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Home» Circulars» Cgst Amendment Act 2018 Clarification On Transitional Credit

CGST (Amendment) Act, 2018 - Clarification on Transitional Credit




Basic Chemicals, Cosmetics & Dyes Export Promotion Council
(Set-up by Ministry of Commerce and Industry, Govt of India)

Jhansi Castle, 4th Floor, 7, Cooperage Road, Mumbai - 400 001. India

Tel : +91 22 22021288 Website : www.//



 EPC/LIC/GST                                                           09/01/2019




CGST (Amendment) Act, 2018 -   Clarification on Transitional Credit



Dear Members,


We would like to inform you that the Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 87/06/2019-GST dated 02/01/2019  to its field formations  whereby Clarification  is given regarding Transitional credit i.e. section 140(1) of the CGST Act, 2017  (Central Goods and Services Tax (Amendment) Act, 2018).


The important points as  per above circular  are reproduced/ highlighted as  follows for the convenience of the members:


We understand  from the circular that doubts have been expressed as to whether the expression “eligible duties” would include CENVAT credit of Service Tax within its scope or not.

Therefore, the CBIC has clarified  following:


  • The CENVAT credit of service tax paid under section 66B of the Finance Act, 1994 was available as transitional credit under section 140(1) of the CGST Act and that legal position has not changed due to amendment of section 140(1) on account of following reasons:


i) The amendment in provisions of section 140(1) and the explanations to section 140 need to be read harmoniously such that neither any provision of the amendment becomes otiose nor does the legislative intent of the amendment get defeated.

ii) The intention behind the amendment of section 140(1) to include the expression “eligible duties” has been indicated in the “Rationale/ Remarks” column (at Sl. No. 37) of the draft proposals for amending the GST law which was uploaded in the public domain for comments. It is clear that the transition of credit of taxes paid under section 66B of the Finance Act, 1994 was never intended to be disallowed under section 140(1) and therefore no such remark was present in the document.

iii) Under tax statutes, the word “duties” is used interchangeably with the word “taxes” and in the present context, the two words should not be read in a disharmonious manner.


  • Thus, expression “eligible duties” in section 140(1) which are allowed to be transitioned would cover within its fold the duties which are listed as “eligible duties” at sl. no. (i) to (vii) of explanation 1, and “eligible duties and taxes” at sl. no. (i) to (viii) of explanation 2 to section 140, since the expression “eligible duties and taxes” has not been used elsewhere in the Act.  The expression “eligible duties” under section 140(1) does not in any way refer to the condition regarding goods in stock as referred to in Explanation 1 to section 140 or to the condition regarding inputs and input services in transit, as referred to in Explanation 2 to section 140.


  • No transition of credit of cesses, including cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, would be allowed in terms of Explanation 3 to section 140, inserted vide sub-section (d) of section 28 of CGST Amendment Act, 2018 which shall become effective from the date the same is notified giving it retrospective effect.

Members are requested to take note of the clarification regarding transitional credit, if applicable.  The said circular is also available for reference using below link-


Issues if any with this clarification, can be  put-forth to the council on &  for taking forward with the authorities.


Thanking You,


Yours faithfully,







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