Cess

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2018 Dear Sir,
Cess paid on coal purchase by a building bricks manufacturer would be refunded or he can adjust it against his cgst or sgst liability?

Renu Goyal

Renu Goyal (Expert)
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12 January 2018 Compensation cess can be utilised for the payment of cess,it cannot be utilised for payment of CGST or SGST liability.

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2018 Whether we can take refund of it?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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19 July 2024 Under the Goods and Services Tax (GST) regime in India, the cess paid on coal falls under the ambit of GST compensation cess. Here’s how it typically works for manufacturers, such as building brick manufacturers:

1. **Cess on Coal Purchase:** When a building brick manufacturer purchases coal, they are liable to pay GST compensation cess on it. This cess is levied as per the provisions of the GST law.

2. **Adjustment against GST Liability:** The GST compensation cess paid on inputs like coal can be used as credit to offset (adjust) the liability of GST (CGST, SGST, or IGST) payable on the output supply of goods or services. This means that the cess paid on coal can be utilized to reduce the overall GST liability on other taxable supplies made by the manufacturer.

3. **Refund of Cess:** As per the current GST laws, there is no provision for a direct refund of GST compensation cess paid on inputs like coal. The cess credit is intended to be used for offsetting GST liabilities only.

4. **Utilization of Cess Credit:** The manufacturer should utilize the cess credit against their CGST, SGST, or IGST liabilities in the order specified under the GST law. If there is any excess credit after offsetting all such liabilities, it can be carried forward to the subsequent tax periods.

5. **Compliance and Documentation:** It is crucial for the manufacturer to maintain proper documentation of the cess paid on coal purchases and the utilization of cess credit in their GST returns. This ensures compliance with GST regulations and facilitates accurate reporting to tax authorities.

In summary, while the building brick manufacturer cannot directly claim a refund of the GST compensation cess paid on coal, they can adjust this cess credit against their CGST, SGST, or IGST liabilities. Therefore, meticulous accounting and compliance with GST regulations are essential for effectively utilizing cess credits under GST.

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