Simplifying miscellaneous transitional provisions under GST
By: – CA.VINOD CHAURASIA
Goods and Services Tax – GST
Dated:- 29-8-2017
Introduction: This article attempts to simplify the miscellaneous transitional provisions under GST for better understanding.
Q1. What types of forms are required to filed in relation to Transition to GST from earlier laws?
Ans. 2 different types of forms have prescribed in relation to GST transition. Summary of these forms is as below:
Purpose
Form Number
Time Limit
Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day
The amount of credit specified in the application in FORM GST TRAN-1 shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
GSTR-Tran-1
Within 90 days from appointed date
Credit in respect of a registered person who was not registered under the existing laws and also not in possession of any docu
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ay tax under composition scheme, shall be entitled to take credit in his electronic credit ledger the amount of CENVAT (or VAT credit) Credit carried forward in the return of the last period before the appointed day, subject to the conditions stated therein.
Q4. What are those conditions?
Ans. The conditions are as below:
(i) the said amount of credit is admissible as input tax credit under this Act;
(ii) the registered person has furnished all the returns required under the existing law (i.e. Central Excise and VAT) for the period of six months immediately preceding the appointed date;
(iii) the said amount of credit does not relate to goods sold under exemption notifications as are notified by the Government.
But under SGST law, there will be one more condition as given below:
So much of the said credit as is attributable to any claim related to section 3, sub-section (3) of section 5, section 6, section 6A or sub-section (8) of section 8 of the Central Sales Tax Act,
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e filling the declaration (GST-Tran-1) for carry forward of credit you have to reduce your Input tax credit by ₹ 3,000 (5% of ₹ 100,000 Reduced by 2% of ₹ 100,000).
Q6. A registered person, say, purchases capital goods under the existing law (Central Excise) in the June quarter of 2017-18. Though the invoice has been received within 30th June but the capital goods are received on 5th July, 2017 (i.e. in GST regime). Will such a person get full credit of CENVAT in GST regime?
Ans. Yes, he will be entitled to credit in 2017-18 provided such a credit was admissible as CENVAT credit in the existing law and is also admissible as credit in CGST section 140(2) of the CGST Act.
Q7. We are a manufacturer and we have purchased a machinery in April,2017 worth ₹ 1 crore on which we have paid Excise duty (ED) of ₹ 15,00,000. We have availed 50 % credit of such ED. 50% is still unavailed. What about carry forward of such credit?
Ans. The proviso to Section 140(2)
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arrears of tax under GST.
Q10. Give two examples of registered taxable persons who are not liable to be registered under the existing law (Central Excise/VAT) but are required to be registered under GST?
Ans. Examples are as below:
*
A manufacturer having a turnover of say ₹ 60 lakh who is enjoying SSl exemption under the existing law will have to be registered under GST as the said turnover exceeds the basic threshold of ₹ 20 lakh under section 22 of CGST Act.
A trader having turnover below the threshold under VAT but, making sales through ecommerce operator will be required to be registered in GST. There will be no threshold for such person(s) under section 24 of CGST Act.
Q11. Will ITC be allowed to a service provider on VAT paid inputs held as stock on the appointed day?
Ans. Yes, he will be entitled to input tax credit on inputs held in stock in accordance with the provisions of section 140(3) of CGST Act.
Q12. We are VAT Registered dealer of “X Goods”
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Such invoice should not be older than 12 months.
e) The supplier of service is not eligible for any abatement under GST.
Q13. We are VAT Registered dealer of “Y Goods” in Gujarat. We do not have any other indirect tax registration. We purchase the “Y Goods” from wholesaler who issues us only VAT invoice. Now we are holding 1000 units of “Y Goods” (Selling price of ₹ 100 per unit) on the appointed day. We already have availed VAT credit for the same.
Ans. This case falls under the provisions 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 9% or more and
b. 40% in all other cases.
So now if “Y Goods” are rated at 18% GST (9% CGST and 9% SGST) you will be eligible for credit at the rate of 60% x 9% x (1000 units x ₹ 100)= ₹ 5400. However first you will have to pay the tax and
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that no capital goods are in transit as on 30th June 2017.
Q15. 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 provision to 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 mentioned 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. So be careful while filling your orig
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TC to GST?
Ans. The registered person will not be able to carry forward the excess ITC of VAT to GST if he opts for composition scheme Section 140(1) of CGST Act.
Q18. Sales return under CST (i.e. Central Sales Tax Act) is allowable as deduction from the turnover within six months? If, say, goods are returned in GST regime by a buyer within six months from appointed day, will it become taxable in GST?
Ans. Where tax has been paid under the existing law (CST, in this case) on any goods at the time of sale, not being earlier than six months prior to the appointed day, and such goods are returned by the buyer after the appointed day, the sales return will be considered as a supply of the said buyer in GST and tax has to be paid on such supply, if:
*
the goods are taxable under the GST Law; and
*
the buyer is registered under the GST Law.
However, if the aforesaid buyer is an unregistered person under GST and the goods are returned within 06 (six) months (or within the exte
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Act, if the said inputs/semi-finished goods are not returned within six months (or within the extended period of maximum two months), the input tax credit availed is liable to be recovered.
However as per section 141(4) of CGST Act, If both the manufacturer and the job worker declare the details of inputs held in stock by the job worker on the appointed day in the prescribed form i.e. GST Form Tran-1, then above 3 conditions shall not apply.
Q20. What happens if the job worker does not return the goods within the specified time?
Ans. Tax will be payable by the job worker on the said goods if they are not returned to the place of business of the manufacturer within six months (or within the extended period of time) from the appointed day. The relevant sections are 141(1) & 141(2) of CGST Act.
Q21. Can a manufacturer transfer finished goods sent for testing purpose to the premise of any other taxable person?
Ans. Yes. As per section 141(3) of CGST Act, a manufacturer can transf
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ob worker prior to the appointed day for carrying out tests or any process not amounting to manufacture under the existing law if such goods are not returned to the manufacturer within six months (or within the extended period of maximum two months) from the appointed day.
Further, as per section 141 (3), the input tax credit enjoyed by the manufacturer will liable to be recovered if the aforesaid goods are not returned within six months from the appointed day.
Q24. Is extension of two months as discussed in section 141 automatic?
Ans. No, it is not automatic. It may be extended by the Commissioner on sufficient cause being shown.
Q25. We are Jewelers. Some of our stock is lying with the job worker. Any formality on our part?
Ans. Yes, you will have to file a declaration in Form GST TRAN 1 within 90 days about the stock lying with your Job worker.
Q26. What is the time limit for issue of debit/credit note(s) for revision of prices?
Ans. The taxable person may issue the debit
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ill be disposed of in accordance with the existing law and any amount of credit of CENVAT/ input tax credit or output tax found admissible for refund will have to be refunded in cash in accordance with the existing law.
Q29. If the appellate or revisional order goes in favour of the assessee, whether refund will be made in GST? What will happen if the decision goes against the assessee?
Ans. As per section 142(6) / 142(7), the refund will be made in accordance with the provisions of the existing law in cash only. In case any recovery is to be made then, unless recovered under existing law, it will be recovered as an arrear of tax under GST.
Q30. How shall the refund arising from revision of return(s) furnished under the existing law be dealt with in GST?
Ans. As per section 142(9)(b), any amount found to be refundable as a consequence of revision of any return under the existing law after the appointed day will be refunded in cash in accordance with the provisions of the existing
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n GST regime?
Ans. Yes, it can be distributed as section 140(7) of CSGT Act, irrespective of whether the invoice(s) relating to such services is received on or after the appointed day section 140(7) of the CGST Act.
Q35. Where any goods are sold on which tax was required to be deducted at source under State VAT law and an invoice was also issued before the appointed day, shall deduction of tax at source shall be made under this Act if the payment is made after the appointed day?
Ans. No, as per section 142(13) of CGST Act, in such case no deduction of tax at source shall be made under GST.
Q36. Goods were sent on approval not earlier than six months before the appointed day but are returned to the seller after 6 months from the appointed day, will tax be payable under GST?
Ans. Yes, as per section 142(12) of CGST Act, if such goods are liable to tax under GST and the person who has rejected or has not approved the goods, returns it after 6 months (or within the extended period
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