is the case of Light Oils & Preparations other than Motor Spirit, falling under 2710 12 20-Natural Gasolene Liquid (NGL) and 271012 90- Others (other than NGL) for which CENVAT rates have been mentioned in Fourth Schedule, even though they are covered under GST. Here also Cenvat rates mentioned in the Fourth Schdeule need to be deleted or fully exempted under specific notification under Sec. 5A of CE Act 1944. In the case of Natural Gas, CENVAT rate has been prescribed under Fourth Schedule against Headings 2711 11 00 and 2711 21 00; B
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and ATF. At the same time, amended Central Excise Law (Fourth Schedule to the Act), prescribes Cenvat Rates not only for Petroleum Crude (Nil Rate), Petrol, Diesel, ATF and Natural Gas, but also for some other petroleum products and intermediates which will fall under HSN Headings 2710 12 11 , 2710 12 12 , 2710 12 13 , 2710 12 19, 2710 12 20 and 271012 90.. Thus Some Petroleum Products & intermediates falling under 2710 12 11 , 2710 12 12 , 2710 12 13 , 2710 12 19, 2710 12 20 and 271012 90, will be simultaneously liable for GST and Cenvat .- examples are SBPS (2710 12 11, Naphtha (2710 12 19) and Reformat (2710 12 19) With the above provisions in the GST Law and Central Excise Law co-existing, both GST and Cenvat would be chargeable on Natural Gas and some other Petroleum Products and intermediates like SBPS, Naphtha, and Reformat.. This needs to be rectified by appropriately correcting the entries against S.No. 27 / Chapter 27 in the GST Rate Schedule of Goods and the entries agai
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