GST : Transitional Provisions (Section 140 of CGST Act)

CENVAT Credit that can be carried forward and allowed as Input Tax Credit [Section 140(1)]

This transition provision enables a taxable person to carry forward unutilized input credit under the CENVAT Credit Rules, 2004.

The following table illustrates how a registered person other than one opting for composition scheme can carry forward the CENVAT Credit as Input Tax Credit.

Particulars	CGST & SGST
Credit to be carried forward	CENVAT Credit
Relevant law	CENVAT Credit Rules, 2004
Laws to be subsumed and the relevant credit	Central Excise Service Tax
Input Tax Credit to be carried forward	•       Central Excise paid on Inputs/Capital goods •       Countervailing duty paid on Inputs/Capital goods •   Special Additional Duty paid on Inputs/Capital goods in case of manufacturers •       NCCD paid on Inputs •       Service tax paid on Input services – both director reverse charge •       KrishiKalyan Cess for Service Provider ED & SHE Cess has not been specifically restricted in GST Acts, therefore, could be carried forward, although could await clarity of law before utilization.
Conditions to be satisfied	•       The said credit is admissible as input tax credit under the provisions of the CGST Act •       The registered person has furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date. Even Nil returns have to be filed to avoid disputes. •      The said credit does not relate to goods manufactured and cleared under such exemption notifications as are notified by the Government •   Must have been reflected as input credit carried forward in the return filed for the last month/period under the existing law, viz., last monthly return or quarterly return or the half yearly return, as the case may be.
Form for availing credit under the GST Law	Would be available as a balance in the Electronic Credit Ledger of the tax payer. FORM GST TRAN-1 (to be submitted electronically within 90 days of the appointed day)

Unavailed CENVAT Credit on Capital Goods [Section 140(2)]

Form GST TRAN – 1 to be submitted within 90 days

Section 140(3) – Credit of eligible duties in respect of inputs held in stock allowed in certain situations

Particulars	Conditions or Requirements
Persons eligible (must be registered under GST)	•       Person not liable for registration under the existing law such as person availing SSI exemption •       Person who was manufacturing exempted goods under the previous law but has now become taxable under the GST law •       Person who was providing exempted services •       Person providing works contract service and was availing the benefit of Notification No. 26/2012-ST dated 20.06.2012 •       First stage or second stage dealer •       Registered importer •       Depot of a manufacturer
Credit available on	Credit of eligible duties available on •       Input held in stock i.e. raw material •       Inputs used in Semi-finished Goods •       Inputs used in Finished Goods
Conditions to be satisfied	•       Such inputs and/or goods are used or intended to be used for making taxable supplies under GST Act •       The registered person is eligible for inputs tax credit on inputs under GST Act •       Is in possession of invoice or other prescribed documents serving as a proof of payment of duty under the existing law •       Such invoices or documents are not issued 12 months preceding 1st of July, 2017 •       The supplier of service is not eligible for any abatement under the Act
Specified duties which would be allowed as transitional credit	•       Central Excise paid on Inputs specified in schedules I and II of CETA, 1985 •       Countervailing duty paid on Inputs under Customs Tariff Act •       Special Additional Duty paid on Inputs •       National Calamity Contingent Duty paid on Inputs •       AED paid under AED (Textile &Textile Articles) Act, 1978 on Inputs •    AED paid under AED (Goods of SpecialImportance) Act, 1957 on Inputs
Exception : Availability of Credit to Trader who is not in possession of invoice evidencing payment of Central Excise Duty –Rule 3 of the Transition Provision Rules There is something called a Credit Transfer Document – 100% credit on stock for a trader eligible. Also, now the rate is 60%/30% of CGST/IGST when GST rate is 18% or 28% 40%/20% CGST/IGST when rate is lower than 18%	•       As per proviso to subsection (1), credit may be allowed to a trader even if he is not in a possession of such invoice/document disclosing payment of duty/tax. •       However, in such cases the person will have to follow the conditions specified below:- •       Credit shall be allowed @ 40%, of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid. This situation arises when invoice is raised under the current tax regime & supply happens in a GST regime. •       Such goods were not wholly exempt from duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated. •  The registered person is in possession of documents relating to procurement of goods. •       The stock of goods on which the credit is availed must be stored in a way that it can be easily identified. •       The scheme shall be available for six tax periods from the appointed date •     Registered person availing this scheme must furnish the details of stock held by him and submit a statement in FORM GST TRAN-01 at the end of each of the six tax periods during which the scheme is in operation indicating 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. •       Eligible Duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day on which the CGST Act comes into force shall include the laws cited in the Section supra

  

Other Transitional Provisions

Eligible CENVAT Credit	Conditions to be Satisfied
CENVAT Credit in respect of inputs and input services in transit [Section 140(5)]	•       Has an invoice evidencing payment of appropriate taxes •       Was recorded in the books within a period of 30 days from 1st of July •       The period of 30 days may be extended by the Commissioner on sufficient cause being shown •       The registered person shall furnish a statement in respect of credit taken under this provision of the Act. This is applicable for inputs and input services, although, input services may not be covered. Suggested  to obtain all input services for month of June and account in June 2017 itself.
CENVAT Credit on inputs and input services to be allowed to a taxable person switching over from Composition Scheme	•           The person must be a registered person under the existing law as well as GST Laws. •           He should have opted for payment of tax at a fixed rate or fixed amount in lieu of tax payable under the existing law. Eg. Compounded Levy Scheme under central excise in case of aluminium/steel pattas/pattis, special service tax rates in case of insurers carrying on life insurance business, persons providing services in relation to purchase/ sale of foreign currency including money changers. •           Specified duties paid on inputs would be allowed as input tax credit, in his Electronic Credit Ledger. •          The person should opt for payment of tax under the regular scheme under the GST law (cannot be a composition taxpayer under section 10 of CGST Law). •           The relevant inputs should be held in stock on the date of introduction of GST. •           Inputs may take any of the following forms – ▪      inputs as such (in the same form as it was procured / received – may be raw materials, consumables, packing materials, traded goods etc.), ▪      may be contained in WIP or semi- finished goods or ▪      may be contained in the finished goods. •           Such inputs must be used or intended to be used for making taxable supplies under the GST Laws. •           Such goods should qualify as eligible inputs under the GST law. •      The registered person should be in possession of the invoice and such other documents (as may be prescribed) that shall satisfy the following conditions: ▪      The invoice / other document should evidence the payment of duty / tax on such goods. ▪      The invoice should not be more than 12 months prior to the date of introduction of GST. •        In terms of Sub Rule 2(b) of the Transition Provision Rules the application in FORM TRAN-1 shall specify separately the details of stock held on the appointed day up to 6 tax periods indicating the details of supplies effected during each tax period.

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