GST UPDATE ON CLARIFICATION ISSUED WITH RESPECT TO PROPOSED AMENDMENT IN SECTION 140(1) OF CGST ACT, 2017:-

GST UPDATE ON CLARIFICATION ISSUED WITH RESPECT TO PROPOSED AMENDMENT IN SECTION 140(1) OF CGST ACT, 2017:-

We had pointed out in our earlier update when the proposed amendment in section 140(1) of the CGST Act, 2017 was released by the government that the manner in which amendment is being made in section 140(1) of the CGST Act, 2017 creates confusion as regards admissibility of service tax credit carried forward in the return filed prior to GST regime because credit would be available only for ‘eligible duties’ which does not include service tax. It appears that the government has reacted to the literal interpretation of the proposed amendment and so has issued clarification in this respect.

It is clarified that the legal position has not changed due to amendment of section 140(1) and the amendment made should be harmoniously read such that the legislative intent is not defeated. It is being clarified that transition of service tax credit balance available in returns was never intended to be disallowed under section 140(1) of the CGST Act, 2017. Some experts also opined that the expression ‘eligible duties’ does not includes service tax as it is not ‘duty’ but ‘tax’. Accordingly, it is clarified that the word ‘duties’ is used interchangeably with the word ‘taxes’ and should not be read in disharmonious manner. Furthermore, the circular clarifies that the linkage of credit transitioned under section 140(1) with Explanation no. 1 and Explanation no. 2 of the section 140 will be removed from the proposed amendment so that there is no confusion as regards the credit which will be transitioned under section 140(1) of the CGST Act, 2017. Lastly, it is clarified that no transition of credit of cesses will be allowed as stated in the newly inserted Explanation no. 3 to section 140 in the proposed amendment Act.

It is submitted that any amendment in the statutory provisions require utmost precision as wrong use or linkage of provisions may lead to absurd interpretation which is not intended by the government. It is hoped that the government has realised that the amendments that are made should be properly reviewed so that the need of issuing clarifications for the same is obviated.
The content of this GST update is for educational purpose only and not intended for solicitation.

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GST UPDATE ON CLARIFICATION ISSUED WITH RESPECT TO PROPOSED AMENDMENT IN SECTION 140(1) OF CGST ACT, 2017:-

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