GST: CBEC issues Directions on Disputed and Blocked CENVAT Credit [Read Circular]

The Central Board of Excise and Customs (CBEC), last day issued directions regarding non-transition of CENVAT Credit under Section 140 of CGST Act or non-utilization in certain cases.

A circular issued by the Board in this regard said that in cases where a dispute on CENVAT Credit is pending before the adjudicating or appellate authority, such disputed credit carried forward 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.

“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,” the circular said.

Regarding non-transition of Blocked Credit, the circular said that as per 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.

“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,” it said.

It further said that “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.”