Transitional Provisions under Revised Model GST Law (Nov-2016)
By: – CSSANJAY MALHOTRA
Goods and Services Tax – GST
Dated:- 10-12-2016
Goods and Service Tax – “Transitional Provisions”
By: CS Sanjay Malhotra (Practising Company Secretary / Indirect Tax Expert)
Goods and Service Tax will bring in Business Transformation; hence it's important to understand the Transitional Provisions to ensure that the proposed tax system takes care of existing tax credits, payments and should not be a TAX COST for the assessee's.
Due care has to be taken in shift over from Present set of Indirect Tax system to GST Regime so that the required compliances shall be complied with and taxes paid under present taxation system should be rolled over in GST Law.
Appointment of Officers under GST Act (Section 165) of Model GST Law provides that all the officers appointed under Central / State Laws relating to Taxes shall be deemed to have been appointed as GST Officers under the respective Act
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y Forward of CENVAT Credit in Return to be allowed as Tax Credit in GST (Section 167)
* Registered Taxable person other than a person opting to pay Tax under Composition Levy shall be allowed to take credit of CENVAT / VAT / Entry Tax as available on the day immediately preceding the day on which GST Act comes into force. Tax credit has to be taken as opening balance in Electronic Ledger i.e. online Input Tax Credit Ledger in GSTIN.
* CENVAT Credit available under Excise and Service Tax as on date preceding to GST Act date shall be carried forward in Electronic Ledger under the head “CGST” and Vat / Entry Tax credit under the head “SGST”.
* Tax Credit has to be carry forward provided the same is admissible both under present and in GST law.
* Refund of CST if any under the earlier law shall be refunded as per the provisions of earlier law and no credit / refund is eligible under GST.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Unavailed
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tronic Ledger under the head “CGST” and VAT /Entry Tax credit under the head “SGST”.
* Tax Credit is allowed provided the same is admissible both under present and in GST law.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations (Section 169)
Any person who is into the sales of Exempted goods / Provision of Exempted Services is exempted from Registration under the present Law. Under GST, these persons besides First Stage & Second Stage Dealer, Registered Importer, Providing Works Contract Services, shall have to get himself registered under the GST Act if the products / services come out of exemption or is subject to levy under the GST Act.
Such registered persons under the GST Act shall be eligible to claim Input Tax credit in respect of Inputs, WIP held in stock , Inputs contained in final products as on the date immediately preceding to the D
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cuments shall be recorded in books of accounts within 30 Days from the date Implementation of GST Act.
Credit of eligible duties and taxes on inputs held in stock to be allowed to a Taxable person switching over from Composition scheme (Section 172)
* Any Registered person who is paying tax in the capacity of Composite Tax Payer at a fixed rate or fixed amount under the present tax law of Centre / State shall be eligible to take input Tax credit in Electronic Credit Ledger in respect of Inputs, WIP held in stock, input contained in Finished Goods as on the date immediately preceding to the Date from which GST Act comes into force.
* Tax Credit is allowed provided the same is admissible both under present and in GST law.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Exempted Goods Returned to Place of Business in GST regime(Section 173)
* No Tax shall be payable by the person returning the exempted goods provided the said goods are cleared n
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Acts.
Inputs removed for job work and returned on or after the appointed day (Section 175)
* In case Inputs as such or removed for Job work after partially processing under the provisions of present tax law for further processing, testing, repair, etc and are returned after processing within a period of 6 months or extended period of 2 months from the date on which GST Act comes into force, then NO Tax shall be payable.
* Tax shall be payable by manufacturer if the inputs are not received back within a period of 6 months or extended period from the date when GST comes into force OR Tax is to be paid by Job Worker if the goods after processing are returned back after a period of 6 months after the GST enactment date.
* If registered person shows sufficient cause, then the period of 6 months may be extended by another 2 months by the competent authority.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Semi-finished Goods removed for job work a
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ed under respective CGST and SGST Acts.
Finished Goods removed for job work and returned on or after the appointed day (Section 177)
* In case finished goods are removed for carrying out certain processes not amounting to manufacture under the provisions of present tax law and are returned after processing within a period of 6 months from the date on which GST Act comes into force, then NO Tax shall be payable.
* Tax shall be payable by manufacturer if the inputs are not received back within a period of 6 months from the date when GST comes into force OR Tax is to be paid by person returning the goods if the goods after processing are returned back after a period of 6 months after the GST enactment date.
* If registered person shows sufficient cause, then the period of 6 months may be extended by another 2 months by the competent authority.
* Manufacturer has the option as available under the earlier law to remove goods from Job worker premises on payment of duty in domestic m
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y under GST Act.
* Such Credit Note / Supplementary Invoice shall be deemed to have been issued as document in respect of Inward supply under GST Act.
* Provided that the taxable person shall be allowed to reduce his tax liability on account of issue of the said invoice or credit note only if the recipient of the invoice or credit note has reduced his input tax credit corresponding to such reduction of tax liability.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Pending Refund Claims to be disposed of under earlier Law (Section 179)
* Claim for Refunds submitted by any taxable person in earlier law in respect of Tax/Duty/Interest or any other amount shall be refunded as per the then provisions of Tax laws and any amount accruing to him shall be paid in cash.
* If the claim is fully or partially rejected, then the amount so rejected shall stands to lapse.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
R
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s recoverable on account of any appeal, revision; review or reference shall be recoverable as Tax arrears and shall not be admissible as input tax credit under this Act.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Finalisation of proceedings relating to Output Tax Liability (Section 183)
* Every proceeding initiated under any appeal, revision, review or reference shall be disposed off in accordance with the provisions of earlier law and any amount stands accrue to the person shall be paid in Cash and ANY amount stands recoverable on account of any appeal, revision; review or reference shall be recoverable as Tax arrears and shall not be admissible as input tax credit under this Act.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings (Section 184)
* Where any duty / interest / penalty or any other amount is de
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on in Return furnished under earlier law, the same shall be refunded to him in Cash or as per the provisions of earlier act.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Treatment of long term construction / works contracts (Section 186)
* Tax is applicable at the rates specified under GST Act in respect of Supply of Goods and services provided after the enactment of GST Act even if the agreement / contract is executed prior to introduction of GST Act.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Progressive or periodic supply of goods or services (Section 187)
* No Tax is payable if the payment has been received and tax has been deposited prior to the introduction of GST Act in respect of Supply of Goods and services after the enactment of GST Act.
* The above provisions shall be incorporated under respective CGST and SGST Acts.
Taxability of Goods / Services in Certain Cases (Section 188-189)
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goods lying at his place subject to the following conditions:-
* (i) the agent is a registered taxable person under this Act;
* (ii) both the principal and the agent declare the details of stock of goods lying with such agent on the date immediately preceding the appointed day in such form and manner and within such time as may be prescribed in this behalf;
* (iii) the invoices for such goods had been issued not earlier than twelve months immediately preceding the appointed day; and
* (iv) the principal has either reversed or not availed of the input tax credit in respect of such goods.
Tax paid on Capital Goods lying with Agents to be allowed as Credit under SGST Law (Section 193)
* This provision shall be incorporated only under respective SGST Acts.
* Input Tax credit is admissible to the Agent in respect of CAPITAL goods lying at his place subject to the following conditions:-
* (i) the agent is a registered taxable person under this Act;
* (ii) both the principal
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Act and are further not received back within a period of 6 months from the date when GST comes into force.
* If registered person shows sufficient cause for delay, then the period of 6 months may be extended by another 2 months by the competent authority.
* The above provisions shall be incorporated only under SGST Acts.
Deduction of Tax at Source (Section 196)
* Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under the earlier law and has also issued an invoice for the same before the enactment of GST act, NO deduction of tax at source shall be made by the deductor under the said section where payment to the said supplier is made on or after the enactment of GST Act.
Transitional provisions for availing CENVAT credit in certain cases (Section 197)
* Wherever CENVAT Credit has been reversed due to non-payment to the supplier within a period of 3 months, the same can be reclaimed subsequently upon payment of considerat
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