Advocate R C Verma

Advocate R C VermaNow, the Central Government has come up with a scheme and methodology for grant of disbursal of IGST/CGST/SGST/UTGST paid by the manufacturing units in the areas earlier which were enjoying full exemption from payment of central excise duty. Since GST was introduced w.e.f. 1.7.2017 and notifications were rescinded which were allowing area based exemption from payment of excise duty to a certain fixed period from the date of their commencement of production. Due to introduction of GST all the manufacturing units are mandatorily required to clear the manufactured goods including traded goods on payment of GST. As the manufacturing units were entitled to avail exemption for a fixed certain period, the Government as a major of goodwill introduced a scheme for disbursal of Budgetary Support against the GST paid by such units since 1.7.2017.

2. In pursuance of the decision of Government of India to provide budgetary support to the existing manufacturing units operating in the state of Jammu and Kashmir, Uttrakhand, Himachal Pradesh and North East state including Sikkim, Ministry of Commerce and Industry introduced the scheme vide Notification dated 05.10.2017 provided therein a detailed procedure for claiming the budgetary support by such eligible units.

3. 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. The aforesaid scheme is applicable in respect of specified goods manufactured by the unit enjoying exemption vide Notification nos. 56/2002-CE dated 14.11.2002, 57/2002-CE dated 14.11.2002 and 01/2010-CE dated 06.02.2010,  Notification nos. 49/2003-CE dated 10.6.2003 and 50/2003-CE dated 10.6.2003, Notification no 20/2007-CE dated 25.04.2007, as amended from time to time.

The “specified goods” means the goods which were being manufactured and cleared by the eligible unit by availing the 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

5. The aforesaid scheme is applicable to the “residual period” and the residual period, in the notification dated 05.10.2017 of the Ministry of Commerce and Industry has been defined as below:-

‘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(sic- of the notification of the Ministry of Commerce & Industry), 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 substituted in terms of Para 5.7(sic- of the notification of the Ministry of Commerce & Industry) .

6. 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.

7. 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.

8. 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

9. 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.

10. 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.

11. The CBEC has also issued two Circulars No. 1060/9/2017-CX dated 27.11.2017 and No. 1060/9/2017-CX dated 30.11.2017 prescribing therewith a detailed procedure for manual disbursal of budgetary support under GST regime.

12. As the claim for the quarter ending September, 2017 has already become due. Hence, it has been decided that unit would be registered on the basis of applications filed by them manually and application for claim of budgetary support for the said quarter would also be filed and processed manually. The applicants entitled for the aforesaid scheme are required to submit an application for registration duly signed in triplicate in the format attached to the above mentioned CBEC Circular. The applicant for budgetary support shall be filed by the eligible units only after return for the quarter for which application is being made, has been filed and tax as per return is paid.

Author: R C Verma is the Author of this article and is an Advocate by profession. The Author can be reached at 


The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.

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November 2020