Issue 1: Carry forward of Accumulated Cenvat Credit under GST
Registered taxable person shall not be allowed to take credit unless the said amount is admissible as input tax credit under CGST /SGST Act. [ provisio to section 167 of Revised Model GST Law ]
Example on Carry forward of Accumulated Cenvat Credit under GST – Issue -1
Suppose Total Accumulated CENVAT credit as on the day before GST is Rs. 90,000/- break up is as follow
Input Service A – Rs 30000
Input Service B -Rs 30000
Input Service C-Rs 30000
Suppose Input Service A (Rs 30000) is ineligible for input credit under GST regime. Exact amount of CENVAT credit that can be carried forward as opening balance under GST regime will be Rs 90000 ( Rs 30000 for Service B and Rs 30000 for Service C)
Relevant Extract of Section 167 of Revised Model GST Law
167 .Amount of CENVAT credit carried forward in a return to be allowed as input tax credit
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.
(CGST Law)
(1) 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, credit of the amount of Value Added Tax [and Entry Tax] carried forward in the a return relating to the period ending with the day immediately preceding the appointed day, furnished, by him under the earlier law, not later than ninety days after the said day, 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:
PROVIDED FURTHER that so much of the said credit as is attributable to any claim related to section 3, sub-section (3) of section 5, section 6 or section 6A of the Central Sales Tax Act, 1956 (74 of 1956) that is not substantiated in the manner, and within the period, prescribed in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 shall not be eligible to be credited to the electronic credit ledger:
PROVIDED ALSO that an amount equivalent to the credit specified in the second proviso shall be refunded under the earlier law when the said claims are substantiated in the manner prescribed in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957.
(2) The amount of credit under the second proviso to sub-section (1) shall be calculated in such manner as may be prescribed
(SGST Law)