1. The accumulated inverted ITC on fabric lapsed by the notification no 20/2018- central tax (rate)dated 26th july,2018.The notification is issued on the recommendation of the GST council but as per minutes of the 28th meeting on GST council’s website, the recommendation is as follows :-
“Refund of accumulated credit on account of inverted duty structure to fabric Manufacturers: Fabrics attract GST at the rate of 5% subject to the condition that refund of accumulated ITC on account of inversion will not be allowed. However, considering the difficulty faced by the Fabric sector on account of this condition, the GST Council has recommended for allowing refund to fabrics on account of inverted duty structure. The refund of accumulated ITC shall be allowed only with the prospective effect on Purchases made after the notification is issued.”
It is to be noted that as per above minutes, it was not decided to lapse the accumulated ITC in the meeting and the chairman of the meeting Shri Piyush Goyal sir also told to traders that “accumulated ITC will not be lapse and will be blocked only for refund” but beyond the chairman and council the ITC is lapsed in the notification.
A. ITC is lapsed in the notification without any recommendation of council to lapse it. Then how the notification is according to council’s recommendations?
B. Which authority did lapse the ITC beyond the council meeting? Who have rights to change council’s decision?
2. The above notification is in exercise of powers conferred by clause (2) of sub section 3 of section 54. Which only permits to notify the supply of goods and services, in respect of which refund shall not be permitted, the power is limited to decide coverage of commodities and services for the purpose of refund of accumulated credit only. It is clear that under section 54 itc may be blocked for refund only it may not be lapsed. Assesses has paid value in cash for surplus ITC and in consideration of rights to utilize the ITC to discharge their tax liabilities in future was granted by the act while accumulation, and the same may not be forfeited later. The section 54 does not empower inherently also to lapse any kind of ITC because there is huge difference between to block for refund and to lapse.
C. Isn’t it unconstitutional misuse of section 54, to forfeit the rights to utilize surplus itc?
D. When the intention was to lapse inverted itc then why only surplus itc is lapsed.A and B both have paid same value for inverted itc A have utilized his itc hence he have nothing to lose and B have to lose his itc because of only that he have surplus. Is it appropriate?
3. Notification is an important document its language and drafting should be able to understand the intention of it. But when the notification published everyone was shocked because the words “shall lapse” used in the notification create a huge confusion, it sounds like that whole ITC is lapse. More clarification for ITC lapse was to be given there and stock also was to be considered in it. In that confusing situation immediate clarification was needed but the circular being no 56/30/2018 was issued after 28 days on 24/08/2018 which was too late.
E. Without any clarification about the words used shall lapse. Is it not confusing? Its drafting is sufficient to understand its intention? The preparation to publish the notification was proper? The notification looks like a complete document?
F. The circular in this regard was issued after 28 days. Was it an ideal time for it in that situation?
Kindly read the Para 1, 2 and 3 and avail me the information asked in column A, B, C, D , E and F at your earliest.
Gopikishan Tulsiram Kabra.
3/50, bohra market Ichalkaranji- 416115 Maharashtra
9422412717 email:gkkabra2002@yahoo.co.in