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Transitional provisions-Part-IIIIn my previous articles

Transitional provisions under Central Goods and Services Tax Bill (Act)-Part-I

And

Job-Work and Transition: CGST Act” Part-II

I have tried to analyzed the transition provisions relating to

-Transitional arrangements for input tax credit.

-Section 140 Transitional provisions relating to job work- Section 141

In this part I am trying to summarized the miscellaneous provisions as mentioned under Section 142 of CGST Act, 2017.

Which deals with goods returned after the appointed date, revisions of price, pending claims of refunds, pending assessment, appeals etc. under the existing laws. It provides a broad guideline to deal with these situations, the provisions are summarized as below:

Section 142. (1) Duty paid goods – removed under existing law- returned on or after the appointed day.
Removal not being done earlier than six months prior to the appointed day, and returned within a period of six month after the appointed date.

a. such goods are identifiable to the satisfaction of the proper officer
b. if goods returned by an unregistered person The Supplier/manufacture shall be eligible for refund of the duty paid under the existing law.
NO ITC shall be available in respect to the such goods under GST
c. If goods returned by an registered person, The return of such goods shall be deemed to be a Supply.

♥ GST shall be payable by the manufacturer to whom goods returned;
♥ Invoice shall be raised by person who is returning the goods;
♥ Valuation of goods shall be done as per Valuation Rules;
♥ ITC shall be available to the person returning the goods;
♥The manufacturer to whom goods returned shall be entitled to avail ITC on Inputs utilised on manufacturing the good returned under Section 140;

Section 142. (2) This subsection deal with the following situations where:
Goods or Services supplied

i. in pursuance of a contract;
ii. such agreement entered into prior to the appointed day
iii. the price of any goods or services or both is revised upwards/downward on or after the appointed day.

Under the above situation the person shall adopt the following procedure:

i. Issue a supplementary Invoice/debit note/credit note as the case may be;
ii. Such supplementary Invoice/debit note/credit note shall be issue within 30 days from the price revision and in the compliance of CGST Act.

Treatment under CGST:

i. Such supplementary invoice/debit note/credit note shall be deemed to be issued under the CGST Act.
ii.The additional amount received under the debit note/supplementary invoice shall be subject to CGST/SGST or IGST as the case may be;
iii.The supplier shall be allowed to reduce his tax liability on issuance of credit note only if the recipient has reduced his input tax credit corresponding to such reduction of tax liability.

Section 142. (3)

i. Every claim for refund filed before/on/after the appointed day, for CENVAT credit etc., shall be disposed of in accordance with the provisions of existing law;
ii. The refund shall be accruing to him shall be paid in cash
iii. Where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse:
iv. No refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

Section 142. (4)

i. Every claim for refund filed after the appointed day;
ii. for refund of any duty or tax paid under existing law in respect of the goods or services exported before or after the appointed day,
iii. shall be disposed of in accordance with the provisions of the existing law:
iv. where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse:
v. No refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

Section 142. (5) Claim filed, after the appointed day for refund of tax paid in respect of services not provided shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash.

Section 142. (6) :

(i) Proceeding of appeal, review or reference relating to a CENVAT credit initiated whether before/on/after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law:

a. any amount of credit found to be admissible to the claimant shall be refunded to him in cash
b. no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act;

(ii) Proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before/on/after the appointed day under the existing law

a. disposed of in accordance with the provisions of existing law;
b. amount of credit becomes recoverable as a result of such appeal etc., shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act; and
c. the amount so recovered shall not be admissible as input tax credit under this Act.

Section 142. (7) APPEAL, REVIEW OR REFERENCE

(a) every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and if any amount becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of duty or tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
(b) every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and any amount found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the
provisions of subsection (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit
under this Act.

Section 142. (8) ASSESSMENT OR ADJUDICATION PROCEEDINGS
An assessment or adjudication proceedings instituted, whether before/on/after the appointed day, under the existing law,

(a) any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act;
(b) any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law.

Section 142. (9) Return, furnished under the existing law, is revised after the appointed day:

(a) Any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible in pursuance of such revision, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act;
(b) Any amount is found to be refundable or CENVAT credit is found to be admissible to any taxable person in pursuance of such revision, the same shall be refunded to him in cash under the existing law;
(c) the amount rejected, if any, shall not be admissible as input tax credit under this Act.

Section 142. (10) Contract prior to the appointed date, supply after the appointed date, shall be governed by CGST Act;

Section 142. (11) Once VAT/Service Tax duly payable on Goods/services no CGST shall be leviable except under 142(12) or 142(13)

Section 142. (12) Goods sent on approval basis are rejected

(i) goods sent on approval basis, not earlier than six months before the appointed day;
(ii) rejected on or after the appointed day are returned within six months (plus 2 months may be extended by Commissioner) from the appointed day,
No tax shall be payable thereon if such goods
(iii) When the time period of 6(+2) months are not adhere with:

♦ The tax shall be payable by the person returning the goods
♦ The tax shall be payable by the person who has sent the goods on approval basis

Section 142. (13)

a. Where a supplier has made any sale of goods in respect of which tax wasrequired to be deducted at source;
b. the supplier also has issued an invoice before the appointed day,

No deduction of tax at source under section 51 shall be made by the deductor, where payment to the said supplier is made on or after the appointed day.

Author is Mr. Sahay Vineet – CS, Senior Manager Taxation

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