This document discusses various transitional provisions under GST relating to migration, credits, returns from job work, price revision, pending litigations and claims. It addresses common issues around availment of credits for inputs, capital goods and input services held in stock, in transit or under job work. It also summarizes provisions for carry forward of credits, distribution of credits by Input Service Distributors and transfer of unutilized credits in centralized registrations.

1. sandesh.mundra@smaca.in
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Sandesh Mundra & Associates
304, Super Plaza, Vastrapur, Ahmedabad.
sandesh.mundra@smaca.in
Institute of Company Secretaries of India
Ahmedabad Chapter

2. sandesh.mundra@smaca.in
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Let us look at Transitional Provisions

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Bifurcation of Dealers covered
Manufacturer
Service providers
Builders
Works contractor
Trader

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Transitional issues
Migration
Credits
Goods Return (S/R and Job work)
Price revision and sale on approval
Litigations and claims

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Provisional
registration (PRN)
on PAN
Furnish
information for
final Registration
Eligible for
composition,
Apply within time
Valid for 6
months
PRN cancel
if info. Not
furnished
PRN cancellation
if not liable for
registration
If not
applied, pay
@ regular
rates
Section 139 - Migration

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GENERAL ISSUES:-
 Change in Constitution in VAT without change in PAN
 Cancellation of VAT no. on temporary basis
 Non-allotment of PRN
 Non-registration within allotted time
 Registration of Marketing offices required?
 What happens to Non Localized Dealers?
 What happens to banks / insurance companies / others with Multiple
branches in a state ?
 Whether separate registration required in IGST Act?
 Technical Loophole
E-signing not enabled after giving Adhar details
Issues in Migration

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1. Section 140(1) – CENVAT in return allowed as ITC (other
than composition scheme)
2. Section 140(2) – Capital Goods Credit not c/f
3. Section 140(3) – For unregistered in the previous law in case
of stocks held.
4. Section 140(4) – Credit of eligible duties/taxes in stock (in
certain cases)
5. Section 140(5) – Credit of eligible duties/taxes on inputs and
input services during transit
6. Section 140(6) – Credit of eligible duties/taxes on inputs in
stock to person switching from composition
7. Section 140(7) – Credit distribution by ISD
8. Section 140(8) - Transfer of unutilised credit in centralized
registration
under earlier law
Carry forward of Credits

8. sandesh.mundra@smaca.in
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Other than Composition Scheme
The returns are not
furnished properly
for 6 months prior to
AD
The amount of
credit is not
admissible under
GST Act
The amount of credit
relates to goods
manufactured and
cleared under
exemption
notification by the
Government
Not Allowed to take credit if
SECTION 140(1)

9. sandesh.mundra@smaca.in
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General issues:-
 What if sale in course of export delivery after AD*?
Refund of credits will be allowed?
 Whether ITC carried forward on basis of revised return?
 What if erroneously carry forward of ITC has been left?
 By mere availing credit in return, can we take credit?
 Will I be given refund for my credit if I am not eligible of
its c/f**?
 If not registered and not liable to file returns, credit can
be c/f**?
Issues in Credits under Section 140(1)

10. sandesh.mundra@smaca.in
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Capital Goods Credit not c/f
Entitled,
CENVAT/VAT ITC
in respect of capital
goods, not carried
forward in return
CENVAT credit is
allowed under the
existing
law.(before GST)
and also the GST
regime.
Unavailed credit =
Total credit - credit
already availed
Allowed to take credit ifSection 140(2)

11. sandesh.mundra@smaca.in
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General Issues:-
 Credit not at all taken in earlier law and allowed in GST will lapse?
 Entry tax credit on capital goods?
 Dealer in composition- Excise, VAT, in GST- Regular. Capital goods (CG) credit allowed?
 How CENVAT on CG allocated to different places of business? Can we plan adhoc distribution?
For Traders:-
 Trader allowed CENVAT on CG in GST?
For Manufacturer:-
 URD in Excise but Registered in GST ?
 Area based exemption under Current Regime, taxable in GST. Credit on CG allowed?
Issues in Credits under Section 140(2)

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For Service Provider:-
 Presently in centralized registration. 50% credit claimed in centralized return. Which place of business
eligible for rest 50% credit?
 Providing exempt services can claim CG credit?
For Builder/Works contractor:-
 CG on various sites in different states. In which state unavailed CENVAT to be claimed?
 Availing benefit of abatement Notification 26/2012, Can carry forward CENVAT on CG?
 CG credit on common capital goods used for projects in Composition and in Regular scheme?
Issues in Credits under Section 140(2)

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Credit of eligible duties/taxes
on stock
Section 140(3)
Conditions for
Availing Benefits
supplier of
services not
eligible for
any abatement
under GST

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Person covered:-
1. Not liable to be registered under earlier law
2. Manufacture/sale of exempted goods
3. Exempted services
4. Works contract service and availing benefit of Notification No.
26/2012-Service Tax, dated 20.06.2012
4. First stage dealer
5. Second stage dealer
6. A registered importer
Benefit provided in this section:-
Credit of eligible duties and taxes for inputs in stock, semi-
finished or finished goods
Section 140(3) – Credit of eligible duties/taxes
on stock……(cont.)

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General Issues:-
 Not availing abatement in GST and abatement notified for us. Will we loose all
credits?
 Credit eligible in GST not eligible in earlier law. Can we claim credit?
 What if we avail any exemption in GST? Our credit will lapse?
 Change in accounting to claim maximum credit
 My invoice is earlier then 12 months but goods/services received 12 months before
AD*?
 Credit of capital goods, WIP and input services?
 Meaning of “PERSON NOT LIABLE TO BE REGISTERED”
 For passing on benefits in anti-profiteering clause, can I deduct my ITC losses
incurred because of GST?
Issues in Credits under Section 140(3)

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For Traders:-
 Not liable to get registered in excise and service tax. Can take CENVAT?
 Credit not allowed as goods in NO ITC SCHEDULE
For Service Provider:-
 Claim VAT credit of inputs held in stock as not liable to register in VAT?
 Service tax paid on advance. Credit availed. Invoice raised after AD
 Availing abatement in Service tax
For Builder and Works contract:-
 A BOT can avail credit of input services?
Issues in Credits under Section 140(3)

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Credit of eligible duties/taxes on stock
Conditions
for Availing
Benefit
Cenvat credit carried
forward in a return
furnished in earlier law
Cenvat credit of
eligible duties of
inputs held in stock,
semi- finished and
finished goods relating
to exempted goods or
services
Section 140(4)

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Credit of eligible duties/taxes on inputs and input
services during transit
Condition for
Availing Benefit
Section 140(5)

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General Issues:-
 Tax paid after appointed day with interest?
 If statement not furnished credit not allowed?
 What if the output supply is exempt?
 It covers input goods and input services. What about capital goods in transit?
For Service provider:-
 How to substantiate services received prior 30/06/2017?
Issues in Credits under Section 140(5)

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For Manufacturer:-
 Goods are in transit but moved to job-worker for quality checking purpose? Benefit be
allowed?
 Includes goods on which ownership is already transferred but the goods are held by third
party on our instructions?
For Works contractors:-
 In case of construction projects, what if the goods are not coming to the dealer's premise but
directly moving to the construction site? Can these goods be termed as goods-in-transit?
Issues in Credits under Section 140(5)

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Credit of eligible duties/taxes on inputs in stock to person
switching from composition
Inputs intended for making
taxable supplies
(Only for state taxes) goods
not specified in schedule
containing ITC restricted
goods
Person not in GST
Composition
Person eligible for ITC under
this Act
Person in possession of
invoice
Invoices not before 12 months
preceding AD*
Condition for Availing Benefit
SECTION 140(6)

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General issues:-
 What about capital goods, input services and WIP?
 Goods mentioned in State’s negative list
 What about credit of Service tax?
 Composition in VAT claim. Can we claim excise in this Section?
For Service Provider:-
 Service at abated value
Issues in Credits under Section 140(6)

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Section 140(7) – Credit distribution by ISD
ONLY FOR CGST
ITC of services received
prior to AD*
Eligible for distribution
as credit
Even if the invoice
received on/after AD*

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ONLY FOR CGST
 Person with centralized registration
 Eligible to credit of cenvat in a return
 Return to be filed within 3 months of AD*
 Return has to be original or revised return where the credit has been
reduced from that claimed earlier
 Credit allowed under GST
 Credit may be transferred to persons having same PAN as centralized
registration have
Section 140(8) - Transfer of unutilised credit in centralised registration
under earlier law

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Return from Job work
1. Section 141(1) – Inputs returned on/after AD
2. Section 141(2) – SFG returned on/after AD
3. Section 141(3) – FG returned on/after AD

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 Inputs received in factory removed to a job worker
 For processing, testing, repair, reconditioning or any other
purpose in accordance with the provisions of earlier law
 Prior to AD
 Returned to factory on/after the AD
 No tax payable if returned within 6 months from AD
 Time may extend by 2 months
 Manufacturer and job worker to declare details of inputs in stock
 If not returned within 6/8 months ITC to be recovered
Section 141(1) – Inputs returned on/after AD

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 SFG removed for manufacturing processes in earlier law
 Prior to AD*
 Returned on/after AD*
 No tax payable if returned within 6 months from AD*
 6 months may be extended for 2 months.
 Goods not returned within 6/8 months
 ITC liable to be recovered
 Manufacturer and job-worker to declare details of goods
 Manufacturer may transfer goods for supply on payment of tax in India or
without payment of tax for exports within six months or the extended
period
Section 141(2) – SFG returned on/after AD

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 Taxable goods removed without payment of tax
 For carrying out tests or any other process not amounting to manufacture
 Prior to AD*
 Returned on/after AD*
 No tax payable if returned within 6 months from AD*
 6 months may extend for further 2 months
 If goods not returned within 6/8 months
 ITC shall liable to be recovered
 Manufacturer may transfer goods for supply on payment of tax in India or
without payment of tax for exports within six months or the extended
period
Section 141(3)– FG returned on/after AD

29. sandesh.mundra@smaca.in
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General Issues:-
 In case of SFG, what if manufacturing process does not takes place?
 What if I forgot to declare details of stock?
 What if goods were in transit and not in stock with job-worker?
 What if I have send some capital goods and some value addition has taken
place?
 What if job-worker was URD in earlier law and registered in GST?
 Which ITC to be recovered?
 We will caught if third party stock is with us?
Issues under Section 141(1),141(2) and 141(3)

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Revision of sales price

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 Goods on approval basis not earlier than 6 months before AD*
 Rejected/not approved by buyer and returned to seller
 On/after AD
 No tax payable if goods returned within 6 months from AD*
 6 months may be extended for 2 months
 Tax by person returning goods if returned after 6/8 months
 Tax by person sending goods if not returned in 6/8 months
 What is difference between not returned or returned after…..Drafting
anomaly?
Section 142(1)– Goods returned on/After AD

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 Contract entered prior to AD*
 Price revised upwards/downwards
 On/or after AD*
 Registered person who made supply
 Issue to the recipient
 Debit/Credit note, within 30 days of revision
 In credit note, person allowed to reduce his liability if recipient reduced
ITC corresponding to such reduction of tax
Section 142(2) – Issue of Debit/Credit Notes

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Pending Litigations and Claims

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1. Section 142(3) - Pending refund claims disposed of under earlier law
2. Section 142(4) - Refund claims filed after AD* for supply before AD* and
exported before/after AD* disposed of under earlier law
3. Section 142(5) - Refund claims filed after AD* for payments received and
tax paid before AD* for services not provided
4. Section 142(6) - Claim of CENVAT credit disposed of under earlier law
5. Section 142(7) - Finalization of output tax liability proceedings
6. Section 142(8)- Treatment of amount recovered/refunded in pursuance of
assessment or adjudication proceedings
7. Section 142(9) - Treatment of amount recovered or refunded pursuant to
revision of returns
Following sections are added to carry forward
Pending Litigations, Refunds and related Claims

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 Identify controversies expected and apply for advance rulings
 Credits dependent on vendors. Ensure registrations, improvements in vendors compliance
rating class, communicate GST impacts for vendors, contractual clauses, Vendor training etc.
 Analysis of credit leakage points in our business and plan to reduce them to the lowest. For
example:- Procuring material within India instead of resorting to imports as custom duty is a
cost to the company.
 Review contractual terms considering the impact of GST. For example:-
– Probable reduction in purchase price for probable A-Class vendors
– Time limits for issue of debit/credit notes
– Compulsions regarding vendor timely paying tax for claiming its credit etc.
General Transitional Activities

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 Review of registrations for various place to ascertain impact under GST
 We may do scenario analysis such as –
1. How to price the products?
Ex:- CIF, FOB, Quantum of discount
2. Contract price to be kept exclusive or inclusive
3. What if tax inclusive price should be kept constant?
4. What if tax exclusive price should be kept constant?
5. Impact on pricing if absolute profit is kept constant
6. Impact on cash flows
General Transitional Activities

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 Companies have to revamp existing distribution strategies. But how to analyise it?
A solution for this issue can be trend analysis. We can do trend analysis on following subjects:-
i. Inventory - Location wise & category wise
ii. Branch transfers
iii. Location wise sales
By trend analysis we make sure the importance of each and every distribution point in our
distribution pattern and we can do decision making as to which one to shut down and where to
start a new one. As a result of above decision we will be able to select states where we have to
obtain provisional registration in GST.
General Transitional Activities

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 Review credits availed and disclosure in returns
 Schemes opted in VAT and impact under GST
 Ascertaining possibility of planning present purchases for better transition
 Review existing litigations pending and action point required for smooth
transition in GST
 Presently, in C Form sales, submission of C Forms get delayed. Govt. may not
allow C Form in transition and gives cash refund of remaining balance on the
submission of C Form?
General Transitional Activities

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For Manufacturer:-
 Review of systems followed with respect to goods sent for job work and
impact under GST
For Trader:-
 Review of systems followed for goods received back from customers and
impact under GST
General Transitional Activities

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• Thank you
• Hope your transition is made easy