GST TRANSITIONAL PROVISIONS – Series 2
CA Raghavendra C.R., Advocate & CA Bhanu Murthy J.S., Advocate
This articles is a continuation of our analysis of the transitional provisions under GST from the last edition and we propose to analyse the miscellaneous transitional provisions under CGST and IGST law covering the aspects relating to job work, return of goods and goods sent on approval basis etc.
I Transitional provisions relating job work – Section 141 of CGST Act, 2017
In case where goods (inputs as such or after processing, semi finished goods or finished goods) on which credit has been availed (on inputs relating to such goods), are sent for job work before the appointed date and effect of receipt or non receipt of goods could be analysed as below:
|Whether received back within 6 months from appointed date||No GST payable|
|The finished goods cleared directly from job workers premises on payment of GST for local clearance within 6 months from the appointed date||No GST payable|
|The finished goods cleared directly from job workers premises for exports on payment of GST or under bond or cleared as deemed export||No GST payable|
|(Period of 6 months could be extended by 2 months where sufficient cause is shown )|
|If goods are not received back within 6 months or extended time period||Credit availed by the sender is recovered as arrears of tax and no credit of such tax shall be eligible|
It shall be noted that to avail this benefit of non payment of GST, inputs held by job worker on behalf of principle manufacturer shall have to be declared both by the principal as well as job worker within 60 days from the appointed date in GST TRAN-1.
II Goods supplied prior to appointed date returned back to the registered premises after the appointed date.
Where goods cleared prior to appointed date are returned back after the appointed date the effect of such transaction is analyzed as below:
|A. Goods are cleared under existing law (whether or not duty paid) upto 6 months prior to appointed date and such goods are returned back within 6 months from the appointed date|
|If goods are returned by a person not registered under GST||The registered person who gets back the goods shall be entitled to refund of duty/ tax (if any paid on the clearance under existing law)|
|If goods are returned by a person registered under GST||Such return shall be deemed to be a supply|
|B. In all other cases|
|If returned by a person registered under GST||Such return shall be deemed to be supply attracting GST|
|If returned by a person not registered||Recipient may be liable under reverse charge.|
III Revisions of price after the appointed date:
In case where in pursuance of the contract, there is a price revision after the appointed date, either upward or downward, on goods or services supplied prior to appointed date the amount to the extent of such revision is deemed to be an outward supply under the CGST Act. The effect of upward or downward revisions could be analysed as below:
|Upward revision||In case of upward revision the supplier shall issue supplementary invoice within 30 days of such price revision and the same shall be treated as supplementary invoice relating taxable GST supply and accordingly GST shall be payable on such balance amount at the prescribed rates.|
|Downward revision||In case of downward revisions, the supplier shall issue credit note within 30 days of such price revision and such credit note shall be treated as credit note relating taxable GST supply. Reduction in tax liability would be allowed only where buyer has reduced his credit.|
IV Refund claims:
Where the refund claim is filed before, on or after the appointed day for refund of Cenvat credit, duty or tax under existing law, the shall be disposed of as per the provisions of existing law. However, where any refund claim is rejected fully or partially, such rejected amount shall lapse.
Every refund claim which is filed after appointed day for refund of duty or tax paid under existing law in respect of goods or services exported before or after the appointed day, shall be disposed of as per the provisions of existing law.
Note: No refund shall be allowed of any balance of Cenvat credit as on appointed day and carried forward under GST.
V Tax treatment for ongoing long term projects:
In case of ongoing projects entered into prior to the appointed date, any goods and/or services supplied on or after the appointed day in pursuance of a such contract shall be liable to tax under the provisions of this GST Act.
VI Avoidance of double taxation on account of time of supply :
Where VAT or services has been paid prior to the appointed date on account of the existing provisions (on account of receipt of consideration) but the goods or services or both are supplied on or after the appointed date, the GST provisions provide following relaxations:
- Where VAT / ST has been paid: To the extent of such payment no GST would be liable to be paid
- Where VAT as well as ST is paid: GST would be leviable entire value of supply and VAT and ST already paid would be eligible as credit.
Every person to whom the above provision applies, shall within a period of 90 days from the appointed day, shall submit a declaration electronically in FORM GST TRAN-1 furnishing the proportion of supply on which VAT or service tax has been paid before the appointed day but the supply is made after the appointed day, and the ITC admissible thereon
Goods sent on approval basis returned on or after the appointed day
Where goods are sent on approval basis prior to appointed date but are returned back after the appointed date, the effect of such transaction under GST could be analysed as below:
- Where goods are sent on approval basis upto 6 months prior to appointed date and such goods are returned back within 6 month from the appointed date then NO GST would be payable on such goods returned.
- In any other case where goods are returned after the period of 6 months (or extended period) the person returning the goods shall pay GST
- Where goods are not returned then the supplier (original supplier) shall be liable to pay GST in accordance with the prescribed rate of tax.
It shall be noted that the period of 6 months (for return) may be extended by a period of 2 months on sufficient cause.
It is to be noted that every person having sent goods on approval under the existing law and who are claiming benefit under the above provision, within 90 days of the appointed day, shall submit details of such goods sent on approval in FORM GST TRAN-1.
VIII Tax deduction at source
Where a supplier has made any sale of goods in respect of which TDS provisions under any state VAT laws would apply and has also issued an invoice for the same before the appointed day, no deduction of tax at source under section 51 of CGST Act shall be made by the deductor under where payment to the said supplier is made on or after the appointed day.
IX Import of services:
Import of services made after the appointed day shall be liable to tax under the provisions of IGST law regardless of whether the transactions for such import of services had been initiated before the appointed day. However, if the tax is paid under the existing law, the balance amount of tax is payable under the IGST Act.