ANALYSIS OF TRANSITIONAL PROVISIONS APPEAL UNDER GST LAW

ANALYSIS OF TRANSITIONAL PROVISIONS & APPEAL UNDER GST LAW A PRESE N TA TION BY: DHA RMEN DRA SR IVASTAV A CHART ERE D ACCO UNTANT

Transitional Provisions • TRANSITIONAL PROVISIONS UNDER CGST/SGST ACT- SECTION 141 TO 162 E (27 SECTIONS) • TRANSITIONAL PROVISIONS UNDER IGST ACT- SECTION 31

Chapter-XXV TRANSITIONAL PROVISIONS Section No. Description of provisions 141 General provisions 142 Migration of existing taxpayers to GST 143, 144, 145, 146, 147, 162 A, 162 B, 162 C, 154 Input tax credit related transitional provisions 148, 149, 153, 162 D Sale transactions midway or revision of consideration 150, 151, 152 Goods removed for job work 155, 156, 157 Adjudication/Appeal under earlier law 158 Revision of Return 159, 160, 161 Tax treatment for specified transactions midway 162 E TDS under earlier law 31 under IGST Import of services or inter-state supplies

MIGRATION OF EXISTING TAXPAYERS IN GST [Sec. 142] A certificate of registration on a provisional basis is first issued to every person registered under earlier law, and such certificate shall be valid for 6 months from the date of the issue. This may be extended for such a period as the central/state governments may specify. It further provides that every such person to whom a certificate of registration has been issued will be required to furnish such information as may be prescribed, and on doing so, the provisional certificate granted under section 142(1) shall be granted on a final basis by the Central/State Government. Any provisional registration granted under this section may be cancelled if such person fails to furnish the prescribed information within such time as may be specified.

Amount of CENVAT Credit carried forward in a return to be allowed as input tax credit [Sec. 143] A registered taxable person shall be entitled to take, in his electronic credit ledger, credit of the amount of Cenvat credit carried forward in a return, furnished under the earlier law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Input tax credit should be admissible in the earlier regime Also should be admissible in CGST/SGST Act Excess credit recoverable as arrears of tax revenue if the said amount found recoverable as a result of proceedings instituted before or after appointed day

CENVAT Credit on Capital goods [Sec. 144] A registered taxable person shall be entitled to take, in his electronic credit ledger, credit of the unavailed cenvat credit, not carried forward in a return, furnished under the earlier law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Input tax credit should be admissible in the earlier regime Also should be admissible in GST Unavailed Cenvat credit means the amount that remains after subtracting the amount of Cenvat credit already availed Capital goods means capital goods under CCR 2004 Excess credit recoverable as arrears of tax revenue if proceedings instituted before or after appointed day

Credit of “eligible duties and taxes” in respect of inputs held in stock [Sec. 145] CGST LAW This provision allows 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 under the earlier law but which are liable to tax under this Act, to take, in his electronic 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, subject to several conditions like: ◦ such inputs/goods are used or intended to be used for making taxable supplies under this Act, and ◦ such taxable person was eligible for cenvat credit on receipt of such inputs and/or goods under the earlier law but for his not being liable for registration or the goods remaining exempt under the said law ◦ Invoice of goods is available ◦ Invoice date is not earlier than 12 months preceding the appointed day SGST LAW • These provisions apply mutatis mutandis to credit of VAT under the State VAT laws

Credit to person switching over from Composition Scheme [Sec. 146] A registered taxable person who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the earlier law, 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, subject to the following conditions: ◦ Such inputs and/or goods are used or intended to be used for making taxable supplies under this Act; ◦ The said person is not paying tax under Section 8—composition under GST ; ◦ The said taxable person was eligible for cenvat credit on receipt of such inputs and/or goods under the earlier law for his being a composition under the said law. ◦ The said taxable person is eligible for input tax credit under this Act; ◦ In possession of the invoices or other prescribed documents not older than 12 months. The above provisions under the CGST law shall apply mutatis mutandis in respect of value added tax relating to inputs held in stock and inputs contained in semi-finished or finished goods held in stock under the SGST law.

Eligible Duties and Taxes under Section 145 & 146 CGST ◦ Excise duty specified in First Schedule to CETA, 1985 ◦ Excise duty specified in Second Schedule to CETA, 1985 ◦ Additional duty of excise leviable under Section 3 of Additional Duties of Excise (Textile and Textile Articles) Act, 1978 ◦ Additional duty of excise leviable under Section 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957 ◦ NCCD ◦ Additional duty leviable under Section 3(1) of Customs Tariff Act, 1975 – CVD ◦ Additional duty leviable under Section 3(5) of Customs Tariff Act, 1975 – SAD ◦ Service Tax leviable under section 66 B of the Finance Act, 1994 SGST ◦ Value added Tax

Amount payable in the event of a taxable person switching over to composition scheme [Sec. 147] Where a taxable person who has carried forward the amount of eligible credit in a return, furnished under the earlier law, in respect of the period ending with the day immediately preceding the appointed day, switches over to the composition scheme in GST regime, he shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over: After payment of such amount, any balance of input tax credit shall be lapsed

Issues of Tax relating to goods lying with the agent Sec. 162 A/162 B Where any goods belonging to the principal are lying at the premises of the agent on the day of enactment. 162 A/ Where any capital goods belonging to the principal are lying at the premises of the agent on the day of enactment. 162 B Agent shall take credit of the tax paid only upon fulfilling the following conditions: v. Agent must be registered. v. Declaration by both of principal and agent regarding the stock of capital goods prior to the enactment of law. v. The invoices for such goods have been issued 12 months immediately preceding the date of enactment. v. The principal has either reversed or not availed the input tax credit in respect of such capital goods.

Pending refund claims to be disposed of under earlier law [Sec 154] Every claim of refund of any duty/tax/interest/any other amount filed before the appointed day Shall be disposed off in accordance with the provisions of earlier law Refund claim accepted shall be paid in cash

Exempted goods returned to the place of business on or after the appointed day [Sec 148] Where any goods on which duty had been exempt under the earlier law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, no tax shall be payable thereon if such goods are returned to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of proper officer. In case the goods are returned after 6 months, the tax shall be payable by the such person returning the goods

Duty paid goods returned to the place of business on or after the appointed day [Sec 149] Where any goods on which duty had been paid under the earlier law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, no tax shall be payable thereon if such goods are returned to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of proper officer. Taxable person receiving such goods within a period of 6 months – credit of duty paid earlier allowed In case the goods are returned after 6 months, the tax shall be payable by the person returning such goods

Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract [Sec 153] Contract prior to the appointed day Price revised upwards on or after the appointed day Issue debit note/supplementary invoices to the recipient Within 30 days of such revision Debit note shall be deemed to have been issue under this Act Price revised downwards on or after the appointed day Issue credit note/supplementary invoices to the recipient Within 30 days if such revision Taxable person allowed to reduce output tax liability, when the recipient has reduced his input tax credit to the extent reduction in price

Goods sent on approval basis returned on or after the appointed day- Only SGST Law [Sec 162 D] Goods sent on approval basis, not earlier than 6 months before the appointed day Goods returned within six months or extended period (i. e. 2 months) from the appointed day No tax shall be payable under this Act Goods not returned within given period, GST payable by supplier Goods returned after given period, GST payable by person returning goods

Inputs removed for job work and returned on or after the appointed day [Sec 150] Where any inputs received in a factory/place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purposes in accordance with the provisions of earlier law prior to the appointed day and such inputs, after completion of the job work, are returned to the said factory/place of business on or after the appointed day, no tax shall be payable if such inputs are returned to the said factory within six months from the appointed day. The period can be extended for a further period not exceeding 2 months In case goods not returned in the above time period, GST payable by the Manufacturer In case the goods returned after the period the job worker shall also pay the GST For taking benefit of this provision, both manufacturer and job worker shall declare the details of such inputs held in stock on the appointed day

Semi-finished goods removed for job work and returned on or after the appointed day [Sec. 151] Where any semi-finished goods had been removed from the factory/place of business to any other premises for carrying out certain manufacturing process in accordance with the provisions of earlier law prior to the appointed day and such goods after undergoing manufacturing process are returned to the said factory on or after the appointed day, no tax shall be payable if the said goods are returned to the said factory within six months from the appointed day. The period can be extended for a further period not exceeding 2 months In case goods not returned in the above time period, GST payable by the Manufacturer In case the goods returned after the period the job worker shall also pay the GST For taking benefit of this provision, both manufacturer and job worker shall declare the details of the goods held in stock on the appointed day

Finished goods removed for carrying out certain processes and returned on or after the appointed day [Sec. 152] Where any excisable goods manufactured in a factory had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of earlier law prior to the appointed day and such goods, after undergoing tests or any other process are returned to the said factory on or after the appointed day, no tax shall be payable if the said goods are returned to the said factory within six months from the appointed day: The period can be extended for a further period not exceeding 2 months In case the goods returned after the period the job worker shall also pay the GST The manufacturer may transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports

Claim of CENVAT credit to be disposed of under the earlier law [Sec 155] Every proceeding of appeal, revision, review or reference relating to a claim of CENVAT credit under the earlier law Shall be disposed of in accordance with the provisions of earlier law, and any amount of credit found to be admissible shall be refunded in cash, notwithstanding anything to the contrary contained under the earlier law other than Section 11 B(2) of Central Excise Act, 1944. Shall be disposed of in accordance with the provisions of earlier law, and if any amount of credit becomes recoverable as a result of such appeals etc. the same shall be recovered as an arrears of tax revenue under this Act and the amount so recovered shall not be admissible as input tax credit

Finalization of proceedings relating to output duty liability [Sec 156] Every proceeding of appeal, revision, review or reference relating to any output duty liability initiated before the appointed day, shall be disposed of in accordance with the provisions of earlier law, if any amount becomes recoverable as a result of such appeal etc. , revision, review or reference, the same shall be recovered as an arrear of tax under this Act and amount so recovered shall not be admissible as input tax credit under this Act. if any amount found to be admissible shall be refunded in cash, notwithstanding anything contained under the provision of earlier law other than provisions of 11 B(2).

Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings [Sec 157] Where in pursuance of an assessment or adjudication instituted, whether before or after the appointed day, under the earlier law any amount of tax, interest, fine or penalty becomes recoverable as an arrear of tax under this Act and the amount so recovered shall not be eligible for input tax credit refundable to the taxable person, the same shall be refunded to him in cash under the earlier law, notwithstanding anything contrary in the said law other than Section 11 B(2) of Central Excise Act 1944

Treatment of the amount recovered or refunded pursuant to revision of returns [Sec. 158] Where any return, furnished under the earlier law, is revised and if, pursuant to such revision, Any amount is found to be recoverable from the taxable person, the same shall 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. Any amount found to be refundable to any taxable person, the same shall be refunded to him in cash under the earlier law, notwithstanding anything to the contrary contained in the said law other than the provisions of Section 11 B(2) of the Central Excise Act, 1944.

Treatment of long term construction/ works contracts [Sec 159] The goods and/ or services 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

Progressive or periodic supply of goods or services [Sec 160] Notwithstanding anything contained in Section 12 and Section 13 No tax shall be payable on the supply of goods and /or services made on or after the appointed day If the consideration for the said supply has received prior to the appointed day and the duty or tax payable thereon has already been paid under the earlier law

Treatment of retention payments [Sec 161] On the supply of goods and /or services made before the appointed day Where a part consideration for the said supply has been received on or after the appointed day, but the full duty or tax payable on such supply has already been paid under the earlier law No tax shall be payable

Deduction of tax source-SGST Law [Sec 162 E] Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under the earlier law and has also issued an invoice for the same before the appointed day, no deduction of tax at source under section 37 shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day

Chapter-X TRANSITIONAL PROVISIONS of IGST Section 31 : Import of services or inter-state supply of goods and/or services made on or after the appointed day Notwithstanding anything contained in Section 12 and 13 in CGST Act Import of services or inter-state supply of goods/services made after the appointed day Whether such transaction initiated before the appointed day GST shall be payable If the tax paid in full/ part in the earlier law- no tax/ balance amount shall be payable under this Act The transaction deemed to be initiated before the appointed day Either the invoice Or the payment (full or part) Received or made before the appointed day

Appeals under GST Law CHAPTER XVIII-APPEALS [SECTION 79 TO 93]

Appeal to First Appellate Authority: Time Limit and Other Provisions [Section 79] Any person aggrieved by any decision or order passed against him by an adjudicating authority is permitted to file an appeal to First Appellate Authority. Even the department can file an appeal against any order of the officer after the Commissioner has examined the records of such proceedings (called on own motion) to satisfy himself as to the legality or propriety of the decision or order. (Under SGST, there is no provision for filing appeal by department. However, there is provision of revision by Commissioner of SGST. ) Appeal shall be filed within a period of 3 months of the date of communication of decision or order to aggrieved person or Commissioner of GST as the case may be. The first appellate authority is empowered to condone the delay in filing appeal upto a further period of 1 month on sufficient cause for such delay in filing is established.

Appeal to First Appellate Authority: cont. . Every appeal should be filed in prescribed form and duly verified in prescribed manner. The appeal should be accompanied by a. mandatory predeposit of 10 per cent of the amount in dispute. Amount in dispute shall include tax, interest, fine, fee and penalty. First appellate authority to hear and decide the appeal, wherever possible, within a period of 1 year from the date of filing excluding the period of stay if any ordered by Court or Tribunal. The order need to be issued in writing and must state all points of determination along with reasons for such decision. The First Appellate Authority can grant adjournment of hearing a case up to 3 times to any party

Comparative Analysis with Existing Regime First Appellate Authority Existing Regime GST Regime Statutory Provisions Section 84 & 85 of the Finance Act, 1994 and Section 35 of the CEA, 1944 Section 79 of CGST/SGST Act Time period for filing appeal In Central Excise: 60 days from the date of communication of order I Service Tax: 2 Months from the date of receipt of the decision/ order 3 months of the date of communication of order Extension of Time period for filing appeal Can be extended by a further period of thirty days (excise)/ 1 month (service tax) by Commissioner (Appeals) on sufficient cause being shown. Can be extended by a further period of 1 month on sufficient cause being shown. Quantum of pre-deposit for filing appeal 7. 5% of the duty, in case where duty or duty and penalty are in dispute; or penalty, where such penalty is in dispute (aggregate of all penalties imposed) 10 per cent of the amount in dispute. Amount in dispute shall include tax, interest, fine, fee and penalty.

Revisional powers of Commissioner in case of SGST : Sec 80 There is no provision for filing departmental appeal before First Appellate Authority in case of SGST. However, there is provision for revision by Commissioner of SGST. The Commissioner of SGST may on his own motion or upon information received by him, call for and examine the record of any proceeding under this Act, and if he considers that any decision or order passed under this Act by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of the revenue, he may, if necessary, stay the operation of such decision or order for such period as he deems fit and after giving the person concerned an opportunity of being heard and after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, including enhancing or modifying or annulling the said decision or order The Commissioner of SGST shall not exercise any power of revision if. (a) the order has been subject to an appeal under section 79 or under section 82 or under section 87 or under section 88; or (b) more than three years have expired after the passing of the decision or order sought to be revised.

Constitution of the National Appellate Tribunal [Sec 81] The Central Government shall on the recommendation of the GST Council constitute Constitution of the National Appellate Tribunal(hereinafter referred to as the Appellate Tribunal) The Appellate Tribunal shall be headed by a National President. The Appellate Tribunal shall have one branch for each state, which shall be called as the State GST Tribunal. Every State GST Tribunal will be headed by a State President. Every State GST Tribunal shall consist of as many Members (Judicial), Members (Technical – CGST) and Members (Technical – SGST) as may be prescribed, to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act. The qualifications, eligibility conditions and the manner of selection and appointment of the National President, the State Presidents, and the Members shall be such as may be prescribed on the recommendations of the Council.

Appeal to Appellate Tribunal [Sec 82] Any person aggrieved by an order of First Appellate Authority passed against him is entitled to file appeal to the Appellate Tribunal against such order. Every appeal to Appellate Tribunal to be filed within 3 months from the date of communication of order or decision appealed against. Appellate Tribunal empowered to condone the delay (without any time limit) in filing appeal or memorandum of cross objection. On filing of appeal by one party, the other party is permitted to file Memorandum of Cross objection within 45 days from the receipt of notice of filing of such appeal. Appellate Tribunal empowered to condone the delay (without any time limit) in filing appeal or memorandum of cross objection. The appeal should be accompanied by a. mandatory pre-deposit of 10 per cent of the amount in dispute. Amount in dispute shall include tax, interest, fine, fee and penalty.

Comparative Analysis with Existing Regime Appeal to Appellate Tribunal Existing Regime GST Regime Statutory Provisions Section 86 of the Finance Act, 1994 and Section 35 B of the CEA, 1944 Section 82 of CGST Act Time period for filing appeal In Central Excise/ Service Tax: 3 Months from the date of receipt of the order 3 months of the date of communication of order Quantum of pre-deposit for If the appeal is filed against the O-I-O passed by 10 per cent of the amount in dispute. filing appeal the Principal Commissioner/ Commissioner /ADG Amount in dispute shall include tax, (adjudication) DRI/DGCEI: interest, fine, fee and penalty. 7. 5% of the duty and/or penalty If the appeal is filed against the O-I-A passed by the Commissioner (Appeals): 10% of the duty and/ or penalty

Orders of Appellate Tribunal: Sec 83 The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the First Appellate Authority or to the original adjudicating authority, with such directions as it may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary. Appellate Tribunal can give upto three adjournments. The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed.

Interest on delayed refund of pre-deposit : Sec 85 Where an amount deposited by the appellant is required to be refunded consequent to any order of the First Appellate Authority or of the Appellate Tribunal, interest at the rate specified under section 39 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount.

Appeal to High Court: Sec 87 Appeal against the order of the Tribunal will lie with the High Court which is to be filed by the Commissioner or the other party and the High Court may admit such appeal if it is satisfied that the case involves a substantial question of law. Appeal to be filed in the form of appeal memorandum, precisely stating the substantial question of law involved, within 180 days from the date of receipt of order appealed against accompanied by prescribed fee. High Court empowered to condone the delay in filing appeal. No appeal before High Court if dispute between State and Centre �A matter where two or more States or a State and Center have a difference of views regarding the treatment of transaction as being intra-State or inter-State; or � A matter where two or more States, or a State and Center, have a difference of views regarding place of supply. In such case, appeal lies directly before Supreme Court.

Appeal to Supreme Court- Sec 88 An appeal against any judgment or order passed by High Court shall lie to Supreme Court. Certificate of fitness is required of the High Court which may be granted by suo moto or on application made by either party during passing of judgment. An appeal against order in following matters passed by the Appellate Tribunal shall lie to Supreme Court – �A matter where two or more States or a State and Center have a difference of views regarding the treatment of transaction as being intra-State or inter-State; or � A matter where two or more States, or a State and Center, have a difference of views regarding place of supply.

THANK YOU CA DHARMENDRA SRIVASTAVA