Transfer of EC SHEC balance in GST is possible or not. If not the what we will do of balances. Rgds, MJ – Reply By Vishnu Dutt Gupta – The Reply = Awaited your valuable comments. – Reply By GOKARNESAN.S SUBRAMANIAN – The Reply = Sri Vishnu Dutt Gupta According to me you are entitled to transfer the closing balance of credit declared in your June 2017 ER-1 return or ST-3 service tax return for the quarter ending June 2017 to the GST credit account on the following grounds:- a) In 2015 Budget, the Finance Minister has stated in his Budget Speech that the rate of duty for excise is fixed as 12.5% from 12.36% (12% basic + 2% Edu cess on Basic duty + 1% She Cess on Basic duty) since Education and SHE Cess have been subsumed in the basic rate of duty. Similarly for service tax from 12.36% to 14% . b) Further, Cenvat credit Rules have been amended in 2015 to allow to take credit Edu Cess and SHE Cess on goods received on or after 1.3.2015 with invoice dated prior t
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period when the same is allowed to be taken, the Department cannot deny such credit subsequently when exemption is given. e) Because of the Policy of Government that both Cesses have been subsumed with Basic Rate, one could not utilise the same . As such, the credit can be eligible for utilisation against basic duty. f) Further, Government allows the credit of Edu cess / SHE Cess on goods received on or after 1.3.2015 and also allow the same to utilise against basic duty. This clearly proves the intention of Government that since both Cessess have been subsumed with Basic rate, the said credit of cessess have been allowed to be utilised for payment of basic duty. The same analogy is applicable to closing balance lying in ER-1 as on 1.3.2015. g) Further, the Department has never insisted the manufacturers to reverse the credit lying in closing balance as on 1.3.2015 and even till the return for JUNE 2017, manufacturers are showing the same as closing balance unutilised and th
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existing Law and is also admissible as input tax credit under this Act. Further the Explanation says that …..unavailed credit means the amount that remains after substracting the amount of credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of cenvat credit to which the said person was entitled in respect of the said capital goods under the existing law. There is no doubt that the Education Cess / SHE cess were allowed as eligible credit in terms of the provisions of Rule 3 of Cenvat Credit Rules, 2004 till June 2017. Since the Transitional Provision clearly says that the credit was allowed under the existing Law , there is no problem in transferring such unavailed credit of Edu Cess and SHE cess along with basic credit. I request the Expers to given their views on this for the benefit of readers. S. Gokarnesan Advocate, Chennai 16.7.2017 – Reply By Vishnu Dutt Gupta – The Reply =
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