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The Sales Tax Practisioners Association TRANSITIONAL ISSUES IN GST PRESENTED BY CA VIKRAM D MEHTA

The Sales Tax Practisioners Association TRANSITIONAL ISSUES IN GST PRESENTED BY CA VIKRAM D MEHTA. Section 2(10) – “appointed day” means the date on which section 1 of this Act comes into effect Can there be different appointed days under CGST and SGST laws? Is it 1 st JULY 2017?

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The Sales Tax Practisioners Association TRANSITIONAL ISSUES IN GST PRESENTED BY CA VIKRAM D MEHTA

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  1. CA VIKRAM D MEHTA The Sales Tax Practisioners Association TRANSITIONAL ISSUES IN GST PRESENTED BY CA VIKRAM D MEHTA

  2. CA VIKRAM D MEHTA Section 2(10) – “appointed day” means the date on which section 1 of this Act comes into effect Can there be different appointed days under CGST and SGST laws? Is it 1stJULY 2017? What if one doesn’t apply for migration which is currently going on?

  3. CA VIKRAM D MEHTA Section 139 of Cgst act CURRENTLY REGISTERED DEALER POSSESSING VALID PAN SHALL BE GRANTED PROVISION REGISTTATION SUBJECT TO CONDITIONS CAN BE CANCELLED BY WAY OF AN APPLICATION

  4. A registered person, (other than paying tax by a way composition a person opting to pay tax under section 10: Composition levy), Shall be entitled to take , credit ledger in his electronic credit ledger. The amount of CENVAT credit carried forward in the return period ending prior to appointed date. CA VIKRAM D MEHTA Section 140 of Cgst act

  5. 140 (1): AMOUNT OF CENVAT CREDIT CARRIED FORWARD IN A RETURN TO BE ALLOWED AS INPUT TAX CREDIT CA VIKRAM D MEHTA

  6. Submit Electronic application in 60days from appointed day in GST Trans -1 Credit will not be allowed to transfer if CA VIKRAM D MEHTA Transition 140(1)……c/f of credit said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government amount of credit is not admissible as input tax credit under GST. not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date

  7. CA VIKRAM D MEHTA NOVEMBER MODEL LAW SGST PROVISION

  8. CA VIKRAM D MEHTA Credit attributable to Form “C” , “H”, :F” , “E1” , “E2” and “I” shall not be eligible for credit in the electronic ledger.—Proviso in SGST …. Whereas Direct Exports are not covered . “Provided Further that so much of the credit as is attributable to any claim related……that is not substantiated in the manner, and within the period , prescribed in Rule 12 ….. Whether credit attributable to Form CST Sales will not be allowed or difference of tax on Forms will be covered…? For example: If a registered dealer has sold the taxable goods outside Maharashtra of Rs. 10.000,000/- and charged 2% tax on it i.e Rs. 2,00,000/- for which the Form “C” is receivable for the entire 2% sale. And the dealer is having the refund of Rs. 5,00,000/- to be carried forward.

  9. Refund exceeding Rs 5 lakh not entitled to carried forward under MVAT Law. Consequences? • Whether SGST provision in Maharashtra applicable only in respect of carried forward set off less than Rs 5 lakh and that too subject too availability of forms • Whether Refund amount of Rs 5 lakhs to be reduced proportionately since only one quarter is falling under the MVAT law….? • Proviso to Sec 50….whose refund claim in a year is rupees five lakhs or less may……… • Whether separate transitional rules will be coming for Maharashtra. CA VIKRAM D MEHTA ISSUES

  10. Unavailed credit =Total credit on capital goods- credit already availed under the existing laws. CA VIKRAM D MEHTA CAPITAL GOODS- UNAVAILED CREDIT Registered Person ( Other than Composition Tax payer under Sec 10 of CGST Act) Provided that the said credit is admissible under GST Act and under the current Act . CENVAT Credit of unavailed credit in respect of capital goods. Entitled to be credited in Electronic credit Ledger.

  11. CA VIKRAM D MEHTA 140 (2): UNAVAILED CENVAT CREDIT ON CAPITAL GOODS, NOT CARRIED FORWARD IN A RETURN, TO BE ALLOWED IN CERTAIN SITUATIONS: Distinct provisions for Cenvat on Capital Goods under Excsie/Service Tax. Under the MVAT Law, entire credit is allowable in the period in which the capital asset is purchased and therefore, Whether this section would have applicability in the state of Maharashtra? Dealer engaged in business of right to use of passenger motor vehicle , credit restricted as per 53 (II)(a) MVAT rule whether can be claimed ..? The credit taken has to be eligible under the old law as well as new law and therefore whether credit will be allowed to be carried forward in respect to motor vehicle used for business of right to use.

  12. ISSUE: • In a situation where goods are lying in WIP and ITC is not claimed can the same be claimed under the new LAW when the capitalization is done under the new law? • Rules require to submit details of Credit availed and yet to be availed under each existing law as on appointed day. CA VIKRAM D MEHTA Transition sec 140(2)…Capital Goods

  13. CA VIKRAM D MEHTA 140 (3): CREDIT OF ELIGIBLE DUTIES AND TAXES IN RESPECT OF INPUTS HELD IN STOCK TO BE ALLOWED IN CERTAIN SITUATIONS REGISTERED UNDER GST NOT REGISTERED UNDER /EXCISE/ SERVICE TAX/VAT SELLING EXEMPT GOODS UNDER ABOVE LAW TAXABLE IN GST STOCK OF GOODS BEING INPUTS , SEMIFINISHED ELIGIBLE TO CLAIM CREDIT OF TAXES ON GOODS IN STOCK

  14. CA VIKRAM D MEHTA • TRANSITIONAL SEC 140(3)…. • CONDITIONS: • Inputs/goods are used or intended to be used for making taxable supplies • Eligible for input tax credit under GST Act • Credit of Input not specifically disallowed under Current Law.(SGST Model law sec 169(1)(iv)) • Possession of invoice or other prescribed documents evidencing payment of duty under earlier law • Not earlier than 12 months immediately preceding the appointed day • The said taxable person passes on the benefit of such credit to the recipient • Dealers Covered…Exempt Goods/Services, First Stage/Second Stage, Registered Importer, Depot of Manufacturer, WCT availing 26/2012.

  15. Proviso to section 140(3) In case duty paying documents not available , credit shall be allowed at the rate of 40% of the central tax applicable on supply of such goods. The credit in the electronic credit ledger will be granted on payment of CGST- Rule 1- 3(a) Provided the transaction is completed within 6 tax period (Months) and the benefit of such credit is passed on by way of reduced prices Available to other than Manufacturer/Service Porvider Rules require to submit stock statement as on appointed day Whether Works Contractors Eligible to take credit of inputs lying with them under this clause..? CA VIKRAM D MEHTA TRANSITIONal sec 140(3)

  16. The credit as per the provisio to sec 140(3)means credit of input tax • The definition of input tax under the Section 2(62) reads as under- “input tax” in relation to a registered person, means the central tax, State tax,integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—………….. • In view of above Whether passing of Credit to the extent of Credit received @40% of CGST is mandatory..? CA VIKRAM D MEHTA Issues in 140(3)

  17. CA VIKRAM D MEHTA 140 (4): CREDIT OF ELIGIBLE DUTIES AND TAXES PERTAINING TO EXEMPT GOODS OR SERVICES FOR A DEALER ENGAGED IN BOTH REGISTERED UNDER GST ENGAGED IN THE MANUFACTURE OF TAXABLE AS WELL AS EXEMPTED GOODS UNDER CENTRAL EXCISE ACT ENGAGED IN THE MANUFACTURE OF TAXABLE AS WELL AS EXEMPTED SERVICES UNDER SERVICE TAX TAXABLE IN GST SHALL BE ENTITLED TO TAKE CREDIT IN ELECTRONIC CREDIT LEDGER CENVAT credit c/f in a return furnished under the existing law and CENVAT credit 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, relating to such exempted goods or services,

  18. CA VIKRAM D MEHTA • 140 (5): CREDIT OF ELIGIBLE DUTIES AND TAXES IN RESPECT OF INPUTS OR INPUT SERVICES DURING TRANSIT • Registered taxable person • Entitled to credit of Input/Input services VAT and Entry Tax • Of inputs/input services received after appointed day, invoice/documents pertaining to previous period • Recorded within 30 days of appointed day or such exceeded period • Subject to furnishing a statement in such manner as may be prescribed

  19. CA VIKRAM D MEHTA 140 (6): REGISTERED TAXABLE PERSON UNDER GST WHO WAS PAYING TAX UNDER COMPOSITION UNDER THE OLD LAW, HAS STOCK OF GOODS BEING INPUTS OR SEMI FINISHED GOODS CAN CLAIM CREDIT, SUBJECT TO THE FOLLOWING CONDITIONS 1) Inputs/goods are used or intended to be used for making taxable supplies 2) Eligible for input tax credit under GST Act 3) Credit of Input not specifically disallowed under existing Law.(SGST law only Model law 172(1)(iv))Clause should not be there 4) Possession of invoice or other prescribed documents evidencing payment of duty / tax under earlier law 5) Invoice not earlier than 12 months immediately preceding the appointed day 6) Stock Statement to be submitted. 7)Not registered as Composition Tax payer under GST Act

  20. Whether the above section will be applicable to mandap keeper , Retailers,Restuarants, Caterers and dealers paying tax under rule 59, Hotelier composition, ? • Whether Works Contracts Composition dealers will be covered here? Whether C/f as per 140(1) and 140(6) on stock ,both will be applicable..? • SGST draft law specifies that amount of credit shall be as prescribed. CA VIKRAM D MEHTA Composition Dealer having Inputs in stock

  21. 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 Input Service Distributor • 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. CA VIKRAM D MEHTA Sec 140 (7)-ISD

  22. CA VIKRAM D MEHTA Sec 140 (8) Centralized registration under service tax CENVAT carried forward in the Return Preceeding appointed day. Allowed to be transferred to Electronic Credit Ledger To any registered person having same PAN for which centralized registration obtained .

  23. Centralized registration covering Mumbai , Delhi , Calcutta , Bangalore CENVAT credit CGST in return prior to appointed day Rs 4 lakh. Options available The distribution can be in any ratio CA VIKRAM D MEHTA eXAMPLE I II III BANGALORE-1 MUMBAI-2 MUMBAI-1 MUMBAI-1 DELHI-2 CALCUTTA-3 DELHI-2 CALCUTTA-0

  24. CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, • such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three monthsfrom the appointed day. CA VIKRAM D MEHTA Sec 140 (9)

  25. CA VIKRAM D MEHTA 141 (1): INPUTS REMOVED FOR JOB WORK AND RETURNED ON OR AFTER THE APPOINTED DAY: INPUT TO SENT TO JOB WORK BEFORE GST RETURN AFTER GST WITHIN 6 MONTHS OR EXTENDED PERIODS IF NOT RETURNED WITHIN 6 MONTHS OR FURTHER EXTENDED PERIOD OF 2 MONTHS . ITC TO BE RECOVERED

  26. Option granted to supply goods from job work premises subject to payment of tax or without payement in case of Exports • PROVISO TO RULE 53(3) MVAT RULES Provided further that  the  deduction provided in thisSubrule  shall  notapply if  the  goods  dispatched arebrought back  to the  State  within six months of the date  of dispatch whether after  processing or otherwise…whether extended period would apply..? Or Saving clause will apply…? CA VIKRAM D MEHTA Return of Goods sent to job worker

  27. CA VIKRAM D MEHTA 141 (2): SEMI-FINISHED GOODS REMOVED FOR JOB WORK AND RETURNED ON OR AFTER THE APPOINTED DAY SENT TO JOB WORK BEFORE GST RETURN AFTER GST WITHIN 6 MONTHS OR EXTENDED PERIODS IF NOT RETURNED WITHIN 6 MONTHS ITC TO BE RECOVERED PROVIDED also that the person dispatching the goods may, in accordance with the provisions of the earlier law, transfer the said goods to the premises of any registered taxable person for the purpose of supplying Therefrom on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.

  28. CA VIKRAM D MEHTA 141 (3): FINISHED GOODS REMOVED FOR CARRYING OUT CERTAIN PROCESSES AND RETURNED ON OR AFTER THE APPOINTED DAY: FINISHED GOODS SENT TO JOB WORK BEFORE GST RETURN AFTER GST WITHIN 6 MONTHS OR EXTENDED PERIODS IF NOT RETURNED WITHIN 6 MONTHS ITC TO BE RECOVERED PROVIDED ALSO that the person dispatching the goods may, in accordance with the provisions of the earlier law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within six months or the extended period, as the case may be, from the appointed day.

  29. Conditions for exemption on Return of Goods -141(4) The provisions of Rule 3 of transitional Rules shall apply only if the person dispatching the goods and the job worker declare the details of the goods held in stock by the job worker on behalf of the said person on the appointed day in such form and manner and within such time as may be prescribed. The rule is applicable to all the clauses of Job work i e 141(1)(2)&(3) CA VIKRAM D MEHTA

  30. CA VIKRAM D MEHTA 142 (1): DUTY PAID GOODS RETURNED TO THE PLACE OF BUSINESS ON OR AFTER APPOINTED DAY TAXABLE GOODS SOLD PRIOR TO SIX MONTHS ON OR BEFORE THE APPOINTED DAY GOODS RETURNED WITHIN 6 MONTHS AFTER APPOINTED DAY BY UNREGISTERED DEALER IN GST REFUND ALLOWABLE PROVIDED that if the said goods are returned by a registered taxable person the return of the goods shall be deemed to be a supply. Similar provision in November Model Law CGST.

  31. CA VIKRAM D MEHTA 142 (2): ISSUE OF SUPPLEMENTARY INVOICES, DEBIT OR CREDIT NOTES WHERE PRICE IS REVISED IN PURSUANCE OF A CONTRACT SALES/SERVICE UNDER MVAT/SERVICE TAX PRICE VARIANCE UPWARDS SUPPLEMENTARY INVOICES, DEBIT NOTE WITHIN 30 DAYS OF REVISION SHALL BE DEEMED TO BE SUPPLY UNDER GST LAW

  32. CA VIKRAM D MEHTA SALES/SERVICE UNDER MVAT/SERVICE TAX PRICE VARIANCE DOWNWARDS SUPPLEMENTARY INVOICES, CREDIT NOTE WITHIN 30 DAYS OF REVISION SHALL BE DEEMED TO BE SUPPLY UNDER GST LAW PROVIDED that the said registered 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.

  33. Goods sold to a unregistered person prior to a appointed date and if half of the goods returned within 6 months of the appointed day How will the credit mechanism work? CA VIKRAM D MEHTA EXAMPLE

  34. CA VIKRAM D MEHTA 142 (3): PENDING REFUND CLAIMS TO BE DISPOSED OF UNDER EARLIER LAW: PENDING REFUND CLAIMS of CENVAT CREDIT UNDER EARLIER LAW FILED BEFORE OR AFTER THE APPOINTED DATE DISPOSED OFF IN ACCORDANCE WITH EARLIER LAWS AMOUNT OF REFUND TO BE PAID IN CASH AS PER EARLIER LAW REJECTED CLAIM FULLY / PARTIALLY SHALL LAPSE NO REFUND CLAIM FOR ANY CREDIT WHICH HAS BEEN CARRIED FORWARD UNDER GST

  35. CA VIKRAM D MEHTA 142 (4): REFUND CLAIMS FILED AFTER APPOINTED DAY FOR GOODS OR SERVICES EXPORTED TO BE DISPOSED OF UNDER EARLIER LAW: PENDING REFUND CLAIMS UNDER EARLIER LAW FILED AFTER THE APPOINTED DATE DISPOSED OFF IN ACCORDANCE WITH EARLIER LAWS AMOUNT OF REFUND OF ANY DUTY OR TAX PAID IN RESPECT OF GOODS OR SERVICES EXPORTED BEFORE OR AFTER THE APPOINTED DAY REJECTED CLAIM FULLY / PARTIALLY SHALL LAPSE NO REFUND CLAIM FOR ANY CREDIT WHICH HAS BEEN CARRIED FORWARD UNDER GST

  36. CA VIKRAM D MEHTA 142 (5): REFUND CLAIMS FILED AFTER APPOINTED DAY FOR SERVICES NOT PROVIDED TO BE DISPOSED OF UNDER EARLIER LAW: PENDING REFUND CLAIMS UNDER EARLIER LAW FILED AFTER THE APPOINTED DATE DISPOSED OFF IN ACCORDANCE WITH EARLIER LAWS AMOUNT OF REFUND OF TAX PAID UNDER EXISTING LAW IN RESPECT OF SERVICES NOT PROVIDED ANY AMOUNT EVENTUALLY ACCURING SHALL BE PAID IN CASH NOTWITHSTANDING ANYTHING CONTRARY CONTAINED U/S (2) OF 11B OF THE CENTRAL EXCISE AXT, 1944

  37. CA VIKRAM D MEHTA 142 (6),(7): FINALIZATION OF PROCEEDINGS RELATING TO OUTPUT DUTY OR TAX LIABILITY: Any proceedings (Including appeal , review, reference) related to output tax liability / Allowance of Cenvat Credit initiated before or after APPOINTED DAY pertaining to earlier law shall be disposed off as per earlier law. The liability so determined shall be recovered as arrears of GST law. In case of refund the same shall be granted as per earlier law notwithstanding provisions of sec 11B(2) of Excise law.

  38. CA VIKRAM D MEHTA 140(8): TREATMENT OF THE AMOUNT RECOVERED OR REFUNDED IN PURSUANCE OF ASSESSMENT OR ADJUDICATING PROCEEDINGS Pursuance of an assessment or adjudication proceedings Instituted before, on or after appointed day Under the earlier law OUTCOME….

  39. CA VIKRAM D MEHTA

  40. CA VIKRAM D MEHTA 142 (9): TREATMENT OF THE AMOUNT RECOVERED OR REFUNDED PURSUANT TO REVISION OF RETURNS RETURN FILED UNDER EARLIER LAWS Amount of tax to be recovered or credit is inadmissible REVISED AFTER APPOINTED DATE Amount found to be refundable or credit found admissible If return revised within time limit as prescribed in earlier law Recover as arrear under GST Act Refund in Cash as per old law

  41. CA VIKRAM D MEHTA 142(10): Supply in a continous Contracts in gst142(11): Part supply in GST Save otherwise provide Contracts entered prior to appointed day and goods/services supplied on or after appointed day …taxable under GST Notwithstanding above if tax paid on goods under earlier act , to that extent no tax payable under GST Similarly if tax paid on Services under earlier law, to that extent no tax payable under GST

  42. CA VIKRAM D MEHTA 142(11)(a): TAXABILITY OF SUPPLY OF GOODS IN CERTAIN CASES Where portion of supply of goods is not covered above, then upto that extent liable under GST Act

  43. CA VIKRAM D MEHTA 142(11)(b): TAXABILITY OF SUPPLY OF SERVICES IN CERTAIN CASES: Where portion of supply of service is not covered above, then upto that extent liable under GST Act (SGST)

  44. Taxability of composite contracts involving payment under VAT as well as service tax continuing after appointed day. Entitled to take credit of VAT, Service tax paid from the tax on supplies made after appointed day as prescribed….. CA VIKRAM D MEHTA 142(11)(C)….Composite contracts

  45. CA VIKRAM D MEHTA 142(12): GOODS SENT ON APPROVAL BASIS RETURNED ON OR AFTER THE APPOINTED DAY

  46. CA VIKRAM D MEHTA Goods sent on approval basis

  47. CA VIKRAM D MEHTA : DEDUCTION OF TAX AT SOURCE Supplier made sale of goods under earlier law Invoice issued before appointed day Payment made after appointed day No Tax at source to be deducted

  48. PREPARE TO INVEST WORKING CAPITAL IN YOUR PROFESSIONAL WORK…. CA VIKRAM D MEHTA Transitional provision for gst practitioner CASH SYSTEM MERCANTILE SYSTEM

  49. CA VIKRAM D MEHTA THANK YOU VIKRAM D MEHTA D.R.MEHTA & ASSOCIATES 9TH FLOOR,H-2,EVEREST BUILDING TARDEO ROAD,TARDEO,MUMBAI-34 MOB-9869036230 vikram@drmehta.in

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