What do you think are the challenging issues, immediately affecting a person covered under earlier laws? The objective of this presentation is to impart understanding on various issues which a business unit/service provider shall face in this change over from earlier law to GST.

1. MODEL GST
LAW
TRANSITIONAL
PROVISIONS
Presented by
CA. VINAY KAUSHIK

2. Preamble
With the enactment of GST, various issues which a business unit/service
provider shall face in this change over from earlier law to GST would be:
 Registration under GST when already registered under any of the earlier
laws;
 CENVAT Credit;
 Goods return/Movement of Goods and Services;
 Revision of prices;
 Refunds pending in the earlier law;
 Issues relating to continuous supply of goods and services
 Issues of tax in case of goods lying with the agent.
 Credit Distribution of service tax by Input Service Distributor.
 Treatment of long term construction/works contracts.
 Deduction of Tax Source.
8/2/2016 2:05 AM 2

3. Preamble
Model GST Law takes care of “Transitional Provisions” under Chapter
XXV of the Goods and Service Tax Act, 2016 comprising section 141 to
section 162E and under Chapter X of the Integrated Goods and
Service Tax Act, 2016 comprising section 31.
The object of this presentation is to impart understanding on various
issues which a business unit/service provider shall face in this change
over from earlier law to GST.
8/2/2016 2:05 AM 3

4. Registration
As per Section 142 every person registered under any of the earlier
laws be it Central Excise, VAT, Service Tax etc. SHALL be mandatorily
given registration on provisional basis. This provisional registration is
only for six months.
Further on furnishing of such information and required documents and
subject to the provisions of section 19, the provisional registration shall
be confirmed by the government and shall be granted on a final basis
by the Central/State Government.
8/2/2016 2:05 AM 4

5. Input Tax Credit
CENVAT credit carried forward
Under Section 143. A registered taxable person shall be entitled to take, in his
electronic credit ledger, credit of the amount of CENVAT credit (under CGST Law)
or Value Added Tax (under SGST Law), as the case may be, carried forward in a
return furnished under the earlier law in respect of the period ending with the day
immediately preceding the appointed day in such manner as may be prescribed.
Provided that the taxable person shall not be allowed to take credit unless the said
amount was admissible as CENVAT credit or Input Tax Credit, as the case may be,
under the earlier law and is also admissible as input tax credit under this Act.
The amount taken as credit shall be recovered as an arrear of tax under this Act
from the taxable person if the said amount is found to be recoverable as a result of
any proceeding instituted, whether before or after the appointed day, against such
person under the earlier law.
8/2/2016 2:05 AM 5

6. Input Tax Credit
CENVAT credit on capital goods
As per section 144. A registered taxable person shall be entitled to take, in his
electronic credit ledger, credit of the un-availed CENVAT credit (under CGST Law)
or un-availed input tax credit (under SGST Law) on capital goods, not carried
forward in a return furnished under the earlier law by him.
The only condition where such carry forward shall not be allowed is when the
CENVAT credit permissible under the earlier law is not admissible under the GST
Law for the particular capital goods. As per Explanation 2 to section 144 Capital
goods means the goods defined under clause (a) of rule 2 of CENVAT Credit Rules
2004.
The amount taken as credit shall be recovered as an arrear of tax under this Act
from the taxable person if the said amount is found to be recoverable as a result of
any proceeding instituted, whether before or after the appointed day, against such
person under the earlier law.
8/2/2016 2:05 AM 6

7. Input Tax Credit
Credit of eligible duties and taxes on inputs held in stock
As per Section 145 the registered taxable person shall be entitled to
take the credit of eligible duties and taxes(under CGST law) and
Value Added Tax (under SGST Law) in respect of inputs held in stock
and inputs contained in semi-finished or finished goods held in stock on
the appointed day subject to fulfilling of ALL the following conditions:
1) such inputs and/or goods are used or intended to be used for
making taxable supplies under this Act;
2) the said taxable person was eligible for CENVAT credit / input tax
credit on receipt / purchase, as the case may be, of such inputs
and/or goods under the earlier law but for his not being liable for
registration or the goods remaining exempt under the said law;
3) the said taxable person is eligible for input tax credit under this Act;
Contd…
8/2/2016 2:05 AM 7

8. Input Tax Credit
Credit of eligible duties and taxes on inputs held in stock
4. the said taxable person is in possession of invoice and/or other
prescribed documents evidencing payment of duty/tax under the
earlier law in respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock on the appointed day;
and
5. such invoices and/or other prescribed documents were issued not
earlier than 12 months immediately preceding the appointed day.
The amount of credit shall be calculated in accordance with generally
accepted accounting principles in such manner as may be prescribed.
The amount taken as credit shall be recovered as an arrear of tax
under this Act from the taxable person if the said amount is found to be
recoverable as a result of any proceeding instituted, whether before or
after the appointed day, against such person under the earlier law.
8/2/2016 2:05 AM 8

9. Excise Duty
Additional Excise Duty
National Calamity Contingent Duty
Duties and taxes eligible for
taking credit
Additional Custom Duty
Service Tax
8/2/2016 2:05 AM 9

10. Tax payer
opting out
composition
scheme under
GST Law
Tax payer
opting in
composition
scheme under
GST Law
Input tax credit
In relation to taxpayers covered under the composition
scheme
8/2/2016 2:05 AM 10

11. Taxpayers opting OUT of
Composition scheme
A registered taxable person who was paying taxes under the
composition scheme of earlier law shall be entitled to take the credit of
eligible duties provided he fulfils ALL the following conditions:
a) such inputs and / or goods are used or intended to be used for
making taxable supplies under this Act;
b) the said person is not paying tax under section 8 i.e. composition
scheme under GST;
c) the said taxable person was eligible for CENVAT credit on receipt
of such inputs and/or goods under the earlier law but for his being a
composition taxpayer under the said law;
Contd..
8/2/2016 2:05 AM 11

12. Taxpayers opting OUT of
Composition scheme
d) the said taxable person is eligible for input tax credit under this Act;
e) the said taxable person is in possession of invoice and/or other
prescribed documents evidencing payment of duty / tax under the
earlier law in respect of inputs held in stock and inputs contained in
semi- finished or finished goods held in stock on the appointed day;
and
f) such invoices and /or other prescribed documents were issued not
earlier than twelve months immediately preceding the appointed
day.
8/2/2016 2:05 AM 12

13. Taxpayers opting in the
Composition scheme of GST
For opting the composition scheme as prescribed by section 8 of Model
GST Law the registered taxpayer shall pay the amount equivalent to
the credit of the input tax in respect of inputs held in stocks and inputs
contained in semi-finished or finished goods held in stock on the day
immediately preceding the date of such switch over. After payment of
such amount the balance of input tax credit if any lying in the account of
the tax payer shall lapse.
8/2/2016 2:05 AM 13

14. Exempted Goods
returned to place
of business after
the
enactment of
GST.
Goods are
identifiable to the
satisfaction of the
proper officer -
Covered under
Section 148
No Tax if the goods were
removed 6 months prior to date
of enactment.
AND the goods are returned
within 6 months of enactment
Tax have to be paid if the goods
are returned after 6 months
Movement of goods after the
enactment of GST
8/2/2016 2:05 AM 14

15. Duty Paid Goods
Returned to a place
of business on or
after the date of
enactment.
Goods are
identifiable to the
satisfaction of the
proper officer -
Covered under
Section 149
No Tax if the goods were
removed 6 months prior to date
of enactment.
AND the goods are returned
within 6 months of enactment
Tax have to be paid if the goods
are returned after 6 months
Movement of goods after the
enactment of GST
8/2/2016 2:05 AM 15

16. Goods sent
on approval
basis returned
on or after the
date of
enactment -
Covered
under
Section 162D
No Tax if the goods were removed 6
months prior to date of enactment.
AND the goods are returned within 6
months of enactment
Tax have to be paid if the goods are
returned after 6 months. Competent
Authority can extend this period
by maximum for 2 moths
Movement of goods after the
enactment of GST
8/2/2016 2:05 AM 16

17. Inputs removed
for Job Work
and returned on
or after the date
of enactment -
Covered
under Section
150
No Tax if the goods were removed
6 months prior to date of enactment.
AND the goods are returned within
6 months of enactment
Tax have to be paid if the goods are
returned after 6 months. Competent
Authority can extend this period
by maximum for 2 moths
Taxability in case of Job Work
8/2/2016 2:05 AM 17

18. Semi-finished
Goods
removed for
Job work and
returned on or
after the
appointed day.-
Covered
under Section
151
No Tax if the goods were removed
6 months prior to date of
enactment.
AND the goods are returned within
6 months of enactment
Tax have to be paid if the goods
are returned after 6 months.
Competent Authority can extend
this period by maximum for 2
moths
Taxability in case of Job Work
8/2/2016 2:05 AM 18

19. Finished goods
removed for
carrying out
certain
processes and
returned -
Covered
under Section
152
No Tax if the goods were removed
6 months prior to date of enactment.
AND the goods are returned within
6 months of enactment
Tax have to be paid if the goods are
returned after 6 months. Competent
Authority can extend this period
by maximum for 2 moths
Taxability in case of Job Work
8/2/2016 2:05 AM 19

20. Taxability in case of Job Work
8/2/2016 2:05 AM 20
The prior condition to the scenario is that 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.

21. Where the Prices
of the goods /
services supplied
before enactment
has increased -
Covered under
Section 153
The taxable person shall issue
to the recipient a supplementary
invoice or debit note containing
the particulars within 30 days of
such price revision. The tax
shall have to be paid on the
same as it will be classified as
“Deemed Sales”.
Revision of Prices after the
enactment of GST Law
8/2/2016 2:05 AM 21

22. Where the
Prices of the
goods /
services
supplied
before
enactment has
decreased -
Covered
under Section
154
.
The taxable person shall issue to
the recipient a supplementary
invoice or credit note containing the
particulars within 30 days of such
price revision. The taxable person
shall be allowed to reduce his tax
liability on account of issue of the
said credit note only if the recipient
has reduced his Input Tax Credit
Corresponding to such reduction of
tax liability.
Revision of Prices after the
enactment of GST Law
8/2/2016 2:05 AM 22

23. Pending refund claims
Every claim for refund of any duty/tax and interest, if any,
paid on such duty/tax or any other amount, filed by any
person before the appointed day, shall be disposed of in
accordance with the provisions of earlier law and any
amount eventually accruing to him shall be paid in cash,
notwithstanding anything to the contrary contained under
the provisions of earlier law other than the provisions of sub
section (2) of section 11B of the Central excise Act, 1944.
8/2/2016 2:05 AM 23

24. Where the consideration
for the supply of the
goods/services have
been received prior to the
appointed day and the tax
payable thereon has
already been paid under
the earlier law - Covered
under Section 160
No Tax shall be payable on
the supply of goods/services
made on or after the
enactment of the law.
Continuous supply of goods
and services
8/2/2016 2:05 AM 24

25. Where the part
consideration for the
supply of goods/services
is received on or after the
date of enactment but the
full duty /tax payable on
such supply has already
been paid under the
earlier law- Covered
under Section 161
No tax shall be payable on
the supply of goods and/or
services made before the
date of enactment of law.
Continuous supply of goods
and services
8/2/2016 2:05 AM 25

26. Where any
goods
belonging to
the principal
are lying at
the premises
of the agent
on the day of
enactment -
Covered
under
Section 162A
Agent shall take credit of the tax paid only
upon fulfilling the following conditions:
I. Agent must be registered.
II. Declaration by both of principal and
agent regarding the stocks prior to
the enactment of law.
III. The invoices for such goods have
been issued 12 months immediately
preceding the date of enactment.
IV. The principal has either reversed or
not availed the input tax credit in
respect of such goods.
Tax relating to goods lying
with the agent.
8/2/2016 2:05 AM 26

27. Where any
capital goods
belonging to
the principal
are lying at
the premises
of the agent
on the day of
enactment -
Covered
under
Section 162B
Agent shall take credit of the tax paid only
upon fulfilling the following conditions:
I. Agent must be registered.
II. Declaration by both of principal and
agent regarding the stock of capital
goods prior to the enactment of law.
III. The invoices for such goods have
been issued 12 months immediately
preceding the date of enactment.
IV. The principal has either reversed or
not availed the input tax credit in
respect of such capital goods.
Tax relating to goods lying
with the agent.
8/2/2016 2:05 AM 27

28. Service Tax Credit Distribution
by Input Service Distributor
The input tax credit on account of any services received
prior to the date of enactment by an Input service
Distributor (ISD) shall be eligible for distribution as credit
under this Act even if the invoice(s) relating to such
services is received on or after the date of enactment.
8/2/2016 2:05 AM 28

29. long term construction/works
contracts
The goods and/or services supplied on or after the date of
enactment in pursuance of a contract entered into prior to
the date of enactment shall be liable to tax under the
provisions of this Act.
8/2/2016 2:05 AM 29

30. long term construction/works
contracts
Where a supplier has made any sale of goods in respect of
which tax was required to be deducted at source under the
earlier law and has also issued an invoice for the same
before the appointed day, no deduction of tax at source
under section 37 shall be made by the deductor under the
said section where payment to the said supplier is made on
or after the appointed day.
8/2/2016 2:05 AM 30

31. 31