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May 102017
May 092017
Returns of outward supplies under the GST Regime
The purpose of this article is to create awareness about the soon to be implemented Goods and Service Tax in India. This article deals with various aspects of return of outward supplies but does not deal with matching which is dealt in a separate article on the subject.
Who are required to file
As per section 37(1) of the CGST Act read with Returns Rules, every registered person except the following:-
i. An Input Service Distributor.
ii. A non-resident taxable person.
iii. A person paying tax under the composition scheme.
iv. A person paying tax under section 51 (TDS related provisions).
v. A person paying tax under section 52 (TCS related provisions).
are required to furnish electronically through the Common Portal either directly or through a Facilitation Centre notified by Commissioner, in FORM GSTR-1, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period.
The registered person shall not be allowed to furnish the details of outward supplies during the period from the eleventh day to the fifteenth day of the month succeeding the tax period.
The Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing such details for such class of taxable persons as may be specified therein. Any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
Contents of details of outward supplies
The details of outward supplies of goods or services or both furnished in FORM GSTR-1 shall include the following details:-
1) Invoice wise details of all
i) Inter-State and intra-State supplies made to registered persons.
ii) Inter-State supplies with invoice value more than two and a half lakh rupees made to unregistered persons.
2) Consolidated details of all
i) Intra-State supplies made to unregistered persons for each rate of tax.
ii) State wise inter-State supplies with invoice value less than two and a half lakh rupees made to unregistered persons for each rate of tax.
3) Debit and credit notes, if any issued during the month for invoices issued previously.
Communication of details of outward supplies with the recipient
The details of outward supplies furnished by the supplier shall be made available electronically to the concerned registered recipient in Part A of FORM GSTR- 2A, in FORM GSTR-4A (Composition Scheme) and in FORM GSTR-6A (Input Service Distributor) through the Common Portal after the due date of filing of FORM GSTR-1.
The author is a fellow member of the Institute of Chartered Accountants of India and also a qualified Company Secretary. The author has also done DISA (ICAI), certificate on IFRS (ICAI), Certificate on Forex and Treasury Management (ICAI), Certificate on Forensic Accounting and Fraud Prevention (ICAI). The author practices as a Chartered Accountant under the name and style of Rishabh Kumar Barmecha and Associates and is an expert in auditing, financial investigation, direct and indirect taxation.
The author can be reached at rishabhkumarbarmecha@gmail.com or 91 9007909221 or Twitter @CARKBarmecha.
CA Rishabh Kumar Barmecha
May 052017
Meaning of profiteering:
It is a situation where a person seeks or exacts exorbitant profits without adding value to the supply or adding lesser value in the supply as compared to price charged. Under such situations profits are earned as a result of scarce supply of goods and/or services or any other reason.
Thus, this results in interfere by government to reduce the price forcefully in the economy so that customers are protected from being exploited. Under GST these measures are added so as to pass on the benefit of GST system to the ultimate customers.
Why anti-profiteering measures in GST:
The proposed GST regime is expected to reduce overall burden of indirect taxes in the economy. Under pre GST era, indirect taxes are indirectly paid by customers and hence post GST any reduction of taxes shall also go into the pockets of customers. However, past experience indicates that any such benefit never/lesser pass on to the customers. Hence, provisions as to anti profiteering are essential to pass on the benefit of taxes paid to customers.
Anti-profiteering measure in GST
Provision relating to anti-profiteering measure is given in section 171 under the chapter – XXI of the central goods and services tax act, 2017 (act no 12 of 2017) which is reproduced as below:
(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to:
- The recipient by way of commensurate reduction in prices.
(2) The Central Government may, on recommendations of the Council, by notification,
- constitute an Authority, or
- empower an existing Authority constituted under any law for the time being in force,
to examine:
- whether input tax credits availed by any registered person or
- the reduction in the tax rate
have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.
(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.
Analysis:
The provision provides that the central government may by law constitute an authority or entrust an existing authority constituted under any law, to examine whether input tax credits availed by any registered taxable person or the reduction in the price on account of any reduction in the tax rate have actually resulted in a commensurate reduction in the price of the said goods and /or services supplied by him.
Further, the authority shall exercise such function and have such powers, including those for imposition of penalty, as may be prescribed in cases where it finds that the price charged has not been reduced as aforesaid.
History:
It may also be noted that the above said concept is not new to India as in the state of Bengal, the West Bengal Anti-profiteering Act, 1985 was enacted to prevent profiteering in certain articles in daily use.
Implications:
This is an attempt to ensure that business do not take advantage of GST and should pass on the benefit of GST input tax credit available or reduction in the rates to the consumer.
Implementation:
The success of the scheme depends on:
- Anti-profiteering measure that are used for identifying the profiteers.
- The proper checks and balances that are deployed by government agency so that undue power given to designated authority is not misused and that results unnecessary harassment of traders.
- Timing of implementation of these measures will also play an important role in ascertaining its success.
Proactive measures:
With detailed guidelines / rules regarding the above scheme is yet come, the business man and small trades will to be very conscious before setting their prices of supply after the implementation of GST. If trades are panning the increase the price of their price in next few month, it is batter to increase the price before GST implementation otherwise it will be very difficult to prove before authority that the benefit of tax save is actually been passed on the customers. Further, a back end working shall be done by every business man to ensure that tax save due to GST results in price reduction of supply.
Mar 292017
UNION CABINET APPROVES 4 GST BILL
The Union Cabinet has cleared four bills related to the Goods and Services Tax (GST), ahead of their introduction in Parliament, to enable roll out of the tax reform from July 1.
Approval of the bills by Parliament and a separate one by all state Assemblies will complete the legislative process for roll out of the GST, the one-nation-one-tax system that merges central taxes like excise duty and service tax and state levies like VAT.
What is GST bill?
- Goods and Services Tax bill is India’s biggest reform in India’s indirect tax structure.
- The purpose of the bill is to introduce one single tax on supply of goods and services, from the manufacturing stage until its delivery to the final consumer.
- The final consumer of the goods and/or services will only have to bear the GST charged by the final dealer in the supply chain, and avail set-off benefits at all the previous stages.
- This means interim tax stages such as excise duties and service tax and state levies like VAT will be absorbed under GST.
What were the four bills approved by the Cabinet ?
- The Central Goods and Services Tax Bill 2017 (The CGST Bill),
- The Integrated Goods and Services Tax Bill 2017 (The IGST Bill),
- The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill) and
- The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill)
GST Bill peak rate to be 40%, slabs intact for now
The GST levy may go up to 40 percent after the GST Council proposed raising the peak rate in the Bill to 20 percent, from the current 14 percent, to obviate the need for approaching Parliament for any change in rates in future.
The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon last year for the moment, In addition, a cess will be levied on demerit goods like luxury cars, aerated drinks and tobacco products.
The CGST Bill sets the tax regime for the levy of GST on intra-state supply of goods or services or both by the central government. IGST Bill deals levy of GST on inter-state supply of goods or services or both by the central government.
Similarly, the UTGST Bill provides for levy of GST on intra-UT supply of goods and services in the Union Territories without legislature. The Compensation Bill provides for compensation to the states for loss of revenue due to GST for a period of five years.
All state assemblies will have to separately approve the state GST legislation before this one-nation one-tax regime can be rolled out.
What are the benefits of GST?
- The introduction of GST bill will help in simplifying administration as it removes multiple taxation systems at every stage of trade model and removes disturbances in production.
- It also aims towards providing a uniform tax rate for all goods and services.
- The manufacturers will be benefited by the tax regime as it will reduce the tax that levied on them.
- A system of seamless tax-credits will lead to minimal cascading of taxes, thus reducing hidden costs during trade.
Roadblocks for GST bill
- The state GST bill has to be approved by every state government, before its introduction in Parliament for approval.
- At the moment, the state GST bill has been sent to all the states by their respective state legislatures for the approval.
Courtesy: Esha Agrawal
For any queries and comments please email on: eshaag6@gmail.com
Mar 202017
Why there is a need to differentiate between goods and services?
- Different rate of tax and classification rule for goods and services: The goods are to be classified as per HSN codes and services are to be classified as per SAC terminology. These codes are to be mentioned over invoices also. Moreover the rate of taxing goods and/ or services are different and hence, difference in amount of liability to pay tax. Hence, there is a requirement to classify a supply between goods or services as per rules mentioned in sch. II of the revised model GST law.
- Different place of supply provisions as to goods / services: GST being destination based tax on consumption and hence tax revenue shall go to the state where goods / services are consumed and hence difference provisions are made under law for place of supply as to goods on one hand and place of supply on the other.
- All transaction including composite transactions has been considered either as goods or as services under schedule II of the Revised Model GST Law.
Meaning of terms Goods and Services:
| Meaning of Goods | Meaning of Services |
| Art. 366(12) of the constitution:
Good includes all materials, commodities and articles. |
|
| Sec 2(49) of Revised Model GST Law:
Goods means every kind of movable property and
o Actionable claim o Things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply |
Sec 2(92) of the revised Model GST law
Services means anything other than goods and
|
o Securities |
o Money |
Case Study:
Trading in securities: Trading in securities is specifically excluded from the definitions of goods (Sec 2(49) and services (Sec 2(92) and hence securities are neither goods not services and hence GST is not payable on trading in securities.
Actionable claims: Actionable claims under revised law are considered to be goods. As per section 2(1) of the Revised Model GST Law – actionable claims shall have the meaning assigned to it under section 3 of the Transfer of property act 1882 (TPA). As per section 3 of TPA, actionable claims comprises two types of claims –
- A claim to unsecured debts and
- A claim to beneficial interest in movable property which is not in possession, actual or constructive – whether present or future, conditional or contingent
Immovable properties: Goods and service tax can not be levy on sale or purchase of immovable goods. However, transfer of immovable property by way of lease or right of usages therefore would be within the preview of GST law as supply of services.
Intangible goods: As per Article 366(12) of the constitution goods includes all materials, commodities and articles. This definition does not make any distinction between tangible goods and intangible goods. The term good, as observed in TCS v State of AP (2004), used in constitution is very wide. The term all materials, articles and commodities includes both tangibles and intangibles which is capable of abstraction consumption and use and which can be transmitted transferred delivered stored possessed. Thus, intangible goods shall be treated as good and supply of intangible goods shall be supply of goods.
Canned software: To minimize the litigation schedule II is inserted in Revised Model GST law to define the matters to be treated as supply of good or service As per entry no 5(d) of the same development, design programming customization adaption up-gradation enhancement implementation of software shall be treated as supply of services. However, canned software are pre fabricated software and are generally sold through a medium. Hence, such canned services shall be considered as goods and supply of the same may be treated as supply of goods.
Mar 132017
High Seas Sale of goods under GST
Meaning of term High Seas Sale
High Sea Sales (HSS) is a sale carried out by the carrier document consignee to another buyer while the goods are yet on high seas. Goods on high seas means:
- After their dispatch from the port / airport of origin, AND
- Before their arrival at the port / airport of destination.
Consequences of HSS:
As mentioned above HSS contract / agreement should be signed after dispatch of goods from origin & prior to their arrival at destination. On concluding the HSS agreement, the bill of lading (B/L) should be endorsed in favour of the HSS buyer.
There is no bar on same goods being sold more than once on high seas. In such cases, the last HSS value is taken by customs for the purpose of levying of duty.
The tile of goods transfers to the HSS buyer prior to entry of goods in territorial jurisdiction of India.
The delivery from customs is, therefore, on account of last HSS buyer. Bill of entry (B/E) is also filed in the name of last HSS buyer.
Imposition of GST on HSS
As per section 3(3) of the IGST Act, supply of goods in the course of import into the territory of India till they cross the customs frontiers of India shall be deemed to be a supply of goods in the course of inter state trade or commerce.
Further, as per proviso to section 4(1) of IGST Act, intra state supply of goods shall not include supply of goods brought into India in the course of import till they cross the customs frontiers of India.
Thus, to conclude, sale in the course of import before customs frontier (i.e. HSS) would be subject to IGST.
Collection of GST on HSS
As per proviso to section 5(1) of IGST, the IGST on the goods imported into India shall be levied and collected in accordance with:
- The provisions of section 3 of the customs tariff act 1975
- At the point when duties of customs are levied on the said goods under section 12 of the customs act 1962
- On the value as determined under the Customs Tariff act.
Conclusion
Thus, the first importer will not charge IGST on sale made by him to the HSS buyer and the later / last HSS buyer (as the case may be) would pay IGST at the time clearing of goods from the customs as per customs act.
Last HSS buyer would be eligible to claim such IGST paid to the customs authorities subject to other provisions of the act. GST paid is this case shall be in addition to Basic Custom Duty paid to custom authorities.
Mar 072017
Impact of GST on Traders
Traders are those taxable person who purchase goods for resale. Here an attempt is made to analyze impact of GST on traders.
Intra state sale of goods and / or services
Like in existing vat acts all sales shall be taxable on its transaction value.
Post sale discounts will also be taxable unless these are allowed in compliance with an existing agreement at the time of sale and other prescribed conditions.
Interstate sale of goods and / or services
With the partial phase out of the CST Act, in respect of those goods which are within the scope of GST, no sale or purchase could take place against Form C. Interstate purchase against Form C presently cost @ 2% of the purchase price and same is not refundable / adjustable. However, after GST same is taxable @ IGST which is equal to CGST and SGST and fully adjustable against sale GST tax. Thus, under GST a person would get credit of the entire amount.
In CST a taxable person could get exemption if he shown Form E –I / II against the sale of goods to another state. Dealer selling the goods has to issue a certificate in prescribed form to the purchasing dealer (Prescribed forms are E1 form if its first sale and E2 form if subsequent sales). Subsequent purchaser has to issue certificate in prescribed form (This is C form) to his seller. Such certificates are to be produced before assessing authorities within prescribed time. The certificates in C, E1 and E2 forms are to be issued on quarterly basis. Such exemption under section 6(2) would be withdrawn and such sales are also taxable at full rate of IGST.
Stock Transfers
In the present regime, in case of stock transfers, the dealers are required to reverse certain percentage of input tax credit. However, no such reversal would be required under the GST.
On the other hand, presently, stock transfers does not attract any tax since these are transferred against Form F. Under GST, however, the person shall pay tax on such transfer on the transaction value.
Impact on business investment
The dealers will have to pay full IGST on all interstate transaction at the time of sale and all stock transfers. Hence, traders will require an additional working capital for investment in tax.
Input tax credit
Traders will also get input tax credit (ITC) for taxes paid on input services. To this extent traders will be benefited which they can pass it on to customer and thus, making their goods cheaper.
List of non creditable goods will also have major impact on the dealers. Shorter the list higher would be the gain.
ITC would not be available on free supplies under the GST even if these are used for furtherance of business. [Section 17(4) (g)].
ITC on capital goods: furniture, fixtures and AC
Definition of capital goods have undergone a dramatic change in the revised Model GST law. Now, capital goods, defined in section 2(19) of the revised model GST, means goods, the value of which is capitalised in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business. Therefore, they would get the tax credit on furniture, AC etc used for business.
Presently, if a trader wants to pass on the excise duty to the purchaser, he needs dealer registrations in central excise. No such separate registration is required under GST. He can pass on the GST credit to the purchaser freely.
Dual control
Since the dealer will be covered under CGST and SGST, they might be under control of the union government as well as the state government. However, the government is trying its best to avoid dual control.
Mar 022017
GST Valuation (Determination of value of supply of Goods and services) Rules 2016
Valuation norms under GST under normal circumstances:
The value taken for calculation of GST is the price actually paid by recipient of goods / service to the supplier. This shall be taken if and only if:
- The supplier and the recipient of the supply are not related
- The price is the sole consideration for the supply
The value thus identified with above formula is popularly known as transaction value under section 15(1) of the model GST law. There are specific inclusions to be made in calculating transaction value as provided under section 15(2) and some exclusions provided under section 15(3) of the act. Section 15(4) provides that where the value of the supply of goods or services cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed.
Hence, GST valuation rules 2016 are come on the way to provide when valuation under 15(1) shall be disregarded and how value shall be calculated under such circumstances.
When value under section 15(1) shall be disregarded
When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any goods and/or services, he may ask the supplier to furnish further information, including documents or other evidence and if, after receiving such further information, or in the absence of any response from such supplier, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such goods and/or services cannot be determined under the provisions of sub-rule (1) of rule 3. [Rule 7(1)]
Thus, only reasons to doubt on truth or accuracy of the value are sufficient to reject the transaction value. The existence of following ingredients is sufficient to arouse existence of reasons of doubt on proper officer to reject transaction value and consider the valuation rules:
- The significantly higher value at which goods and/or service of the like kind or quantity are supplied
- The significantly lower or higher value of the supply of goods and/or services compared to the marker value
- Mis-declaration of parameters such as description, quantity, quality, year of manufacture or production
Goods or services of like kind and quantity
| Goods of like kind and quantity means :- | Services of like kind and quantity means |
| Goods which are identical or similar in1. Physical characteristics,2. Quality and3. Reputation as the goods being valued, and4. perform the same functions or5. Are commercially interchangeable with the goods being valued6. And supplied by the same person or by a different person | services which are:1. Identical or similar in nature,2. Quality and3. Reputation as the services being valued and4. supplied by the same person or by a different person |
If value can not be determine and/or in case value is determine but proper officer rejected the value, then, value shall be determine by proceeding sequentially through rules 4 to 6.
Step 1: Determination of value by comparison:
Rule 4 : Where transaction value of supply of goods or services can not be determine, value shall be determine in following manner:
- Transaction value of goods and/or services of like kind and quality
- Supplied at or about the same time to other customers,
- Adjusted in accordance with the provisions of sub-rule (2) which are given below:
- Difference in dates of supply
- Difference in commercial level
- Difference in quantity levels
- Difference in composition
- Difference in quality and design
- Difference in freight and insurance charges depending on the place of supply
When value can not be determine under rule 4:
- Goods and/or services of like kind and value are not available
- If they are available, but adjustments as required in point no 3 above can not be made
Step 2: Computed value method
If value can not be determined under rule 4 value shall be calculated under computed value method which shall be determined as below:
- The cost of production, manufacture or processing of the goods or, the cost of provision of the services;
- Charges, if any, for the design or brand;
- An amount towards profit and general expenses equal to that usually reflected in supply of goods and/or services of the same class or kind as the goods and/or services being valued which are made by other suppliers.
Feb 252017
What is composition?
Composition means to receive less than for what a person or authority entitled for. Composition provisions under taxing laws are made to give relief to the small traders from the tactical booking keeping and return formalities of the law so that to ensure that no person is given undue hardship.
Who are small traders for composition scheme?
As per section 8(3) only those registered taxable persons are eligible for the scheme whose aggregate turnover in the preceding financial year did not exceed Rs 50,00,000/-. Thus, only those traders can take benefits of this scheme whose aggregate turnover is either less than or equal to Rs 50,00,000/-. Under this scheme trader shall pay an amount at the maximum rate of 1% (2.5% in case of manufacturer) and relived of maximum of his compliance burden under the act.
Silent features of the scheme:
- Composition of one out of three business of a person is not possible. The objective of this scheme is to provide relief from compliance over burden. Hence, composition scheme would become applicable for all the business verticals/registrations which are separately held by the person with same PAN.
- The taxable person engaged in interstate supply of goods / services can not opt for composition scheme.
- Taxable person opting for this scheme is not eligible for inter tax credit (ITC).
- Composition scheme supplier cannot issue a tax invoice and hence cannot pass forward the ITC.
- The composition supplier has to pay tax on all his purchases as a normal taxable person on all of his purchases made by him.
- The customer who buys goods from taxable person who is under composition scheme is not eligible for composition input tax credit because as mentioned above composition scheme supplier cannot issue a tax invoice.
- The taxable person under composition scheme is restricted from collecting tax.
- The term aggregate turnover is defined under sec 2(6) of model law. Accordingly aggregate turnover means – “the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services and inter-State supplies of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be. Further, aggregate turnover does not include the value of inward supplies on which tax is payable by a person on reverse charge basis or value of inward supplies.
- Penal consequences: Taxable person who was not eligible for the composition scheme would be liable to pay tax, interest and in addition he shall also be liable to a penalty equivalent to the amount of tax payable.
Who could actually take benefit of composition scheme?
Now the important question arises is that who could actually take benefit of this scheme? Certainly any taxable person whose turnover is more than Rs 50,00,000/- cannot avail this scheme. Now other taxable person should carefully analyze the impact of this scheme on the sale price their product. In case difference between tax rate of purchase and tax on sale is more than 1%, than under normal provisions his products are costlier under normal provisions and composition scheme is batter in this case if he is dealing with ultimate customer.
While making selection for the scheme the customer with which he is dealing with should also be kept in mind if the person to whom sale is being made is not an ultimate customer.
Further, analysis shall be made with respect to all business held under the same PAN number and all his business verticals. As the scheme will either apply to all or to none. Hence, a very careful study needs to be made before selection of the scheme.
Feb 142017
Transitional Provisions
As we all know that process of migration of existing taxpayers under different indirect taxation laws to GST system in at pace and this migration results in too many legal issues to be resolved. Under the existing provision lots of stock lying at departmental side and as well as on assessee side. The gist of such stock is as below:
- How CENVAT and / or VAT credit of earlier laws will carry forward under the new GST system?
- What happen to CENVAT on capital goods under earlier laws?
- Whether CENVAT Of on item not allowable under earlier laws can be claimed under the new law?
- What happens to wrong credit made by assessee under earlier law?
- Will ITC of VAT paid on inputs under earlier law is allowable to a service provider?
- Time limit for issue of debit notes or credit notes to be issued under earlier law?
- Pending refund proceedings, appeal or revision proceedings and interest recovery by departments under earlier law? Etc.
To resolved all the above issues CHAPTER XXVII (section 165 to section 197) is introduced under the model GST law with named as “TRANSITIONAL PROVISIONS”. Here we will discuss only transition provisions related to CENVAT credit and VAT credit carry forward in a return filled under earlier laws.
Section 167 – Amount of CENVAT credit carried forward in a return to be allowed as input tax credit
With the introduction of migration to GST regime endeavor of the central government, the first worries to the taxpayer is his CENVAT credit and VAT credits carry forward in his earlier laws. Under section 167 such taxpayer is eligible to carry forward such credits under GST regime also if he is allowed to do so under normal provisions of GST and he had not opted for composition scheme and such amount is also eligible under the GST regime for INPUT credit.
The provision of sec 167 as to carry forward of CENVAT is reproduced below:
A registered taxable person, other than a person opting to pay tax under section 9 , shall be entitled to take, in his electronic credit ledger, the amount of cenvat credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished, by him under the earlier law in such manner as may be prescribed:
PROVIDED that the registered taxable person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act.
The provisions of sec 167 as to carry forward of VAT is produced below:
(1) A registered taxable person, other than a person opting to pay tax under section 9, shall be entitled to take, in his electronic credit ledger, credit of the amount of Value Added Tax [and Entry Tax] carried forward in the a return relating to the period ending with the day immediately preceding the appointed day, furnished, by him under the earlier law, not later than ninety days after the said day, in such manner as may be prescribed:
PROVIDED that the registered taxable person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act:
PROVIDED FURTHER that so much of the said credit as is attributable to any claim related to section 3, sub-section (3) of section 5, section 6 or section 6A of the Central Sales Tax Act, 1956 (74 of 1956) that is not substantiated in the manner, and within the period, prescribed in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 shall not be eligible to be credited to the electronic credit ledger:
PROVIDED ALSO that an amount equivalent to the credit specified in the second proviso shall be refunded under the earlier law when the said claims are substantiated in the manner prescribed in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957.
(2) The amount of credit under the second proviso to sub-section (1) shall be calculated in such manner as may be prescribed.
Hence, the above provisions may be summarized as under:
| Particulars | CENVAT c/f under earlier laws | VAT c/f under earlier laws |
| Will credit is eligible to taxable person opting for composition scheme under GST? | No | No |
| Manner of carry forward of CENVAT and / or VAT under earlier returns in GST? | Take the amount shown in earlier return in his electronic credit ledger | Take the amount shown in earlier return in his electronic credit ledger after deducting the input which require special declarations from the dealer. |
| How the amount to be carry forward will be calculated? | Amount shown in last of the earlier returns relating of excise acts and / or service tax acts may get carry forward as such. | Carry forward of VAT or entry tax as the case may be claimed with in a period of ninety days.Any claim on this account is not maintainable after 90 days. |
| Additional condition | The carry forward shown in earlier return shall also be eligible under the GST regime also. | The carry forward shown in earlier return shall also be eligible under the GST regime also. |
| What happens when special declaration is required (e.g. Form C etc.) is required under sales tax laws? | ——- | Input related to such turnover is not eligible to carry forward but such amount may be refunded when such claims are sustainable after proper deposit of form C etc to sales tax authority. |