Due to lack of tax exemptions under the Goods and Services Tax (GST) regime for investing in industrially marginal areas of Uttarakhand, J&K, Himachal Pradesh and the North East, the suppliers to major Fast Moving Consumer Goods ( FMCG ) Companies have approached the Uttarakhand High Court.
Under the old tax regime, several tax exemptions were given to the manufacturers who would invest in some areas with a view to promoting investments in the exempted zones.
Before the Nainital bench of the Uttarakhand High Court, the petitioners contended that there is no clarity in GST of what would happen to the exemptions given under the earlier regime.
Under the transitional credit rules, these manufacturers have not been able to claim the credit of the past taxes paid or exemptions availed to set off their current GST liabilities. “The Indian Constitution provides that GST Council shall make recommendations with respect to special provisions for area-based exempted units,” the petition reads.
The denial of credit on capital goods… in these cases appears to be an unintended omission as section 140 of the CGST Act doesn’t cover the proportionate availing of credit”, said Abhishek A Rastogi, partner, Khaitan & Co, and an advocate for the manufacturers.
