Cenvat Credit on Outward Goods Transportation Denied! – Supreme Court Judgement Will Hurt Many Assesses
By CA Ankit Gulgulia (Jain)
Supreme Court set aside all High Courts and Tribunals orders to decide that Outward GTA shall not be allowed as Input services making all such cenvat claims by assessee as ineligible
The Judgement in case of Commissioner of Central Excise Service Tax Versus Ultra Tech Cement Ltd. 2018 (2) TMI 117 – SUPREME COURT OF INDIA has held that
| “Cenvat credit availed during the period January 2010 to June 2010, on outward GTA service used by the assessee for transportation of their goods from factory gate to the customer’s premises in case of domestic sale, is ineligible.” |
Supreme Court also held that Board Circular No. 97/8/2007 dated 23.08.2007 which took into account, the definition of ‘place of removal’ as under Section 4(3)(c) of the Central Excise Act, 1944 cannot be relied upon in the favour of assessee in light of amendments which makes the circular inapplicable in the current scenario.
Importantly, SC observed that since the definition of Input services allowed . Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal , the benefit which was admissible (earlier before 2008 amendments) even beyond the place of removal now gets terminated at the place of removal and doors to the cenvat credit of input tax paid gets closed at that place.
Impact of this Judgement on Current Cases
Department shall be able to pursue all the disallowance and applicable interest/penalty for such credit of Outward GTA taken. In my view, invoking extended period of limitation would be both harsh and may again face litigation. Nonetheless, matter will take its due course.
Whether it will be Dealt under GST or Central Excise Cenvat
Further note as per Section 142(6)(b) of CGST Act, 2017
“every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the 1st July, 2017 shall be disposed of in accordance with the provisions of Earlier law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this GST Act.”
Hence the amount of such cenvat will be completely dealt as per Excise / Cenvat Provisions only. Comments and Feedbacks in Box Below.
Related Tags Articles, Central Excise, Cenvat, Excise, GST, Supreme Court
