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TMI Blog2018 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... n provisions, Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such 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- Description (in brief) M/s. Kansai Nerolac Paints Limited (hereinafter referred as company) holder of registration number STC no. AAACG1376NST001 is engaged in business of manufacture of paints and engaged in provision of works contract service as well. The works contract services are carried out from the company's Head Office. Under chapter V of Finance Act 1994, the Company has a centralized registration for Head Office, factories and depots at its Head Office (HO) in Mumbai, Apart from centralized registration, the Company also has a separate registration as Input Service Distributor (ISD) for its HO to distribute the eligible CENVAT credit to its factories and Head Office according to Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taxable service provider which receives bills/invoices etc., of input services. The input service distributor can distribute the eligible credit to any unit of the manufacturer or any premises/office of taxable service provider. 1.4 Rule 9(10) of the CCR requires the input service distributor to file the half yearly return in the statement giving the detail of the credit received and distributed during the said half yearly period by the end of the following months. 1.5 As an input service distributor, company received cenvat credit at its head office. Those Cenvat credit includes Krishi Kalyan Cess (KKC) as well but the company could not distribute KKC to its manufacturing units as because, KKC credit could be utilized only with KKC liability as prescribed under CCR, and recipient entities being manufacturing units did not have any KKC liability to set off KKC credit. As a result of which there was accumulation of KKC credit in the return, filed under Rule 9(10) of CCR. 1.6 In view of provision of see 140(1) of CGST Act 2017 read with Rule 117(1) of CGST Rules 2017, company has carried forward the aforesaid accumulated KKC as appeared in the ISD return on June 30, 2017 to ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accumulation of KKC credit. In Post GST regime neither there is any specific restriction in law regarding admissibility of KKC nor there any specific provision in law regarding admissibility of KKC as input tax credit. In view of the aforesaid facts, our question regarding admissibility of input tax credit is duly covered under clause (d) of section (2) of section 97 of CGST,/MGST Act 2017 and thus the said question is duly covered under the provision of Advance Ruling as provided under CGST/MGST Act 2017. Submission of NIL date 2. Legislative provisions. 2.1 Sec 161 of Finance Act 2016 read with Chapter VI of Finance Act 2016: 161. (1) "This Chapter shall come into force on the 1st day of June, 2016 (2) There shall be levied and collected in accordance with the provisions of this Chapter a cess to be called the Krishi Kalyan Cess as Service tax on all or any of the taxable services at the rate of 0.5 per cent. on the value of such services for purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto. (3) The Krishi Kalyan Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely : - 1. (1) These rules may be called the CENVAT Credit (Seventh Amendment) Rules, 2016. (2) They shall come into force on 1st of June, 2016. 2. In the CENVAT Credit Rules, 2004, in rule 3, (a) after sub-rule (1), the following sub-rule shall be inserted, namely :- "(1a) 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 (28 of 2016);"; (b) in sub-rule (4), after the ninth proviso, the following proviso shall be inserted, namely,- "Provided also that the Cenvat credit of any duty specified in sub-rule (1) shall not be utilised for payment of Krishi Kalyan Cess leviable under section 161 of the Finance Act, 2016 (28 of 2016);"; (c) in sub-rule (7), (i) after the words, figures and brackets "sub-rule (1)", the words, figures and brackets ", sub-rule (1a)" shall be inserted; (ii) after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e our CGST liability. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- Legal Submission: What is Krishi Kalyan cess (KKC)? It is a Cess which shall be levied and collected in accordance with the provisions of Section 161 of the Finance Act, 2016, called Krishi Kalyan Cess, as service tax on any or all of taxable services at the rate of the value of taxable service. What about carry forward of credit of Krishi Kalyan Cess, to GST Regime? Section 140 (1) of the GST law permits carry forward of Credit of GST regime. Transitional provisions have been prescribed in the GST law which provids tax treatment for transitional matters like spill over transactions, transitional credits etc. It allows existing taxpayers to transfer the input tax credit available as closing balance in the existing tax returns to the GST returns. Therefore, assesses were able to transfer the closing balance of credit in respect of Central Excise duty, Service Tax, Local VAT etc. As the opening credit balance in the GST returns. As specified in the proviso to Section 140(1) of the Act, the taxable person is allowed to carry forward the credit to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, we find CENVAT credit rules, 2004 wherein the word "credit" is said to mean "CENVAT credit" as can be seen thus- Rule 3. CENVAT credit. - (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of- (i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act', (ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act; (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 (40 of 1978): (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act. 1957 (58 of 1957); (v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001); (vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004); (via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable under section 161 of the Finance Act, 2016 (28 of 2016)"; It can be seen that by express provision, it was made clear that KKC would be utilised towards payment of KKC only, Further, it was expressly provided that the list of items in respect of which CENVAT credit is available, as enumerated above, would not be utilized for payment of KKC. Thus, there was a clear demarcation of the credit in respect of KKC. Under GST, there is no levy of KKC. Now, we know that tax and duty and cess are distinct levies. In Cellular Operators Association of India vs. Union of India 2018 (2) TMI 1264 - DELHI HIGH COURT [Writ Petition (Civil) NO. 7837/ 2016 dt. 15.02.2018], the Hon. Delhi High Court was dealing with the Petition for direction that the credit accumulated on account of Education Cess (EC, for short) and Secondary and Higher Education Cess (SHE, for short) should be allowed to be utilised for payment of service tax leviable and payable on telecommunication services. The facts of this case were thus - "2. Finance (No. 2) Act, had introduced levy of EC on excisable goods and taxable services. SHE on excisable goods and taxable services was imposed vide Finance Act, 2007 3. Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioners seek is an amendment of the scheme to allow them to take cross utilization of the unutilized EC and SHE upon the two cesses being Withdrawn against excise duty and service tax, though this was not the position even earlier," The Hon. Court dismissed the Writ Petition. In the present case, KKC is to be utilized for payment of KKC only. Therefore, KKC cannot be treated as excise duty or service tax. in view thereof, the CENVAT credit as referred to in sub-section (1) of section 140 would not include the credit in respect of KKC. We can also see the position in respect of the Swachh Bharat Cess (SBC) which was brought in force by Chapter VI (Section 119) of the Finance Act 2015. The Frequently Asked Questions (FAQ) issued by the Central Board of Excise and Customs (CBEC) in regard to SBC explained the new levy thus - Q. 1 What is Swachh Bharat cess (SBC)? Ans. It is a Cess which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015, called Swachh Bharat Cess, as service tax on all the taxable services at the rate 0.5% of the value of taxable service. Q. 14 Whether Cenvat Credit of the SBC is available? Ans. SBC i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force. (4) The proceeds of the Krishi Kalyan Cess levied under sub-section(2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf utilise such sums of money of the Krishi Kalyan Cess for such purposes specified in sub-section (2), as it may consider necessary. (5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection Of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under the said Chapter or the rules made thereunder, as the case be. As can be seen, both SBC and KKC are on the same lines. Therefore, the FAQs explaining SBC apply with equal force to KKC. Under the GST Act too, the FAQs issued by CBEC clarify thus - 112 Can ITC of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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