Closing Balance Credit of Krishi Kalyan Cess, Education Cess etc. – whether transferrable to GST
By: – Ravi Kumar Somani
Goods and Services Tax – GST
Dated:- 22-12-2017<\/p>\n
Transitional provisions have been prescribed in the GST law which provides tax treatment for transitional matters like spill over transactions, transitional credits etc. It allows existing taxpayers to transfer the input tax credit available as closing balance in the existing tax returns to the GST returns. Therefore, assesses were able to transfer the closing balance of credit in respect of Central Excise duty, Service Tax, Local VAT etc. as the opening credit balance in the GST returns. The issue has been faced by the taxpayers and doubts have arisen upon transfer of credit available as closing balance in respect of Krishi Kalyan Cess, Education cess & Secondary and Higher education cess etc. to the GST regime. Different interpretations have been placed and as usual revenue authorities are drawing inte<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n NVAT credit of the Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016″. Similarly, by virtue of this rule, credit was also allowed under the earlier law on Education cess and Secondary & Higher Education cess. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n & SHEC is in respect closing balance being covered u\/s 140(1). = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nt aspect that what has been provided in the Act cannot be taken away by the Rules. In other words, Rules cannot override the Statutory Provisions of the Law. In case of any discrepancy between two, the section shall prevail over rules. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n utilisation. Wait till clarity emerges in the law based on clarification by department or any judgment of law. This step would ensure that the right of the company in case of favourable decision is protected and at the same time, there will not be any adverse consequences as to the interest or penalty. Needless to mention that the credit shall not be available for utilisation during the period reversed under protest. The fact of availment of credit and its reversal under protest should be intimated to department along with basis thereof. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Closing Balance Credit of Krishi Kalyan Cess, Education Cess etc. – whether transferrable to GSTBy: – Ravi Kumar SomaniGoods and Services Tax – GSTDated:- 22-12-2017 Transitional provisions have been prescribed in the GST law which provides tax treatment for transitional matters like spill over transactions, transitional credits etc. It allows existing taxpayers to transfer the … Continue reading “Closing Balance Credit of Krishi Kalyan Cess, Education Cess etc. – whether transferrable to GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-9566","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/9566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9566"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/9566\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nFurther, there is condition that the credit of KKC can be utilised only against the liability of KKC arising on provision of output service, similarly for education cess and Secondary & Higher Education cess.
\nAbove definition of CENVAT Credit indicates that the KKC, EC and SHEC are included within ambit of definition of CENVAT Credit and therefore credit in respect of the same was allowed under the earlier law. Needless to say, that the KKC is\/was not available to manufacturer as they did not have any liability to pay KKC.
\nIt shall be imperative to discuss at this juncture that one of the restrictions placed in section 140(1) is that the transfer of credit shall not be available if the said amount of credit is not admissible as input tax<\/p>\n
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\nAnother aspect that would merit discussion here is in regard to Rule 117 of the CGST Rules which provide the mechanism for carry forward of credit. Sub Rule 1 of the said Rule read as under:
\n Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of “eligible duties and taxes as defined in explanation to section 140” to which he is entitled under the provisions of the said section:
\nThe opening part of the rule provides that it is applicable for carry forward of credits provided under entire section 140. (There are many sub-sections within section 140 which allows for carry forward of credit one of which is sub section 1 as discussed above). However, later on the scope has been confined to carry forward of only eligible<\/p>\n
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\nWhen the section 140 (1) clearly provides that the CENVAT Credit (as defined in the Cenvat Credit Rules) as per last return filed before GST can be carried forward under GST Law, the Rule cannot curtail the rights by confining it to merely service tax portion and excluding the carry forward of KKC.
\nBased on above, we are of the considered view that the credit of KKC taken in last return filed for the period upto 30th June should be allowed to be carried forward in the GST regime.
\nIt is equally important to note that the credit cannot be carried for KKC in respect of services which have been received after appointed date in respect of which tax was paid by the supplier prior to the GST Law as such cases are covered by section 140 (5) of the CGST Act.<\/p>\n
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\nOption 3: Avail the credit and utilise against output liability of GST. However, this should be done under the intimation to department. It is relevant to note that this option is likely to invite the litigation by department which has to be appropriately addressed.
\nConclusion:
\nOnce the transition forms are filed then there will not be any recourse available in the hands of assessee to avail these credits, therefore any decision in this regard must<\/p>\n
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