But what about balance of credit? CBEC Refuses to see reason
THE confusion continues:
With this latest notification, CBEC has allowed the CENVAT credit on inputs and input services on goods or services received after 1.3.2015/1.6.2015, but CBEC refuses to understand that almost all the assessees must have had credit balance of education cess paid on inputs or input services as on 1.3.2015/1.6.2015. How can this credit be used? DDT extensively covered this issue on several days:
01 05 2015: What about the balance of CENVAT credit of education cess lying in CENVAT account as on 28.02.2015? The amendment to CENVAT Credit Rules allows credit on inputs/input services received on or after 01.03.2015, but it does not provide solution to the balance of credit as on 28.02.2015.
What if someone had already received the inputs/input services before 28.02.2015, but did not take credit of education cess? Should he lose that?
In case of capital goods, it is not mandatory that the balance 50% should be taken only in the immediate next financial year. Then, why they allowed the credit only to the capital goods received in 2014-15, but not before that?
Why can't they make a simple amendment without creating any fresh problems?
DDT 2591 06 05 2015: We are still waiting for the clarification/amendment from the Board (read TRU).
DDT 2609 01 06 2015: While there will be no education cess on Service Tax from today, somehow CBEC is shying away from giving a clarification on how the balance of CENVAT credit on education cess lying in the accounts as on 1.6.2015 can be used by the service providers and as on 1.3.2015 by the manufacturers.
CBEC should understand that they have put every manufacturer and every service provider in the country under deep distress, because there is no clarity on the issue. A leading manufacturer asked us, "What is the status of balance amount lying in both the cess in CENVAT account as on 01.03.2015 and Service tax Edu cess lying as on 31.05.2015. Shall we wait till the board clarifies or can we merge all the cess with basic excise duty?." With the hope that Board will soon clarify, we advised them to wait. But how long? Does the Board believe in the concept of 'ease of doing business'? Or are our tax laws intentionally made complicated to torture the assessees?
Unfortunately, there is a school of thought in the Department, which believes that this credit will lapse. Before such dangerous thoughts spread and the litigation system is further clogged with unwanted notices and appeals, CBEC/TRU should wake up to the reality and urgently issue the clarifications/amendments.
Will TRU listen?
DDT 2614 08 06 2015: There are important issues crying for Board's attention, like the issue of balance of CENVAT Credit of Education Cess. Instead of clarifying such issues Board embarks upon this kind of misadventures and tells the world that they are a little weak in elementary arithmetic.
DDT 2616 10 06 2015: Without wasting its time in useless clarifications, why can't the Board clarify on what to do with the credit balance of education cess?
DDT 2624 22 06 2015: The PHD Chamber of Commerce and Industry in a Press release said,
Commissioner Service Tax Mr.Gautam Bhattacharya on Friday asked India Inc. to be excessively pro-active in sharing its inputs with the government officials when they are in the middle of preparing the direct and indirect tax proposals rather than commenting on them after such a policy documentation is finalized, for it becomes difficult for them to insert and incorporate valuable industry's inputs later on in such a paper.
Mr. Bhattacharya indicated that clarification sought by industry on application of service taxes including education and secondary education cess, especially after the service tax has been increased to 14% would be addressed suitably by the finance ministry without giving a particular roadmap for it.
Who will pay for the un-utilisable credit?
01 07 2015: Mr. Najib Shah will take over as the new Chairman of CBEC today. Sir, while there are a lot of issues crying for your attention, it will be a good idea to start your innings with a clarification on what happens to the accumulated credit of education Cesses lying in the CENVAT accounts of the assessees. The assessees are really concerned about this blocked up amount and the unconcerned silence of the Board. Will you ask your concerned officers to clarify the position as soon as possible?
DDT 2644 20 07 2015: We have been requesting them to clarify on the education cess credit lying in balance and there is deafening silence from them, but they rush in with such notifications.
DDT 2647 23 07 2015: While on it, Board may be pleased to consider issuing a clarification on that accumulated Education Cess Credit.
DDT 2714 29 10 2015 (yesterday): Najib Shah - New Chairman of CBEC - Please clarify Education Cess
Mr. Najib Shah will take over as the new Chairman of CBEC today. Sir, while there are a lot of issues crying for your attention, it will be a good idea to start your innings with a clarification on what happens to the accumulated credit of education Cesses lying in the CENVAT accounts of the assessees. The assessees are really concerned about this blocked up amount and the unconcerned silence of the Board. Will you ask your concerned officers to clarify the position as soon as possible?
Yesterday, Mr. Najib Shah took over as the regular Chairman of the Board and when I heard that they have issued a notification clarifying the issue of CENVAT credit of education cess, I was thrilled, but the thrill vanished in a couple of minutes as I realised they have not clarified the issue of credit balance. Disappointing Mr. Shah!
Is the Board ready to clarify or do they want the issue to be settled only in the Supreme Court after 15 years - after all, lawyers need to live too.
Why can't they make a simple rule that credit of any duty/tax can be used for payment of any duty/tax? Or simply be silent? The restrictions in Rule 3(7)(b) can be removed altogether. There will be no national calamity if they do this. The CENVAT Credit Rules with its varied sub-rules, sub-clauses and provisos looks like a maze created by several thoroughly confused minds - and have contributed to endless litigation.
I am scared of GST, because these very officers who make life miserable for the taxpayers will be administering GST and they are sure to export all the confusion - they are already on the job. The credit flow under the GST will be based on the present CENVAT Credit Rules - only made more complicated.