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Understanding GST Transitional Provisions in India

Explore Provisional Registration, Tax Credit, Refund Scenarios, Time Limits, and Procedures under the GST Law in India. Get expert insights!

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Understanding GST Transitional Provisions in India

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  1. GOODS AND SERVICES TAX R. L. KABRA B.Com., ICWA SUPERINTENDENT CENTRAL EXCISE, H.Q. A’BAD-II

  2. GST TOPICS ALREADY COVERED

  3. GST TOPICS TO BE DISCUSSED

  4. TRANSITIONAL PROVISIONS TRANSITIONAL PROVISIONS

  5. GST OFFICERS • All persons appointed by the respective Governments for discharging various functions under the Central/State laws relating to taxes on goods or services (which are being subsumed in GST) and continuing in office on the appointed day, shall be deemed to have been appointed as GST officers/Competent Authorities under the respective provisions of the Act. [Sec. 141]

  6. PROVISIONAL REGISTRATION • Provisional Certificate of Registration to be issued to all the persons registered under any of the earlier law. Provisional Certificate of Registration shall be valid for 6 months (or further period as may be extended [Sec. 142]

  7. CARRY FORWARD OF CENVAT / VAT BALANCE • Balance of CENVAT credit and VAT credit to be taken in Electronic Credit Ledger under GST Law [Sec. 143] • Registered taxable person shall be entitled to take credit of ‘unavailed CENVAT credit’ on Capital Goods in his Electronic Credit Ledger under GST Law [Sec. 144]

  8. CENVAT / VAT CREDIT • A taxable person, earlier not liable to be registered or was engaged in manufacture / sale of exempted goods shall be entitled to take credit of CENVAT / VAT in respect of inputs in stock / semi finished goods and finished goods. [Sec. 145] • A taxable person, earlier under composition scheme (hence not eligible for CENVAT / VAT credit) shall be entitled to take credit of CENVAT / VAT in respect of inputs in stock / semi finished goods and finished goods. [Sec. 146] • A taxable person, earlier paying duty / tax at normal rate, switches over to composition scheme under GST Law, shall pay amount equivalent to CENVAT / VAT in respect of inputs in stock / semi finished goods and finished goods from Electronic Credit Ledger or Electronic Cash Ledger [Sec. 147]

  9. TAX REFUND REFUND

  10. REFUND - MEANING • The dictionary meaning of `refund’ is – “to give or pay back money etc.”, [Webster Comprehensive Dictionary, International Edition 1984. ] • Refund of tax means – returning to the assessee, what had been taken or received from him unlawfully. • No tax shall be levied or collected, except by the authority of law [Art. 265 of Constitution of India]

  11. REFUND SCENARIOS IN GST • Refund in case of export of goods / service • refund of tax on goods and/or services exported out of India, or • Refund of tax on inputs or input services used in the goods and/or services which are exported out of India, or • refund of tax on the supply of goods regarded as deemed exports • Refund of unutilized Input Tax Credit • Export (Except where goods are liable to Export Duty) • Inverted Tax Structure

  12. OTHER REFUND SCENARIOS • Final Assessment (If refund is due, it shall be paid) [Section 44A(5)] • Refund of Pre-Deposit (when appeal is decided in favour of the assessee / supplier / appellant) • Excess payment of tax due to mistake or inadvertence • Tax wrongfully collected and paid as IGST / CGST-SGST mistakenly as an Interstate/intrastate supply, but the nature of which was subsequently clarified. On payment of CGST-SGST / IGST, Refund admissible for tax paid under wrong head. (As per Rules to be framed and Sec. 38) [Sec. 30 of IGST Act / Sec. 53 of GST Act] • Purchases made by Embassies or specified UN authorities (Separate procedure to be notified) • The person who has borne the incidence of ‘amount’ collected by any person as representing tax under GST Act. [Sec. 52 (11)]

  13. TIME LIMIT FOR FILING REFUND CLAIM • Two (2) years from the relevant date. • Limitation of two (2) years not applicable, where tax paid “Under Protest”

  14. PROVISIONAL PAYMENT OF REFUND • In case of export of goods or service, 80% of Refund amount to specified category of registered taxable person. • remaining 20% may be refunded after due verification of documents furnished. • Circular No. 828/5/2006-CX., dated 20-4-2006 (a) All exporters who have an export turnover of Rs. 5 crores in the current / preceding year (b) Public Sector Undertakings including PSUs of the State Government. (c) Star Export Houses (d) Manufacturer-exporters having minimum export of Rs. 1 crore or more (e) Manufacturer-exporters who has paid duty of Rs. 1 crore or more. • All Export Oriented Units. • Circular No. 187/6/2015-S.T., dated 10-11-2015

  15. TIME LIMIT FOR SANCTION OF REFUND • 90 Days from the date of receipt of application (complete application containing all information as may be prescribed) • If any tax refundable is not refunded within three months from the date of receipt of application interest at specified rate shall be payable.

  16. REFUND TO BE PAID TO CLAIMANT • In following cases – (a) refund of tax on goods and/or services exported out of India or on inputs used in the goods and/or services which are exported out of India; (b) refund of unutilized input tax credit under sub-section (2); (c) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or (d) the tax or interest borne by such other class of applicants as the Central or a State Government may, on the recommendation of the Council, by notification, specify.

  17. UNJUST ENRICHMENT PASSING OF INCIDENCE OF TAX Manufacturer Distributor Dealer Buyer

  18. REFUND NOT TO BE PAID TO CLAIMANT • Amount of Refund sanctioned (but not paid to claimant as not falling under 4 specified category) is to be deposited in Consumer Welfare Fund. • Refund to be paid to claimant, if and only if, claimant falls under 4 specified category.

  19. WITHHOLDING OR ADJUSTING REFUND OF ITC • Withholding Refund • In case of default in filing Return or in payment of Tax, Interest or Penalty • Deducting amount from Refund • Unpaid Tax, Interest or Penalty, not stayed – after specified date (Specified Date–If no appeal filed ->Last date of filing appeal If appeal has been filed -> 30 days after last date of filing appeal)

  20. WITHHOLDING OF REFUND • Where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under this Act is pending; and • Where the Commissioner / Board is of the opinion that grant of such refund is likely to adversely affect the revenue • Refund can be withheld for the time determined by the Commissioner / Board, after Personal Hearing. • If claimant becomes entitled to Refund, interest shall also be paid at notified rate.

  21. DE MINIMUS THRESHOLD FOR REFUND • No Refund -> If amount of Refund is less than Rs. 1,000/-

  22. CONSUMER WELFARE FUND • To be established by the Central or State Government • To be credited by – • The amount of Refund sanctioned and transferred to Consumer Welfare Fund • Income from investment of the amount credited to the fund or other sums received from Government. • To be utilised - for the welfare of the consumers

  23. TRANSITIONAL PROVISIONS • Refund Claim filed before appointed day shall be disposed off in accordance with provisions of earlier law. • Amount of such Refund to be paid in cash • Where any claim for refund is fully or partially rejected, the amount so rejected shall lapse.(appears to be in relation to rejection of refund / rebate to be paid in cash and allowed as CENVAT credit) [Sec. 154] • Refund arising out of Assessment or Adjudication proceedings instituted under earlier law, to be paid in cash, in accordance with provisions of earlier law. [Sec. 157] • Refund arising out of revision of Return filed under earlier law, to be paid in cash, in accordance with provisions of earlier law. [Sec. 158]

  24. OTHER IMPORTANT PROVISIONS OTHER IMPORTANT PROVISIONS

  25. REGISTRATION • Every person shall have a Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961) in order to be eligible for grant of registration under subsection (1), (2) or (3). [Sec. 19(4)] • Notwithstanding anything contained in sub-section (4), a non-resident taxable person may be granted registration under sub-section (1) on the basis of any other document as may be prescribed. [Sec. 19(4A)] • 1-2 State Code • 3-12 PAN • 13 Entity Code • 14 Blank • 15 Check Digit

  26. TAX INVOICE /BILL OF SUPPLY • A registered taxable person supplying,- • (i) taxable goods shall issue, at the time of supply, a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed; • (ii) taxable services shall issue a tax invoice, within the prescribed time, showing the description, the tax charged thereon and such other particulars as may be prescribed: • Revised Invoice against the invoice already issued during the period starting from the effective date of registration till the date of issuance of certificate of registration:

  27. TAX INVOICE /BILL OF SUPPLY • A registered taxable person supplying non-taxable goods and/or services or paying tax under the provisions of section 8 (Composition Scheme) shall issue, instead of a tax invoice, a bill of supply containing such particulars as may be prescribed.

  28. CREDIT NOTE / DEBIT NOTE • on or before the thirtieth day of September following the end of the financial year in which such supply was made, or the date of filing of the relevant annual return, whichever is earlier: • No Credit Note shall be issued if the incidence of tax and interest on such supply has been passed by him to any other person.

  29. TAX DEDUCTION AT SOURCE • (a) a department or establishment of the Central or State Government, or • (b) Local authority, or • (c) Governmental agencies, or • (d) such persons or category of persons as may be notified • to deduct tax at the rate of one percent • from the payment made or credited to the supplier (the deductee) of taxable goods and /or services, notified, • where the total value of such supply, under a contract, exceeds rupees ten lakh.

  30. ELECTRONIC COMMERCE OPERATOR

  31. COLLECTION OF TAX AT SOURCE • Every electronic commerce operatorshall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount, out of the amount payable or paid to the supplier, representing consideration towards the supply of goods and /or services made through it, calculated at such rate as may be notified in this behalf by the Central/State Government. • The amount collected shall be paid to the credit of the appropriate Government by the operator within ten days after the end of the month in which such collection is made, in the manner prescribed. [Sec. 43C]

  32. ACCOUNTS AND RECORDS • Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of – • production or manufacture of goods, • inward or outward supply of goods and/or services, • stock of goods, • input tax credit availed, • output tax payable and paid, and • such other particulars as may be prescribed in this behalf [Sec. 42 (1)]

  33. ACCOUNTS AND RECORDS • Every registered taxable person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit to the proper officer a copy of the audited statement of accounts, the reconciliation statement under sub-section (2) of section 30 and such other documents in the form and manner as may be prescribed in this behalf. [Sec. 42 (4)]

  34. ASSESSMENT • Self Assessment [Sec. 44] • Provisional Assessment [Sec. 44A] • Scrutiny of Return [Sec. 45] • Assessment of Non-filers of Returns [Sec. 46] • Assessment of Unregistered Persons [Sec. 47] • Summary Assessment in Special Cases [Sec. 48] • Audit by Tax Authorities [Sec. 49] • Special Audit by Chartered / Cost Accountant [Sec. 50]

  35. ADJUDICATION • Normal Cases • Duty with interest paid before SCN -> No SCN • Duty with interest paid within 30 days of SCN -> No Penalty • In other cases -> Adjudication within 3 years -> Penalty not exceeding 10% of tax or ten thousand rupees, whichever is higher.

  36. ADJUDICATION • Cases involving Fraud, Wilful Misstatement, Suppression of Facts • Duty with interest and 15% penalty paid before SCN -> No SCN • Duty with interest and 25% penalty paid within 30 days of SCN -> Proceeding deemed to be concluded • In other cases -> Adjudication within 5 years -> Penalty equal to tax evaded -> Duty, interest and 50% penalty paid within 30 days of communication of Order, proceeding deemed to be concluded

  37. RECOVERY OF GOVERNMENT DUES • By deducting amount owing to such person • By detaining and selling any goods belonging to such person • By notice to other person from whom money is due or may become due to such person • By distraining any movable or immovable property belonging to or under the control of such person, and by auctioning the said property • By issuing Certificate to District Collector to recover amount as dues of Land Revenue • By filing an application with Magistrate to recover the amount as if it were a fine imposed by him. • Cross empowerment of Central and State Government Officers for recovery

  38. RECOVERY OF GOVERNMENT DUES • Transfer of property to be void in certain circumstances. • Any amount payable on account of Tax, Interest or Penalty shall be first charge on the property of such person. • Provisional Attachment of property (maximum for one year)

  39. TAX COMPLIANCE METHODS • Inspection of place of business, transporter, warehouse or any other place • Search and Seizure • Inspection of goods in movement • Arrest • Summons • Audit, Scrutiny, Verification and Checks • Records to be made available include, Income Tax Audit Report under Section 44AB of the Income Tax Act, 1961.

  40. AUTHORITY FOR ADVANCE RULING • Authority for Advance Ruling shall be located in each state and shall comprise of one Member CGST and one Member SGST. • Appellate Authority for Advance Ruling shall be located in each state and shall comprise of the Chief Commissioner of CGST and Commissioner of SGST

  41. AUTHORITY FOR ADVANCE RULING • Any Registered Person or person desirous of obtaining Registration may file application. • Advance Ruling may be sought on following issues – • (a) classification of any goods and/or services • (b) applicability of a notification having a bearing on the rate of tax; • (c) determination of value of the goods and/or services • (d) admissibility of input tax credit • (e) determination of the liability to pay tax on any goods and/or services • (f) whether applicant is required to be registered under the Act; • (g) whether any particular thing done by the applicant with respect to any goods and/or services amounts to or results in a supply of goods and/or services, within the meaning of that term.

  42. MISCELLANEOUS • GST Compliance Rating Score of every taxable person on the basis of prescribed parameters to be intimated to taxable person and also placed on public domain . [Sec. 115] • Third Party Information (Information Return) [Sec. 117] • Power to collect statistics -> such statistics should not be disclosed [Sec. 119]

  43. MISCELLANEOUS • Information contained in Returns / Accounts / Documents not to be disclosed except as prescribed [Sec. 126] • Nothing contained in this section shall apply to the disclosure of,- (g) such facts to an officer of the Central Government or any State Government as may be necessary for the purpose of enabling that Government to levy or realise any tax or duty imposed by it; or • Test Purchase of goods / service from business premises to check issue of tax invoice / bill of supply by such taxable person -> on return of goods, amount to be refunded and tax invoice / bill of supply to be cancelled. [Sec. 121] • Authorised officer has power to draw samples [Sec. 122]

  44. MISCELLANEOUS • Service of Order, Summons, Notices etc. [Sec. 136] • Personal Delivery • By Post or Courier • By Fax • By E-mail • On dash-board • On Registered Mobile, etc.

  45. MISCELLANEOUS • an agriculturist shall not be considered as a taxable person [sec. 9(1) proviso] • “agriculturist” means a person who cultivates land personally, for the purpose of agriculture; [Sec. 2(8)] • “to cultivate personally” means to carry on any agricultural operation on one’s own account - [Sec. 2(103)] (a) by one’s own labour, or (b) by the labour of one’s family, or (c) by servants on wages payable in cash or kind (but not in crop share) or by hired labour under one’s personal supervision or the personal supervision of any member of one’s family; Explanation 1. - A widow or a minor or a person who is subject to any physical or mental disability or is a serving member of the armed forces of the Union, shall be deemed to cultivate land personally if it is cultivated by her or his servants or by hired labour. Explanation 2. - In the case of a Hindu Undivided Family, land shall be deemed to be cultivated personally, if it is cultivated by any member of such family.

  46. MISCELLANEOUS • (104) “turnover in a State” means the aggregate value of all taxable and non-taxable supplies, including exempt supplies and exports of goods and / or services made within a State by a taxable person and inter-state supplies of goods and / or services made from the State by the said taxable person excluding taxes, if any charged under the CGST Act, SGST Act and the IGST Act, as the case may be;

  47. INPUT TAX CREDIT • Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961, the input tax credit shall not be allowed on the said tax component. [Sec. 16 (10)] • Concept of Input Service Distributor

  48. THANK YOU, SIRS R.L. KABRA

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