Fate of units claiming area bases exemption under excise act

This query is : Resolved

CA. AMIT (Querist)
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30 May 2017 Dear Sir,

My query is that how the units will work which are claiming area based exemption under Excise act. Please confirm whether these units are eligible for cenvat on stock lying with them as on 30.06.2017. and under what sec of CGST Act,

Further whether these units will charge GST on sale of its final product on or after 01.07.2017 . Further will the units are eligible for refund of GST Paid as these uints are still claiming area based exemption.

CA CS Jainam Shah

CA CS Jainam Shah (Expert)
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31 May 2017 In GST regime, there is no provision for area based exemptions and thus CGST would be payable which can be recovered from customers https://t.co/YiDp4bmD9x

CA. AMIT

CA. AMIT (Querist)
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31 May 2017 Sir,

Thanks for your reply. What will be the position of stock available as on 30.06.2017. Whether it is eligible for input tax credit . Further will the GST payable is refundable to us as there is still area based exemption available.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 Units claiming area-based exemption under the Excise Act before GST implementation face several considerations under the GST regime:

1. **Cenvat Credit on Stock as on 30.06.2017:**
- As per Section 140 of the CGST Act, units eligible for area-based exemption under the Excise Act are allowed to take credit of Cenvat (central excise duty) paid on inputs held in stock as on 30th June 2017, subject to certain conditions. This credit can be utilized for payment of GST liability.

2. **Charging GST on Sale of Final Product:**
- From 1st July 2017 onwards, units availing area-based exemption under the Excise Act need to charge GST on the sale of their final products. The rate of GST applicable would depend on the category of goods produced and the prevailing GST rates.

3. **Eligibility for Refund of GST Paid:**
- Units that continue to avail area-based exemption under GST may be eligible for refund of GST paid on inputs and input services used in the manufacture of goods. This would be subject to the provisions of GST law regarding refund, including fulfillment of documentary and procedural requirements.

4. **Position of Stock Available as on 30.06.2017:**
- The stock of inputs, semi-finished goods, and finished goods held as on 30th June 2017 by units availing area-based exemption under the Excise Act would be eligible for input tax credit under GST. This credit can be availed provided the goods are used or intended to be used for making taxable supplies under GST.

5. **Refund of GST Payable:**
- If GST has been paid on inputs or input services used for goods manufactured under area-based exemption, and the final product is sold with GST, units may be eligible to claim refund of the accumulated input tax credit (ITC). This process involves filing for refund under GST law and complying with the prescribed procedures.

It's crucial for units availing area-based exemption to carefully review the transition provisions under GST and ensure compliance with the requirements for claiming Cenvat credit on stock, charging GST on sales, and seeking refunds where applicable. Professional advice from a GST consultant or a Chartered Accountant specialized in indirect taxation can provide specific guidance tailored to your unit's circumstances.