Modalities for sanction & disbursement of IPS under GST

Source: The Hitavada      Date: 07 Jan 2019 09:10:32

By CA Julfesh Shah,
INTRODUCTION: The Package Scheme of Incentives (PSI) 2013 which was eligible for a period of 5 years i.e. up to 31st March, 2018 has been extended by the Maharashtra Government till the new policy comes into force. In view of revision in tax system from VAT to GST w.e.f. 01.07.2017 the modalities for sanction and disbursement of Industrial Promotion Subsidy (IPS) declared by Government are required to be revised. Hence, recently on December 20, 2018, Government of Maharashtra has prescribed the modalities for all eligible units other than mega / ultra mega projects covered under PSI-2001, PSI-2007 and PSI-2013 as follows:
Definition: 1.1) IPS for MSME in PSI 2007 and PSI 2013: ‘Relevant Taxes’ referred to in PSI-2007 shall mean the amount of SGST payable under the GST Act-2017 by the eligible units (other than mega projects) in respect of first sale of finished products billed and delivered to same entity within Maharashtra, (as defined under para 3.7 of PSI-2007), before adjustment of set-off or any other credits available for the tax period, less the amount of benefits drawn by way of Electricity Duty exemption, exemption from payment of Stamp Duty, refund of royalty and any other benefits.
1.2) IPS for large projects in PSI 2007 and 2013: Industrial Promotion Subsidy (IPS) to eligible large scale unit under PSI 2007 and PSI-2013 shall be based on amount of SGST paid on first sale of eligible finished products billed and delivered to same entity within Maharashtra, by the eligible unit in Maharashtra after adjustment of set-off or any other credit available for tax period.
Explanation:1) Any part payment made in appeal, interest paid on taxes, penalties and fees there under, etc., shall be excluded for determining the taxes payable for computation of IPS.
2) In respect of expansion or diversification, the quantum and period for availing IPS shall be restricted to the extent of relevant taxes paid in respect of sales of finished products manufactured out of the expanded / diversified capacities.
3) Transactions between following category of related persons, no IPS will be allowable in respect of SGST paid on these transactions.
(A) Transactions between:
I) GST numbers in State having common PAN.
II) Different firms of a director or partner of an eligible manufacturing unit under PSI registered in the State under GST law.
(B) Transactions between related persons as detailed in GR: 2) Filing of claims for IPS:
2.1) An eligible unit other than ultra mega, mega project, shall file a valid claim on an annual basis. The first valid claim shall pertain to the period commencing from the date of start of commencement of commercial production.
2.2) An eligible unit holding eligibility certificate shall prefer a claim for every financial year in Form II (Annexure-A). The valid claim shall be supported with necessary documents.
3) Sanctions to IPS Claims:
3.1) The implementing agency shall sanction the admissible quantum of IPS ordinarily within 30 days of receipt of the valid claim complete in all respect, after verifying the correctness of the particulars furnished in the application and the documents, and reconciling the quantum of taxes payable / paid for determining the IPS amount to be sanctioned for every year.
However, pending assessment / reconciliation by the Sales Tax Department, the claim of the eligible unit other than mega / ultra mega project shall be provisionally sanctioned at 85% of the admissible IPS amount. The balance amount of admissible IPS shall be sanctioned after reconciliation / assessment by the Sales Tax Department and after disposal of appeals, if any, preferred by the eligible unit.
3.2) The valid claim should be filed within 11 months of the close of the concerned financial year. However, for financial year 2017-18 considering the transition period to roll over from VAT to GST based incentives the time to submit the valid claims shall be 18 months from close of financial year 2017-18.
3.3) Any delay in filing of valid claim beyond the period stipulated shall attract penalty by way of 10% deduction in the quantum of admissible IPS relating to that claim. For delays exceeding 6 months, the relevant claim shall be automatically treated as having lapsed and no IPS shall be admissible for the period covered in the claim.
3.4) If it is found by the implementing agency that, due to an error in fact or of law, an amount of IPS has been sanctioned or paid to the eligible unit which is in excess of or less than what was actually payable in respect of any period or part thereof, the implementing agency may, with the prior approval of the State Government, pass a revised order recording the reasons thereof, within 5 years from the date of the original sanction order, determining the actual amount of IPS payable to the eligible unit in respect of that period (or part thereof), and there upon:
(a) If a higher amount of IPS is payable to the eligible unit, the balance amount may be disbursed, or (b) If an excess amount of IPS has already been paid on account of the eligible unit revising its GST returns downwards after sanction / disbursement of IPS or for any other reason, steps shall be taken to recover the excess amount by way of deduction from the amount of IPS for any subsequent period (or part thereof), or to effect a lump-sum recovery to be paid by the eligible unit within 30 days of passing of the order.
3.5) The implementing agency shall maintain an account of each eligible unit in whose favour the eligibility certificate has been granted, and shall fix the limit of disbursement to the extent of the value of incentive as mentioned in the eligibility certificate.
3.6) For the purpose of assisting Government to assess future budgetary requirements, all units are required to submit information to the implementing agency in the prescribed format specifying the anticipated liabilities under SGST the next financial year. The information shall be submitted to the implementing agency by the October 31 of the financial year previous to the claim period.
4) Procedures for disbursement of subsidy: The cases approved/ sanctioned by the implementing agency will be disbursed as per the availability of funds. The disbursement of sanctioned amount shall be made chronology of date of
(The author is a leading
industrial consultant and a
practicing chartered accountant)