TaxTMI 
TaxTMI 
2018 (9) TMI 234
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....uch a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus - Statement of relevant facts having a bearing on the question raised- We are making provision for slow moving/ non moving materials as required under accounting standards. As a prudent accounting practice, we make provision for slow moving/non moving materials. The goods would be in usable condition and will be used as and when required in ongoing projects. We are showing inventory value net of provisions in notes forming part of the financial statement under the head inventories. It is only a provision in books of accounts and not a write off of inventory value. As per Company policy, 25%, 50% and 100% provision will be made for materials not moved 2 year, 3 year and 4 year respectively. As per 3 (5B) of cenvat credit rules, 2004 we reverse the cenvat credit when the provision for write off inventory value is made in our books of accounts. As per above said rules re-credit can be taken only when such goods are subsequently used. From October-2014 to 30/06/2017 we have ....
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....ucation cess on excisable goods or taxable services. Similarly, utilisation of credit of SHE Cess was allowed only for payment of SHE Cess on excisable goods and taxable services. Section 95 of the Finance Act, 2004 (Education Cess on services) and Section 140 of the Finance Act, 2007 (SHE Cess on services) were omitted by the Finance Act, 2015 with effect from 1.6.2015 which meant that there was no levy of Education Cesses on taxable services with effect from 1.6.2017. Though Section 93 of the 2004 Act and Section 138 of the 2007 Act, levying Education Cesses on excisable goods were not omitted, vide Notification No.14/2015-CE and 15/2015-CE both dated 1.3.2015, EC on excisable goods was exempted. Therefore, there was no levy of EC on excisable goods from 1.3.2015 itself. Introducing the changes, the Finance Minister in his Budget speech stated that "As part of the movement towards GST, I propose to subsume the Education Cess and SHE Cess in Central Excise duty. In effect, the general rate of Central Excise Duty of 12.36% including the cesses is being rounded off to 12.5%' (para 118). The FM also stated that "Introduction of GST is eagerly awaited by Trade and Industry. To fac....
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....n 93 of the Finance Act, 2004. The Secondary and Higher education cess on excisable goods leviable under section 136, read with Section 138 of the Finance Act, 2007, The cess on taxable service leviable under section 91, read with section 95 of the Finance Act, 2004 the Secondary and Higher education cess on taxable services leviable under Section 136, read with Section 140 of the Finance Act, 2007; paid on any input or capital goods or input service received by the manufacturer of final products or provider of output service paid on any input or capital goods or input service received by the manufacturer of final products or provider of Output service. Therefore, there can be no doubt that the Education Cess/ SHE Cess On excisable goods and input services continued to be CENVAT Credit. Krishi Kalyan cess as per rule 3(1a) inserted by notification No.28/2016-CE(NT) with effect from 1.06.2016 provided that a provider of output service shall be allowed to take CENVAT credit of the Krishi Kalyan Cess on taxable services leviable under Section 161 of the Finance Act, 2016. Statement containing the applicant's interpretation of law in respect of the aforesaid question-Once the credi....
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....on the strength of the rules available certain acts have been done by the parties concerned, incidents following thereto must take place in accordance with the scheme under which the duty had been paid on the manufactured products and if such a situation is sought to be altered, necessarily it follows that right, which had accrued to a party such as availability of a scheme, is affected and, in particular, it loses sight of the fact that provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assessees concerned. Therefore, the scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier scheme was applied under which the assessees had availed of the credit facility for payment of taxes. It is on the basis of the earlier scheme necessarily the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said rule would result in affecting the rights of the assessees.' In the context of the GST Transition provisions, the Education Cesses & Higher secondary educat....
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....e allowed. This facts has been explained by the party in their application itself. So, no further comments are warranted. 7. For the Para 5 :- It is further mentioned that entries in respect of Krishi Kalyan Cess and Education Cess etc. are not found at any of the place in the existing Section of 140 of the CGST Act and Rules 2017. Therefore, the credit of taxes which are not covered in the definition of eligible duties in Section 140 cannot be availed. This fact has been explained by the party in their application itself. So, no further comments are warranted. The above submissions are made only as preliminary submissions about the admissibility of the application and detailed submissions would be filed as a later stage. From the discussion as made above taxes leviable in the pre GST regime are now not finding any entry under the existing GST Act, 2017 hence, Input Tax Credit is not applicable in any case. In any case, this application is out of jurisdiction. Hence, it is prayed that the application may be rejected at this stage only. 04. HEARING The case was taken up for preliminary hearing on 20.03.2018. Sh. S Ramaiya, Asstt. Chief Manager appeared and made an oral request a....
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....ch is as under:- Question No. 2:- is whether they are eligible to avail ITC against unutilized cenvat credit such as Education Cess (EC) Second & Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC) lying in in their books of accounts. Education Cess (EC) was levied under the provisions of the Finance Act, 2004 with effect from 10.9.2004 and the CCR vide Rule 3(1) notified that the manufacturer or provider of taxable (output) service shall be allowed to take credit of EC. The CCR also mandated that such credit of EC could be utilized only for payment of EC on excisable goods or taxable services. Under both, the service tax laws and the central excise laws, EC was not supposed to be used for making duty/ tax payments. Levy of EC was abolished by the Finance Act, 2015, w.e.f. 01.06.2015, in the case of taxable services and w.e.f. 01.03.2015 in the case of excisable goods. Later on Notification No. 12/2015-CE (NT) dated 30.04.2015 was issued and the said Notification allowed manufacturers to utilize the Cenvat credit on CESS towards payment of basic excise duty in certain situations. The amendment was made applicable only to CESS paid on inputs, capital goods and input services....
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....5 in case of Goods and 01st June 2015 in case of Services, as the EC and SHEC was ceased to be applicable after the said dates. The provisos added to Rule 3, sub-rule (7) in clause (b) allowing utilization of EC and SHEC (availed on inputs, capital goods or service received after 01st June 2015) for making payment of service tax is in the nature of concessions confined to a limited and narrow set of cases which are distinct and separate and are not of general application. Therefore, the same cannot be applied to the balance of EC and SHEC available as on 01st March 2015 and 01st June 2015 as the said benefit of cross-utilization was never available earlier and this amounts to seeking the additional benefit and concession beyond those granted. Further, the Hon'ble High Court held that there is no provision in the law which states that EC and SHEC are subsumed into Service Tax and Excise Duty to allow the cross-utilisntion of credit. Thereby decision concluded that the credit of EC and SHEC cannot be used for the payment of excise duty. The Hon. Court dismissed the Writ Petition. From the submissions made by the applicant it is seen that in addition to the EC and SHEC their query is....
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...., the amount of "eligible duties and taxes as defined in explanation to section 140" to which he is entitled under the provisions of the said section: The said rule provides for carry forward of only eligible duties and taxes as defined in the explanation to section 140. Eligible duty has been defined in the explanation to section 140 with reference to sub sections i.e. 140 (3,4,5&6). The definition of eligible taxes does not include the EC SHEC and KKC. The usage of word "eligible duties and taxes" in the latter part of the Rule has confined the scope of carry forward of credit by excluding the EC, SHEC and KKC within its ambit. Further, GST Guidance Note 11 on Transitional Provisions, para 11.04 with respect to the Transfer of credit of cesses such as Education Cess, Secondary and Higher Education Cess, Swatch Bharat Cess and Krishi Kalyan Cess states that "The Transitional provisions under the CGST Act allow carryover of only the Cenvat Credit and Credit of eligible duties mentioned in the explanations given at the end of section 140. Education Cess & Secondary and Higher Education Cess are not mentioned there. Therefore these will not be carried forward as credit of these ces....