gst lapse on textile vide notification no.20/2018, Goods and Services Tax - GST

[Gopikishan Kabra]

according to gst notification no 20/2018 accumulated gst for textile as on 31/07/2018 will be lapse later in another notification they consider stock but it is not fair because.

1. we have paid value for the accumulated gst as well as income tax also as on 31/03/18, so we have rights to utilize the same and it was understood that we can utilize it suddenly how can government lapse the said accumulated gst.

i want to ask that does government have powers to lapse it ? should we file a case in court against said decision ?

Posts / Replies

[DR.MARIAPPAN GOVINDARAJAN]

You can file a writ petition.

[Yash Jain]

Sir,

The notification and subsequent clarification there to, provide for lapse of credit accumulated only on account of inverted duty input and "not" All the lapses

2. Refer rule 89(5) for mechanism for reversing of input on account of accumulation. Hence if sale of high GST products are more, in comparison to only 5 percent products, then reversal will reduce.

3. Credit for zero rated exports would not lapse - hence apply for refund of ITC on zero rated export.

4.Only "fabric" word is mentioned , so to say that full textile industry will suffer will not be justice, eg. : synthetic, polyester company may not have to do reversal.

5. From August 1, please do ensure to take refund of inverted duty taxes.

6. Approach association (texipcol) , approach ministry of textile, write mail to Shri Upendra Guptaji (GST head) , Shri Suresh Prabhu ji (Ministry of commerce) and hon able FM Arun Jaitley Ji. Their mail I'd is available on respective websites. In mail inform them on losses which would occur due to this.

7. Form an association to file writ petition.

Rgds

[Gopikishan Kabra]

SIR, THANKS FOR YOUR REPLIES I KNOW THAT INVERTED DUTY WILL BE LAPSED BUT

1. WE HAVE PAID VALUE FOR INVERETED GST IT IS OUR CURRENT ASSET IT MAY BE BLOCKED FOR CASH REFUND BUT MUST NOT BE LAPSED BY FORCE, RIGHT TO UTILIZE OUR SURPLUS GST MUST CONTINUE.

2 WHEN THEY DISQUALIFY TEXTILE INDUSTRY FOR CASH REFUND OF ITC, THAT TIME THEY DID NOT CLEARED THAT INVERTED DUTY WILL BE LAPSE AND RIGHT TO UTILIZE THE SAME WAS CONTINUE, .ANY AMENDMENT IN LAW MUST BE EFFECTIVE FROM FUTURE SHOULD NOT EFFECT PAST. I MEAN IF GOVERNMENT INTENTION TO LAPSE INVERTED DUTY THEY HAVE TO ISSUE A NOTIFICATION FOR IT AT THAT TIME WHEN THEY DISQUALIFY TEXTILE FOR CASH REFUND.

EXPERTS PLEASE ADVICE IS IT FAIR ?

GOVERNMENT HAVE POWERS TO LAPSE OUR SURPLUS GST FOR WHICH WE HAVE PAID VALUE IN CASH ?

[Yash Jain]

Sir,

I think there is some confusion. Lapse is only for fabrics as defined in chapter 55 to 65.

It's not for entire textile industry.

Please approach ministry of textiles, I think they have already taken matter with FM.

As for power of government - Yes they have power in accordance with Constitution of India. They can amend, enact, modify the law. Vodafone case is a clear example (Vodafone case in supreme court, but govt. Enacted law of share transfer "retrospectively", and Vodafone was thus liable to pay tax. I think in this textile industry is aIso at fault.

Why did the industry protest for bringing down tax from 12 to 5 percent. Why did the industry did not raise issue of accumulated taxes due to higher input?

It's first time that refund will be given for inverted tax, (from Aug 1, 2018)which was not given previously.

Hence please approach your textile association they will guide you.

It's an election year, hence right strategy (like forming union, approaching political parties, writing in paper column, making public aware about ur difficulty will help u.

Start these immediately.

[KASTURI SETHI]

Dear Querist,. "Time factor" cannot forfeit your substantive right of ITC. This case is fit for litigation. You must fight legally and I am dead sure you will win the case. The possibility of journey up to Supreme Court cannot be ruled out. It is pertinent to mention here without fight you will lose today. If you opt for litigation as you intend, your victory is sure. Keep it on record. This is my assessment of your situation. I also agree with both experts.

[Gopikishan Kabra]

thanks sir for your replies. we registered grievance on following points .

1. The above notification in exercise of powers conferred by clause (2) of sub section 3 of section 54 only permits to notify the supply of goods and services in respect of which refund shall not be permitted the power is limited to decide coverage of commodities and services for the purpose of refund accumulated credit .The section 54 does not empower to lapse any kind of ITC, even any word like lapse is not used in the above section.

2. We have paid value for the accumulated gst in cash, it’s our current asset and part of our working capital, so it is our right to utilize the same in future for discharging our output tax liabilities, so it should not be lapsed.

3. Value of GST is not included in cost of goods hence we have paid income tax also for the accumulated gst for 17-18.If it is lapsed now it will Impact on accounting and profitability.

4. The period of duty accumulation was 01/07/17 to 31/07/18 and during the period of accumulation right to utilize the surplus duty was available so during the said period while paying value for accumulated gst it was understood that we can utilize it in future. But after we paid value for it suddenly the said notification lapsed it.it’s not a justice. Notification should be issued prior to effective date and effective date should be a date in future but the said notification is effecting past period that’s not appropriate.

5. We have input credits form goods, services, capital and inverted duties as the law doesn’t require HSN wise GST accounting hence it’s impossible to find out which one is utilized and which one is surplus. Let us see it by the following examples

Example 1.

There are two assesses A and B both have inverted itc A have utilized the same in the said period so he have nothing to lose but B did not utilized it hence he have to lose the accumulated gst, it’s not fair with B because both a and b have inverted duty but only b is losing his itc due to accumulation but a have nothing to lose because he utilized his itc. The base of laps should be inverted duty instead of accumulation.

Example 2.

C who have inverted duty and utilized it till month of june 18,and he have input credit from capital goods in july18 then according to formula given he have to lapse itc out of capital inputs, because lapse itc is calculated for the period 01/07/18 to 31/07/18.

6.There is a huge confusion due to this notification union finance minister shri piyush goyal sir told to traders that the government has no intentions to lapse the credit, but they are just blocking refunds on accumulated gst up to 31/07/18, but it’s being lapse by the notification and clarification.

[Gopikishan Kabra]

1. उपरोक्त अधिसूचना वस्तू व सेवाकर परिषद की 28 वी बेठक मे की गयी सिफ़ारिश के आधार पर जारी की गयी है जो की परिषद की वेबसाईट पर मिनिट बुक के अनुसार इस प्रकार है।

Refund of accumulated credit on account of inverted duty structure to fabric manufacturers: Fabrics attract GST at the rate of 5% subject to the condition that refund of accumulated ITC on account of inversion will not be allowed. However, considering the difficulty faced by the Fabric sector on account of this condition, the GST Council has recommended for allowing refund to fabrics on account of inverted duty structure. The refund of accumulated ITC shall be allowed only with the prospective effect on Purchases made after the notification is issued.

स्पष्ट है कि परिषद की बेठक मे संग्रहित itc को समाप्त करने का निर्णय नही हूआ था किन्तु इसके विपरीत पर अधिसूचना मे इसे समाप्त (lapse) कर दिया गया जो की उपयुक्त प्रतीत नही होता।

[Gopikishan Kabra]

Notification no 20/ 2018 was issued on recommandation of gst councils 28 th meeting. But as per minutes available on website of council accumulated inverted itc as on 31/7/18 is not lapse and refund only allowed.

But in notification it is lapse. How it is possible ? Who can add the word lapse in notification? Advice please.