Will there be 18(4) reversal on stock in hand for items going outside the purview of Cess?

[Chitresh Gupta]

In cases where goods held as stock-in-trade subsequently fall outside the purview of Compensation Cess, would there be a requirement for reversal of input tax credit under section 18(4) of the CGST Act? Raising this question to ignite the discussion among the learned professional friends.

AI Summary

Does Input Tax Credit Require Reversal Under Section 18(4) CGST When Goods Lose Compensation Cess Status Later The forum post asks whether input tax credit must be reversed under section 18(4) of the CGST Act when goods held as stock-in-trade later cease to attract Compensation Cess. The core legal issue is whether a change in cess applicability amounts to an exempt supply or otherwise triggers the proportionate reversal/adjustment of attributable input tax credit. Resolution depends on classification of the subsequent transaction, the method of attribution/allocation of credit between taxable and non-taxable supplies, and applicable statutory provisions, rules and authority or circulars interpreting s.18(4); contributors are invited to discuss statutory interpretation and relevant administrative/judicial guidance.