meis scrip, Goods and Services Tax - GST

[Madhavan iyengar]

When Company A exports products it is entiled to MEIS scrip and it satisfies the condition for grant of MEIS

Company A received certificate of MEIS in FY 18-19 for ₹ 5 lacs and accoridngly accured income of ₹ 5 lacs

In FY 19-20 it utilised the scrip of ₹ 5 lacs for payment of customs duty

Since govt has clarified that when scrip is sold it attracts nil rate of duty hence becomes an exempt supply ( as per notif 13/2017)

Query: However if scrip is utilised for payment of customs duty then whether it will be an exempted supply since the scrip is tendered for payment of Customs duty ie it is a barter hence it will be treated as exempt supply at that point

and the ITC reversal will get attracted at the time when the scrip is utilised iein FY 19-20 and not when MEIS Income was accrued in FY 18-19

experts please throw light

Posts / Replies

[KASTURI SETHI]

Scrip is an incentive and not a barter. In my view, reversal is not required. However, Board's circular pertaining to pre-GST era may help you.

Duty credit scrip - Reversal of amount under Rule 6(3) of Cenvat Credit Rules not applicable

Circular No. 973/7/2013-CX., dated 4-9-2013

[Madhavan iyengar]

thank you sir for the views given

the trade circular of the pre-gst era speaks of scrip utilisation for payment of excise duty

here the scrip is used for payment of customs duty and not gst

[KASTURI SETHI]

Scrips cannot be used for payment of any kind of GST. Scrips are post export incentives.

[YAGAY andSUN]

There is a specific notification/circular that MEIS cannot be used for payment of GST.

[Madhavan iyengar]

Thanks

yes agreed MEIS cannot be used for payment of GST.

But my issue was on taxability on receipt of MEIS script since the GST notification has provided for exemption only on sale of scrip however what happens when company does not sell but utilises the scrip for payment of customs duty can it be taxed at that stage.

To which Kasturi sir has clearly replied that it is not taxable

the background for seeking the replies is from ITC reversal perspective as prescribed in sec 17 wherein in case of exempt supplies ITC is required to be reversed

[YAGAY andSUN]

MEIS scrip is given by DGFT (Ministry of Commerce and Industry) on exporting of goods and getting the remittance from the foreign customer and filing of online MEIS Application. There is no need to reverse any ITC, as MEIS is a reward from the GOI on successful exporting of specified goods. Supply to self is not a supply. Further paying customs duty through MEIS is not a barter therefore no point will raise of any Exempt supply at any point of time.