As per section 140(2) of the GST Act company shall be allowed to carry forward the unavailed CENVAT credit on capital goods not carried forward in return for the period immediately preceding the appointed date. The credit on capital goods shall be allowed only when it is allowable under existing law as well as under GST. The company shall make an application in the form GST TRAN 01 specifying separately the amount of tax/duty availed or utilized and the amount of tax/duty yet to be availed or utilized.
As per CENVAT credit rules, 2004 the company is allowed to take up to 50% of the credit of capital goods in first year of purchase & balance in one or more subsequent years. In case the company has procured goods during the year 2016-17 then, the part credit must have been availed by company & balance will be taken during the year 2017-18. Therefore, the above provision will enable the company to avail the balance CENVAT credit of capital goods in GST regime.
However, there may be instances where capital goods are procured between 01.04.2017 to 30.06.2017 (Quarter 1) and assuming appointed date i.e. implementation of GST to be 01.07.2017 then in such case maximum upto 50% credit can be taken in Quarter 1 (Apr to Jun 2017 ) but when to take balance 50% credit?
A. In the same financial year but after implementation of GST (i.e. on or after 01.07.2017) OR
B. During the next financial year (i.e. 2018-19)
For solution please see my short video on the same as attached below