Opinion on Ladhak Registration Post Reorganisation of State

The Central Board of Indirect Taxes and Customs (CBIC) has reallocated the New Goods and Services Tax Identification Number ( GSTIN ) to Taxpayers of Union Territory of Ladakh.

In a Statement issued by CBIC said that, New GSTINs are reallocated to active existing taxpayers registered under J & K State earlier with State code(01), having Principal Place of Business in the jurisdiction of Union territory of Ladakh (with UT code “38”).

The CBIC also said that, The list contains new GSTINs along with old GSTINs. Taxpayers are requested to use new GSTINs while generating the invoices and receiving of supplies etc. w.e.f. 1st Jan 2020.

Earlier, CBIC had notified Transition Plan under Goods and Services Tax (GST) for Jammu and Kashmir Reorganisation. According to the notification, a special procedure in respect of the transfer of Input Tax Credit (ITC), payment of tax, the period of return filing etc.

return filing

Notification no 62/2019-Central Tax dated 26th November, 2019 reads as follows:

‘’In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Government, on the recommendations of the Council, hereby notifies those persons whose principal place of business or place of business lies in the erstwhile State of Jammu and Kashmir till the 30th day of October, 2019; and lies in the Union territory of Jammu and Kashmir or in the Union territory of Ladakh from the 31st day of October, 2019 onwards, as the class of persons who shall follow the following special procedure till the 31st day of December, 2019 (hereinafter referred to as the transition date), as mentioned below.

2. The said class of persons shall:–

(i) ascertain the tax period as per sub-clause (106) of section 2 of the said Act for the purposes of any of the provisions of the said Act for the month of October, 2019 and November, 2019 as below:

(a) October, 2019: 1st October, 2019 to 30th October, 2019;

(b) November, 2019: 31st October, 2019 to 30th November, 2019;

(ii) irrespective of the particulars of tax charged in the invoices, or in other like documents, raised from 31st October, 2019 till the transition date, pay the appropriate applicable tax in the return under section 39 of the said Act;

(iii) have an option to transfer the input tax credit (ITC) from the registered Goods and Services Tax Identification Number (GSTIN), till the 30th day of October, 2019 in the State of Jammu and Kashmir, to the new GSTIN in the Union territory of Jammu and Kashmir or in the Union territory of Ladakh from the 31st day of October by following the procedure as below:

(a) the said class of persons shall intimate the jurisdictional tax officer of the transferor and the transferee regarding the transfer of ITC, within one month of obtaining new registration;

(b) the ITC shall be transferred on the basis of ratio of turnover of the place of business in the Union territory of Jammu and Kashmir and in the Union territory of Ladakh;

(c) the transfer of ITC shall be carried out through the return under section 39 of the said Act for any tax period before the transition date and the transferor GSTIN would be debiting the said ITC from its electronic credit ledger in Table 4 (B) (2) of FORM GSTR-3B and the transferee GSTIN would be crediting the equal amount of ITC in its electronic credit ledger in Table 4 (A) (5) of FORM GSTR-3B.

3. The balance of State taxes in electronic credit ledger of the said class of persons, whose principal place of business lies in the Union territory of Ladakh from the 31stday of October, 2019, shall be transferred as balance of Union territory tax in the electronic credit ledger.

4. The provisions of clause (i) of section 24 of the said Act shall not apply on the said class of persons making inter-State supplies between the Union territories of Jammu and Kashmir and Ladakh from the 31stday of October, 2019 till the transition date.’’

The above notification was further amended through notification no: 3/2020 CGST dt 1st Jan 2020 as:

‘’In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance, Department of Revenue No. 62/2019–Central Tax, dated the 26th November, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i) vide number G.S.R. 879(E), dated the 26th November, 2019, namely:–

In the said notification,–

(i) in paragraph 2, in clause (iii), for the figures, letters and words “30th day of October, 2019” and “31st day of October”, the figures, letters and words “31st day of December, 2019” and “1 st day of January, 2020” shall respectively be substituted;

(ii) in paragraph 3, for the figures, letters and words “31st day of October, 2019”, the figures, letters and words “1st day of January, 2020” shall be substituted.’’

Analysis of above notifications:

1. New Registration for Ladhak has been opened.

2. Reorganisation of state into 2 UT’s of J&K and Ladhak was done on 31st Oct 2019.

3. Hence to give above effect, tax periods for the month of Oct and November have been modified as

a. For the month of Oct 19—- 1st Oct to 30th Oct

b. For the month of Nov 19—– 31st Oct to 30th Nov

4. Persons supplying goods or services from new UT Ladhak have to take registration at the earliest. There will be separate state codes for J&K (UT code-01) and Ladhak (UT code-38)

5. Till the time registration of Ladhak is taken assessee shall continue to show its supplies in state of J&K. It will continue to pay appropriate tax at appropriate rate in existing return.

6. The registered person has an option to transfer the input tax credit (ITC) from the registered GSTIN, till the 30th day of October, 2019 further extended to 31st December 2019, from the State of Jammu and Kashmir to the new GSTIN in the Union territory of Jammu Kashmir or Ladakh.

7. The Notification is silent about the transfer of Electronic Cash Ledger balance to new GST registration. In that case, it may have to be claimed as refund.

8. The said class of persons shall intimate the jurisdictional tax officer of the transferor and the transferee regarding the transfer of ITC, within one month of obtaining new registration.

9. The ITC shall be transferred on the basis of ratio of turnover of the place of business in the Union territory of Jammu and Kashmir and in the Union territory of Ladakh

10. The transfer of ITC shall be carried out through the return under section 39 of the said Act for any tax period before the transition date(i.e. 31/12/2019) and the transferor GSTIN would be debiting the said ITC from its electronic credit ledger in Table 4 (B) (2) of FORM GSTR-3B and the transferee GSTIN would be crediting the equal amount of ITC in its electronic credit ledger in Table 4 (A) (5) of FORM GSTR-3B.

11. The balance of State taxes in electronic credit ledger of the said class of persons, whose principal place of business lies in the Union territory of Ladakh from the 31st October, 2019 extended to 1st January 2020, shall be transferred as balance of Union territory tax in the electronic credit ledger

12. The provisions of section 24(i) of the said Act shall not apply on the said class of persons making inter-State supplies between the Union territories of Jammu and Kashmir and Ladakh from the 31st October, 2019 till the transition date (i.e. 31/12/2019).

13. Balance in Electronic Credit ledger to be transferred to new UT’s if twin condition fulfilled as below (Notification no 62/2019-Central Tax dated 26th November, 2019  read with Notification no 3/2020 dt 1st Jan 2020)

a. First, assessee had taken new registration before 1st Jan 2020

b. Second, within 1 month from taking new registration an intimation had to be made to Jurisdictional officer to the said effect.

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