Transitional Provisions Udayan Choksi 17 May 2017 18-05-2017 1
S139 - Migration of Existing Taxpayers» Migration is for Every existing registered person Having a PAN Shall be issued a certificate of registration on provisional basis Unless the provisional registration certificate is replaced by a final registration certificate it shall be liable to be cancelled if the conditions so prescribed are not complied with» Provisional registration certificate shall be deemed to have not been issued if the said registration is cancelled in pursuance of an application filed by a person that he was not liable to registration u/s 22 or u/s 24» Same provisions under SGST Acts* *Rajasthan Gujarat, Telangana, UP, Punjab, Assam, Chhattisgarh 18-05-2017 2
S140(1) - CENVAT Credit c/f in a Return» A registered person Other than a person opting to pay tax under composition scheme Shall be entitled to take credit of amount carried forward in his last return furnished under the existing law» Credit entitlement is subject to following conditions 1. Credit is admissible as input tax credit under CGST Act 2. Registered person has furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date 3. Credit does not relate to goods manufactured and cleared under existing exemption notifications» Same provisions under SGST Acts with a change in condition 3 that so much of credit that is attributable to Inter-state sales (transit sales) Penultimate sales for export CST sales Stock transfers Sales to SEZ for which relevant forms are not available shall not be eligible to be carried forward 18-05-2017 3
S140(1) - CENVAT Credit c/f in a Return» If claims are evidenced by forms subsequently, the equivalent amount shall be refunded» The amount of credit to be carried forward in the electronic credit ledger» In case of multiple registration within a state, the amount of CENVAT credit will be merged 18-05-2017 4
S140(2) - Unavailed CENVAT Credit on Capital Goods» A registered person Other than a person opting to pay tax under composition scheme Shall be entitled to credit of unavailed CENVAT credit in respect of capital goods that is not carried forward in a return» Credit entitlement is subject to following conditions 1. The credit on such capital goods was admissible as CENVAT under the existing law 2. The credit is also admissible as input tax credit under CGST Act» Provision applies to capital goods procured in FY 2017-18 and credit of previous FY s when there is an unavailed balance of CENVAT credit» Same provisions under SGST Acts 18-05-2017 5
S140(3) - Credit of Inputs Held in Stock» A registered person A. Not liable to be registered under the existing law Eg. A manufacturer currently availing SSI exemption or a trader having diminimis turnover, but making sales through e-commerce operators or a trader vis-à-vis central excise duty or a service provider vis-à-vis VAT or supplies of goods which are currently taxed at the first point of sale and are then tax free but which will be liable to tax under GST, or suppliers who are eligible for ITC only at the time of sale B. Engaged wholly in the manufacture of exempted goods or provision of exempted services C. Provider of works contract service and availing benefit of abatement under notification No. 26/2012-ST D. First stage dealer E. Second stage dealer F. Registered importer G. Depot of a manufacturer shall be entitled to take credit of eligible duties in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the appointed day 18-05-2017 6
S140(3) - Credit of Inputs Held in Stock» Credit entitlement is subject to following conditions 1. Such inputs or goods are used or intended to be used for making taxable supplies under CGST Act 2. Registered person is eligible for input tax credit on such inputs under CGST Act 3. Registered person is in possession of invoice or other prescribed documents evidencing payment of duty 4. Such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and 5. The supplier of services is not eligible for any abatement under this Act» A registered person, other than a manufacturer or a supplier of services, who is not in possession of an invoice or any other documents evidencing payment of duty may still be allowed to take credit subject to conditions and restrictions 1. Benefits of such credit is passed on by way of reduced prices 2. Credit shall be restricted to 40% of the CGST to be paid on such goods 3. Credit can be availed at the time of supply of such goods» Same provisions under SGST Acts» Eligible duties defined to mean all duties on which CENVAT credit is available under Rule 3 of CENVAT Credit Rules 2004 except service tax and cesses 18-05-2017 7
S140(4) - CENVAT Credit of Goods/Services Manufactured or Provided» A registered person A. Engaged in the manufacture of taxable as well as exempted goods B. Engaged in provision of taxable as well as exempted services which are liable to tax under this Act, shall be entitled to take credit of CENVAT carried forward in the last return furnished under the existing law in accordance with Section 140(1) CENVAT 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, in accordance with Section 140(3)» Same provisions under SGST Acts 18-05-2017 8
S140(5) - Credit in respect of Inputs or Input Services During Transit» A registered person shall be entitled to take credit of Eligible duties and taxes in respect of inputs or input services Received on or after the appointed day The duty or tax in respect of which has been paid by the supplier under the existing law The invoice or any other duty or tax paying document was recorded in the books of account within a period of thirty days from the appointed day unless such period is on sufficient cause being shown, extended by the Commissioner for a further period not exceeding thirty days» Registered person furnishes a statement in respect of credit taken» Eligible duties defined to mean all duties on which CENVAT credit is available under Rule 3 of CENVAT Credit Rules 2004 including service tax but excluding cesses» Section does enables taking of credit not availed for goods and services already received» Same provisions under SGST Acts 18-05-2017 9
S140(6) - Credit of Inputs to Person Switching From Composition Scheme» A registered person A. Paying tax at a fixed rate or B. Paying a fixed amount in lieu of the tax payable shall be entitled to take credit of eligible duties in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the appointed day» Credit entitlement is subject to following conditions 1. Such inputs or goods are used or intended to be used for making taxable supplies under CGST Act 2. Registered person is not paying tax under composition scheme 3. Registered person is eligible for input tax credit on such inputs under CGST Act 4. Registered person is in possession of invoice or other prescribed documents evidencing payment of duty 5. Such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day» Same provisions under SGST Acts 18-05-2017 10
Section 140(7) - Credit Distribution by Input Service Distributor» Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an ISD 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» ISD definition refers to receipt of the invoices towards the receipt of input services» No such provisions under SGST Acts in absence of ISD concept 18-05-2017 11
Section 140(8) - Credit of ITC in case of Centralised Registration» A registered person Having centralised registration under the existing law Who has obtained a registration under CGST Act shall be allowed to take credit of the amount of CENVAT carried forward in the last return» Credit should be admissible as input tax credit under the CGST Act» Return can be filed within three months of the appointed day and credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier» Such credit may be transferred to any of the registered persons having the same PAN who were covered under the centralised registration 18-05-2017 12
Section 140(9) - Reversal of ITC under Existing Law» CENVAT credit availed for the input services that has been reversed due to non-payment of the consideration within a period of three months, can be reclaimed provided that the registered person has made the payment within a period of three months from the appointed day 18-05-2017 13
Section 140(10) - Manner of Calculating Credit» The amount of credit under sub-sections (3), (4) and (6) shall be calculated in such manner as may be prescribed» Same provisions under SGST Acts 18-05-2017 14
Section 141(1)(2)(3) - ITC on Inputs Sent Out Under Existing Law» Inputs/ semi-finished goods/ excisable goods are sent in accordance with provisions of existing law» No tax shall be payable if returned within six months from appointed day Type To For 1. Inputs (removed as such or after being partially processed) Job-worker Processing, testing, repairing, reconditioning or any other purpose 2. Semi-finished goods Any other premise Carrying out certain manufacturing process 3. Excisable goods Any other premise Carrying out tests or any other process not amounting to manufacture» The period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months» If not returned within the period specified the input tax credit shall be liable to be recovered in accordance with the provisions of section 142(8)(c) 18-05-2017 15
Section 141(1)(2)(3) - ITC on Inputs Sent to Job Worker Under Existing Law» In respect of Semi Finished Goods and Excisable Goods (above) the manufacturer may 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» The tax under sub-sections (1), (2) and (3) shall not be payable, only if the manufacturer and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the manufacturer on the appointed day» Tax will be payable by job-worker if not returned within six months from appointed day» Same provisions under SGST Acts 18-05-2017 16
Section 142(1) - ITC on Finished Goods Returned After Appointed Date» Where any goods on which duty had been paid under the existing law not being earlier than six months prior to the appointed day are returned on or after the appointed day If returned by unregistered person Within a period of six months from the appointed day the registered person shall be eligible for refund of the duty paid under the existing law and goods are identifiable to the satisfaction of the proper officer If returned by registered person The return of goods shall be deemed to be a supply» Same provisions under SGST Acts 18-05-2017 17
Section 142(2) - ITC in case of Revision in Price» Where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised on or after the appointed day» Registered person shall issue a document to the recipient Revised upwards Revised downwards Situation RP is required to issue Supplementary Invoice or debit note Credit note To be issued within thirty days of price revision Such documents shall be deemed to have been issued in respect of an outward supply made under CGST Act» The registered person shall be allowed to reduce his tax liability only if the recipient of the credit note has reduced his input tax credit» Same provisions under SGST Acts 18-05-2017 18
Section 142(3) - Pending Refund Claims» Every claim filed before, on or after the appointed day for refund of any amount of CENVAT credit, duty, tax, 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 shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions Section 11B(2) of the CEA, 1944» Where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected 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 CGST Act» Same provisions under SGST Acts 18-05-2017 19
Section 142(4) - Refund Claim of Goods/Services Exported Under Existing Law» Every claim filed after the appointed day for refund of any duty 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» Where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected 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 CGST Act» Same provisions under SGST Acts 18-05-2017 20
Section 142(5) - Refund Claim of Services not Provided» Every claim filed after the appointed day for refund of tax paid under the existing law in respect of services not provided shall be disposed of in accordance with the provisions of existing law» No provision stating that amount rejected will lapse» Any amount eventually accruing shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions Section 11B(2) of the CEA, 1944» Same provisions under SGST Acts except Telangana and Gujarat and Rajasthan which provide that any amount of ITC reversed prior to appointed day shall not be admissible 18-05-2017 21
Section 142(6) - Claim of CENVAT Credit for on Finalization of Proceedings» Every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law» Any amount of credit found to be admissible 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 Section 11B(2) of the CEA, 1944» The amount rejected shall not be admissible as input tax credit under CGST Act» 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 CGST Act» Every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law» Any amount of credit becomes recoverable shall, unless recovered under the existing law, be recovered as an arrear of tax under CGST Act» The amount so recovered shall not be admissible as input tax credit under CGST Act» Same provisions under SGST Acts 18-05-2017 22
Section 142(7) - Finalization of Proceedings Related to Output Duty/Tax Liability» Every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of the existing law» Any amount found to be admissible 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 Section 11B(2) of the CEA, 1944» The amount rejected shall not be admissible as input tax credit under CGST Act» Every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of the existing law» If any amount becomes recoverable shall, unless recovered under the existing law, be recovered as an arrear of duty or tax under CGST Act» The amount so recovered shall not be admissible as input tax credit under CGST Act» Same provisions under SGST Acts 18-05-2017 23
Section 142(8) - Treatment of Amount Recovered or Refunded on Account of Assessment or Adjudication» Where in pursuance of an assessment or adjudication proceedings instituted whether before, on or after the appointed day any amount of tax, interest, fine or penalty becomes recoverable shall, unless recovered under the existing law, be recovered as an arrear of tax under CGST Act» The amount so recovered shall not be admissible as input tax credit under CGST Act» Where in pursuance of an assessment or adjudication proceedings instituted whether before, on or after the appointed day, under the existing law any amount of tax, interest, fine or penalty becomes refundable shall be refunded to him in cash under the said law, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions Section 11B(2) of the CEA, 1944» The amount rejected shall not be admissible as input tax credit under CGST Act» Same provisions under SGST Acts 18-05-2017 24
Section 142(9) - Treatment of Amount Recovered or Refunded on Account of Revision of Returns» Where any return, furnished under the existing law is revised after the appointed day, if pursuant to such revision any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible shall, unless recovered under the existing law, be recovered as an arrear of tax under CGST Act» The amount so recovered shall not be admissible as input tax credit under CGST Act» Where any return, furnished under the existing law is revised after the appointed day, if pursuant to such revision any amount is found to be refundable or any amount of CENVAT credit is found to be admissible shall be refunded to him in cash under the said law, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions Section 11B(2) of the CEA, 1944» The amount rejected shall not be admissible as input tax credit under CGST Act 18-05-2017 25
Section 142(10) - Treatment of Long Term Contracts/Works Contract» The goods or services or both supplied on or after the appointed day» In pursuance of a contract entered into prior to the appointed day» Shall be liable to tax under the provisions of CGST Act 18-05-2017 26
Section 142(11) - Continuous or Periodic Supply» Notwithstanding anything contained in section 12 No tax shall be payable on goods under this Act To the extent the tax was leviable on the goods under the Value Added Tax Act of the State» Notwithstanding anything contained in section 13, No tax shall be payable on services under this Act To the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994» Where tax was paid on any supply Under the Value Added Tax Act and under Chapter V of the Finance Act, 1994 Tax shall be leviable under this Act 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 18-05-2017 27
Section 142(12) - Treatment of Goods Sent on Approval Basis» Where any goods sent on approval basis Not earlier than six months before the appointed day Rejected or not approved by the buyer Returned to the seller on or after the appointed day No tax shall be payable if goods are returned within six months from the appointed day» The period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months» The tax shall be payable by the person returning the goods If returned after a period specified in this sub-section, such goods are liable to tax under this Act» The tax shall be payable by the person who has sent the goods on approval basis If goods not returned after a period specified in this sub-section, such goods are liable to tax under this Act 18-05-2017 28
Section 142(13) - Treatment of Tax Deducted at Source» Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under any law of a State or Union territory Invoice issued before appointed date Where payment to the supplier is made on or after the appointed day No deduction of tax at source under section 51 shall be made by the deductor 18-05-2017 29
Section 142(14) of SGST - Treatment of Goods Lying With Agent» Where any goods or capital goods belonging to the principal are lying at the premises of the agent on the appointed day the agent shall be entitled to take credit of the tax paid on such goods or capital goods» Credit entitlement is subject to following conditions 1. The agent is a registered taxable person under CGST Act 2. The principal and the agent declare the details of stock of goods or capital goods lying with such agent on the day immediately preceding the appointed day in such form and manner and within such time as may be prescribed 3. The invoices for such goods or capital goods had been issued not earlier than twelve months immediately preceding the appointed day 4. The principal has either reversed or not availed of the input tax credit in respect of such (a) goods; or (b) capital goods or, having availed of such credit, has reversed the said credit, to the extent availed 18-05-2017 30