transitional provisions - epitomesolutions.inestv.in/icai/idtc/pdf/transitional provision-ca rajesh...
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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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Preparation – Action Points
(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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Preparation – Action Points
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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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Preparation – Action Points
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
Illustration on 142(2)
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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Preparation – Action Points
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.
Illustration on 142(10)
• 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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Preparation – Action Points
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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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