Rosl and SGST credit taken together - Is it permissible

[Somit Goyal]

We are exporter of Garments and availing the benefit of Rebate of State Levies (ROSL). At the same time we have also availed Input credit of SGST on various input and input services.

My query is can we simultaneously avail both the benefit i.e. ROSL and also claim Input credit of SGST.

In case SGST is eligible will it make any difference if it is on input goods or Input services ?

[ABHISHEK TRIPATHI]

RoSL was introduced to provide rebate of state taxes/levies where the state levies were becoming cost to the exporters. By providing rebate of state levies, the government has made sure that the export should not be burden with taxes and thus exporters may create competitive market outside, eventually for forex.

The erstwhile RoSL scheme was in operation till 06.03.2019 and has been replaced by the Rebate of State and Central Taxes and Levies (RoSCTL) scheme.

To my understanding claiming RoSL/RoSCTL and ITC (utilizing the same) will amount to double benefit. For instance, if your SGST is the part of the rebate for RoSL/RoSCTL and also you are utilising the ITC of SGST, then such situation will lead to double benefit. The scheme is for the situation in which embedded SGST are there which eventually becomes cost. The scheme is not for the taxes which you can take claim/rebate. Even the declaration for erstwhile RoSL bars from claiming double benefit.

"I declare that, I have not claimed or shall not claim credit/ rebate/ refund! reimbursement of these specific State Levies under any other mechanism and I am eligible for the rate and rebate claimed for. Further, declare that an Internal Complaints Committee (ICC), where applicable, in pursuance of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Re-dressal) Act, 2013 has been constituted."

In short, if it amounts to double benefit then you cannot take ITC SGST (utilise) and RoSL/RoSCTL both.

*the above comment is not well researched thus, you should seek professional legal opinion with more facts for the same*

[KASTURI SETHI]

Sh.Somit Goyal Ji,

Answer is NO. You cannot avail both benefits. This scheme is meant for specific purpose i.e. to support textile sector. ROSL is no more in vogue as it stands replaced by ROSCTL. As per the definitions in the Notification dated 07.03.2019 issued by Ministry of Textile you will get rebate for those State and Central Tax taxes and duties involved on material and consumables used in the manufacture of garments.

Scheme to Rebate State and Central Embedded Taxes to Support the Textile Sector No. 14/26/2016-IT (Vol II).-dated 07.03.2019

DEFINITIONS

3.6. Rebate of State Taxes and Levies shall be understood to comprise VAT on fuel used in transportation, captive power, farm sector, mandi tax, duty of electricity, stamp duty on export documents, embedded SGST paid on inputs such as pesticides, fertilizers etc. used in production of raw cotton, purchases from unregistered dealers, coal used in production of electricity and inputs for transport sector.

3.7. Rebate of Central Taxes and Levies shall be understood to comprise central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertilizer etc. used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and Compensation Cess on coal used in production of electricity.

[ABHISHEK TRIPATHI]

Thank you, KS Sir for you valuable addition.

[KASTURI SETHI]

Sh.Abhishek Tirpathi Ji,

I am very grateful to you for appreciating my contribution. I have a great regard for you. Your knowledge, interpretation and analysis on any issue is par excellence. I read your all replies and thus enrich my knowledge.

[ABHISHEK TRIPATHI]

Dear Kasturi Sir,
Thank you, that's very kind of you. We all put in a lot of effort; thank you for acknowledging our hard work.

AI Summary

Double benefit prohibition: exporters cannot claim RoSCTL rebate and also use SGST input tax credit. Claiming RoSL/RoSCTL rebate and simultaneously utilising SGST input tax credit is prohibited when the SGST represents the embedded state levy that the rebate compensates. RoSL was replaced by RoSCTL, which specifies rebate-eligible embedded state and central taxes on inputs; applicant declarations bar claiming the same levies under another mechanism. The rule applies to SGST on inputs or input services if that SGST is included among the scheme's defined embedded levies, so exporters must confirm rebate eligibility before availing SGST ITC.