STATUTORY PROVISIONS - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

5. STATUTORY PROVISIONS The Statutory provisions relating to transition are contained in Chapter XX from Sections 139 to 142 of the CGST Act, 2017, and Rule 117 to 121 of the CGST Rules, 2017. 5.1. Section 139 of CGST Act, 2017 provides for migration of existing taxpayers. 5.2. Section 140 of the CGST Act, 2017 contains provisions for transitional arrangements for input tax credit. 5.3. Section 140(1) of the CGST Act, 2017 provides that a registered person can avail CENVAT credit of eligible duties carried forward in the return under the existing law relating to the period ending with the day immediately preceding the appointed day, provided such credit is admissible as ITC under the CGST Act, 2017, the credit does not relate to goods cleared under notified exemption notifications and all returns for the last 6 months under the existing law are filed immediately preceding the appointed date. 5.4. Section 140(2) of the CGST Act, 2017 stipulates that a registered person can avail the unavailed CENVAT credit of capital goods not carried forward in the return under the existing law relating to the period before 01.07.2017, if such credit is admissible as ITC under the CGST Act, 2017. 5.5. Section 140(3) of the CGST Act, 2017 states that a registered person can take credit of eligible duties in respect of inputs held in stock inputs contained in semi-finished or finished goods held in stock on appointed day, if he was not liable to be registered under the existing law, manufactures or provides exempted supply, provides works contract service was availing benefit of Notification No. 26/2012-ST and is a first or second stage dealer or a registered importer or a depot of a manufacturer, subject to following conditions: The inputs or goods are used for making taxable supplies under this Act; The registered person is eligible for ITC on such inputs under this Act; Invoices evidencing payment of duty under existing law is in possession; Such invoices were issued not earlier than 12 months before the appointed day; The supplier of services is not eligible for any abatement under this Act. 5.6. Section 140(4) of the CGST Act, 2017 provides that Input tax Credit can be taken under Section 140(1) 140(3) of the CGST Act, 2017 for supply taxable under this act previously assessable under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994. 5.7. Section 140(5) of the CGST Act, 2017 states that Input tax Credit of eligible duties (except service tax) can be taken for supplies received on or after the appointed day if the invoice was recorded in the books of accounts within 30 days from the appointed day statement is furnished. 5.8. Section 140(6) of the CGST Act, 2017 states that a registered person paying tax at a fixed rate or composition levy can take credit of eligible duties in respect of inputs held in stock inputs contained in semi-finished or finished goods held in stock on appointed day provided, the inputs or goods are used for making taxable supplies under this Act, the registered person is eligible for ITC on such inputs under this Act, invoices evidencing payment of duty under existing law are in possession and such invoices were issued not earlier than 12 months before the appointed day. 5.9. Section 140(7) of the CGST Act, 2017 provides that Input tax Credit on services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution (Substituted by Section 147 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.) [whether the invoices relating to such services are received prior to, on or after, the appointed day.] 5.10. Section 140(8) of the CGST Act, 2017 states that a registered person having centralized registration under existing law can avail CENVAT credit carried forwarded in the return under the existing law relating to the period before the appointed day, provided that such credit is admissible as ITC under this Act and all returns for the last 3 months under the existing law are filed before the appointed date. 5.11. Section 140(9) of the CGST Act, 2017 provides that if CENVAT credit for input services provided under the existing law has been reversed due to non-payment of consideration within 3 months, credit can be reclaimed if payment is made within 3 months from the appointed day. 5.12. Section 141 of the CGST Act, 2017 Transitional provisions relating to job work: If any inputs or semi-finished goods or excisable goods are sent to a job worker without payment of tax under existing law prior to the appointed day such inputs or goods are returned within 6 months from the appointed day, no tax is payable, if manufacturer job-worker declare the details of the inputs or goods held in stock by the job-worker on the appointed day. If said inputs or goods are not returned within the specified period, ITC shall be recovered under Section 142(8)(a) of the CGST Act, 2017. The manufacturer may transfer the said goods to the premises of any registered person for supplying there from, on payment of tax in India or without payment of tax for exports within specified period. 5.13. Section 142 - Miscellaneous transitional provisions: (i) Section 142(1) of the CGST Act, 2017 provides that if goods on which duty had been paid under the existing law at the time of removal (less than 6 months prior to the appointed day) are returned by an unregistered person within 6 months from the appointed day, then the person shall be eligible for refund. (ii) Section 142(2) of the CGST Act, 2017 provides that if in pursuance of a contract entered into prior to the appointed day, the price of supply is revised on or after the appointed day, supplementary invoice or debit or credit note shall be issued within 30 days of such revision such issue shall be deemed to be outward supply made under this Act. If recipient has not reduced ITC relating to credit note, supplier cannot reduce his tax liability relating to credit note. (iii) Section 142(3) of the CGST Act, 2017 provides for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law and will be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash. (iv) Section 142(4) of the CGST Act, 2017 provides for refund filed after the appointed day 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 and shall be disposed of in accordance with the provisions of the existing law. (v) Section 142(5) of the CGST Act, 2017 provides for refund of tax paid after the appointed day under the existing law in respect of services not provided and shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash. (vi) Section 142(6) of the CGST Act, 2017 provides that every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash. (vii) Section 142(7) of the CGST Act, 2017 states that 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 in case any amount found to be admissible to the claimant shall be refunded to him in cash. (viii) Section 142(8) of the CGST Act, 2017 states that where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, 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 if found refundable to the taxable person, the same shall be refunded to him in cash under the said law. (ix) Section 142(9) of the CGST Act, 2017 states that where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and if found to be refundable or CENVAT credit is found to be admissible to any taxable person, the same shall be refunded to him in cash under the existing law. (x) Section 142(10) of the CGST Act, 2017 stipulates that the goods or services or both supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act. (xi) Section 142(11) of the CGST Act, 2017 provides that no tax is payable to the extent the tax was leviable under the VAT Act of the State or Chapter V of the Finance Act, 1994 if tax is already paid then credit can be taken for supplies after the appointed day. (xii) Section 142(12) of the CGST Act, 2017 provides that if goods are sent on approval not less than 6 months before the appointed day are rejected or returned within 6 months after the appointed day, no tax is payable. (xiii) As per Section 142(13) of the CGST Act, 2017 if invoice is issued before appointed day but payment is made on or after the appointed day, TDS is not deducted under Section 51 even if required to be deducted under any State or Union territory law relating to VAT.