Whenever a new levy or new scheme / Law of taxation is introduced, it may completely overwrite the existing tax laws and rewrite rules of the game. That’s what will happen when GST is introduced. Entire scheme of Indirect Taxation will undergo radical overhaul. So to cope up with that change, transitional provisions are created in new law to ensure smooth and hassle-free adoption of new scheme of taxation to safeguard interests of existing taxpayers. In this article explain the Section 139 , 140 and 141.
| Section | Particulars |
| 139 | Migration of Existing Tax payers |
| 140 | Input Tax Credit on Stock |
| 140(1) | Amount of Cenvat Credit (CGST) and VAT and Entry Tax Credit (SGST ) to be allowed as Input Tax Credit |
| 140(2) | Amount of Cenvat Credit on Capital Goods |
| 140(3) | Amount of Eligible duties and Taxes in Respect of Input held in Stock
(a) Possession of duty paid Invoice held in Stock — (100 % ITC ) (b) NOT Possession of Invoice held in Stock — ( 60 % or 40 % ITC) |
| 140(4) | Manufacture engaged in Taxable as well as Exempt goods and services |
| 140(5) | Duties and taxes in respect of input and input services during Transit |
| 140(6) | Input Tax Credit to person switching from Composition Scheme |
| 140(7) | Credit Distribution by Input Service Distributors |
| 140(8) | ITC in case of Centralized Registration |
| 140(9) | Reversal of ITC under existing Law |
| 141 | Provision Related to Job Work |
Section 139: Migration of Existing Taxpayers
Migration for every
a) Registered Tax Payer
b) Having PAN
Shall issue a certificate of registration of provisional basis
Any provisional registration granted under this section may be cancelled if such person fails to furnish the prescribed information within such time as may be specified
Provisional Registration certificate shall be deemed to have not been issued if th said registration is cancelled pursuance of an application filed by a person that he was not liable to registration u/s 22 or u/s 24
**Same provision applicable in SGST Act
Section 140 (1): Amount Of CENVAT CREDIT Carried Forward In A Return to be allowed As Input Tax Credit.
A Registered Taxable Person (except person opting for composition scheme) shall be entitled to take credit, in his electronic credit ledger, The amount of CENVAT credit carried forward in the return relating to the period ending with the day appointing preceding the appointed day furnish by him as may be prescribe in the existing law.
Provided that A Registered Person shall not be allowed to take credit in following circumstance,
| 1 | Where the said amount of credit shall not admissible as input tax credit under this act |
| 2 | Where he has not furnished all the return required under existing law for the period of Last SIX Month immediately preceding the appointed date |
| 3 | Where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government |
Example : if person is registered under central excise , service tax and VAT and had credit forward of Rs.10,000 , Rs. 25000/- , Rs. 50,000/-respectively. how will this amount be carried forward in GST.
- Amount of Central Excise Rs. 10,000 and service Tax Rs. 25,000 will C/f — CGST
- Amount of VAT 50,000/- will C/f as — SGST
Example : if person dealing in 2 Product like Sugar and Alcoholic liquor , Sugar is Chargeable to GST and Alcoholic liquor not chargeable to GST has available credit for Rs. 50000/- in earlier law. Can he take credit under GST ?
Answer : if assesses segregated the amount carried forward credit of Sugar and alcoholic liquor, then he is eligible to take credit related to sugar in the GST law and balance credit laps . but if person not segregated the amount then he will not carried forward any amount in GST law it will be loss for the assessess
Section 140 (2): Amount of Cenvat Credit on Capital Goods
A Registered Taxable Person (except person opting for composition scheme) shall be allowed to take the Unaviled amount of CENVAT Credit on capital goods not carried forward in the return. However, the said credit should be admissible under the existing law as well as under the provisions of the Act.
| Under Existing Law | Under GST | Whether Input Eligible |
| Unavailable | Available | Not Admissible |
| Available | Unavailable | Not Admissible |
| Available | Available | Available |
Unveiled Amount of CENVAT = Total Eligible Credit – Credit availed under earlier law
Example : if a manufacturer purchase capital goods worth Rs. 1125000 ( including excise duty Rs. 125000 ) on 15th April 2017 in the F.Y 2017-18 he could only availed CENVAT Credit to the extent Rs. 62,500/- ( 125000 * 50%).
Un-availed credit CENVAT Credit = Rs. 125000 – Rs. 62500 = Rs.. 62500 that he can be carried forward under GST as CGST Credit
Section 140 (3): Amount of Eligible duties and Taxes in Respect of Input held in Stock on the appointed Day
{A} In Possession of an invoice or any other documents evidencing payment of duty in respect of inputs, ( Take 100 % Credit )
A Registered Taxable Person who,
| 1 | Not Registered under existing law |
| 2 | Engaged in Manufacturer of exempted goods or Provision of exempted services |
| 3 | Providing Work contract services availed benefit of notification 26/2012 dated 20.06.2012 |
| 4 | 1st Stage Dealer |
| 5 | 2nd Stage Dealer |
| 6 | Registered Importer |
| 7 | Depot of manufacturer |
shall be entitled to take 100%, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock or inputs contained in semi-finished goods or finished goods held in stock on the appointed day.
Subject to the following conditions:
| 1 | Such goods used or intended to be used for making taxable supply |
| 2 | Credit allowed if admissible in GST Law |
| 3 | Possession of invoice and other related documents evidencing payment of duty |
| 4 | Such Invoices are not Older Than 12 Month preceding the appointed day |
| 5 | supplier of services is not eligible for any abatement under the Act |
** Eligible duties defined to means all duties on which CENVAT Credit is available under Rule 3 of CENVAT Credit Rule 2004 except Service Tax and cesses.
{B} NOT in Possession of an invoice or any other documents evidencing payment of duty in respect of inputs, ( Take 40 % or 60 % credit subject to Condition )
Availability of Credit to TRADERS (I.e. Other than Manufacturer or Supplier of Services) who is not in possession of invoice evidencing payment of Central Excise Duty
Condition for Credit (CGST)
| 1 | Such Scheme is available for 6 Tax Period ( i.e. Six Month) |
| 2 | Central Tax Payable on Supply of such goods has been paid |
| 3 | Such goods are not wholly exempt from excise duty or NIL rated |
| 4 | the registered person is in possession of documents relating to procurement of goods |
| 5 | The stock of goods on which the credit is availed must be stored in a way that it can be easily identified. |
| 6 | Benefit of Such Credit Should be passed to the recipient by way of Reduced Price (i.e benefit pass on to buyer or customer by discount price ) |
| 7 | The Registered Person availing this scheme and having furnished the details of stock held by him in accordance with clause (b) of sub rule (2) submit statement in Form GST TRANS 2 at the end of each of SIX Tax Period ( every month end) during which scheme is operation. |
Condition for Credit (SGST)
A Registered Person holding stock of goods which have suffered tax at First point of their sale in the state and subsequent sales of which are not subject to tax in the State.
Shall be allowed to take Input tax credit on goods held in stock on the appointed day in respect of which he is not in possession of any documents evidencing of payment of value added tax.
| 1 | Such Scheme is available for 6 Tax Period ( i.e. Six Month) |
| 2 | All other condition given in CSGT Rules are same in this SGST Rules |
| 3 | The Registered Person availing this scheme and having furnished the details of stock held by him in accordance with clause (b) of sub rule (2) submit statement in Form GST TRANS 2 at the end of each of SIX Tax Period ( every month end) during which scheme is operation. |
Chart of Input Tax Credit Available
| If GST Rate on Such Goods | Intra State Supply and CGST Paid | Inter State Supply is made and IGST Paid |
| 9 % or More | 60% | 30% |
| Other I.e Less than 9 % | 40% | 20% |
Example :
| Existing Law | |
| VAT | 100 |
| Add: Excise Duty | 12.5 |
| Add: VAT | 12.5 |
| Total | 125 |
|
GST Law |
|
| Net Selling Price | 200 |
| CGST/SGST @ 18% | 36 |
| Total Commercial Value | 236 |
| Eligible for Credit @ 60% of 36 | (21.6) |
| Gross Selling Price | 214.4 |
Section 140(4): Registered Person engaged in Manufacturer of Taxable and exempted goods / or services now liable for GST.
This provision is applicable only for inputs (not capital goods) held in stock or in respect of inputs contained in semi-finished goods or finished goods held in stock on the appointed day on ‘ELIGIBLE DUTIES and the amount of CENVAT credit carried forward in a return furnished under the existing law by him.
The details of credit availment are as follows:
| Credit to be carried forward | 1. Amount of CENVAT credit carried forward in a return furnished under earlier law in terms of section 140(1).
2. Amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to exempted goods or services, in terms of section 140(3). |
Section 140(5): Amount of Eligible duties and Taxes in Respect of Inputs or input Services during Transit
A Registered Person shall entitled to take credit of
| 1 | eligible duties and taxes in respect of input and input services received on or after Appointment Day |
| 2 | Duties and Taxes in respect of which has been paid by supplier under existing law. |
| 3 | Such Invoice and Duty paid documents was recorded in the books of accounts of such person within period of (thirty) 30 Days from the Appointment Day. |
| 4 | PROVIDED may, on sufficient cause being shown, be extended by the commissioner for a further period not exceeding thirty days. |
| 5 | Registered Person furnish statement in respect of credit taken |
Note : if any Capital Goods in transit then duties and taxes is not available for Input tax credit under GST Law.
Section 140(6): Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme
A registered person,
– Paying Tax at a fixed rate
– Paying a fixed amount in lieu of tax payable
shall be entitled to take, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day,
Condition:
| 1 | such inputs or goods are used or intended to be used for making taxable supplies under this Act; |
| 2 | the said registered person is not paying tax under Composition Scheme |
| 3 | the said registered person is eligible for input tax credit on such inputs under this law |
| 4 | Registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; |
| 5 | Such Invoices or other prescribed documents were issued not earlier than twelve month immediately preceding the appointed day. |
| 6 | Same Provision Apply in SGST Act |
Section 140(7): Credit distribution of service tax by Input Service Distributor
The input tax credit on account of any services received prior to the appointed day by an Input Service Distributor 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.
Condition:
| 1 | The services are received by the Input Service Distributor before the date of applicability of GST |
| 2 | Tax on such services have not yet been distributed by the Input Service Distributor on the date of applicability of GST. |
| 3 | Invoices relating to such services are received on or after appointed date. |
| 4 | Such services will be eligible for distribution as credit under the GST law. |
Chart for Expiation ISD
| Sr No | Receipt of Service by ISD | Receipt of invoice | Whether credit would be distributed GST |
| 1 | Prior To GST | Prior to GST | No, because credit would have been distributed earlier |
| 2 | Prior to GST | Post GST | Yes |
| 3 | Post GST | Prior to GST | No, because service must be received prior to appointed day |
| 4 | Post GST | Post GST | Yes |
Section 140(8) : Provision for transfer of unutilized Cenvat Credit by taxable person having centralized registration under the earlier law
Where centralized registration is obtained and credit is lying in balance
| 1 | Credit May be taken and Carried forward in GST |
| 2 | Returns Shall be filed within 3 Months from Appointed Day |
| 3 | Credit Carried Forward shall be eligible under GST law |
| 4 | Credit may be transferred to any registered taxable person having the same PAN for which centralized registration was obtained under existing law |
| 5 | This section does not prevent upward revision of credits. However, in respect of downward revision of credits such lower credits alone shall be permitted. |
| 6 | The application in FORM TRAN-1 shall specify separately the details of stock held on the appointed day up to 6 tax periods indicating the details of supplies effected during each tax period. |
Explanation :
- what will happen if there is revision of return ????
– In the case of revised return is filed the amount that can be carried forward shall be of the return (Original / Revised ) which is claimed lesser carried forward of CENVAT credit.
Example : Appointed Day 01st July 2017,
Que : Original Return filed on 10th Sep. 2017 claiming Cenvat carried forward as Rs. 200000/-
Revised return filed on 20th Sep 2017 claiming Cenvat carried forward as Rs. 250000/- how much amount assesses carried forward ???
Ans : Since both returned field within 3 month from the appointed day. Credit can be carried forward of a return which has lesser claim ( i.e. Cenvat credit of Rs. 2,00,000/-) can be carried forward
2. how the credit can be transferred ?
– Credit can be carried forward transfer to any taxable person having the same PAN in any proportion
Que : A person having centralized registration under service tax had operation in three state Delhi, Gujarat and Maharashtra and had credit carried forward of Rs. 500000/- how and in what proportion credit can be carried forward ?
Ans : The Amount of Rs. 500000/- can be transferred to any state registration be it in Delhi, Gujarat or Maharashtra and transfer of credit can be made in any proportion. there is no imitation and restriction in this regard.
Section 140(9): Reclaiming CENVAT credit reversed due to non-payment of Consideration
It provides that where the below conditions are fulfilled, the credit shall be allowed as CGST credit.
| 1 | The CENVAT credit had been reversed by the manufacturer or the service provider in terms of second proviso to Rule 4(7) of the CENVAT Credit Rules, 2004. |
| 2 | Such Payment made within the 3 month from the appointed day |
| 3 | The registered person files an original/revised return within 3 months of the appointed day. |
This Provision does not provide any further carry forward of such credit and the same shall be lapse if the payment is not made within specified period
SECTION : 141 : PROVISION RELATED TO JOB WORK
If any inputs , Semi Finished Goods and Finished Goods sent to Job worker or for further processing, testing, repairing, etc. [ Sec 141 (1) , (2), (3) ]
in Such Cases :
| 1 | No Such Tax payable if the goods
Condition : a) goods returned within 6 month by job worker from the appointed day ( or Extended Period Further 2 Month ) b) Both Principal ( i.e. manufacturer and job worker must have to declare such goods in Form GST Trans – 1 within 90 days from appointed day ( 90 days from 1st July 2017 ) |
| 2 | If Such Goods are not returned within 6 Month from appointed day
a) ITC availed by the manufacturer on input liable to be recovered U/s 142 (8)(a) |
Example :
| Case : 1 Goods returned within 6 Month or extended period | No Tax |
| Case : 2 Goods not returned within 6 months Or extended period | Input tax credit shall be recovered from the who had removed such goods |
| Case: 3 Transfer directly within Period (Six Month) or extended period | a) goods can be transferred to the another registered taxable person on payment of
GST. OR b) Goods can be exported out of India without payment of duty / taxes in accordance with provision of earlier law. |
As per the Goods and Service Tax (GST) Act 2017 every person who take benefit/ Credit under this provisions of section 140(1) to 140(9) input tax credit held in stock , and section 141 goods/stock lying with job worker shall have file Form GST TRANS – 1 within 90 days from the 1st July 2017 online.
Author Bio
sir
whilefilingtran1 by mistake enteredamount as stockcol.7(d) that is mistake and not credited in the ledger now the cto asked to pay the wrong amount
though not credited in the ledger i reversed the wrong amount in march 2019 3b return pl.advise
Sir,
i have paid service under RCM for the month of june in 6th july 2017
shall i take credit in tran 1
where i have to show it
pls advise
There is not provision in GST TRANS-1 Form to take credit of in-transit goods & Servise as per Sec.140(5)