GST: Proactive Approach In Transitional Provision

First of all I would like to thanks all the readers who read my article related with GST Knowledge transition provision. Since from 1st july GST implemented all over India excluding jamu & kasmir.

1. What if I belong to Chhattisgarh and I have sold goods worth Rs. 500,000 against ‘C’ Form to a dealer in Chennai however I have not received the ‘C’ form Yet? Normal VAT rate for the goods sold is 5%.?

Ans: In Such cases, You are required to obtain ‘C’ forms within 3 months as per rule 12 of the Central Sales Tax. If you could not receive the ‘C’ forms within such 3 months then while filling the declaration (GST-Tran-1) for carry forward of credit you have to reduce your Input tax credit by 15,000 (5% of Rs. 500,000 Reduced by 2% of Rs. 500,000).

2. In order to avoid dispute later on, our company avail the credit only after payments have been made to the Input service provider.?

Ans: As far as transition period is concerned, please avail the credit prior to 30-06-2017. If you have availed the credit, then it may be considered otherwise you will loose the credit forever.

Note: Suppose any input tax credit reversed after getting the show cause notice from department is better from non availement of credit.

3. Suppose our company purchase a machinery in April 17 worth Rs 10 crore on which we paid Excise duty of RS 15 lacks. We have availed 50% of Credit on such ED. 50% i.e 7.5 lacks still unavailed. What about carry forward of such credit?

Ans: The proviso to Section 140(2) provides for availement of balance credit provided the credit was available under the existing law and is also available under the current law. (There is specific section in GST-TRN-1 Column no 6 form where you can avail such credit.

4. What about carry forward of credit of Cess (Krishi Kalyan Cess, Swachh Bharat Cess) to GST Regime?

Ans: To solve this matter you can read Definition of Input tax given in section 2(62) of GST ACT, 2017. Here in such definition, Cess is not included in INPUT TAX so it is clear that KKC, are not carried forward.

Note: No one any clarification from the department regarding Education cess/Secondary higher education cess/Clean energy cess.It is a litigation matter department not yet any notification in this regard.

6. We are VAT Registered dealer of ‘cement’ in Chhattisgarh. We do not have any other indirect tax registration. We purchase the ‘cement’ Directly from Manufacturer who issues us excisable invoice however we cannot avail excise credit currently as the same we are not excise registered dealer. Now we are holding 100000 bags of ‘cement’ on the appointed day. We already have availed VAT credit for the same.

Ans: You will be entitled to take the 100 % credit of all eligible duties and taxes (Includes all excise duties and additional custom duties) in respect of inputs held in stock, inputs contained in semi finished or finished goods held in stock as on the immediately preceding the appointed date. The following conditions must be satisfied:

♦ Such inputs are intended for making taxable supplies under GST

♦ The registered person is eligible for input tax credit on such inputs under this act.

♦ The said registered person is in possession of Invoice evidencing payment of duty under the existing law in respect of such inputs.

♦ Such invoice should not be older than 12 months.

♦ The supplier of service is not eligible for any abatement under GST

6. We are VAT Registered dealer of Cement’ in Chhattisgarh. We do not have any other indirect tax registration. We purchase the Cement’ from wholesaler who issues us only VAT invoice. Now we are holding 100000 bag of ‘cement’ (Selling price of Rs. 240 per Bag) on the appointed day. We already have availed VAT credit for the same.

Ans: This case under the provision of Deemed Credit

♦ As per Proviso to Section 140(3) read with Rule 1(3)(a) In case where the person does not have duty paid document with him in such case he will be eligible for the credit at the rate of:

a. 60% of CGST where CGST RATE is 14% and

b. 40% in all other cases

So now if ‘Cement’ are rated at 28% GST (14% CGST and 14% SGST) you will be eligible for credit at the rate of 60%  x 14% x (100000 Bag x Rs. 240)= Rs. 2016000. However first you will have to pay the tax and then avail the credit by filling Form GST TRN 2 Column no 4.

Problem: You have to File GST Tran 2 at the end of every month.

7. We are a dealer of ‘Cement’ in Bihar. Our Supplier resides in What if they send goods on 29th June 2017 and we receive the same on 3rd July. Shall we be eligible to get the credit in respect of such goods?

Ans: As per Section 140(5) – Yes, Provided Following Conditions are satisfied:

√ Taxes on such goods are paid before appointed date, i.e. on or before 30th June 2017.

√ Receipts of such goods/Services are recorded in the books of recipient within 30 days of appointed date, i.e. on or before 30th July 2017.

√ Furnish GST TRAN 1 within 90 days.

Note: Section 140(5) of speaks about Inputs and Inputs Services in Transit , however It does not make any provisions for Capital Goods in Transit. Therefore the availement of Credit of capital Goods may be disputed by department so suggested that the manufacturer should try to ensure that no capital goods are in transit as on 30th June 2017.

8. We are Service Tax Registered entity. Is there any requirement under GST that my Service tax Return has to be filed within prescribed time to carry forward the credit of existing law to GST? Can I revise such return later on?

Ans: Yes As per Section 140(8) you will have to file your Service tax return or for that matter any other return within 3 months from the appointed date subject to penalty. I said penalty because as per Service tax provisions you will have to file your return within 25 days however you can file your return late subject to Penalty.

As far as revision is concerned you can definitely revise your return but only within 3 months from the APPOINTED DATE (1st July 2017). Further The credit balance shown in the revise return should be same or less than original return. So the credit amount as per revise return cannot be more than Original Return.

Note: So Be careful during filing of original Return.

9. Some of our stock is lying with the job worker. Any formality on our part?

Ans: You will have to file a declaration in Form GST TRAN 1 within 90 days about the stock lying with your Job worker.

Check New GST Rate List 2017 here

Summary of form to be filled