This circular provides clarification on the scope of the term “eligible duties” used in section 140(1) of the CGST Act, 2017, as amended retrospectively by the CGST (Amendment) Act, 2018, particularly in relation to transition of CENVAT credit.

The circular clarifies that CENVAT credit of Service Tax paid under section 66B of the Finance Act, 1994 continues to be admissible as transitional credit under section 140(1). The amendment introducing the expression “eligible duties” was not intended to exclude service tax credit, and the legal position allowing such transition remains unchanged. It is emphasized that the amendment and the explanations to section 140 must be read harmoniously so that legislative intent is not defeated. The Board notes that, in tax statutes, the terms “duties” and “taxes” are often used interchangeably and should not be interpreted narrowly in this context.

The circular further explains that the expression “eligible duties” under section 140(1) covers the duties listed in Explanation 1 and the “eligible duties and taxes” listed in Explanation 2 to section 140. At the same time, this expression does not import the conditions relating to goods in stock or inputs and input services in transit mentioned in those explanations.

It is also clarified that certain provisions of the CGST (Amendment) Act, 2018 linking section 140(1) with Explanations 1 and 2 have not been notified. This ensures that transitional credit under section 140(1) is not conditional upon stock-related or transit-related requirements.

Finally, the circular reiterates that no transition of credit of any cesses is permitted, including cesses collected as additional duty of customs, in line with Explanation 3 to section 140.