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.

[Atul Rathod]

He cant claim the credit but output tax needs to be paid. He should not report instead the same should be paid through DRC-03.

[KASTURI SETHI]

Hit by Section 16(4) of CGST Act. I agree with Sh.Atul Rathod Ji.

[deepak gulati]

Sir,

With due respect, we would like to draw your attention towards below mentioned illustration:-

Lets suppose against an invoice dealer has availed input tax credit of CGST but inadvertently missed availing credit of SGST. In such case sec. 16(4) restriction still applies.

P.S.- Sec. 16(4) talks about ITC in respect of any invoice.......... but in above case dealer has taken input of one component and missed input of other component within the same invoice.

[KASTURI SETHI]

In this scenario too, ITC will be hit by the time bar limit under Section 16 (4) of CGST.

[YAGAY and SUN]

In our view also it is not available as per the limitation of time period u/s 16(4).

[Ganeshan Kalyani]

Sec. 16(4) states the taxpayers should claim credit of GST pertaining to a financial year upto the month of September following the end of that financial year. So, for F.Y.2018-19 , the time limit to claim credit was up to September, 2019.

[deepak gulati]

Dear Sirs,

We respect your opinion, Further we would like to draw your attention to the following points:-

a) Sec. 16(2) of CGST Act starts with "Notwithstanding Anything Contained in this section" clause. This means if these conditions are met registered person should be allowed Input Tax Credit.

b) This additional cess is levied on the basis of no. of CIGARETTES i.e. its not levied on value addition basis.

Please throw some light on this.

AI Summary

Input tax credit time-bar prevents belated cess credit claims and requires payment of unreported cess as output tax.
The dealer cannot now claim input tax credit for the omitted additional quantity based cess because the time bar under Section 16(4) precludes belated ITC claims for the earlier financial year; the correct course is to discharge the unreported output cess liability through the appropriate payment mechanism (for example, DRC 03) rather than treating it as available credit.