QUESTION

Mr. X has obtained the EPCG Authorisation License. But any how Mr. X is not in position to fulfil the Export Obligation that require under EPCG Authorisation Scheme. He paid the Duty Saved amount along with Interest and penalty and Duty Saved amount includes the Custom Duty, SWS and GST. So, My question are
1. Whether GST amount payable is allowed as Input Tax Credit?
2. If yes, then how to avail such credit on GST Portal?

ANSWER

As per Section 142(9) of the CGST Act credit is not allowed for any tax deposited under the exiting law after the appointed date. Sub section (9) of Section 142 is reproduced below:

(9) (a) where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act;

But you should check the following points to reduce the tax liability:
Check the original application of EPCG to assure that export obligation was correct or can be reduced to some extent
The amount of duty will get reduced to the extent of export obligation is achieved.

Further credit is restricted under Rule 36 of CGST Rules because this amount will not be reflected in GSTR-2A. (Reply dt. 21/06/2021)