Transitional Provisions under GST

Transitional Provisions under GST
By
CA Manindar
CA Sri Harsha
M/s SBS and Company LLP

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 What will happen to the closing balance of credits under existing laws?
 Can credit be claimed on closing stock of inputs relating to goods or services which are exempt under
existing law but are taxable under GST?
 How will the refund claims be disposed off after the introduction of GST?
 How will the stocks cleared under existing law but are returned under GST regime be treated?
 How will price revisions under GST regime towards goods or services supplied under existing law be
treated?
 How will the demands and claims of CENVAT Credit pending before Judicial Authorities be handled?
Need and Importance of Transitional
Provisions

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 Migration of Existing Tax Payers
 Transitional arrangements for carry forward of Input Tax Credit
 Transitional provisions relating to job work
 Transitional provisions relating to stock returns, price revisions, refunds, proceedings etc.
Coverage

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 Every person registered under any of the existing laws and holding a valid pan is required to migrate
 Upon enrolment— a certificate of registration shall be granted on provisional basis
 Single Registration shall be granted to a person having multiple registrations under existing laws
 Service Provider having Centralised Registration— granted provisional registration in the State or UT in which he
is registered under existing law
 Provisional Registration certificate shall be issued under GST FORM REG-25
Migration of Existing Tax Payers— Sec 139
X Ltd is having a factory in Shamsabad for which registration is obtained under Excise and VAT. They have a depots in Nizamabad,
Adilabad, Karimnagar which are registered under VAT. X Ltd having corporate office in Hyderabad for which they have obtained
centralised registration.
X Ltd is having a factory in Shamsabad for which registration is obtained under Excise and VAT. They have a depots in Mumbai,
Bengaluru, Kolkata, Chennai which are registered under VAT of respective States. X Ltd having corporate office in Hyderabad for
which they have obtained centralised registration.
XYZ is a firm of Chartered Accountants having offices in Hyderabad, Bengaluru, Chennai, Mumbai and Delhi. XYZ has obtained
centralised registration under Service tax at their office in Mumbai

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Migration of Existing Tax Payers— Sec 139
Decided to hold the
Registration
Decided to Withdraw
Registration
o Application in GST REG 26 shall be submitted within
3 months or such further extended period along
with the required documents
o Upon enquiry, final registration shall be granted in
GST REG 06
o Cancellation of provisional registration shall be by
issuing a SCN and hearing opportunity
o Submit an application in GST REG 29 within 30
days from the appointed day
o Cancellation shall be undertaken after proper
enquiry
Provisional Registration

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Transition Arrangement for Carry forward
of Input Credit (Section 140)
Section Description of the Provision
140(1) Transfer of closing balance of Credits disclosed in Returns
140(2) Transfer of un-availed Credit relating to Capital Goods
140(3) & (4) Transfer of Credit relating to inputs in Stock, WIP, FGs in certain cases
140(5) Transfer of Credit relating to input or input services in transit
140(6) Switching from Composition Scheme
140(7) Availment and Distribution of Credit by Input Service Distributor
140(8) Transfer of Credit with Centralised Registration
140(9) Reversal of Credit relating to input services due to non-payment to vendor

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 This section enables the every registered person to carry forward closing balance of CENVAT Credit as per
the last return filed under existing law to electronic credit ledger maintained under GST
 Carry forward is not permissible to a person opting to pay tax under composition scheme
 Carry forward is not allowed in the following circumstances—
 Where the said amount of credit is not admissible as ITC under this Act
 All returns under existing law are not furnished for a period of six months immediately preceding the appointed day
 Credit relates to goods manufactured and cleared under such notifications as are notified by CG
 Similar provision exists under SGST Bill to carry forward VAT & Entry tax credit
Transfer of Closing Credits as shown in
Returns {Section 140(1)}

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 Closing balance of CENVAT Credit as per the returns filed under existing law
 Manufacturer— VAT Returns; ER Returns; ST-3 Returns
 Service Provider— ST-3 Returns
 Dealer— VAT Returns
 Works Contractor – ST-3 returns and VAT returns
 Credit should be admissible as ITC under this Act
 This implies that credit should be admissible under existing law in order to be reflected in returns and also under GST
for carry forward.
 Section 17(5) blocks credit on certain supplies of goods or services or both viz. motor vehicles, outdoor catering
services, membership of a club
 Every item forming part of closing CENVAT Credit shall be examined for eligibility in light of ITC provisions under GST
 Whether Education Cess or KKC would be admissible to be carried forward to GST regime?

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 All Returns under existing law for last six months preceding the appointed date shall be
furnished
 Ensure All returns including VAT returns shall be filed before the GST roll out.
 Re-examine the applicability of specific returns viz. Annual Return; Annual Installed Capacity
 Credit should not relate to goods manufactured and cleared under such notifications as are
notified by CG.
 CG may notify the notifications under which manufactured goods are cleared
 credit on such goods cannot be carried forward
 The amount of credit carried forward under this section shall be intimated by way of an
application in GST TRAN-1 with 60 days from the appointed day

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 No carry forward of credits pertaining to the following CST sales, unless they are substantiated
in the manner and within the period prescribed under Rule 12 of CST (Registration and
Turnover) Rules, 1957
Section Particulars
Section 3 Explains the sale or purchase in the course of inter-state trade or commerce
Section 5(3) Exempts levy of sales tax on the last sale or purchase of any goods preceding the sale or
purchase occasioning the export of goods
Section 6 Liability of tax on Inter-State sales
Section 6A Burden of proof on the transferor, in case of transfer of goods otherwise by way of sale
Section 8(8) Sale to Special Economic Zone

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 Precautions to be taken for transfer of credit—
 Ensure all vendor bills are accounted before the appointed day
 Credits disputed by department and are not availed can be identified and an appropriate action should
be taken in this regard.
 Credits disputed and SCN or Appellate proceedings are going on— ensure that credit is carried forward
 Practice of taking credit on input services only after payment to vendors— ensure that credit is taken
on all invoices for which payment is pending.
 Credits relating to reverse charge— ensure payments are made on or before the appointed day.

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 This provision enables every registered person to carry forward the un-availed credit of capital goods in to
electronic credit ledger under GST
 Carry forward under this provision is permissible if the registered person unable to carry forward credit on
capital goods by reflecting the same in the last return filed under existing law.
 Carry forward is not permissible to a person opting to pay tax under section 10
 Carry forward is not allowed unless the said credit was admissible as CENVAT Credit under the existing law
and is also admissible as ITC under this Act.
 Un-availed CENVAT credit is defined as Total CENVAT Credit available on CGs minus CENVAT Credit already
availed
Transfer of un-availed Credit relating to Capital
Goods {Section 140(2)}

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 Example— X Ltd Purchased Capital Goods on 20.04.2017. The total excise duty paid on the said
goods is Rs. 15,00,000 respectively. X Ltd has availed 50% of the credit i.e. 7,50,000/- on
20.04.2017. As per existing CCR, 2004, X Ltd is entitled to avail balance 50% CENVAT Credit i.e.
7,50,000 on or after 01.04.2018. Therefore X Ltd cannot avail credit of the balance 50% CENVAT
Credit in the last return in order to carry forward the same into GST regime
 Solution—
 Carry forward of balance credit into electronic credit ledger shall be as per the provisions of
section 140 (2)
 Rule 1(2)(a) provides that every application in Form GST Tran-1 should provide the details of
such capital goods
Carry Forward of Un-availed CGs Credit
{Section 140(2)}

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 This provision is applicable in the following scenarios
 Registered person not liable for registration under existing law or
 Registered was engaged in manufacture of exempted goods or provision of exempt services or
 Providing works contract services and was availing the benefit of Notification 26/2012-ST or
 A First Stage or Second Stage Dealer, A Registered Importer or a depot of a manufacturer
 Such persons are entitled to take credit in electronic credit ledger, credit of eligible duties in respect of
inputs held in stock, inputs contained in semi finished or finished goods
Transfer of Credit relating to inputs in Stock, WIP, FGs in
certain cases {Section 140(3)}

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 Eligible duties are defined to mean the following in respect of inputs in stock, semi-finished or finished
goods held on the appointed day—
 the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957;
 the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975;
 the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975
 the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978;
 the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985;
 the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985 and
 the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001,
 Does not include any cesses paid on excisable goods

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 Condition for availment of this benefit—
 Such inputs or goods are used or intended to be used for making taxable supplies under this Act
 The said registered person is eligible for ITC on such inputs under this Act
 The said registered person is in possession of invoice or other prescribed document evidencing payment of duty
under existing law in respect of such inputs
 such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the
appointed day
 The supplier of services is not eligible for any abatement under this Act
 Similar provision exits under SGST law to allow credit of opening stock of inputs where the registered
person was not liable to be registered under earlier law, engaged in sale of exempted or tax free goods
Transfer of Credit relating to inputs in Stock, WIP, FGs
in certain cases {Section 140(3)}

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 If the registered person is other than a manufacturer or supplier of service who is not in possession of
invoice or any other documents evidencing duty payment in respect of inputs, then such registered person
shall be allowed to take credit at such rate subject to such conditions and safe guards including passing of
such benefit to the recipient by way of reduction of prices to recipient
 Scheme for deemed credit provided under GST Transition Rules. Conditions are prescribed as under—
 ITC at forty percent of applicable CGST on supply of goods after the appointed day
 The scheme shall be available for six tax periods from the appointed date
 Goods were not wholly exempted from duty of excise or nil rated
 Document of procurement is available with the registered person
 Furnish statement as may be prescribed indicating the details of the stock at the end of each tax period
 This stock should be separately stored for easy identification
X Ltd is a dealer in FMCG goods. X Ltd as on 30.06.2017, holds a stock of value of Rs. 10 crores which includes excise duty. X Ltd
availed credit of ITC paid on these stock and shown in VAT returns. As X Ltd has not registered under central excise, he cannot carry
forward the credit of excise duty that is embedded in the value of the stock. The said stock was sold in market for 12 crores on
which CGST of Rs. 60 lakhs and SGST of Rs. 60 lakhs was paid. After payment of GST of 1.2 crores, X Ltd will get a credit of Rs. 24
lakhs (40% of CGST) in their electronic credit ledger.
Benefit is subject to Anti-profitering clause. By availing this option, traders can be more competitive by reducing prices.
Similar Benefit available under SGST for Goods that are subject to sales tax at first point of Sale

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 Construction contractors other than builders are not extended the benefit of credit availment on inputs
 All construction contracts are works contracts and are treated as supply of service alone under GST and accordingly subject to tax at
the rate applicable to services.
 At present, CENVAT cannot be availed on inputs used in construction. Under GST regime ITC can be claimed on all the inputs
 However benefit of credit availment on stock of inputs prior to GST roll out is restricted to builders availing abatement option under
Notification 26/2012- ST
 To this extent, the provisions are discriminatory on other contracts where ST is paid on 40%/70% of GAC under Rule 2A
 Sub-contractors undertaking works contracts to builders are also denied this benefit
Transfer of Credit relating to inputs in Stock, WIP, FGs
in certain cases {Section 140(3)}
INFRA SECTOR HAS TO MAKE A SUITABLE REPRESENTATION IN THIS REGARD

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 This section is applicable to person engaged in manufacture of taxable as well as exempted goods or
provision of taxable services or exempt services
 The credit shall be carried forward in the following manner—
 Credits under Returns relating to taxable activities— shall be carried forward in accordance with the provisions of
sub-section (1)
 Eligible duties on stock of inputs relating to exempt activities— shall be carried forward in accordance with the
provisions of sub-section (3)
Credit Availment of Person engaged in taxable and
exempted activities under GST {Section 140(4)}

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 This provision is applicable to take credit of eligible duties and taxes in respect of inputs or input services in transit
 Such inputs or input services are received on or after the appointed day but the duty or tax in respect of which has been
paid by supplier under existing law.
 Credit can be taken subject to the condition that Invoice or any other duty or tax paying document of the same was
recorded in the books of accounts within a period of thirty days from the appointed day
 The time limit of thirty days can be extended by commissioner for a further not exceeding thirty days
 Eligible duties and taxes means in addition to excise duties also include service tax levied under Finance Act, 1994
Transfer of Credit relating to input or input services
in transit {Section 140(5)}

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 What about the credits relating to capital goods in transit?—
 This section does not cover capital goods
 Capital goods for this purpose shall be determined as per CCR, 2004
 Procurement of capital goods at the time near to the appointed day needs to be planned properly
 Inputs or input services should be in transit as on the appointed day
 Invoice is issued on 29th June 2017 and goods received on 30th June 2017
 Invoice issued on 29th June 2017 and goods received on 04th July 2017
Transfer of Credit relating to input or input services in
transit {Section 140(5)}

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 Currently, many excisable goods are taxed at a composite rates or at fixed amounts with out CENVAT
facility.
 Under VAT law, dealers engaged in works contracts are allowed to pay a composite rate of 5% on total
contract value as an alternative to regular tax payable on material incorporated at site.
 Such tax payers may be required to pay tax regularly under GST regime. In such cases, this provision allows
to carry forward credit relating to eligible duties /taxes paid on inputs in stock, WIP and FGs
 This will entitle a works contractor to allow VAT credit on stock of inputs.
Carry forward of Credit by Tax Payers opted to pay
taxes at fixed rate or at fixed amounts {Section 140(6)}

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 This provision enables the following privilege to an Input Service Distributor
 Credit can be claimed on account of any services received prior to appointed day even though the invoices relating
to such services are received on or after the appointed day
 Eligible to distribute such credit as credit under this Act.
 Example— X Ltd received management consultancy services on 20.06.2017. An invoice is raised in this
regard by the SP on 25.06.2017 containing service tax of Rs. 20,000. The said invoice is received by X Ltd
on 20.07.2017
Availment and Distribution of Credit by ISD {Section
140(7)}

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 This provision is applicable to SPs obtained centralised registration under Service Tax
 Allowed to carry forward the closing CENVAT Credit for period immediately preceding the appointed day
subject to satisfaction of the following conditions—
 Return either original or revised return shall be furnished within three months of appointed day
 Revised return shall be considered where the credit has been reduced from that claimed earlier
 Carry forward is not permitted where the said amount is not admissible as input tax credit under this Act
 Credit carried forward in the above manner can be transferred to any other registered persons having
same PAN
 Example— X Ltd is providing commercial or industrial construction services with head office in Hyderabad.
X Ltd is having branch offices in Chennai and Bangalore. X Ltd is having centralised registration at
Hyderabad with Closing CENVAT Credit of Rs. 7.5 lakhs.
Transfer of Credit with Centralised Registration
{Section 140(8)}

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 Rule 4(7) of CCR, 2004 specifies that input service provider shall be paid within three months of invoice
date. In case of failure, credit availed needs to be reversed immediately after the expiry of such three
months period. Credit can be re-claimed as when payment is made after such reversal.
 This provision deals with cases where credits are reversed due to non-payment within three months under
existing law but amounts are re-paid to customer during the GST regime.
 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 months from the appointed day
 Example— X Ltd received works contract services from Y Ltd where invoice is issued on 28.02.2017 for an
amount of Rs. 11,50,000/- including CENVAT of Rs. 1,40,000/-. CENVAT Credit of the same is availed on
01.03.2017. But credit reversed due to not payment within three months on 30.05.2017. The said amount
is paid on 30.08.2017
Reversal of Credit on input services due to non-
payment {Section 140(9)}

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 Applicable to the following three situations—
 Inputs on which CENVAT Credit availed sent to job worker to undertake a process without reversing credit
 Semi-finished goods on which CENVAT availed sent to job worker for further processing without reversing credit
 Goods sent for testing, repair purposes without reversing credit
 Processed inputs/semi-finished/repair goods shall be returned by job worker within six months from the
appointed day. (can be extended by Commissioner by a further period of two months)
 The manufacturer can within the period specified above, remove the processed goods directly to
Customer from Job worker’s premises.
 If goods are not returned or removed within the period specified above, input tax credit on such goods
shall be recovered as if it is an arrears of tax under CGST.
Goods removed to a Job Worker {Section 141}

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Transitional provisions relating to stock returns, price
revisions, refunds, proceedings etc.(Section 142)
Section Description of the Provision
142(1) Duty Paid Goods Returned after the Appointed Date
142(2) Price Revisions After the Appointed Day
142(3) & (4) Refund Claims Pertaining to Existing Laws
142(5) ST Paid on Advances but eventually Service not provided
142(6), (7) &(8) Manner of Disposal of Pending Cases
142(9) Revision of Returns filed under Existing Law
142(10) Treatment of Long term Contracts
142(11) Supplies attracting tax under Existing Laws and GST
142(12) Goods Sent on Approval Basis Returned After Appointed Day
142(13) Avoidance of Double Deduction of Tax at Source

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 This provision deals with refund or re-transfer of duties or taxes paid under existing law but the goods are
returned by receiver under GST regime
 Following conditions are required to be satisfied in order to trigger this provision
 Goods are subject to excise duty or VAT under existing law upon their removal
 Such goods shall not be removed not being six months prior to the appointed day
 The goods are returned to the said place of business within six months from the appointed day
 The goods are identifiable to the satisfaction of the proper officer
Duty Paid Goods Returned After the Appointed Day
{Section 142(1)}

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 If the said conditions are satisfied— stock returns are dealt in the following manner
 What about the stock returns that are not covered by this section?
{Section 142(1)}
Returns made by
unregistered person
Returns made by
registered person
Duties or taxes paid
under existing law shall
be refunded
Returns are deemed
as supply and GST
taxes are levied

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 Example 1: X Ltd is engaged in the business of selling refrigerators to the customers. On 15.01.2017, X Ltd has sold a
refrigerator to Mr. PQR for Rs. 50,000 plus VAT @ 5% i.e. Rs 2500. On 01.08.2017, the refrigerator is returned by PQR
and claimed the amount back.
 Example 2: X Ltd has sold a generator set to Y Ltd on 20.05.2017 for Rs. 50,00,000. The excise duty and VAT charged o
the said goods is Rs. 5,00,000 (ED 10%) and 2,50,000 (VAT 5%) respectively making the total bill amount as Rs.
57,50,000. The said generator is returned by X Ltd on 20.07.2017. The total GST rate applicable for generator is 18%. Y
Ltd will treat it as supply and it will charge GST of Rs. 9,00,000. Implications are as under;
 X Ltd will pay Rs. 59,00,000 to Y Ltd towards the return of generator and claim the excess paid Rs. 9,00,000 as ITC.
 Y Ltd carry forwards Rs. 7,50,000 as ITC u/s 140(1). Y Ltd will receive 59,00,000 from X Ltd. It will pay GST of Rs. 1,50,000 after
adjusting ITC of Rs. 7,50,000.
 Example 3: What will be the implications if the generator is returned on 01.01.2018?
 Return of generator by Y Ltd will not be treated as supply. Y Ltd will use the carry forward credit of Rs. 7,50,0000
 X Ltd will only repay Rs. 50,00,000 which is his actual consideration received towards sale of generator.
{Section 142(1)}

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 This provision is applicable for contracts entered into prior to GST. Goods are removed or services are provided prior to
the appointed day. However price revision has happened after the appointed day
 The supplier can issue debit notes/credit notes towards price revision. They shall be treated in the following manner
Price Revisions after the Appointed Day {Section 142(2)}
Upward Revision Downward Revision
Supplier will issue Debit
note on differential price
Supplier will issue credit
note on differential price
Such Debit note/Credit note shall be deemed to be issued under this Act

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 Example 1: X Ltd entered into sub-contract for construction of a flyover for Rs. 25 crores with Y Ltd. With respect
to work completed up to 31.03.2017, Rs. 15crores was charged along with service tax of Rs. 0.9 crores and vat of
Rs. 0.75 crores. Due to price escalation clause, the price is revised upwards by Rs. 5 crores on 20.07.2017 for the
work completed up to 31.03.2017. Works contracts are subject to GST at 18%. The implications are as under—
 X Ltd will issue a debit note for Rs. 5 crores. X Ltd will charge GST at 18 % on Rs. 5 crores i.e. Rs. 0.9 crores.
 Y Ltd pay Rs. 5.9 crores on account of price revision and will claim ITC of Rs. 0.9 crores
 Example 2. What will be the implications if the price is revised downwards by Rs. 5 crores—
 X Ltd will issue a credit note for Rs. 5 crores. It will also reflect the GST component at 18% on Rs. 5 Crores i.e. Rs. 0.9 Crores.
It will adjust Rs. 0.9 crores towards outstanding liabilities under GST for the month of July, 2017
 Y Ltd will accept the credit note and 0.9 crores will be added to their output liability under GST for the month of July, 2017
Price Revisions after the Appointed Day {Section 142(2)}

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 These provisions are applicable with respect to refunds of duty, tax, CENVAT Credit, Interest or any other amount
paid under existing law
 The application for refund claim can be made before or on or after the appointed day
 Such application shall be disposed off as per the provisions of existing law
 Such refund claims are subject to the provisions of section 11B of Central Excise Act, 1944
 Refund claims will be paid in cash only notwithstanding anything to the contrary contained under existing law
 Upon rejection of claim towards refund of CENVAT credit, the claim amount will lapse.
Refund Claims Pertaining to Existing Laws {Section
142(3) & (4)}

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 This provision is applicable where service tax is paid on advances received prior to the appointed day for GST. The service tax is
paid on such advances. However, the service is not provided eventually either prior to or after the appointed day.
 Application for refund of the ST paid shall be made. The service tax amount to be refunded shall be paid in cash only
notwithstanding anything to the contrary contained under existing law
 Refund is subject to unjust enrichment under section 11B of Central Excise Act, 1944
 Example— X Ltd paid Rs. 5.75 lakhs as advance towards consultancy services to Y Ltd including 0.75 lakhs towards service tax on
14.04.2017. On 20.08.2017, it is mutually agreed to cancel the contract and no service is provided by Y Ltd. Y Ltd has repay Rs.
5.75 lakhs to X Ltd and file refund claim for Service Tax of Rs. 0.75 lakhs
ST paid on advances but eventually the service is not
provided {Section 142(5)}

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 These provisions are applicable to every proceeding of assessment, adjudication, appeal, review, reference initiated before or on or after the
appointed day under existing law. The cases shall be disposed off in accordance with the provisions of existing law;
 In cases where proceedings are related to duty/tax/interest/penalty—
 If decided against the assessee— The amounts payable are recovered as arrears of tax under this Act.
 If decided in favour of assessee— The amounts if any paid shall be refunded in cash subject to the provisions of unjust enrichment under
section 11B of Central Excise Act, 1944
 The amount of duty/tax recovered shall not be admissible as credit to the corresponding recipient of goods or services.
 In case where the proceedings are related to claim of CENVAT Credit
 If decided in favour of the assessee— refund is allowed except where such CENVAT Credit is carried forward to GST regime
 If decided against the assessee and claim amount is recoverable— recovered as an arrear of tax under this Act
Manner of Disposal of Pending Cases {Section
142(6),(7) &(8)}

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 This provision is applicable in cases where return furnished under existing law is revised after the appointed day but within the
time limit specified for such revision under existing law.
 Pursuant to such revision, any amount is refundable or CENVAT Credit is found to be admissible to any taxable person, the same
shall be refunded in cash notwithstanding anything in contrary to the existing law but subject to provisions of unjust
enrichment.
 If any amount is recoverable, then the same shall be recovered as if it is an arrear under this Act.
 Example 1: X Ltd has filed ST-3 return for the Quarter April to June 2017 by 25th July 2017. Under Service Tax law, X Ltd is
entitled to revise the return within 90 days from the date of its filing. X Ltd can revise the return at any time on or before 23rd
October, 2017. X Ltd revised the return on 23rd October, 2017 by claiming additional CENVAT Credit of Rs. 2,00,000. The said
amount will be refunded in cash.
Revision of Returns filed under Existing Law {Section
142(9)}

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 This provision is applicable for supply of goods or services or both after the appointed day pursuant to a contract entered into
prior to the appointed day.
 The supply of goods or services or both after the appointed day shall be liable to be taxed as per the provisions of GST laws.
 This is applicable to continuous supply of services.
 X Ltd has entered into an AMC contract with Y Ltd towards maintenance of Generator set for the FY 2017-18. An amount of Rs.
100000 plus service tax was charged in April 2017. Service tax was paid on 06.05.2017.
 X Ltd has entered into an AMC contract with Y Ltd towards maintenance of website for FY 2017-18. An amount of Rs. 10,000
plus service tax is charged monthly after the end of each month
Treatment of Long Term Contracts {Section 142(10)}

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 This provision is applicable in cases tax is paid on supply of goods or services under existing law but tax is also attracted under
GST on account of provisions relating to time of supply under section 12 and section 13.
 No tax under the GST laws shall be leviable to the extent of tax paid under existing law
 Example 1: X Ltd supplied goods to Y Ltd on 29.06.2017. VAT is charged by raising an invoice. Y Ltd received the said goods on
03.07.2017. The said goods are liable for GST under reverse charge. In case of goods for which reverse charge is applicable,
liability to pay GST arises at the time of receipt of goods or date of payment whichever is earlier. As VAT is charged under
existing law, there is no need on recipient of supply to pay GST again on said goods.
Supplies attracting tax under Existing Laws and GST
{Section 142(11)}

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 Separate provision exists for works contracts that attract levy under Existing laws and under GST
 In case of supplies for which tax was paid under VAT and Service Tax law and tax shall be leviable under this Act
also— Tax will be collected under GST again. The taxable person is entitled to take credit of VAT and Service Tax
paid under the existing law which shall be determined in the manner as may be prescribed.
 Example 2— X Ltd has entered into contract with Y Ltd to construct a building on 20.05.2017. An amount of Rs. 10
Crores was received in advance on which VAT of Rs. 0.5 crores and ST of Rs. 0.6 crores collected and paid. The
work is commenced on 15.07.2017. The entire Rs. 10 crores will be subject to GST. X Ltd is entitled to take credit
of Rs. 1.1 crores under GST Regime
Supplies attracting tax under Existing Laws and GST
{Section 142(11)}

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 This provision deals with goods sent to recipient for sale on approval basis within six months prior to the
appointed day and are neither approved nor rejected by recipient as on the appointed day.
 If the goods are returned within six months from the appointed day— No supply— No GST
 If the goods are not returned within six months from the appointed day— The seller of goods shall be deemed to
have supplied the goods to recipient and has to pay GST
 If the goods are returned subsequently after six months— The recipient of goods shall be deemed to have
supplied the goods to seller and has to pay GST.
Goods Sent on Approval Basis Returned After
Appointed Day {Section 142(12)}

41
 VAT Law requires the contractees to deduct tax at source on specified works contracts.
 Similarly, section 51 of CGST Act provides for deduction of tax at source for specified supplies
 The provision ensures that there should not be double deduction of tax at source under existing VAT laws and
under GST laws.
 There is no need to deduct tax at source by recipient under section 51 in the following circumstances—
 The supplier has undertaken sale of any goods for which TDS is required to be made under VAT laws. Accordingly complied.
 The supplier has issued invoice for the same before the appointed day
Avoidance of Double Deduction of Tax at Source
{Section 142(13)}

42
 Applicable to import of services where the transaction has been initiated before the appointed day but import is
completed on or after the appointed day
 A transaction is deemed to be initiated before appointed day if invoice is received or payment is made before the
appointed day
 If no tax is paid on such imports before appointed day, tax shall be payable under GST
 If tax is paid on such import in full before the appointed day then no tax is payable under GST
 If tax is paid in part on such imports before the appointed day, then balance amount of tax is payable under GST
Import of Service on or after the appointed day—
{Section 21}

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