SECTION 167. AMOUNT OF CENVAT CREDIT CARRIED FORWARD IN A RETURN TO BE ALLOWED AS INPUT TAX CREDIT
The following provisions have been incorporated under CGST Laws:-
A registered taxable person, other than a person opting to pay tax under section 9, shall be entitled to take, in his electronic credit ledger, the amount of cenvat credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished, by him under the earlier law in such manner as may be prescribed:
PROVIDED that the registered taxable person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act.
If we make a comparision of the provisions enumerated in the Revised GST Law with the provisions of the old GST Law, we find that person opting for paying tax under composition scheme under section 9 will not be able to carry forward amount of cenvat credit relating to return filed under earlier law. It is pertinent to note that person operating under composition scheme will not be entitled for input tax credit and also the tax paid under composition scheme will not be admissible as credit to the recipeint. Consequently, the provision debarring carry forward of credit pertaining to return filed under earlier law was expected to be denied in GST regime.
As regards the proviso is concerned, the same is a better version of the earlier proviso in old GST Law. As per old proviso, it was specified that credit will be available only if the credit was admissible both under earlier law and under the GST law. This provision was very difficult to comply as there are different provisions under present laws and GST laws. As far as credit availment in present scenario is concerned, the same is governed by Cenvat Credit Rules, 2004 whereas credit under GST regime is governed by section 16 of the GST Act, 2016 and there are significant differences. For example, under Cenvat Credit Rules, 2004, the definition of capital goods is very specific while under GST, goods which are capitalised in the books of accounts are considered as capital goods. The old proviso was very difficult to comply with and representations were made to restrict the credit admissibility under GST regime only. Consequently, the revised proviso says that credit will be allowed to be carried forward if the same is admissible under GST law which is appreciated.
As far as provisions for carry forward of credit under SGST laws is concerned, similar provisions have been incorporated with the amendment that credit will be admissible of Value Added Tax and Entry Tax. Here, one point that needs clarification is that credit of entry tax is admissible only in certain State Laws and so whether credit of entry tax will be available in all States or only in States where it is cenvatable. This is for the reason that the proviso merely states that registered taxable person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act. Under GST regime, all taxes are cenvatable and one opinion may be that credit of entry tax will be allowed even if the same was not allowed under earlier law. However, the revenue authorities will not accept such an interpretation and will definitely dispute credit of entry tax if the earlier State Laws denied it.
New provisos have been added regarding credit under section 3, 5(3), 6 or 6A of the Central Sales Tax Act, 1956. It is provided that amount of credit substantiated in the prescribed manner and within the stipulated period will be admissible in the form of refund to the assessees whereas the amount of credit not substantiated in the manner prescribed within the stipulated period will not be eligible to be credited to the electronic credit ledger of the assessee. It is observed that the credit admissible under earlier laws is allowed as refund in many situations except that carried forward through return filed under earlier laws. This is probably done to demarcate the credit pertaining to earlier laws and that taken under GST regime.
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