Central Tax Circulars

CGST Circular 33/2018

To

The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All),

The Principal Director Generals/ Director Generals (All).

Madam/Sir,

Sub: Directions under Section 168 of the CGST Act regarding non-transition
of CENVAT credit under section 140 of CGST Act or non-utilization thereof in
certain cases-reg.

1) In exercise of the powers conferred under section 168 of the Central Goods
and
Services Tax Act, 2017 (hereinafter referred to as “Act”), for the purposes of
uniformity in implementation of the Act, the Central Board of Excise and
Customs hereby directs the following.

2) Non-utilization of Disputed Credit carried forward

2.1 Where in relation to a certain CENVAT credit pertaining to which a show
cause notice
was issued under rule 14 of the CENVAT Credit Rules, 2004, which has been
adjudicated and where in the last adjudication order or the last
order-in-appeal, as it existed on 1st July, 2017, it was held that such CENVAT
credit is not admissible, then such CENVAT credit (herein and after referred to
as “disputed credit”), credited to the electronic credit ledger in terms of
sub-section (1), (2), (3), (4), (5) (6) or (8) of section 140 of the Act, shall
not be utilized by a registered taxable person to discharge his tax liability
under this Act or under the IGST Act, 2017, till the order-in-original or the
last order-in-appeal, as the case may be, holding that disputed credit as
inadmissible is in existence.

2.2 During the period, when the last order-in-original or the last
order-in-appeal, as the case
may be, holding that disputed credit as inadmissible is in operation, if the
said disputed credit is utilised, it shall be recovered from the tax payer,
with interest and penalty as per the provisions of the Act.

3) Non-transition of Blocked Credit

3.1 In terms of clause (i) of sub-section (1) of section 140 of the Act, a
registered person shall
not take in his electronic credit ledger, amount of CENVAT credit as is carried
forward in the return relating to the period ending with the day immediately
preceding the appointed day which is not eligible under the Act in terms of
sub-section (5) of section 17 (hereinafter referred to as „blocked credit‟),
such as, telecommunication towers and pipelines laid outside the factory
premises.

3.2 If the said blocked credit is carried forward and credited to the
electronic credit ledger in
contravention of section 140 of the Act, it shall not be utilized by a
registered taxable person to discharge his tax liability under this Act or
under the IGST Act, 2017, and shall be recovered from the tax payer with
interest and penalty as per the provisions of the Act.

4) In all cases where the disputed credit as defined in terms of para 2.1 or
blocked credit
under para 3.1 is higher than Rs. ten lakhs, the taxpayers shall submit an
undertaking to the jurisdictional officer of the Central Government that such
credit shall not be utilized or has not been availed as transitional credit, as
the case may be. In other cases of transitional credit of an amount lesser than
Rs. ten lakhs, the directions as above shall apply but the need to submit the
undertaking shall not apply.

5) Trade may be suitably informed and difficulty if any in implementation of
the circular may
be brought to the notice of the Board.