Relief for first stage dealers as Gujarat HC strikes down GST provision on excise duty credits
The court said that under the Central Exercise Act and CENVAT credit rules there was no such restriction on availing of credit for purchase of good prior to the 12 months period.
“The law existing prior to introduction of GST therefore, made suitable provisions to ensure that the first stage dealers like the petitioners are not burdened with the excise duty component,” the judgement read further.
In the earlier tax regime, the first stage dealers were considered in the same position as the manufacturers by not implementing the excise duty on local goods or the countervailing duty paid on imports. However, under nder sub-section (3) of section 140 of the CGST Act in respect of goods purchased by a first stage dealer from the manufacturer prior to 12 months time frame, the dealer is put in disadvantageous position.
The government had justified the move in the court saying that the provision to restrict the option of availing credit was done to make sure that such first stage dealers do not take advantage of the benefit and also to enhance administrative convenience.
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