CA. Sanjeev Singhal

CA Sanjeev SinghalThere are 22 sections under transitional provision of GST Law when all major indirect tax Act’s going to subsumed under the GST Law. This is most important provisions as these are applicable from the appointed day means when the GST Law shall be applicable. Why this is important and relevant because of the fact that on very first day we need to apply these provisions with due intelligence after extracting the exact meaning of law. Otherwise this will lead to wrong brought forward of CENVAT . Though the provision will be applicable one time but carry due weight as long as transition is concern .How the CENVAT will be available on appointed day whether on the basis of last return filed under earlier law or as per the opening stock is answered in GST Law which has been described as below:

1. General provision [S. 141]

Officer appointed in law by Central and State Govt. for discharging various function relating to taxes on goods and services and how the order may be issued or rule can be make consistent with the smooth transition of GST.

2. Migration of existing taxpayer to GST [ S.142]

Every registered person under earlier shall be issued provision certificate under on the appointed day and certificate will be valid for six months . Such validity may be extended on the recommendation of GST council.

Every person to whom certificate is issued within prescribed time submit information as desired. After submission of certificate , final registration shall be issued u/s 19 of the Act.

Provision certificate may be cancelled if the required information has not been submitted.

3. CENVAT credit amount Carry forward in return to be allowed as Input Tax Credit[ S.143]

Registered taxable person shall be allowed to take in his electronic credit ledger a/c the amount of CENVAT carry forward in his return filed under earlier law. Both under CGST and SGST.

Central tax like excise and service tax shall be brought forward under CGST electronic credit ledger and State tax like VAT Input shall be carry forward under SGST electronic credit ledger.

Any amount wrongly taken as credit in CGST and SGST shall be recovered as arrear under this Act weather before or after the appointed day.

4. Unavailed CENVAT Credit on capital goods, not forward in return, will be allowed in certain situation; [ S.144 ]

A registered taxable person shall be allowed to take credit in Electronic ledger a/c for the CENVAT on capital goods, not carry forward in return in earlier law, in such manner as prescribed.

“Unavailed CENVAT Credit” Means the amounts remains after subtracting the amount of CENVAT credit availed on capital goods under earlier law. “Explanation -1”

“ Capital Goods Means “ as defined under Rule 2(a) of CENVAT Rule,2004.

Any CENVAT wrongly taken shall be recovered as arrear under the ACT. Explantion-2

Example : 50% of CENVAT on capital goods under service tax can be availed only in next year or if 100 cenvat on capital goods have not availed in first year which can be taken under this Act.

Q : if RTP purchased capital goods and received the invoice before 31.03.2016 but not received the capital good. Capital Goods has been received in April,2017. Will he entitle for ITC.

Ans: Yes

Q; A purchased capital goods on which VAT credit was not available though in GST it is available. Will the A will get the credit.

Ans ; No .Since he was not entitle for ITC under the earlier Law.

These provision are applicable both under CGST and SGST.

5. Credit of eligible duties and taxes in respect of input held in stock to be allowed in allowed in certain situations

Person who was not registered in earlier law but become taxable person under this Act which are liable to pay tax shall be entitle to take credit in Electronic credit ledger A/c of eligible duties and taxes in respect of input held in stock on the appointed day subject to the following conditions;

A]

  • Such input / goods shall be used for making taxable supplies under this Act.
  • Such taxable person are eligible for credit under this Act.
  • Said taxable person is holding valid invoice or document under the earlier law and having evidence that tax were paid on input.
  • Such invoice or documents must not be older that 12 months immediately proceeding the appointed day . Means if appointed day is 1.4.2017 then invoice from 1.4.2016 shall be treated as valid documents.

B] credit shall be calculated in accordance with GAAP as prescribed.

C] Credit provided to taxable person shall be recovered as arrear tax under this act if the amount is found to be recoverable under any proceeding in earlier law after the appointed day.

These provision will apply for CGST and SGST both.

6. Credit of eleigible duties and taxes on input held in stock to be allowed to taxable person switching from composition scheme. [ S.146]

RTP [ Registered Taxable Person] who was paying tax at fixed rate or in lieu of the tax in earlier law shall be entitles to take credit on input held in stock in semi finished or finished form on appointed date. Provided

  • Such input are used for making taxable goods.
  • Said person is not paying tax u/s 8 of this Act means composition scheme under this Act.
  • Such RTP was eligible to take credit under the earlier law.
  • Eligible to take credit under this act.
  • Said taxable person is holding valid invoice or document under the earlier law and having evidence that tax were paid on input.
  • Such invoice or documents must not be older that 12 months immediately proceeding the appointed day .

B] credit shall be calculated in accordance with GAAP as prescribed.

C] Credit provided to taxable person shall be recovered as arrear tax under this act if the amount is found to be recoverable under any proceeding in earlier law after the appointed day.

These provision will apply for CGST and SGST both.

7. Amount payable in respect of taxable person switching to composition scheme[ S.147]

Where RTP has carry forward the eligible credit in return under the earlier law just the day proceeding the appointed date and switch over to composition scheme u/s 8. He shall pay by way of debit to electronic credit ledger or cash ledger equal to credit of input tax in respect to input held in stock and input contained in semi finished goods and finished goods. If any credit lying in his credit ledger will also lapse.

Applicable for both CGST and SGST.

8. Exempted goods return to the place of business on or after the appointed date [s.148]

Any goods on which duty was exempted under earlier law , not being earlier than six months prior to appointed day, has been return back on or after the appointed day , no tax shall be payable under this act if such goods has been returned within six month from the appointed day.

Example : if appointed date is 1.4.2017 and exempted goods were sold after 1.10.2016 but returned on or before 30.9.2017, no tax shall be payable.

If the goods has been return after six months month from the appointed date then tax shall be paid by person returning the goods means purchaser.

Applicable for both CGST and SGST.

9. Duty paid goods return to the place of business on or after the appointed date[ S.149]

Any goods on which duty was paid under earlier law , not being earlier than six months prior to appointed day, has been return back on or after the appointed day , no tax shall be payable under this act if such goods has been returned within six month from the appointed day

If the goods has been return after six months from the appointed date then tax shall be paid by person returning the goods means purchaser

Every RTP receiving such goods within six months can take the input credit of duty paid earlier means goods received till 30.9.2017.

Applicable both for CGST and SGST.

10. Input removed for Job work and returned on or after the appointed date [ S.150]

Where any input has been received in factory and has been removed as such or after partial processing to job worker , has been return back on or after the appointed day , no tax shall be payable under this act if such goods has been returned within six month from the appointed day

The period of six month on sufficient cause may extend to another two months

If the goods has been returned after six months or extended period of two months by Job worker from the appointed date then tax shall be paid by job worker returning the goods.

If the goods has been not been returned within six months or extended period of two months from the appointed date then tax shall be paid by manufacturer if such goods are liable to tax .

The above provision will apply only If manufacturer and job worker declare the goods held in stock on appointed date within time as prescribed .

Applicable both under CGST and SGST.

11. Semi finished goods removed for Job work and returned on or after the appointed date [ S.151]

Where any semi finished goods has been removed from the factory for further manufacturing process in accordance with earlier law prior to appointed date , has been return back on or after the appointed day , no tax shall be payable under this act if such goods has been returned within six month from the appointed day

The period of six month on sufficient cause may extend to another two months

If the goods has been returned after six months or extended period of two months by person returning goods from the appointed date then tax shall be paid by person returning the goods.

If the goods has been not been returned within six months or extended period of two months from the appointed date then tax shall be paid by manufacturer if such goods are liable to tax

The above provision will apply only If manufacturer and job worker declare the goods held in stock on appointed date within time as prescribed

Applicable both under CGST and SGST.

12. Issue of supplementary invoices , debit or credit note where price is revision in pursuance of contract [ S.153 ]

Where any contract has been entered prior to appointed day and wherein price of any goods or services has been revised upward on or after the appointed day, person sold the goods, issue supplementary invoice or debit note containing such particulars as prescribed to the receiver of goods or services . Such invoice or debit note shall be issued in respect of Outward supply made under this act.

Where any contract has been entered prior to appointed day and wherein price of any goods or services has been revised downward on or after the appointed day, person sold the goods, issue invoice or credit note containing such particulars as prescribed to the receiver of goods or services . This will reduce the input tax credit of recipient of the invoice or credit note.

Applicable both under CGST and SGST

13. Pending refund claims to be disposed of under earlier law [ S. 154]

Any amount of refund for duty and taxes and interest thereon filed by the person before the appointed date shall be dispose off under earlier law only and any amount if any due shall be paid in cash. If any amount is rejected then it will lapse.

Applicable both under CGST and SGST

14. Claim of CENVAT credit to be disposed of under earlier law [ S.155]

Any proceeding appeal , revision or review or reference relating to claim for CENVAT credit under earlier law before the appointed date shall be dispose off under earlier law only and any amount if any due shall be paid in cash. If any amount is rejected then it will lapse.

Any proceeding appeal , revision or review or reference relating to claim for CENVAT credit under earlier law before the appointed date shall be dispose off under earlier law only and if any credit becomes recoverable as result of appeal , revision or review or reference shall be recovered as arrear of this Act and the amount so recovered shall not be admissible as input credit under this Act.

Applicable both under CGST and SGST

15. Finalisation of proceeding relating to out put tax liability [ S. 156 ]

Any proceeding appeal , revision or review or reference relating to any output tax liability under earlier law before the appointed date shall be dispose off under earlier law only and if any credit becomes recoverable as result of appeal , revision or review or reference shall be recovered as arrear of this Act and the amount so recovered shall not be admissible as input credit under this Act

Any proceeding appeal , revision or review or reference relating to output tax liability under earlier law before the appointed date shall be dispose off under earlier law only and any amount if any due shall be paid in cash and shall not be admissible as input tax credit under the law.

Applicable both under CGST and SGST

16. Treatment of amount recovered or refunded pursuance to assessment proceeding or adjudication proceeding. [S.157]

If because of Assessment or adjudication proceeding before or after the appointed day under the earlier law , any tax, interest, fine or penalty , becomes recoverable shall be recovered as an arrear under this act and the amount recovered shall not be admissible as input tax credit.

If the tax is payable the same shall be paid in cash under the earlier law.

Applicable both under CGST and SGST

17. Treatment of amount recovered or refunded pursuance to revision of return.[S.158]

If because of revision of return under the earlier law , any tax becomes recoverable shall be recovered as an arrear under this act and the amount recovered shall not be admissible as input tax credit.

If because of revision of return under the earlier law , any tax found to be refundable shall be paid in cash .

Applicable both under CGST and SGST

18. Treatment of long term construction/ work contracts [S.159]

The goods or services supplied on or after the appointed day for contract entered before the appointed day shall be dealt under this act only.

Applicable both under CGST and SGST

19. Progressive or periodic supply of goods or services [ S.160]

Besides the provision in S.12 and 13 , tax under this act shall not be paid under this act if the consideration of goods and service has been received before the appointed date and tax thereon has already been paid.

Applicable both under CGST and SGST

20. Treatment of retention payment [ S.161 ]

Besides the provision in S.12 and 13 , tax under this act shall not be paid under this act if the part consideration of supplies has been received after the appointed date but tax thereon has already been paid.

Applicable both under CGST and SGST

21. Credit distribution of service tax by ISD [ S.162A ]

Input tax credit in respect of any services received before the appointed day shall be admissible to ISD even the invoice for such services has been received after the appointed day.

Only under CGST Law

22. Tax Paid on goods and capital goods lying with the agent to be allowed as credit [ S.162A and 162B]

If any goods lying at the premises of the agent on the appointed day , agent shall be entitled to take credit of the same subject to the following conditions :

  • Agent is RTP under the act.
  • Both the agent and principal declare the detail of such goods before the appointed day as prescribed.
  • Invoice of the same goods have not been issued earlier than twelve months.
  • Principal has not availed the credit of the same goods.

Only under SGST law

23. Branch transfer [S. 162C]

Ay amount of input tax reversed on branch transfer before appointed date ,shall not be admissible under this act.

Only under SGST law

24. Goods sent on approval basis returned on or after the appointed day[ S. 162D]

Where the goods have been sent on approval not before the six month from the appointed date and rejected or not approved by the buyer and returned back within six months or within extended period of two months after the appointed date. No tax shall be charged on such goods .

Tax shall be paid by buyer if the goods are returned after six month or extended period from appointed day ,if the goods are taxable.

Tax shall be paid by supplier if such goods are not returned within six months or extended period from the appointed day, if the goods are taxable.

25. Deduction of tax at source [ S.162E]

Where supplier has sold the goods and TDS was required to be deducted under earlier law has not deducted . No tax shall be deducted u/s 37 under this act if the payment to the supplier is made after the appointed date.

(About the Author: Author is practicing chartered accountant in  Gurgaon and having specialisation in Service Tax and Haryana VAT. He can be reached at  ca.sanjeevkumar@hotmail.com)

GST on Transportation Services in India

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Qualification: CA in Practice
Company: Grandmark & Associates LLP
Location: Gurgaon, Haryana, IN
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