Input Tax Credit on Capital Goods in transit
Query (Issue) Started By: – S R AGRAWAL Dated:- 16-8-2017 Last Reply Date:- 17-8-2017 Goods and Services Tax – GST
Got 8 Replies
GST
Dear Experts,
I have to submit if the Input Tax Credit will be admissible in case Capital Goods as defined under Rule 2(a) of the CENVAT Credit Rules, 2004 cleared prior to 01.07.2017 and received in the factory of manufacturer after 01.07.2017?
Section 140 of CGST Act, 2017 contains the transitional provisions and Sub-section (5) relating to Inputs and Input Services, but no such provisions are found in respect of Capital Goods.
Kindly advise.
Thanks,
S R AGRAWAL.
Reply By KASTURI SETHI:
The Reply:
There was some restriction for taking ITC on Capital goods during transition period. So the word, "Capital Goods' does not find place.
Reply By HimansuSekhar Sha:
The Reply:
Capital goods credit cannot be taken.
Reply By Ashok Chopra:
The Reply:
It is very unfortunate for trade and i
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o admissible as input tax credit under this Act.
Explanation.For the purposes of this sub-section, the expression “unavailed CENVAT credit” means the amount that remains after subtracting the amount of CENVAT 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."
Further rule 117 (2) (a) of CGST Rules, 2017 stipulates that "in the case of a claim under sub-section (2) of section 140 (Availmnet of remaining credit in respect of capital goods), specify separately the following particulars in respect of every item of capital goods as on the appointed day
(i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day; and
(ii) the amount of tax or duty yet to be availed or utilized by way of input tax credit under each of t
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ods should not be kept in transit as transition benefit is not there.
In my view if all industry request the law maker to give credit in case of capital goods then council may come out with some relief.
Reply By HimansuSekhar Sha:
The Reply:
In the FAQ it is clarified. Credit is not available
Reply By S R AGRAWAL:
The Reply:
Thanks all experts for their opinion. Special thanks to Mr. Rajgopalan who has explained the issue on the basis of existing provisions of CGST law.
To my considered opinion it is just an escape of attention and once the Capital Goods received on 30.06.2017 and credit to be carried forward, there can not be any logic not to allow the Credit on Capital Goods under transit. As regards capitalization, except parts or components all Capital Goods are generally capitalized and depreciation is claimed by the trade and industry.
To my opinion, the matter needs to be referred to the authorities or some one should take credit and if objected, it should pass the test
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