Transitional Provisions - Epitomesolutions.inestv.in/icai/idtc/pdf/Transitional Provision-CA Rajesh...

Transitional Provisions- CA Rajesh Kumar T.R.

Migratory Steps

Approaches :

From Business to Law

Each activity and examining the implication and taking required

action.

Eg. While examining sales, different types of sales, for each type of sales,

identifying taxability, nature of supply, classification, rate of tax, Invoicing

method, documents for movement of goods, recording of the transaction,

summarising the same in the required format for reporting in returns and

reconciliation with financial records;

Law to Business

Each of the provision is understood and then tried to examine which

all the business areas gets affected by virtue of that provision.

Migratory Steps

Reviewing and correction of Functional areas :

Other Steps

Business process/Functional Analysis

Staff training

System configuration and Technology upgradation

Business Models review

Analysis of Impact under other laws

Revisit Contractual Obligations

Litigation Status

Many others

• Existing Regd. persons having valid PAN will be issued given Regn.

certificate on provisional basis;

• This will be subject to compliance of conditions and procedure in

Rules;

• On such compliance it will be replaced by final Regn. certificate.

• If not -> it is liable for cancellation.

• If any person who was not required to be registered in terms of

GST law, it can be cancelled on specific application and procedure.

• On such cancellation, it is deemed that no regn. was issued.

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Migration of Existing Tax Payers – Sec 139 of CGST Act

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Inputs & semi-finished/finished goods received/mfrd. at a place of

business, removed for job work under existing law and returned to the said place after appointed day

Returned after6m*

Returned within 6m*

No tax by JW ITC recoverable in terms of section 142(8)(a)

141(1),(2),(3)

*Extendable upto further 2 months

- Apply the above only if manufacturer and JW declare -details of inputs or goods held in stock by JW on the appointed day.

Input And Semi Finished Goods Removed For Job Work

Form GST TRAN-1 - Details of inputs or goods held in stock by JW to be disclosed

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Issues u/s 141

• Whether Job worker is liable for payment of duty on the

processed goods if the same are returned after 6 Months;

• Provision provides for recovery of ITC if the goods are not

returned within 6 months from the appointed date. Whether

ITC is as defined under GST Act or Earlier Credits like CENVAT

Credit or VAT Credit/deduction;

• Whether goods sent to JW has to be received back at any other

place and cannot be removed from there?

• What would be the treatment of Capital Goods sent to JW?

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• Inputs, Semi-finished, finished goods lying with Job worker:

Existing jobwork tracking mechanism - Jobwork challans/

register;

Reco of jobwork Records;

ITC to be reversed - Principal to bear for the job workers

lapses also;

Goods lying for more than 180 days - already credit

reversed, where goods yet to receive – No provision for re-

availing credit in GST;

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Preparation – Action Points

(A) Return of goods before

appointed date possible

• All inventory with job worker where more than 6 months are lapsed;

• Other be called back to reduce compliance burden.

(B) If return of goods before

appointed date is not

possible:

• Physical inventory to be taken in respect of goods held by job worker. Such stock taking/identification has to be made both by job worker and principal and reported.

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(C)Treatment post

appointed date:

• No JW Process taken yet: bring back to same location from where it was originally sent. Goods should be brought on delivery challan giving reference.

• The details of goods on job work basis is required to be submitted within 90 days from transition date in Form TRAN-1. Ensure that it is submitted within due date.

• It must be ensured that all goods are received back within 6 months from the transition date. JW charged by job worker would be subject to GST.

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No refund

Taxable person shall be eligible for refund of the duty paid

under the existing law

Returned by a Registered Person

Section- 142(1)

Returned after 6 months

Returned within 6 months

Return of goods after appointed day on which duty had been paid

under existing law

Returned by other than a Registered Person

Deemed Supply

Dutiable Goods Returned To Place Of Business

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Illustration on 142(1)

SituationGoods sent on

Goodsreceived on

Goodsreturned

Conclusion

Goods sentworthRs. 10 lakh -Assuming rollout date to be01/07/2017

28/02/2017 30/09/2017

WorthRs. 2.0 L byunregisteredperson

Since goodsreturned within6 months fromroll out date theduty shall berefunded

• No credit reinstatement, refund restricted;

• Refund route if returned by unregistered person - tax alreadypaid;

• Identifiable to the satisfaction of the proper officer..??;

• Difference in tax rate - dominating party;

• Clear return policy - more than 6 months, tax rate, refundeligibility, deemed supply etc.;

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Contract entered prior to appointed day

Price of goods/services revised on/after appointed day:

Upwards - Issue Supplementary invoice or debit note.

Deemed to be in respect of outward supply under GST

Downwards - Issue supplementary invoice or credit note.

Reduction in tax liability allowed only if recipient has reduced

corresponding ITC

Section-142(2)

*Issue within 30 days of such revision.

Issue Of Supplementary Invoices, Debit/Credit Notes

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SituationDate of entering contract

Date of re-negotiation of

ContractConclusion

EnteredContract forsome service worth Rs. 10L-GST Roll out date assumed to be 01/07/2017

15/06/2017 31/07/2017-Contract price revised to Rs. 12L

Supplementary invoice to be issued within 30 days for the increased amount i.e. 2L from the date of revision i.e. within 30/08/2017


Credit note has reduced his corresponding input tax credit.

• Can discounts be covered – transactional change;

• Different tax rate on escalation element;

• complexity for Firm price contracts, exempted contracts,

lesser tax rate contracts - addl tax collectability issue;

• In case of credit note Higher ITC reversal & lower tax payment

if tax rate increased in GST regime;

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Section-142(3)

Pending Refund Claims To Be Disposed Of Under Existing Law

Situation Treatment under GST

Condition

• Refund claimedbefore, on orafter appointedday

• Of CENVAT credit,duty, tax, interestor any amountpaid

• Shall be disposedas per provisionsof existing law

• Amount accruingshall be refundedin CASH

• Any REJECTION –Fully OR Partly,SHALL LAPSE

• No refund shall beallowed of anyamount of Cenvatcredit carriedforward

• No UnjustEnrichment

Refund of duty / tax paid under existing law for

goods / services exported

Refund of tax deposited under existing law with respect to services not

provided

Shall be disposed off in accordance with existing law

Amount if rejected shall lapse.

No refund if CENVAT credit is c/f on appointed day

Amount accruing shall be paid in cash subject to unjust enrichment

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Section-142(4),(5)

Refund Claims Filed After Appointed Day

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If the refund claim is rejected, then the amount of credit willlapse and not be available as credit.

Date of filing the refund Refundamount

Conclusion

Application for Refund05/06/2017 – AssumedGST Roll out date to be01/07/2017

10 L Since refund applicationis filed before roll out datethe refund to beprocessed under oldprovisions and to be paidin Cash only.

Illustration on 142 (3) & (4)

• Decision to withdraw refund:

• Before issue of SCN,

• After issue of SCN,

• After issue of O-I-O,

• Before 1-7-2017 or After 1-7-2017

• Credit v/s refund - if utilizable in GST. For ex: software companies

– credit utilisable even against goods;

• No option for recoupment of refund of CENVAT credit in returns, if

rejected;

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Preparation – Action Points - 142 (3) & (4)

• Option to take credit where no surety, no documentation,

disputable cases etc. – Professionals view on probability to be

taken;

• Re-look at the old refund claims - central & various states;

• Rule 6(3) reversal - Adjustment in returns if timely known;

• Deficiency in the provision of service..??

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Preparation – Action Points - 142 (3) & (4)

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Every proceeding of claim for CC under the existing law

initiated before/ after appointed date

Disposed of in accordance with provisions of existing law

Admissible amount-refund in cash subject to unjust

enrichment. Not be admissible as ITC

Amount recoverable as arrears of tax under GST Act.

Not be admissible as ITC

142(6)(a),(b)

*No refund of CC if c/f on the appointed day

Every proceeding of recoveryof CC under the existing law

initiated before/ after appointed date

Disposed of in accordance with provisions of existing law

Claim of Cenvat Credit To Be Disposed Of Under The Existing Law

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142(7)(a),(b)

Every proceedings of output duty/tax liability

Disposed off as per existing law

Amount found admissible

If amount recoverable

CGST - To be refunded in cash subject to unjust enrichment SGST - In accordance with the provisions of earlier law

Recovered as arrear of tax under GST.

Not be admissible as ITC

Finalization Of Appeal, Revisions, Review, Relating To Output Liability

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Any assessment or adjudication proceedings

instituted under earlier law whether before / after

appointed day

Tax or any amtbecomes refundable

If amt becomesrecoverable

CGST - To be refunded in cashsubject to unjust enrichmentSGST - In accordance with theprovisions of earlier law

To be recovered as arrear of tax*

*Not be admissible as input tax credit- GST

142(8)(a),(b)

Adjudication Proceedings

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142(9)(a),(b)

Return furnished under existing law is revised after the

appointed date

If amt is recoverable

CGST - To be refunded in cash subject to unjust enrichment SGST - In accordance with the provisions of the said law* If revised within time limit specified under existing law

Recover as arrear of tax under GST*

If amt is refundable

*not be admissible as input tax credit in GST. For Ex: RCM

Amount Recovered Or Refunded Pursuant To Revision Of Returns

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Contract entered prior to appointed day& Goods and/or services supplied

On/After the appointed day

Before the appointed day

Provisions of GST law

Provisions of existing law

Sec 142(10)

Proposals, RFQ’s, Sale Orders sent in current regime -executed in the GST regime. Cum Tax, international txns;

Pre-GST Contracts

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Situation Contract entered on

Contract execution b/w

Conclusion

Contract for original works-Assumed GST Roll out date to be 01/07/2017

15/02/2017 20/07/2017 to 30/10/2017

The supply will be taxable under the GST Law irrespective of the fact that the contract was entered under old law.


• Impact on long term contracts - exempted, cum-tax, low taxrate;

• Planning the tax regime - for ex: telecommunication,internet, security/ manpower supply, AMC’s etc.

receive advance & pay off taxes,

beneficial in B2C supplies, marketing opportunity,

boost in working capital.

• Spill over transactions - opportunity to shift tax regime tothe extent POT covered under earlier law.

Taxability/ exempted;

credit availability;

Rate of tax;

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Situation Treatment under GST Condition

Not withstandinganything contained u/s12

No tax shall be payableunder GST

to the extent of taxLEVIABLE under VAT

Not withstandinganything contained u/s13

- do -To the extent of taxLEVIABLE underChapter V of FinanceAct, 1994

Tax was paid on anySupply both under VAT& Chapter V

Tax shall be leviable under GST, taxable person shall be entitled to take credit under GST of VAT

or Service Tax paid

Taxability - Point of Taxation - 142(11)

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Section-142(12)

Goods sent on approval basis, not earlier than 6

months of appointed day is rejected

Returned within 6* months

Returned after 6* months

No, tax on goods returned

Tax payable- by person returning

taxable goods

* May be extended for further period of 2 months

Not Returned within 6* months

Tax payable- by person sending the

taxable goods

Goods Sent On Approval Basis Returned

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• Sale of goods in respect of which TDS provision is attracted under law

• Invoice issued for the same

Before appointed

day

• Payment to the said supplier is made

After GST

No deduction of TDS u/s 51

Sec-142(13)

Deduction of Tax at Source (TDS)

For any [email protected]

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Transitional Provisions - Epitomesolutions.inestv.in/icai/idtc/pdf/Transitional Provision-CA Rajesh...

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