Can we avail refund of CESS paid on purchase of coal stock held as at 22nd September-2025

This query is : Resolved

Quick Summary

Following the removal of coal cess and increased GST from 22nd September, businesses with existing coal stock paid cess on may have credit balances. Generally, this cess credit cannot be offset against GST liabilities or refunded for domestic trade. However, refunds may be possible for exported goods, provided all conditions and documentation are met. For coal intended for domestic supply, the paid cess credit might become unusable for future GST payments.

Venkateshwarlu Pulluri

Venkateshwarlu Pulluri (Querist)
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23 September 2025 sir/s, from 22nd September onwards government removed cess on coal and increased gst rate, but plenty of stock held in trade and cess was paid on inward supplies, and there is credit balance of cess,

how to utilize said cess credit balance, can we cross utilize against I/C/S/GST Liability or claim refund, kindly inform

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 September 2025 Existing coal cess credit cannot generally be set off against regular GST (IGST, CGST, SGST) liabilities and is not eligible for refund except in the case of exports (zero-rated supplies), subject to fulfillment of all statutory provisions and proper documentation.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 September 2025 Cross-utilization with GST: The accumulated compensation cess credit cannot be cross-utilized against IGST, CGST, SGST, or UTGST liabilities. As per GST law and interpretation, compensation cess credit is permitted to be utilized only for payment of compensation cess on outward supplies, which is now abolished for coal.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 September 2025 Refund of unutilized compensation cess credit is generally permitted where coal (or the final goods) is exported (zero-rated supply), subject to usual conditions. Courts have ruled that refund is possible under Section 54 of the CGST Act read with the Compensation to States Act—even if cess is no longer levied on output—provided no dual benefit (drawback/refund/ITC) is claimed for the same input. Recent jurisprudence allows refund for exporters; merchants trading in India without export may face credit blockage.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 September 2025 For trade stocks of coal meant for domestic supplies, the credit for compensation cess—already paid on inward supplies—remains unusable for future GST liabilities since the outward supply does not attract cess anymore. There is no provision for direct set-off against IGST, CGST, SGST, or UTGST, nor is there any blanket refund/encashment for unutilized credits.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 September 2025 For more clarification...
Refer:: https://gstcouncil.gov.in/sites/default/files/2025-09/faq.pdf

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 September 2025 Good Luck...

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