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Understanding the Transitional Provisions in GST

Goods and Services Tax - GST - By: - Uday Ranalkar - Dated:- 8-10-2016 Last Replied Date:- 30-12-1899 - Understanding the transitional provisions under GST Model Law With the formation of Goods & Services Tax (GST) Council and its immediate first meeting the Central Government has given clear indications about its commitment to implement the proposed GST law from 1st April, 2017. The trade, industry and professionals have geared up to understand the new law, its provisions and its probable i .....

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tax laws. Chapter XXV will enable and allow them to decipher and plan its migration from different aspects like registrations, CENVAT credit, and invoicing, pending refund and litigation matters, if any. Important transitional provisions provided under Chapter XXV are discussed below: APPOINTED DAY Section 2 (10) of the Model GST law defines as: appointed day means the date on which section 1 of this Act comes into effect. Section 1 provides for a date when the GST Act will come into force. (Th .....

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law provides for migration of existing tax payers to GST. The said section specifically provides for the registration process for the persons having registrations under indirect tax laws. The existing registrants would be granted provisional registration certificates on appointed day. The said provisional certificate would be valid for 6 months from the date of its issue. The Central / State Government have the authority to extend the period of 6 months based on the recommendation of the Council .....

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s. The incomplete and incorrect data from existing registration database to GST database will adversely impact the reports and intelligence derived out of GST database. Hence, certain additional information, which may not be available with the Government, would be sought from the registrants on the recommendations of the GST Council. After receipt of the prescribed information, the concerned government authorities would grant fresh certificate of registration. If the assessee to whom the provisi .....

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registrations for different business verticals situated in same state. The published draft GST Rules for registration brings the further clarity over the procedure. Relevant forms for associated with registration process under GST: Sr.No Form Purpose Remarks 1 GST REG-20 Submission of information and documents as specified by the persons getting the provisional registration under the GST act.(Migrants) Within 6 months from date of issue of provisional registration certificate. 2 GST REG-21 Issue .....

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t ****** CENVAT CREDIT Input/Input Service: Section 143 of the Model GST Law provides for the amount of CENVAT credit carried forward in a return to be allowed as input tax credit. This would be the enabling section allowing the assesees to carry forward their closing balance of CENVAT credit under current indirect tax laws regime into GST regime. The credit carried forward would be available as a balance in the electronic credit ledger of the registrant. However, following conditions needs to b .....

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books of account would be immaterial. Consider following illustration: On the assumption that the GST would be applicable w.e.f 1stApril, 2017,the amount of CENVAT credit carried forward would be the figures of closing balance of CENVAT credit reflected in the return for the period ending on 31st March, 2017. The hypothetical figures are given in the table below. The eligibility of the credit under GST regime is discussed in column (4) & (5) of below table. Sr.No (1) Various input credit (2 .....

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s CGST for supplier of goods will be as follows: Sr.No (1) Various input credit (2) Amount (In Rs.) (3) 1. Central Excise 3,00,000 2. Service Tax 1,00,000 3. Additional Duty u/s 3(1) of CTA 80,000 4. Additional Duty u/s 3(5) of CTA 70,000 TOTAL 5,50,000 Therefore, credit eligible under GST as SGST for supplier of goods will be as follows: Sr.No (1) Various input credit (2) Amount (In Rs.) (3) 1. Credit under VAT 2,00,000 TOTAL 2,00,000 Therefore, credit eligible under GST as CGST for supplier of .....

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ion 144 of the Model GST Law provides for the unavailed CENVAT Credit on capital goods not carried forward in a return, to be allowed in certain circumstances. In current scenario, as per sub-rule (2) (a) of Rule 4 of the CENVAT Credit Rules, 2004, the only fifty percent of the credit of the duties paid is taken in a financial year. Remaining fifty percent can be taken in subsequent financial year. In case of VAT there are different scenarios like 6 or 12 equated monthly installments, or likewis .....

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goods by the taxable person under the earlier law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the earlier law. In view of the same, following credit can be carried forward in GST regime: Eligible Credit CGST SGST Central Excise paid on Capital goods. Countervailing duty paid on Capital goods. Special Additional Duty paid on Capital goods. VAT paid on capital Goods. The following conditions in relation to capital good .....

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in stock: Section 145 of the Model GST Law provides for the credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations. There might be a situation where a person is not liable to be registered under the existing law or who is engaged in the manufacture of exempted goods under the existing law but now liable to tax under the GST regime. In such scenario the said section enables the person, now liable to register, entitled to take credit of eligible .....

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model GST law proposes an exemption of Rupees Ten Lacs then many assesses who are noweligible for an exemption would be covered under the purview of GST. Being covered under GST these said assesees would also be entitled for input tax credit on inputs held in stock. However, the entitlement to input credit would be subject to following conditions: The assessee must be a registered taxable person under the GST law and not under earlier law; The assesse must be engaged in an activity which was exe .....

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der the GST law; and The taxable person should be in possession of the relevant documents which should not be older than 12 months from the date of introduction. 1. JOBWORK Section 150 of the Model GST Law provides for the inputs removed for job work and returned on or after the appointed day. The said section 150 seeks to provide clarity over the taxability of the inputs removed as such or removed, from factory, after being partially processed sent to a job worker for further processing, testin .....

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escribed. However, if the said inputs are returned by the job worker after a period of 6 months or such extended period (can be extended by the competent authority by upto 2 months) then supply (clearance) of such inputs would be liable taxable and the job worker would GST, as the case may be .If the inputs are not returned within a period of 6 months or such extended period (can be extended by the competent authority by upto 2 months) then the principal manufacturer would be liable to GST. It s .....

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del GST Law provides for the issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract. The model GST law envisages a situation of price revision, either upward or downward, for a supply under a contract. In such cases the provision has been made to issue a supplementary invoice, debit note or credit note as the case may be. Increase in agreed price: If, in pursuance of a contract entered into prior to the appointed day, there is an increase in agre .....

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supplementary invoice or a credit note within 30 days from the date of such decrease. The supplier of goods would be allowed to reduce the tax liability. However, this reduction in the tax liability would be subject to condition that the recipient of the invoice / credit note also reduces his input credit accordingly. As there is no clarity on the event of Sales returns, it seems that the supplier can issue a credit note (considering it as decrease in agreed price for invoice) to its customer w .....

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ed before the appointed day shall be disposed off in accordance with the provisions of such earlier indirect tax laws under which it was filed. Accordingly, the refund would be paid in cash to the assesee and not by credit to any of his electronic credit ledger under GST law. Attention is invited to the proviso to said section 154 which provides that where any claim for refund is fully or partially rejected, the amount so rejected shall lapse. No provision for appeal is provided for with respect .....

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n 11B of the Central Excise Act, 1944. The provisions of GST law would not be applicable for such refund claim. If, out of total refund claim of ₹ 10, 00, 000/- refund to the extent of ₹ 8,00,000/- is sanctioned then the remaining refund claim of ₹ 2,00,000/- would lapse. PENDING PROCEEDINGS Cenvat credit under proceeding of appeal: Section 155 of the Model GST Law provides for the Claim of credit to be disposed of under the earlier law. The section provides for appeal or revis .....

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