CESS ON CIGARETTES

[deepak gulati]

A dealer who deals in sale of cigarettes has duly taken Input Tax Credit of

1) CGST

2) SGST

3) Compensation Cess (based on ad-valorem)

And he was under impression that he need not show output liability on Additional Cess (based on quantity of cigarettes) as it is same in both cases of sale and purchase. Further he has not shown input / output w.r.t such additional cess in GSTR-3B.

Now in this case assuming FY 2018-19:-

1) Should he report this additional cess output liability now in February 2020?

2) Will he be eligible to claim ITC of such additional cess now?

It is mentioned here that both input / output cess amount is same.

For example:- additional cess on cigrattes is ₹ 4,170 per 1,000 pcs on both purchase and sales transactions.

AI Summary

Dealer Cannot Claim ITC for Additional Cess on Cigarettes Due to Time Limit Under Section 16(4) of CGST Act A dealer dealing in cigarette sales took Input Tax Credit (ITC) for CGST, SGST, and Compensation Cess, but did not report output liability for an additional cess based on cigarette quantity, assuming it was unnecessary. The discussion revolves around whether the dealer should report this additional cess output liability for FY 2018-19 in February 2020 and if they can claim ITC for it. Contributors agree that due to Section 16(4) of the CGST Act, the dealer cannot claim the credit now, as the time limit to claim ITC for FY 2018-19 expired in September 2019.