Oct 20, 2017
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GST transition provisions and rules as per the central board excise and customs

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GST transition provisions

As GST seeks to consolidate multiple taxes into one, it is very essential to have GST transition provisions to ensure that them transition to the GST regime is very smooth and hassle-free and no ITC (Input Tax Credit)/benefits earned in the existing regime are lost.

The GST transition provisions can be categorised under three heads:

A. Relating to Input Tax Credit.
B. Continuance of existing procedures such as job work for a reasonable period without any adverse consequence under GST law.
C. All claims (pending as well as future) pertaining to existing laws filed before, on or after the appointed day.

However, this article also contain Transition rules,2017  mainly talks about the rules that are revised by the GST council. Total 4-rules, so far stated under the transition rules,2017.

Under GST , the council has clearly stated the types and forms so required to file the return.  Thus only registered person has right to claim. And filed for return under GST India.

A. Transitional arrangements for ITC

Elaborate provisions have been made to carry forward the ITCearned under the existing law. Such credit should be permissible
under the GST law. However, the taxable person opting for composition scheme would not be eligible for carry forward of the existing ITC. ITC of various taxes under the existing laws (CENVAT credit, VAT etc.) would be carried forward as under:

(a) Closing balance of the credit in the last returns:

The closing balance of the CENVAT credit/VAT in the last returns filed under the existing law can be taken as credit in electronic credit ledger.

In order to claim this credit, declaration in form GST TRAN 1 is required to be furnished on the common portal within ninety days from the appointed day i.e. the day on which the GST law would come into force.

(b) Un-availed credit on capital goods:

The balance instalment of un-availed credit on capital goods credit can also be taken by filing the requisite declaration in the GST TRAN 1.

(c) Credit on duty paid stock:

Such credit can be taken as under:
(i) Credit shall be taken on the basis of invoice evidencing payment of duty of excise or VAT.
(ii) Such invoices should be less than one-year old.
(iii) Declare the stock of duty paid goods within the prescribed time on the common portal.

(d) Credit on duty paid stock when Registered Person does not possess the docu-m-ent evidencing payment of excise duty/VAT.

(e) Credit relating to exempted goods under the existing law which are now taxable

(f) Input/input services in transit:

Registered person (RP) may take credit of eligible duties and taxes, provide  the in-voice has been recorded in the books within 30 days from the appointed day. The period can be extended by the Commissioner GST by another 30 days. A statement of such in-voices have to be furnished. ISD can also distribute such credit.

(g) Tax paid under the existing law under composition scheme:

Those taxpayers who paid tax at fixed rate or fixed amount in lieu of the tax payable un-der the existing law but are working under
normal scheme under GST can claim credit on their input stock, semi-finished and finished stock on the appointed date, subject to the following conditions:
(i) Such input stock used for taxable supply under this Act
(ii) Registered Person is not covered under section 10 (composition scheme) of this Act
(iii) Registered Person is eligible for ITC under this Act
(iv) Registered Person is in possession of the invoice or other duty payment documents
(v) Such invoices are not more than twelve months old on the appointed day

(h) ITC in case of Centralised Registration under service tax.

(i) Reclaim the reversed Input Service credit.

(j) Where any goods or capital goods belonging to the principal are lying at the premises of the agent on the appointed day:

This provision is specific to SGST law. In such cases, agent shall be
entitled to take credit, subject to the following conditions:
(i) The agent a registered taxable person
(ii) Both the principal and the agent declare the details of stock

(iii) The invoices are not older than twelve months
(iv) The principal has either reversed or not avail on the input tax credit.

B. Transition provisions relating to job work, goods returned/sent on approval etc

(a) Job work:

Inputs, semi-finished goods or finished goods were sent to the job worker or any other premises without payment of duty/VAT under
the existing law. No GST payable by the job worker when such goods are returned by him within six months after the appointed
day. The period can extend by the Commissioner, GST by another two months.

(b) Goods removed before 6 months of the appointed day but returned within 6 months from the appointed day:

If such goods return by an unregistered person, then refund of the duty/VAT paid under the existing law can claim.
If returned by a Registered Person, then the return of goods shall be treated as supply of goods (ITC can be claimed).

(c) Goods sent on approval basis before 6 months of the appointed day but re-turned within 6 months from the appointed day:

No tax is payable by the person returning the goods. Commissioner may extend the peri-od by 2 months. If returned after that, tax is
payable if the supply is taxable under GST (by the recipient). If not returned, tax is payable by the person who sent the goods on approval

(d) TDS deducted in VAT

Where a supplier has made any sale of goods, and tax was required to deduct under VAT Act, and invoice was issued before the appointed day. However, the payment made on or after the appointed day. In such cases, no TDS under GST is to deduct.

(e) Price revision in respect of existing contracts

  • In case of upward price revision, a registered person will issue a supplementary invoice or debit notes within 30 days from the date
    of revision and such revision shall treat as supply under GST, and tax payable under this Act.
  • In case of downward revision, Registered Person may issue credit note within 30 days from such revision and credit note shall deem to have issue in respect of outward supply made under this Act. A Registered Person will reduce his tax liability for such credit note, subject to reversal of credit by the recipient.

C. Proceedings under the existing laws

  • GST law would become operational w.e.f. the appointed day and existing laws would repeal. Elaborate provisions have been
    made to save the pending as well future claims relating to existing law made before, on or after the appointed day. Such proceedings may pertain to refund claims of CENVAT credit/VAT or export related rebate or service tax, and the proceedings may either result in recovery of tax or refund.
  • All such cases would dispose of under the existing law. If any claim for refund of CENVAT credit fully or partially reject, the amount so rejected shall lapse. Refund of CENVAT credit shall pay in cash. There will no refund of CENVAT if already carry forward. If any amount becomes recoverable, the same shall recover as arrear of tax under GST Act.

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Renuka is a Final Year LL.B. student at Siddharth College of Law. She has done her Bachelors in Banking & Insurance and has also completed her Masters in Business Management . She likes to participate in legal workshops and Moot Courts. Besides her interest in law, she has a keen aptitude for legal research and is good at putting her analysis into words.

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