(Last Updated On: August 10, 2018)

CGST Amendment: Businessmen may have to reverse Cess credits

After the CGST Amendment Bill was passed in the Lok Sabha, Business which have claimed input credits for cesses like Krishi Kalyan Cess and Secondary & Higher Education cess (SHEC) are now required to reverse that credit

As part of the proposed amendment an explanation under the relevant provisions (section 140 of CGST Act ) said that credit of these cesses can’t be transitioned into GST

As per the government, the provision related to cesses will apply retrospectively from 01.07.2017 once the parliament and all the state legislatures pass the bill.

Thus businessmen may have to reverse cess credits along with interest

Relevant proposed Amendment in Provisions of CGST Act 2017 is as follow

Amendment of section 140.

In section 140 of the principal Act, with effect from the 1st day of July, 2017,––

(a) in sub-section (1), after the letters and word “CENVAT credit”, the words “of eligible duties” shall be inserted and shall always be deemed to have been inserted;

(b) in the Explanation 1—

(i) for the word, brackets and figures “sub-sections (3), (4)”, the word, brackets and figures “sub-sections (1), (3), (4)” shall be substituted and shall always be deemed to have been substituted;
(ii) clause (iv) shall be omitted and shall always be deemed to have been omitted;

(i) for the word, brackets and figure “sub-section (5)”, the words, brackets and figures “sub-sections (1) and (5)” shall be substituted and shall always be deemed to have been substituted;

(ii) clause (iv) shall be omitted and shall always be deemed to have been omitted;

(d) after Explanation 2 as so amended, the following Explanation shall be inserted and shall always be deemed to have been inserted, namely:—

‘Explanation 3.—For removal of doubts, it is hereby clarified that the expression “eligible duties and taxes” excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as
additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975.’.