I. Sec 140(1) of CGST Act, 2017 – Carried over of CENVAT in the returns on the appointed day

       A.  Applicability

•       Registered Person under existing law•       Not opting for composition under GST law

       B.  Eligibility

•   Return has been furnished for past 6 months immediately preceding appointed day. If we consider the GST applicability day as 01/07/2017, thenALL the return should be furnished by the person for the month of January 2107 to June 2017;
•   The said amount of credit should be admissible under CGST Act; and
•  Such amount of credit should not relate to goods manufactured and cleared under such exemption notifications, as are notified by the government.

       C. Value of Credit   

•       Entire value (100%) of the credit shall be allowed to the said registered person

       D.Transition Rules

•   Every registered person, entitled to take credit of input tax under section 140(1), shall, submit an application, duly signed, electronically in form GST TRAN -1

• Such application must be submitted within 90 days (and not 3 months) of the appointed day. ( If appointed day is deemed to be 1st July 2017, then such application can be filed by 28th September 2017)

•   The commissioner may, on recommendations of the GST Council, further extend the period of 90 days by further 90 days. (Total days to file application in such case would be 180 days-90+90).

•   Amount of tax or duty for which said personise entitled a credit, shall be separately stated in the form.

•   Where the inputs have been received from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park, the credit shall be allowed to the extent as provided in sub-rule (7) of rule 3 of the CENVAT Credit Rules, 2004 [this proviso only in CGST rules]

• In the case of a claim under sub-section (1) of section 140, the application shall specify separately— 

(i)  the value of claims under section 3, sub-section (3) of section 5, sections 6 and 6A and sub-section (8) of section 8 of the Central Sales Tax Act, 1956 made by the applicant and

(ii)  the serial number and value of declarations in Forms C and/or F and Certificates in Forms E and/or H or Form I specified in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 submitted by the applicant in support of the claims referred to in sub-clause (i) above; (this proviso only in SGST rules)

       E. Observations

•   There is no specific time limit towards the period to which such transitional credit should pertain to under GST. Thus the credit might even be carried forward for several years in the existing law.

•  Where the dealer fails to state the carry over the amount in the last return, he cannot claim credit under this section. It could be claimed by way of refund under section 142(2).

•   If the surcharge is levied under the Union laws, such as Krishi Kalyan cess, is eligible for credit, then such credit should also be eligible for carry forward as GST credit.

 II.  Sec 140(2) of CGST Act, 2017 – Unavailed CENVAT on Capital Goods    

       A.  Applicability

•       Registered person;
•       Has not claimed certain amount of tax credit
•       In respect of capital goods
•       In his return that has been furnished by him under existing laws
•       Not opting for composition scheme under GST Act

       B.  Eligibility

•       Amount of unavailed credit pertains to period up to appointed day ( 01/07/2017)

•       Credit should be admissible under GST Act

•       Unavailed Credit means  = Total Duty paid (As per invoice) – Duty availed and utilized in the returns

       C. Transition Rules

• Every registered person, entitled to take credit of input tax under section 140(2), shall, submit an application, duly signed, electronically in formGST TRAN -1

•  Such application must be submitted within 90 days (and not 3 months) of the appointed day. ( If appointed day is deemed to be 1st July 2017, then such application can be filed by 28th September 2017)

•  The commissioner may, on recommendations of the GST Council, further extend the period of 90 days by further 90 days. (Total days to file application in such case would be 180 days-90+90).

•  The application shall also specify separately the following particulars in respect of every item of capital goods as on the appointed day-

(i)    the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day, and
   
(ii) The amount of tax or duty yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day

       D.Observations

•  Amount of tax which has been filed in return but not availed for payment of output tax (i.e. the credit is carried forward) shall be eligible to be carried forward in GST as per sec 140(1).

• As per Rule 4(2) (b) of the Cenvat Credit Rules, Cenvat Credit on capital goods, which has not been availed in first year, will be available in any financial year subsequent to the financial year in which it was purchased. Cenvat Credit Rules do not prescribe any time limit for availment of credit on Capital Goods. Therefore, unavailed amount can be claimed under this section.  

•  When capital goods are received after the appointed day, and thus no amount can be claimed before that day, entire credit on such capital goods can be claimed after the appointed day under this sub section.

III.  Sec 140(3) of CGST Act, 2017 – Unavailed CENVAT on Inputs held in stock on the appointed day

A.     Applicability

•       This section is applicable to a person who is liable to pay tax under GST and who was –

a)     Not liable to be registered under existing law (a manufacturer or a dealer or a retailer or a service provider having turnover below exemption limit in respective acts) ; or

b)  Engaged in manufacture of exempted goods or provision of exempted services; or

b)     Providing works contract service and was availing the benefit of notification No.26/2012 – Service Tax dated 20.06.2012; or

c)     A First Stage Dealer or Second Stage Dealer; or

d)     A registered importer; or

f)     A depot of a manufacturer

B.     Eligibility

•       He held the duty paid stocks in hand on the appointed day;

•       Credit pertains to eligible duties in respect of inputs held in stock; and inputs contained in semi-finished or finished goods held in stock on the appointed day;

•       Such inputs are used or intended to be used for making taxable supplies under GST act;

•       The said person is eligible for input tax credit on such inputs under GST act ( Person opting for composition scheme cannot avail benefit of this section)

•       The said person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs (exception noted in section “Value of Credit”);

•       Such invoice and/or other prescribed documents were issued not earlier than 12 months immediately preceding the appointed day, i.e. credit would be available for such stocks only which have been purchased between 01 July 2016 to 30 June 2017. Any purchase made before 01/07/2016 would not qualify for credit under this section and any purchases made after 01/07/2017 will get full credit under GST.

•       The supplier of service is not eligible for any abatement under the CGST Act

C.     Value of Credit

•If the manufacturer or provider of service has invoice and/or other documents evidencing payment of duty, and invoice is not older than 12 months preceding the appointed date, then he is eligible to avail 100% of duty paid

•       If the manufacturer or provider of service  do not have invoice and/or other documents evidencing payment of duty in his possession, no credit would be allowed to him

•       If a dealer (FSD or SSD) or a retailer, registered under GST Act are in possession of invoice and/or other documents evidencing payment of duty, and invoice is not older than 12 months preceding the appointed date, then he is eligible to avail 100% of duty paid

•       If a dealer (FSD or SSD) or a retailer, registered under GST Act is not in possession of invoice and/or other documents evidencing payment of duty, then credit shall be provided in the following manner:

In CGST Rules

Ø   Credit available in respect of duty of central excise or, as the case may be, additional      duties of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975

Ø   If the goods are intended to be supply in the course of Intra –state transactions (i.e. within the state); and

Ø   Attract central tax at the rate of 9% or more (i.e. in 18% or more bracket);

Ø   Credit shall be allowed at the rate of 60% ; and

Ø   If goods attract central tax at the rate of  less than 9%;

Ø   Credit shall be allowed at the rate of 40%

Ø   If the goods are intended to be supply in the course of Inter –state transactions (i.e. outside the state);

Ø   Attract central tax at the rate of 9% or more

Ø   Credit shall be allowed at the rate of 30% ; and

Ø   If goods attract central tax at the rate of  less than 9%;

Ø   Credit shall be allowed at the rate of 20%

Ø   The said taxable person shall pass on the benefit of such credit by way of reduced prices  to the recipient.

In SGST Rules

Ø    Goods attract state tax at the rate of 9% or more (i.e. in 18% or more bracket);

Ø   Credit shall be allowed at the rate of 60% ;

Ø   Goods attract state tax at the rate of  less than 9%;

Ø   Credit shall be allowed at the rate of 40%

Ø   The said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient.

D.Transition Rules

•  Credit shall be allowed after the CGST/SGST payable on such supply has been paid.  This means until the goods, on which the registered person (under GST) is claiming tax credit, are supplied and tax thereupon is paid, he is not eligible for Input Tax Credit under GST.

•       The scheme shall be available for six tax periods from the appointed date. 

•       Such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule. 

•       Such goods were not wholly exempt from tax under the State Value Added Tax Act,

•       The document for procurement of such goods is available with the registered person.   

•        The registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.

•       The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal. 

•       The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

IV. Sec 140(4) of CGST Act, 2017 – Unavailed/Unclaimed CENVAT on Inputs held in stock on the appointed day

A.     Applicability

•       A Registered Person, who was engaged in

•       Manufacture of non – exempted as well as exempted goods

•       Provision of exempted as well as non-exempted services

B.     Eligibility

•       He has duty paid stocks on the appointed day on which he has not claimed Cenvat credit

•       He also has forward tax credit in his last return preceding the appointed day

•       Unclaimed credit pertains to eligible duties in respect of inputs held in stock and inputs contained in semi-finished and finished goods held in stock on the appointed day.

C.Value of Credit

•  He shall be entitled to take credit for the amount of Cenvat credit carried forward in a return furnished under existing law by him in terms of sec 140(1)

•  Cenvat credit pertaining to eligible duties in respect of inputs held in stock or semi-finished goods relating to exempted goods or services on the appointed day in terms of section 140(3)

V.      Sec 140(5) of CGST Act, 2017 – Input/Input Services received after the appointed day

A.   Applicability

•  The registered person has paid eligible duties and taxes under the existing law in respect of input or input services, which are received after the appointed day

B.    Eligibility

• Invoice or any other duty/tax paying document was recorded in the books of accounts of such person within period of 30 days from the appointed day.

C.Transition Rules

The registered person shall submit the following documents –

•  The name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law, 

• The description and value of the goods or services,

•  The quantity in case of goods and the unit or unit quantity code thereof,

•  The amount of eligible taxes and duties or, as the case may be, the value added tax [or entry tax] charged by the supplier in respect of the goods or services, and 

• The date on which the receipt of goods or services is entered in the books of account of the recipient.
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