TMI Blog2018 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... se, 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. The non-availability of carry forward of credit with respect to KKC has been clarified to the Trade - accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) on June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under CCST Act 2017, will not be considered as admissible input tax-credit. The question in the present case is answered in negative. - GST-ARA-18/2017-18/B-25 - - - Dated:- 5-4-2018 - B.V. BORHADE AND PANKAJ KUMAR, MEMBER PROCEEDINGS (under section 98 Of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by KANSAI NEROLAC PAINTS LIMITED ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed 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 service tax ISD return, filed under Rule 9(10) or CCR. In view of provision of sec 140(1) of CGST Act 2017 read with Rule 117(1) of CGST Rules 2017, the company had carried forward aforesaid accumulated KKC as appeared in the ISD return on June 30, 2017 to electronic credit register maintained under CGST ACT 2017 but not utilized. Statement of relevant facts having a bearing on the question(s) raised 1.1 Kansai Nerolac Paints Ltd (herein after referred as the Company or Nerolac) is registered under Central Goods and Service Tax Act, as taxable person, engaged in supply of goods and supply of service. Company is also registered in some identified States/Union Territories as taxable person under the respective State/Union Territory Goods and Service Tax Act 2017. 1.2 During pre GST regime, that is prior to July 1, 2017, company was engaged in manufacture and sale of goods across the states and in the state of Maharashtra Company was engaged in wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Union List I of Indian Constitution empowers legislature to levy service tax as provided under Chapter V of Finance Act 1994. 1.4 122nd amendment of Constitution deletes Entry 92C of Union List I, in view of implementation Of Goods and Service Tax. 1.5 It implies KKC is also subsumed in Goods and Service Tax along with service tax. In other words CGST liability under CGST Act 2017 contains liability on account of KKC as well. 1.6 Rule 3(1a) of CCR includes KKC as cenvat credit. 1.7 Sec 140(1) allows a registered person to carry forward the CENVAT credit in return to electronic credit ledger provided the said credit is admissible under CGST Act 2017. 1.8 As discussed in para 1.5 above, CGST liability represent KKC liability as well therefore KKC credit will also be considered as admissible CENVAT credit as per proviso (1) to see 140(1) of the CGST Act. Submission dt. 06.02.2018 on acceptance of application for Advance Ruling .we like to bring it to your kind attention that we Kansai Nerloac Paints (herein after referred as the Company ) is registered under Central Goods and Service Tax Act, as taxable person, engaged in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2), as it may consider necessary. (5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those to refunds and exemptions from tax, interest and imposition or 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 may be. (Emphasis supplied) 2.2 Deletion of entry 92C vide constitution 122 nd amendment 17. In the Seventh Schedule to the Constitution. (a) an List I Union List, (i) for entry 84, the following entry shall be substituted namely: 84. Duties of excise on the following goods manufactured or produced in India namely:- (a) petroleum crude: (b) high speed diesel: (c) motor spirit (commonly known as petrol) (d) natural gas (e) aviation turbine fuel; and (f) tobacco and tobacco products . (ii) entries 92 and 92C shall be omitted; (Emphasis supplied) 2.3 CGST Rules 2017 117. Tax or duty credit carried forward under existing law or on goods held in stock on ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 3. Question on which advance ruling is required Whether accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) ON June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under (CGST Act, 2017, will he considered us admissible input tax-credit? 4. Our submission 4. 1 KKC is levied as per sec 161 of the Finance Act, 2016 (Please para 2) Sec 161(5) of the Finance Act specified that for levy and collection of KKC, Chapter V of Finance Act 1994 (Service Tax) will be applicable. 4.2 Entry 92C of Union List I of Indian constitution empowers legislature to levy service lax as provided under Chapter V or Finance Act 1994. 4.3 122 nd amendment of Constitution deletes Entry 92C of Union List l, in view of implementation and Service Tax. 4.4 It implies is also subsumed in Goods and Service Tax along with service tax. In other words CGST liability as accrued under CGST Act, 2017 contains liability on account or KKC as well.. 4.5 Rule 3(1a) of CCR includes KKC as cenvat credit. 4.6 CCR provides KKC liability could be set off with KKC cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or hearing on dt.06.02.2018 and on dt.21.02.2018 when Sh. Subhasis Banerjee, Chartered Accountant attended alongwith Sh. Sandesh Shinde, Executive Accounts (GST) and Sh. Mahesh T. Mandlik, Senior Accounts Officer appeared and reiterated the contention as made in the written submission. The jurisdictional Officer, D.C. GST, LTU 4, Mumbai was not present during both the hearings but has furnished a written submission in the matter. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is whether accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) on June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under CGST Act 2017, will be considered as admissible input tax-credit. Krishi Kalyan Cess was brought into implementation by Chapter VI of the Finance Act, 2016. Since the applicant mentions about accumulated credit as carried forward in the Service Tax return on 30 th June, 2017, we would refer to the relevant transitional provision as available in the CST Act- 140. (1) A registered person, other than a person opting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r clauses (i), (ii), (iii), (iv), (v) (vi) and (via); (viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, Provided that a provider of taxable service shall not be eligible to take credit of such additional duty; (viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003); (ix) the service tax leviable under section 66 of the Finance Act', (x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004); and (xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and (xi) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005) The enumerated list of items in respect of which CENVAT credit is available makes no reference to the KKC. BV the Notification No. 28/ 2016 - Central Excise (N.T.), the 26th May, 2016, the Central Government made the following rules, which came into force on 1st of June, 2016, to amend the CENVAT Credit Rules, 2004. In rule 3, as rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible and could be utilised for payment of EC and SHE respectively. In other words. CENVAT credit on EC and SHE on inputs, capital goods and input services could be utilised and availed of for payment of EC and SHE on manufactured goods and output services. Input EC and SHE credit had the effect of preventing cascading effect on EC and SHE payable down the line. It is an accepted and admitted case that benefit of EC and SHE on inputs, etc. could not have been utilised for payment of excise duty service tax on the output, i.e, manufactured goods or taxable services Thus, cross utilization of EC and SHE towards excise duty or service tax was impermissible and not permitted. 4. EC and SHE were abolished and were not payable on excisable goods with effect from 1 st March, 2015 vide Notification Nos. 14/2015-CE and 15/2015-CE both dated 1 st March, 2015. EC and SHE were also abolished and ceased to be payable on taxable services when Section 95 of Finance Act (No, 2) 2004 and Section 140 of Finance Act, 2007 were omitted by Finance Act, 2015. The omission was to take effect from 1 st June, 2015 vide Notification No, 14/2015-STdated 19 th May, 2015. As a result, levy of EC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , SBC cannot be paid by utilizing credit of any Other duty or tax. Chapters of the Finance Act by which SBC and KKC were brought into effect could be had a look at thus - CHAPTER VI SWACHH BHARAT CESS CHAPTER VI - KRISH KALYAN CESS 119. (1) This Chapter shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. (2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent. on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto. The Swachh Bharat Cess leviable under sub-section (2) shall be in addition to any cess or service lax lev table on such taxable services under Chapter of the Finance Act, 1994, or under any other law for the time being in force. (4) The proceeds of the Swachh Bharat Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BEC clarify thus - 112 Can ITC of Swach Bharat Cess or Krishi Kalyan Cess be carried forward under GST? No Thus, it can be seen that the non-availability of carry forward of credit with respect to KKC has been clarified to the Trade. In view thereof, we are convinced that accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) on June 30, 2017 which is carried forward in the electronic credit ledger maintained by the company under CCST Act 2017, will not be considered as admissible input tax-credit. 05. In view of the deliberations as held hereinabove, we pass an order as follows ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-18/2017-18/B-25 Mumbai, dt. 05-04-2018 For reasons as discussed in the body of the order, the question is answered thus - Q. Whether accumulated credit by way of Krishi Kalyan Cess (KKC) as appeared in the Service tax return of Input Service Distributor (ISD) ON June 30, 2017 which is carried forw ..... 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