In continuation to the previous article Transitional Provisions For Cenvat Credit & Taxes Part-I, which focused more on transitional provisions w.r.t. Cenvat Credit & Eligible duties / taxes for various types of assesses, here is the Part II of the said article. In this article we shall focus on other transitional scenarios like Job work, sales return, goods sent on approval basis, refund claims, appeals, references & reviews etc.
Below is the analysis of Transitional Provisions under CGST law as presented in Lok Sabha & transition Rules released on March 31st, 2017
TRANSITIONAL PROVISIONS RELATING TO JOB WORK: NO TAX shall be payable in following cases subject to the below conditions:
I. INPUTS –removed as such / removed after being partially processed for further processing, testing, repair, reconditioning or any other purpose in accordance with existing law
II. SEMI-FINISHED GOODS – removed for carrying out certain manufacturing processes in accordance with existing law
III. EXCISABLE GOODS – removed without payment of duty in accordance with existing laws for carrying out tests or any other process not amounting to manufacture, to any other premises in accordance with existing law
CONDITIONS:
– Such inputs/goods are removed prior to the appointed day;
– Such inputs/goods after completion of the job work or otherwise, are returned within 6 months from the appointed day to the said place; and
– Manufacturer and the job-worker declare the details of the inputs/goods held in stock
Note –
- In case the said goods are not returned within 6 months after the appointed day, the input tax credit shall be recoverable u/s 142(8)(a).
- Commissioner on sufficient cause being shown may extend the said period of six months for a further period not exceeding two months
- In case of Semi-finished goods – A manufacturer may in accordance with the provisions of the existing law, transfer the said goods to the premises of any registered person for the purpose of supplying therefrom on payment of tax in India / without payment of tax for exports within the period specified in this sub-section.
- In case of Excisable Goods removed without payment of duty –the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.
IN FORM GST TRAN – 1 Need to specify separately below details within 60 days from the appointed day:
i. the stock / capital goods held by him on the appointed day
ii. the stock / capital goods held by him as a principal at the place/places of business of his agents/branch (separately agent-wise/branch-wise).
MISCELLANEOUS TRANSITIONAL PROVISIONS
I. SALES RETURNS:
(i) BY UNREGISTERED PERSON – DUTY REFUNDABLE under existing laws
(ii) BY REGISTERED PERSON – DEEMED SUPPLY (Cr/Dr notes to be issued subsequently & adjustments for credits to be done in returns)
CONDITIONS:
– duty has been paid under existing laws at time of removal of goods not being earlier than 6 months from
the appointed day;
– returned within 6 months of appointed day; and
– such goods are identifiable to the satisfaction of the proper officer.
II. CHANGE IN PRICES : A Supplementary invoice (Dr/Cr) Note shall be issued which shall be deemed to have been issued in respect of an outward supply made under this Act.
CONDITION:
– Change in price is in pursuance of a contract which was entered before the appointed day;
– Supplementary invoice (debit/credit note) to be issued with necessary particulars to be issued
within 30 days of such price revision & under this Act; and
– Input Tax Credit to be adjusted accordingly
Note – Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability.
II. GOODS SENT ON APPROVAL BASIS: No Tax shall be payable subject to below conditions:
CONDITIONS
– Such goods are sent not earlier than six months before the appointed day;
– Such goods are rejected or not approved by the buyer; and
– Such goods are returned to the seller on or after the appointed day but within 6 months from the appointed day
Note:
- If such goods are not returned within 6 months– tax shall be payable upon return of such goods if such goods are taxable under this Act.
- Period ofsix months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months.
IN FORM GST TRAN –shall, within sixty days of the appointed day, submit details of such goods sent on approval basis.
IV. Analysis of S142(10) &(11) expressly states that the goods or services or both supplied on or after the appointed day in pursuance of a contract entered into prior to theappointed day shall be liable to tax under CGST except for below expressly provided situations:
(i) GOODS ON WHICH VAT WAS LEVIABLE UNDER ANY VAT ACT OF STATE – No tax payable under this Act subject to Sec 12.
(ii) SERVICES ON WHICH Service TAX WAS LEVIABLE UNDER CH-V OF FINANCE ACT 1994 – No tax payable under this Act subject to Sec 12.
(iii) ANY SUPPLY ON WHICH BOTH VAT & ST HAS BEEN PAID TAX shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed.
V. TDS / TCS DEDUCTIONS in case of SALE OF GOODS– No deduction of tax at source u/s 51 shall be made by the deductor subject to below conditions:
CONDITIONS:
– TDS / TCS was required to be deducted under any VAT law of a State / UT;
– Invoice for the same has been issued before the appointed day; and
– Payment to the said supplier is made on or after the appointed day.
VI. REFUND CLAIMS:
(i)GENERAL RULE for refund claim (filed before, on or after the appointed day) of any amount of CENVAT CREDIT, DUTY, TAX, and INTEREST OR ANY OTHER AMOUNT paid under the existing law:
– shall be disposed of in accordance with the provisions of existing law;
– any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of subsection (2) of section 11B of the Central Excise Act, 1944;
– In case any claim for refund of CENVAT credit is fully / partially rejected, the same shall lapse;
– No refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(ii)EXPORTS – where refund claims is filed after the appointed day of ANY DUTY OR TAX paid under existing law in respect of the goods or services exported before or after the appointed day,
-Shall be disposed of in accordance with the provisions of the existing law;
– In case any claim for refund of CENVAT credit is fully / partially rejected, the same shall lapse;
– No refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(iii)IN RESPECT OF SERVICES NOT PROVIDED- where refund claims is filed after the appointed day of TAX PAID under the existing law in respect of services not provided
-Shall be disposed of in accordance with the provisions of the existing law;
-any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944.
VII. APPEAL, REVIEW OR REFERENCE filed whether before, on or after the appointed day for CENVAT CREDIT / OUTPUT DUTY / TAXES under existing laws whether initiated shall be disposed off in accordance with the provisions of the existing law and in pursuant of such appeal , review & reference:
(i) ANY AMOUNT IS ADMITTED – To the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944.
(ii) ANY AMOUNT IS REJECTED,if any, shall not be admissible as input tax credit under this Act
(iii) ANY AMOUNT ISRECOVERABLE shall be recovered as Arrear of Tax, unless recovered under the existing law and the amount so recovered shall not be admissible as input tax credit under this Act
(iv) WHERE CENVAT CREDIT IS ADMISSIBLE– no refund shall be allowed where the balance of the said amount as on the appointed day has been carried forward under this Act
VIII. ASSESSMENT OR ADJUDICATION PROCEEDINGS – for any amount of TAX, INTEREST, FINE OR PENALTY whether instituted before, on or after the appointed day, under the existing law & & pursuant to such proceedings
(i) ANY AMOUNT BECOMES RECOVERABLE – the sameshall be recovered as Arrear of Tax, unless recovered under the existing law and the amount so recovered shall not be admissible as input tax credit under this Act
(ii) ANY AMOUNT BECOMES REFUNDABLE– the same shall be refunded to him in cash under the existing law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
IX. REVISION OF RETURN – Return has been revised under existing laws after the appointed day & pursuant to such revisions
(i) ANY AMOUNT BECOMES RECOVERABLE or CENVAT CREDIT as INADMISSIBLE – the sameshall be recovered as Arrear of Tax, unless recovered under the existing law and the amount so recovered shall not be admissible as input tax credit under this Act;
(ii) ANY AMOUNT BECOMES REFUNDABLE or CENVAT CREDIT as ADMISIBLE:the same shall be refunded to him in cash under the existing law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
Condition – Return has been revised under existing laws after the appointed day but within the time limit as specified for such revision under existing laws.
Note: The above is not a legal advice & just interpretation of laws to the best knowledge of author.
Reliance & reference has been made on CGST Law & Transition Rules as presented in Lok Sabha, the contents are subject to change upon the release of the Final CGST Law & other relevant notifications & circulars.
