Budgetary support under GST to units located in NE and other regions

F. No. 10(1)/2017-DBA-II/NER

The Government of India was implementing North East Industrial and Investment Promotion Policy (NEIIPP), 2007 for North Eastern States including Sikkim and Package for Special Category States for Jammu & Kashmir, Uttarakhand and Himachal Pradesh to promote industrialization. The benefits of the NEIIPP, 2007 and Package for Special Category States was excise duty exemption for first 10 years after commencement of commercial production.

Upon repeal of the Central Excise duty laws, the Government of India has withdrawn the said facilities and has decided to pay a budgetary support equal to the central share of the cash component of CGST and IGST paid by the affected eligible industrial units. The support shall be available for the residual period (ten years from the date of the commercial production) in the States of North Eastern region and Himalayan States.

Coverage of Scheme: 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

Commencement of scheme: The said Scheme shall come into operation w.e.f. 01.07.2017 for an eligible unit and shall remain in operation for residual period  for each of the eligible unit in respect of specified goods

The overall scheme shall be valid upto 30.06.2027.

Applicability of scheme: The Scheme of Budgetary Support under Goods and Services Tax (GST) Regime applicable only 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.

DEFINITIONS '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.

INSPECTION FOR ELIGIBILITY FOR ELIGIBLE UNITS: The Budgetary Support under the Scheme shall be allowed to an eligible unit subject to

1. an inspection by a team constituted by DIPP
2. The inspection report shall be uploaded by the inspection team on ACES-GST portal
3. It shall be made available to the jurisdictional Deputy/Assistant Commissioner of the Central Tax on the portal before sanction of the budgetary support 

CRITERIA FOR ELIGIBLE UNIT: The manufacturer applying for benefit under this scheme for the first time shall also file the following documents:

1. 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;
2. document issued by the concerned Director of Industries evidencing the commencement of commercial production
3. the copy of last monthly/quarterly return for production and removal of goods under exemption notification of the Department of Revenue.
4. 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.         
5. Any other document evidencing the details required in clause (a) to (c) may be accepted with the approval of the Commissioner.

The grant of budgetary support under the scheme shall be subject to compliance of provisions relating to any other law in force.

PROCESS OF SACTIONING BUDGETRY SUPPORT SCHEM OF REFUND:

• The eligible units shall obtain one time registration on the ACES-GST portal
• 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
• The application for reimbursement 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
• The Deputy Commissioner or Assistant Commissioner of the Central Tax as case may be process the application for sanction of the admissible amount of budgetary support 

DETERMINATION OF THE AMOUNT OF BUDGETARY SUPPORT:

The amount of budgetary support under the scheme for specified goods manufactured by the eligible unit shall be sum total of

• 58% of the CGST 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 ITC of CGST and IGST.
• 29% of the IGST 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 IGST and CGST.

 SPECIAL RATE

The provisions relating to facility of determination of special rate under the respective exemption notifications would not apply under this scheme

Respective Notifications are.

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. 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;
3. North East States including Sikkim- Notification no 20/2007-CE dated 25.04.2007 as amended from time to time.

VERIFICATION OF THE VALUE ADDITION

Where the CGST or IGST paid on value addition is higher than the CGST or IGST 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 For calculation of the value addition the procedure - refer Notification no.1/2010 dated 06.02.2010

MANNER OF FILLING AND SACTIONING OF BUDGETARY SUPPORT

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,
2. The eligible unit shall submit application for reimbursement of budgetary support along with additional information duly certified by a Chartered Accountant related to
   1. receipt of inputs, input tax credit involved on the inputs or capital goods received by the eligible unit
   2. and quantity of specified goods manufactured by the eligible unit vis-a-vis the inputs,
   3.  input tax credit availed by the registrant under the given GSTIN.
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.
4. The application to be filed by the assessee by 5th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates
5. Claims shall be filed on a quarterly basis namely for January to March, April to June, July to September & October to December.
6. Ac/DC examination of the application for sanction the reimbursement of the budgetary support
7. The sanctioned amount shall be conveyed to the applicant electronically
8. 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 authorized officer of the jurisdictional Commissionerate of the Central Tax through the ACES-GST portal to e-PAO.
9. CBEC will disburse directly into the bank accounts of the eligible units.

PROVISIONAL REFUND

Where delay is expected in such findings of the inspection by DIPP team, the Deputy/ Assistant Commissioner of Central Taxes may sanction provisional reimbursement to the eligible unit.

However, such provisional reimbursement shall not continue beyond a period of six months.

SPECIAL AUDIT

• CBEC may identify selected units for Special audit by the Chartered accountant /Cost accountant based on risk parameter 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

CONDITION FOR REPAYMENT / RECOVERY AND DISPUTE RESOLUTION

The budgetary support allowed is subject to the conditions specified under the scheme in case of contravention of any provision of the scheme/ notification

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

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 unitintimating

• the amount recoverable from the unit and the date from which interest thereon is due and
• Interest shall also be paid by unit at the rate of 15% per annum calculated from the date of payment of refund till the date of repayment, recovery or return.
• 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
• Where the amount is not paid within the time of 30 days, 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.
• Where any amount of budgetary support and/or interest remains due from the unit, based on the report sent by the AC/DC, 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.

RESCINDING NOTIFICATIONS

Following 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

• 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;
• 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;
• North East States including Sikkim- Notification no 20/2007-CE dated 25.04.2007 as amended from time to time.

However, the limitations, conditions and prohibitions under the respective notifications would continue to be applicable under this scheme.

Disclaimer: The material contained on this article is general information. Readers should seek appropriate professional advice before acting on the basis of any information contained herein.