Reema Sondhi
Transition of the unavailed Cenvat Credit as on the appointed day & eligible duties is one of the most crucial question for the Tax Payers as they want to ensure smooth carry forward / refund of the same. Below is the analysis of Transitional Provisions under CGST law as presented in Lok Sabha & transition Rules released on March 31st, 2017:
I. GENERAL SCENARIO – REGISTERED PERSONS OTHER THAN COMPOSITE SCHEME AVAILERS u/s 10
(i)AMOUNT CARRIED FORWARD IN RETURN (NON CAPITAL & CAPITAL GOODS) –
Amount of Cenvat Credit as carried forward in return (relating to the period ending with the day immediately preceding the appointed day) shall be eligible for the purpose of Cenvat Credit to be carried forward in the electronic cash ledger.
EXCEPTIONS:
(i) If Credit is not admissible as input tax credit under this Act; or
(ii) If returns are not furnished as required under the existing law for the period of six months immediately preceding the appointed date; or
(iii) Amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government
IN FORM GST TRAN – 1 entitled amount of tax & duty to be filed within 60 days from the appointed day.
(ii)AMOUNT NOT CARRIED FORWARD (CAPITAL GOODS)–
Unavailed Cenvat Credit with respect to Capital Goods not carried forward in the RETURN as furnished under existing laws for period ending with the day immediately preceding the appointed day shall be eligible for the purpose of Cenvat Credit.
CONDITION: Credit should be admissible as CENVAT credit under both EXISTING & GST Law.
IN FORM GST TRAN – 1 entitled amount of tax & duty along with below specific points with respect to CAPITAL GOODS:
(i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day, and
(ii) the amount of duty or tax yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day
II. SPECIFIC REGISTERED PERSONS AS PER BELOW LIST– shall be eligible for CREDIT OF ELIGIBLE DUTIES with respect to inputs in form of stock / semi-finished / finished goods:
– not liable to be registered under the existing law; or
– engaged in the manufacture of exempted goods or provision of exempted services; or
– provides Work Contract Service & avails abatement as per Not No. 26/2012 ST; or
– a first stage dealer ; or
– a second stage dealer ;or
– a registered importer ;or
– a depot of a manufacturer
CONDITIONS:
(i) such inputs/goods are used / intended to be used for making taxable supplies under this Act;
(ii) the said registered person is eligible for input tax credit on such inputs under this Act;
(iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs;
(iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and
(v) the supplier of services is not eligible for any abatement under this Act:
IN FORM GST TRAN – 1 Need to specify separately details of stock held on the appointed day wherever applicable along entitled amount of tax & duty within 60 days from the appointed day.
Further, a person availing credit u/s 140(3) who was not liable to be registered under the existing law & who doesn’t not has evidence for payment of Excise Duty shall avail Input Tax Credit on goods held in stock as on appointed day at the rate of 40% of central tax applicable & shall be credited with Input Tax Credit post payment of Central Tax on supply of such goods after the appointed date.
Note – This scheme shall be available for 6 tax periods.
Other conditions to be satisfied namely:
(i) Such goods were not wholly exempt from duty of excise specified in the Ist Schedule of Central Excise Tariff Act, 1985 or were not nil rated.
(ii) Document for procurement of such goods is available with the registered person.
(iii) Registered person availing this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN— at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.
(iv) The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
(v) The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.
III. REGISTERED PERSONS ENGAGED IN BOTH TAXABLE AS WELL AS EXEMPTED GOODS / SERVICES shall be eligible for CENVAT CREDIT CARRIED FORWARD IN RETURN and ELIGIBLE DUTIES / TAXES on INPUTS in form of stock/semi-finished / finished goods relating to such exempted goods or services provided such exempted goods & services should be liable to tax under this Act
IN FORM GST TRAN – 1 Need to specify separately details of stock held on the appointed day with respect to inputs held in stock , semi-finished goods or finished goods on the appointed day wherever necessary along with entitled amount of tax & duty to be filed within 60 days from the appointed day
IV. REGISTERED PERSON AVAILING COMPOSITE SCHEME UNDER EXISTING LAWS– shall be eligible for CENVAT CREDIT OF ELIGIBLE DUTIES in respect of inputs held in stock / semi-finished goods / finished goods on the appointed day.
CONDITIONS:
(i) such inputs / goods are used / intended to be used for making taxable supplies under this Act;
(ii) the said registered person is not paying tax under section 10 (composite scheme);
(iii) the said registered person is eligible for input tax credit on such inputs under this Act;
(iv) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs;
(v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day.
IN FORM GST TRAN – 1 Need to specify separately details of stock held on the appointed day wherever applicable along with entitled amount of tax & duty to be filed within 60 days from the appointed day.
V. REGISTERED PERSON HAVING CENTRALIZED REGISTRATIONS UNDER EXISTING LAWS – shall be eligible for credit of the amount of CENVAT credit carried forward in a return, furnished under the existing law by him, in in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed.
CONDITIONS:
(i) Return (original return or a revised return) for the period ending with the day immediately preceding the appointed day should be furnished within 3 months of the appointed day
(ii) Said amount should be admissible as input tax credit under this Act
Note – Such credit may be transferred to any of the registered persons having the same Permanent Account Number for which the centralized registration was obtained under the existing law.
Comments – Here the big question to be answered is what will happen if the entity has more than 2 manufacturing sites of which 1 is eligible for Cenvat credit & other is eligible for Cenvat credit.
IN FORM GST TRAN – 1 Need to specify separately details of stock held on the appointed day wherever applicable along with entitled amount of tax & duty to be filed within 60 days from the appointed day
VI. REGISTERED PERSON WHO HAS RECEVIED INPUTS / INPUT SERVICES AFTER APPOINTED DAY shall be eligible CREDIT OF ELIGIBLE DUTIES & TAXES
CONDITIONS:
(i) Duty or tax has been paid under Existing Law before the appointed day
(ii) Invoice / Tax Challan or other such document has been recorded in the books of accounts within 30 days from the appointed day
(iii) Statement needs to be furnished in the manner to be prescribed in GST TRAN – 1
IN FORM GST TRAN – 1 Need to specifically provide following along with entitled amount of tax & duty:
(i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law,
(ii) the description, quantity and value of the goods or services
(iii) the amount of eligible taxes and duties or, as the case may be, the value added tax [or entry tax] charged by the supplier in respect of the goods or services,
(iv) the date on which the receipt of goods or services is entered in the books of account of the recipient.
VIII. REVERSAL OF ANY CENVAT CREDIT AVAILEDfor the input services provided under the existing law due to non-payment of the consideration within a period of 3 months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of 3 months from the appointed day.
IN FORM GST TRAN – 1 Need to specify separately details of stock held on the appointed day wherever applicable along with entitled amount of tax & duty to be filed within 60 days from the appointed day
VIII. Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an ISD shall be eligible for distribution as credit under this Act even if the invoices relating to such services are received on or after the appointed day.
NOTE – The amount of credit as specified in the application in FORM GST TRAN-1shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
Format of GST TRAN 1 is not yet available in public domain as of now.
Note: The above is not a legal advice & just interpretation of GST laws to the best knowledge of author.
Reliance & reference has been made on CGST Law as presented in Lok Sabha & Transition Rules, the contents are subject to change upon the release of the Final CGST Law & other relevant Rules / Notifications / Circulars.
Also Read- Transitional Provisions for Cenvat Credit & Taxes – Part II
Useful post. Kindly clarify the below points
1) Transfer of Finished goods from manufacturing Location to Central where house at the same state on payment duty with Excise Invoice – Possession of Invoice evidencing payment of duty available as mentioned in sub sec (3) (iii) of sec 140
2) Transfer of finished goods from where house to other depot (same state as well as other states) with Delivery note (only total value mentioned in the delivery note, but able to correlate with Excise invoice from manufacturing location) – Kindly clarify whether it will come under other documents evidencing payment of duty sub sec (3) (iii) of sec 140 or it will come under Proviso to sub sec (3) of sec 140 (i.e. not in a passion of an invoice or any other documents evidencing payment of duty)