Department of Industrial Policy & Promotion of Government of India has vide Notification No. F. No. 10(1)/2017-DBA-II/NER, dated October 5, 2017, has notified benefit under GST regime for units enjoying benefits under different Industrial Promotion Schemes of the Government of India. The erstwhile Schemes which were in operation on 18.07.2017 were as follows:
Notifications for which scheme is announced:
Jammu & Kashmir: Notification nos. 56/2002-CE dated 14.11.2002, 57/2002-CE dated 14.11.2002 and 01/2010-CE dated 06.02.2010 as amended from time to time.
Himachal Pradesh & Uttarakhand : Notification nos. 49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 as amended from time to time.
North East States including Sikkim : Notification no 20/2007-CE dated 25.04.2007 as amended from time to time.
The above notifications were rescinded vide notification no. 21/2017 dated 18.07.2017.
In lieu of above schemes, Government has notified Scheme of Budgetary Support (“SBS”) under Goods and Services Tax (GST) Regime.
The Salient features of the scheme are as under:
– SBS shall be available to the units located in State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim
– SBS shall come into operation w.e.f. 01.07.2017 for an eligible unit. ‘Eligible unit’ means a unit which was eligible to avail the benefit of ab-initio (since beginning) exemption or exemption by way of refund from payment of central excise duty under above specified notifications and was availing the said exemption immediately before 1st day of July, 2017.
– SBS shall remain in operation for residual period. ‘Residual period’ means the remaining period out of the total period not exceeding ten years, from the date of commencement of commercial production, as specified under the relevant notification listed above, during which the eligible unit would have been eligible to avail exemption for the specified goods under the earlier regime.
– SBS shall be available for each of the eligible unit in respect of specified goods. ‘Specified goods’ means the goods specified under exemption as specified in above said notifications which were eligible for exemption under the said notifications, and which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption.
Operation of Scheme:
– SBS shall operate by way of part reimbursement of the Goods and Services Tax, paid by the unit limited to the Central Government’s share of CGST/ IGST.
– SBS shall be worked out on quarterly basis for which claims shall be filed on a quarterly basis – January to March, April to June, July to September & October to December
– The benefit under SBS shall be computed in the following manner:
- Unit shall from its output liability utilise available ITC towards CGST / IGST.
- From the balance amount as payable in cash, 58% in case of CGST and 29% in case of IGST
- The amount so computed be decreased by such percentage as goods procured from composition supplier bears for such unit to all purchase of goods. This may have a detrimental to the units as ITC of Services is also getting reduced in the above computation.
Other Deterrents of the Scheme:
– Limitations, conditions and prohibitions under the respective notifications issued by Department of Revenue as they existed immediately before 01.07.2017 would continue to be applicable under this scheme
– Activity relating to concealment of input tax credit, purchase of inputs from unregistered suppliers (unless specifically exempt from GST registration) or routing of third party production or other activities aimed at enhancing the amount of budgetary support by mis-declaration would be treated as fraudulent activity
– Specific rates above which if value addition is found in certain specified goods, such cases shall be taken up for scrutiny by the department. General rate other than specific ones is 36% paid on value addition is higher
– SBS shall be allowed to an eligible unit subject to an inspection by a team constituted by DIPP for every State to scrutinize in detail the implementation of the previous schemes
– Special audit by the Chartered Accountant/Cost Accountant may be undertaken for units selected based on the risk parameters identified by CBEC
– Strong recovery provisions in case of wrongful availment of benefits
Procedural aspects of the scheme:
– In case of multiple units, the computation with other documents be supported by a CA Certificate
– The manufacturer shall file an application to the Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, by the 15th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates. This means for July- September , the last date shall become 15th November, 2017.
– The manufacturer shall file an application for payment of budgetary support for the Tax paid in cash, other than the amount of Tax paid by utilization of Input Tax credit under the Input Tax Credit Rules, 2017, to the Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, by the 15th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates
– Documents to be filed by the applicant to SBS:
(a) the copy of the option filed by the manufacturer with the jurisdictional Deputy Commissioner/ Assistant Commissioner of Central Excise officer at the relevant point of time, for availing the exemption notification issued by the Department of Revenue;
(b) document issued by the concerned Director of Industries evidencing the commencement of commercial production
(c) the copy of last monthly/quarterly return for production and removal of goods under exemption notification of the Department of Revenue.
(d) An Affidavit-cum-indemnity bond, as per Annexure A, to be submitted on one time basis, binding itself to pay the amount repayable under para 9 below.