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

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.