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TMI BlogTRANSITIONAL PROVISIONS-PART-IIIX X X X Extracts X X X X X X X X Extracts X X X X ..... TRANSITIONAL PROVISIONS-PART-III - By: - Pradeep Jain - Goods and Services Tax - GST - Dated:- 30-12-2016 - - GST DAILY DOSE OF UPDATION BY CA PRADEEP JAIN TRANSITIONAL PROVISIONS-PART-III 169. Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations This provision intends to enable the taxable person to avail the cenvat of duties and taxes in respect of inputs held in stock subject to certain conditions. The provision reads as follows: (1) A registered taxable person, who was not liable to be registered under the earlier law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of the benefit of notification No. 26/2012-Service Tax, dated 20.06.2012 or a first stage dealer or a second stage dealer or a registered importer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions: (i) such inputs and / or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said taxable person passes on the benefit of such credit by way of reduced prices to the recipient; (iii) the said taxable person is eligible for input tax credit on such inputs under this Act; (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law in respect of such inputs; (v) such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and (vi) the supplier of services is not eligible for any abatement under the Act: A very important thing to note that earlier the benefit of such availment was only extended to registered taxable person engaged in manufacture of exempted goods or a person not liable to register under the earlier law. Now this provision has been extended to such persons also who are engaged in provision of exempted services, or who was providing work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated 20.06.2012 or a first stage dealer or a second stage dealer or a registered importer. Interestingly, works contract service has been linked with notification no. 26/2012 which is an abatement notification. This notification does not prescribe any abatement for works contract service. It seems that there is a clerical error. There can be two intentions behind the same. First is to allow the credit to works contract only as they are getting credit of input services only in current regime. Hence, the credit of inputs lying in stock should be allowed. Only the notification is wrongly quoted. The second intention could be to allow the credit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those services covered under abatement notification because there is also condition of allowing credit either only on input services or no credit at all. The trade and industry will support second interpretation. But this clerical mistake should also be rectified to avoid any unwarranted litigation. Secondly, the conditions also have been revised. The second condition earlier stated that the taxable person should be eligible for cenvat but haven t availed it because of him being exempted. This condition has been replaced to insert a new condition that the benefit of such credit has been passed by way of reduced prices to the recipient. This meant that if the credit is allowed to him then he should reduce the prices also. Following the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court decision in Dai ichi Kankaria case, the credit will not form the part of cost of goods then the prices should come down. This is very good intention on the part of the Government. But the market forces determine the prices and not the credit allowed. Hence, this condition may prove difficult to adhere to and to prove. This will lead to uncalled litigation as revenue department in each and every case will ask the assessee to prove that the price is reduced. Another condition no. (v) has been inserted to provide that any supplier of service intending to avail benefit of this provision should not be eligible for any abatement under the new act. But there is no abatement provision in proposed revised GST law. We are failed to under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand the meaning of this provision. It may imply that there are going to bring abatements in new law also. It is welcome step but it is again going against the concept of GST of one rate of tax. We are already seeing four rates along with cess as well as separate rate for Gold. The abatements will also add to number of rates in GST. Apart from this a new proviso has been inserted to this provision to provide that any registered taxable person apart from a manufacturer or a supplier of services, who is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then such registered taxable person shall be allowed to take cenvat at a specified rate and manner. This is welcome step and we on part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade and industry has been continuously demanding the same. This is the same provision which came for textile industry (popularly known as one time credit) in 2003. It will greatly benefit the traders who normally do not possess the duty paying documents as they do not receive the goods directly from manufacturer. But the exempted manufacturer or exempted service provider are kept out of this provision. They also do not receive the duty paying documents. Normally goods are sold by input manufacturer to traders and these traders sell to these exempted manufacturer. Hence, the duty paying documents do not travel to ultimate exempted manufacturer because he do not need to take the credit. Hence, this provision should also be passed on to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturers and service providers. You may visit us at www.capradeepjain.com https://www.facebook.com/GSTTODAYBYPRADEEPJAIN - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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