Backward and Hills Area Incentives in GST
[Ref: Notification
dated 5 October 2017]
·
Jammu & Kashmir
·
Himachal Pradesh & Uttarakhand
·
North East States including Sikkim
·
Short Title And
Commencement
·
Objective:
·
Definitions
·
Determination Of The Amount Of Budgetary
Support
·
Inspection Of The
Eligible
Unit
·
Manner Of Budgetary
Support
·
Budgetary Provision
And
Payment
Of Amount
Of Budgetary Support
·
Repayment By Claimant/ Recovery And Dispute Resolution
·
Saving Clause
·
Affidavit – Cum – Indemnity Bond
Subject: Scheme of budgetary
support under Goods and Service Tax Regime to the units
located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and
North
East including
Sikkim.
F. No. 10(1)/2017-DBA-II/NER - In pursuance of the decision of the Government of India
to provide budgetary support to the existing eligible manufacturing units operating in the States
of
Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North Eastern States including Sikkim under different
Industrial Promotion Schemes of the Government
of
India, for a residual period for which each of the units is eligible, a new scheme is being introduced. The new
scheme is offered, as a
measure of goodwill, only to the units which were eligible for drawing benefits under the earlier excise duty exemption/refund schemes but has otherwise no relation
to
the erstwhile schemes.
1.2 Units which were eligible under the erstwhile Schemes and were in operation through
exemption notifications issued by the Department of Revenue in the Ministry of Finance, as listed under
para
2 below would be considered eligible under this scheme. All such notifications
have ceased to apply w.e.f. 01.07.2017 and stands rescinded on 18.07.2017 vide notification
no.
21/2017 dated 18.07.2017.
The
scheme shall be limited to the tax which accrues
to the Central Government under Central Goods and Service Act, 2017 and Integrated Goods and Services Act, 2017, after devolution of the Central tax or the Integrated tax to the States, in
terms of Article
270 of the Constitution.
2. The erstwhile
Schemes which were in
operation on 18.07.2017 were as follows:
2.1 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;
2.2 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;
2.3 North East States including Sikkim- Notification no 20/2007-CE dated 25.04.2007 as amended from time to time.
3. SHORT TITLE AND COMMENCEMENT
3.1 The scheme shall be called Scheme of Budgetary Support under Goods and Services Tax
(GST) Regime to the units located in State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh
and North Eastern States including Sikkim. The
said Scheme shall
come into operation w.e.f. 01.07.2017 for an eligible unit (as defined in para 4.1)
and
shall remain in operation for
residual period (as defined in para 4.3 )
for each of the eligible unit in respect of specified
goods (as defined in para
4.2
). The overall scheme shall
be valid upto 30.06.2027.
3.2 OBJECTIVE
The GST Council in its meeting held on 30.09.2016 had noted
that exemption from
payment
of indirect
tax
under
any existing
tax incentive
scheme of Central or State Governments
shall not continue under the GST
regime and the concerned units shall be
required to pay tax
in
the GST regime. The Council left it to
the
discretion of Central and State
Governments to notify schemes of budgetary support to such units.
Accordingly, the Central
Government in recognition
of the
hardships arising due to withdrawal of above exemption notifications has decided that it would provide budgetary support
to
the eligible units for
the residual
period by way of part reimbursement of the Goods and Services Tax, paid by the unit limited to the Central
Government’s share of CGST and/or IGST retained
after devolution of a
part
of
these taxes to the States.
4. DEFINITIONS
4.1 ‘Eligible unit’ means a unit which was eligible before 1st
day of July, 2017 to avail the benefit of ab-initio
exemption or exemption by way of refund from payment
of
central excise
duty under notifications, as the case may be, issued in this regard, listed in para 2 above and was availing the said exemption immediately before 1st day of July, 2017. The eligibility of the unit
shall be on the
basis of application
filed
for
budgetary support under this
scheme with reference to:
(a) Central Excise registration number, for the premises of the eligible manufacturing unit,
as it existed prior to migration
to GST; or
(b) GST registration
for the
premises as a place of business, where manufacturing activity
under
exemption notification
no. 49/2003-CE
dated
10.06.2003 and
50/2003-CE dated
10.06.2003 were being carried
prior to 01.07.2017
and the unit was not registered under Central
Excise.
4.2 ‘Specified goods’ means the
goods specified under exemption notifications, listed in
paragraph 2, 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, from:
(a) The premises under Central Excise with a registration
number, as it existed
prior to migration to GST; or
(b) The manufacturing premises registered in GST as a place of business
from where the
said goods under exemption notification no. 49/2003-CE
dated
10.06.2003 and 50/2003-CE dated
10.06.2003 were being cleared
4.3 ‘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
in paragraph 2, during which
the
eligible unit would have been
eligible to avail exemption for the specified goods.
The
documentary evidence regarding date of commercial production
shall
be submitted in terms of para 5.7.
5. DETERMINATION OF
THE AMOUNT OF BUDGETARY
SUPPORT
5.1 The amount of budgetary support under the scheme for specified goods manufactured by the eligible unit shall be sum total
of
–
(i) 58% of the Central
tax paid through debit in the cash ledger account maintained by the unit
in
terms of sub-section(1) of section 49 the Central Goods and Services Act, 2017
after utilization
of the Input
tax
credit of the Central Tax and Integrated Tax.
(ii) 29% of the integrated tax paid through debit in the cash ledger account maintained by the unit in terms of section 20 of the Integrated
Goods and Services Act, 2017
after
utilization of the Input tax credit
Tax
of the Central Tax and
Integrated Tax.
Provided where inputs are procured from a registered person operating under the Composition Scheme under Section
10 of
the Central Goods
and
Services Act, 2017 the amount i.e. sum total of (i) & (ii) above shall be reduced by the same percentage as is the percentage value of inputs procured under
Composition scheme out
of total
value
of
inputs procured.
Explanation:- Explanation-I
|
a |
Sum total worked
out under clause (i) & (ii) |
Rs.200 |
|
b |
Percentage value of inputs procured under Composition
Scheme out of total value of inputs
procured |
20% |
|
c |
Admissible amount out of
(a) above |
Rs(200-20% of
200) = Rs.160 |
Explanation- II
(a) Calculation of
(ii) shall be followed by calculation of (i)
(b) To avail benefit of this scheme, eligible unit shall first utilize input tax credit of Central tax and Integrated tax and balance of liability, if any, shall be paid in cash and where this condition is not fulfilled, the reimbursement sanctioning officer shall reduce the amount
of budgetary support
payable to the extent credit of Central tax and integrated tax, is not utilized for payment of tax.
5.2 The
above
58% has been fixed
taking
into consideration
that
at present Central Government devolves 42% of the
taxes on goods and services to the States as per the
recommendation
of
the 14th Finance Commission.
5.3 Notwithstanding, the rescinding of the exemption notifications listed under para 2 above,
the
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. However, the provisions relating to
facility of determination of
special rate under the respective exemption
notifications
would
not apply under this scheme.
5.4 Budgetary support under this scheme shall be worked out on quarterly basis for which claims shall be filed on a quarterly
basis namely
for
January to March, April to June, July
to September & October to December.
5.5 Any unit which is found on investigation to over-state its production or make any mis-
declaration to claim budgetary support would be made in-eligible for the residual
period and be
liable to recovery
of
excess budgetary support paid. 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 and,
without prejudice to any other action under law may invite denial of benefit under the scheme
ab-initio. The units will have to declare total procurement of inputs from unregistered suppliers
and
from suppliers working under Composition Scheme under CGST Act,
2017.
5.6 The
grant of budgetary support under the scheme shall be subject to compliance of provisions relating
to any other law in force.
5.7 The manufacturer applying for benefit under this scheme for the first time shall also file the following documents:
(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.
Any other document evidencing the details required in clause (a) to (c) may be accepted with
the approval
of
the Commissioner.
5.8 For the purpose of this Scheme, “manufacture” means any change(s) in the physical object resulting in transformation of the object into a distinct article with a different name or
bringing a new
object into existence with a different chemical
composition or integral
structure. Where
the Central Tax or Integrated Tax paid on value
addition is higher than the
Central Tax or Integrated
Tax worked out on the value addition shown in column (4) of the table below, the unit
may
be taken up for verification
of the value addition:
Table
|
Serial
No. |
Chapter |
Description
of goods |
Rate (%) |
Description
of inputs
for manufacture of
goods in column
(3) |
|
(1) |
(2) |
(3) |
(4) |
(5) |
|
1. |
17 or 35 |
Modified starch
or glucose |
75 |
Maize, maize
starch or tapioca starch |
|
2. |
18 |
Cocoa
butter or powder |
75 |
Cocoa
beans |
|
3. |
25 |
Cement |
75 |
Lime stone
and gypsum |
|
4. |
25 |
Cement clinker |
75 |
Lime stone |
|
5. |
29 |
All goods |
29 |
Any goods |
|
6. |
29 or 38 |
Fatty acids or
glycerine |
75 |
Crude
palm kernel, coconut, mustard
or rapeseed oil |
|
7. |
30 |
All goods |
56 |
Any goods |
|
8. |
33 |
All goods |
56 |
Any goods |
|
9. |
34 |
All goods |
38 |
Any goods |
|
10. |
38 |
All goods |
34 |
Any goods |
|
11. |
39 |
All goods |
26 |
Any goods |
|
12. |
40 |
Tyres, tubes and flaps |
41 |
Any goods |
|
13. |
72 |
Ferro alloys, namely, ferro chrome, Ferro manganese
or silico manganese |
75 |
Chrome
ore or manganese ore |
|
14. |
72 or 73 |
All goods |
39 |
Any goods, other
than iron ore |
|
15. |
72 or 73 |
Iron and steel
products |
75 |
Iron ore |
|
16. |
74 |
All goods |
15 |
Any goods |
|
17. |
76 |
All goods |
36 |
Any goods |
|
18. |
85 |
Electric motors
and generators,
electric generating sets and parts
thereof |
31 |
Any goods |
|
19. |
Any chapter |
Goods other than those mentioned
above in S.Nos.1 to
18 |
36 |
Any goods |
Explanation: For calculation of the value addition the procedure specified in notification no. 01/2010-CE dated 06.02.2010 of the Department of Revenue as amended from time to time shall
apply mutatis-mutandis.
5.9.1 In cases
where an entity is carrying
out its operations in a State
from multiple business premises, in addition to
manufacture of specified goods by the
eligible unit, under the
same GST Identification Number (GSTIN) as that of the eligible unit, the eligible unit shall
submit application for reimbursement of budgetary support alongwith
additional
information, duly
certified by a Chartered Accountant, relating to
receipt of inputs, input tax credit involved on the
inputs
or capital goods received
by the eligible
unit and quantity of
specified goods manufactured by the eligible unit vis-a-vis the inputs, input tax credit availed by the registrant under the given
GSTIN.
5.9.2 Under GST, one business entity having multiple business premises would generally
have one registration in a State and it may so happen that only
one
of them (eligible unit) was
operating under Area Based Exemption Scheme. In
such situations where inputs are received
from another business premises of (supplying unit) of the same registrant (GSTIN) by, the
details of input tax credit of Central
Tax
or Integrated Tax availed by the supplying unit for
supplies to the eligible unit shall also be submitted duly certified by the Chartered Accountant.
The jurisdictional Deputy/Assistant Commissioner in such cases
shall sanction the
reimbursement of the budgetary support after reducing input tax credit relatable to inputs used
by the
supplying unit.
6. INSPECTION OF THE ELIGIBLE UNIT
6.1 The Budgetary Support under the Scheme 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.
The
inspection report shall be uploaded by the inspection team on ACES-GST portal of the
Central Board of Excise & Customs (CBEC) and
shall be made available to the jurisdictional Deputy/Assistant Commissioner of the Central Tax
on the portal before sanction of the budgetary
support. Budgetary support will be released only after the findings to these teams are available. Provided that where delay is expected in such findings of the inspection, the
Deputy/ Assistant Commissioner of Central Taxes may sanction provisional reimbursement
to the
eligible
unit.
Such provisional
reimbursement shall
not continue
beyond
a period
of
six months.
7. MANNER
OF BUDGETARY SUPPORT
7.1 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.
7.2 The Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case
may be, after such examination of the application as may
be necessary, shall sanction reimbursement of the budgetary support. The
sanctioned amount shall be conveyed to the
applicant electronically. The PAO, CBEC will sanction and disburse the recommended
reimbursement of budgetary support.
8. BUDGETARY PROVISION AND PAYMENT OF
AMOUNT OF
BUDGETARY
SUPPORT
8.1 The budgetary support shall be disbursed from budgetary allocation of Department of Industrial Policy & Promotion (DIPP),
Ministry of Commerce & Industry.
DIPP shall keep such budgetary allocation on the disposal of PAO, CBEC. The eligible units shall obtain one time registration on the ACES-GST portal
and
obtain a unique ID which is to be used for all
processing of claims under the
scheme. The application
by the
eligible
unit for reimbursement of
budgetary support shall be filed on the ACES-GST portal with reference to unique ID obtained
and
shall be processed by the Deputy Commissioner or Assistant Commissioner of the Central Tax for sanction of
the
admissible amount of budgetary support.
8.2 The application for imbursement of budgetary support shall be made by the eligible unit after the payment of CGST/IGST has been made for the quarter to which the claim relates, in cash in respect of specified goods after utilization
of Input Tax credit, if any.
8.3
The
sanctioning authority (AC/DC) with the approval of the Commissioner may call for additional
information (inclusive but not limited to past data on trends of production and removal of goods) to verify the correctness of various factors of production such as consumption of principal inputs, consumption of electricity and decide on the basis of the same, if the quantum
of
supply have
been correctly declared.
8.4
Special audit by the Chartered Accountant/Cost Accountant may be undertaken for units
selected based on the risk parameters identified by CBEC in order to verify correctness of
declared production capacity and production or overvaluation of supplies. Such special audit shall
be undertaken only with the approval of the Commissioner, CGST.
8.5 The list of sanctions for payment, on the basis of amount sanctioned by the jurisdictional
Deputy Commissioner or Assistant Commissioner of the Central Tax shall be forwarded by the
authorised officer of the jurisdictional Commissionerate of the Central
Tax
through the ACES- GST portal to
e-PAO, CBEC for disbursal
directly into the bank accounts of the
eligible
units.
9. REPAYMENT BY CLAIMANT/ RECOVERY AND DISPUTE RESOLUTION
9.1 The budgetary support allowed is subject to the conditions specified under the scheme and in case of contravention of any
provision of the scheme/ notification, the budgetary
support shall be deemed
to have
never
been allowed and
any inadmissible budgetary support
reimbursed including the
budgetary support paid
for
the past period under this scheme
shall be recovered alongwith an interest @15% per annum thereon. In case of recovery
or voluntary adjustment of excess payment, repayment, recovery or return, interest shall also be paid by unit at the rate of fifteen per cent per annum calculated from the date of payment of refund till the date of
repayment, recovery or return.
9.2 When any amount under the scheme is availed by wrong declaration of particulars
regarding meeting the eligibility
conditions in this scheme or as specified under respective
exemption notification
issued by the Department
of Revenue, necessary
action would be initiated and
concluded in the individual case
by the Office
of concerned Assistant Commissioner or Deputy Commissioner of Central
Taxes, as the case may be.
9.3 The
procedure for recovery: Where
any amount is recoverable from a unit,
the
Assistant Commissioner or Deputy Commissioner of Central Tax, as the case may be, shall issue a demand note to the unit (i) intimating the
amount recoverable from the unit and the date
from which interest thereon is due and (ii) directing the manufacturer to deposit the full sum within
30 days of the
issue
of
the demand note in the
account head of
DIPP
and submit proof of
deposit to him/her
9.4 Where the amount is not paid by the beneficiary within the time specified as above,
action for recovery shall be taken in terms of the affidavit –cum- indemnity bond submitted by the
applicant at the time of submission
of the
application, in
addition to other modes
of recovery.
9.5 Where any amount of budgetary support and/or interest remains due from the unit, based on the report sent by the Assistant Commissioner or Deputy Commissioner of Central
Tax as the case may be, the authorized officer of DIPP shall, after the lapse of 60
days from the date of
issue of the said
demand note take
required legal
action and send a certificate specifying the amount due from the unit to the concerned District Magistrate/ Deputy
Commissioner of the district
to
recover that amount,
as if it were arrears of land
revenue
10 Residual issues related to the Scheme arising subsequently shall be considered by DIPP, Ministry of Commerce & Industry whose decision
shall be final
and
binding.
11. SAVING CLAUSE
11.1 Upon cessation of the Scheme, the unpaid claims shall be settled in accordance
with
the provisions of the Scheme while the recovery and dispute resolution mechanisms shall continue to
be in force.
Annexure A
AFFIDAVIT – CUM – INDEMNITY BOND
I / We Shri___________
s/o__________(add names) in my/our capacity of ____________(designation) of Company/Unit Name) hereby solemnly affirm and declare for and on behalf of__________(company/unit name) that an application for registration for reimbursement of budgetary support has been filed on_____________
under the
Scheme of
Budgetary Support notified
by Department
of Industrial
Policy and
Promotion (DIPP).
I/We confirm that the eligible unit is manufacturing and supplying specified goods on
payment of Central
GST/ Integrated GST and the claim will not include any other activity being carried out under the same GSTIN.
I /We
further affirm and
declare, as stated above, goods other than
specified goods
manufactured by the eligible unit will not be taken into account while filing the application under
the
scheme. The input tax credit on
the goods availed by
the
eligible manufacturing unit or the
supplying unit under the same GSTIN will
be taken into account while calculating the input tax credit of the eligible manufacturing unit. No amount of budgetary
support which is not due as per the
conditions of the
scheme notified
by DIPP shall
be claimed by the
eligible
unit and where
any mis-declaration is detected, the amount paid by the Government shall be paid back by me/us with interest as prescribed in the scheme.
I/We solemnly
affirm and declare that whatever is stated above is true to the best of my
/ our knowledge and record. I/We further indemnify the Government of India to recover the amount, if any for any revenue loss which may occur (might have occurred) due to
the
above submission made
by me / us.
DATE : NAME:
PLACE: SIGNATURE:
DESIGNATION:
ADDRESS:
Note:
1. This indemnity bond
should be submitted on Rs.150/- Stamp Paper.
2. The bond
is
required to notorised.
3. Proprietors /Partners / Directors / Authorised Signatory
has to sign the bond alongwith their
name and residential address.
In case the bond is signed by authorized signatory, copy of power of attorney in favour of authorized signatory needs to be enclosed.
Copy for information
and necessary action to:
(i) All Ministries/Departments of the Government
of India and the NITI Aayog.
(ii) Department of Revenue, ( Central Board OF Excise and Customs, North Block, New Delhi.
(iii) Chief Secretaries of
the
States
of Arunachal Pradesh, Assam,
Himachal
Pradesh,
Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland,
Tripura, Sikkim & Uttrarakhand .
(iv) Secretary ( Industries ) of the States of Arunachal Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland,
Tripura, Sikkim & Uttrarakhand.
Copy also to:
(i) Cabinet Secretariat
(ii) PMO