Question4:

Sub: GST TRAN1 We are registered with GSTN as a manufacturer of Textiles Articles as per the Provisions of Section 140 of the CGST Act, 2017 we are eligible transitional credit of the stock as on 30/6/2017. We request you to kindly clarify on following issues: -

1. Are we eligible for transitional credit of Grey Fabrics in Semi Finished form?
2. Are we eligible for the transitional credit of finished goods stock of Raw Cotton and Processed Fabrics?
3. Are we eligible for the un availed credit of capital goods for invoices older more than one year?
4. Please clarify for the finished goods cleared on payment of Excise Duty & VAT and returned back (Sales Return) after the appointed day of GST and the buyer of the goods is not registered under GST. What are the provisions of the Cenvat Credit of Goods Return under the CGST Act, 2017?
5. Please clarify in case of Service Tax- VAT invoice received after 30/6/2017, can we avail credit for the same in GST for the duties /taxes paid in earlier regimes?
6. Is there provision in the CGST Act to amend the TRAN1 filed earlier if we file the same with readily available details and some details are under preparation which we intend to file after submission of TRAN-1, can we amend the TRAN1 FILED EARLIER?

ANSWER

Quarry no. 1. Are we eligible for transitional credit of Grey Fabrics in Semi Finished form?

Answer – Transition provision of un-used credit prior to appointed day is given under Section 140 of CGST Act, 2017. Fabric processors were exempted from registration under repealed law, therefore, they are covered under Section 140(3) for the purpose of availing ITC under this Act. As per the said Section 140(3) the exempted manufacturers under earlier law who are now registered are entitled to take credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished/finished goods which was held in stock as on appointed day i.e. 01.07.2017. Certain conditions are prescribed for availing the credit which are as under;

(i) You will use inputs or goods for making taxable supplies.

(ii) You are otherwise eligible to avail the credit, (iii) You are in possession of documents evidencing payment of duty under earlier law. (iv) The above said documents should not have been issued earlier than one year preceding the appointed day.

2. Are we eligible for the transitional credit of finished goods stock of Raw Cotton and Processed Fabrics?

Answer – Same as given under quarry no. 1. 

3. Are we eligible for the un-availed credit of capital goods for invoices older more than one year?

Answer – You are not eligible to avail credit on capital goods for the following reasons;

(i) Under the existing law you were not entitled to avail credit on capital goods, therefore, you could not carry forward the credit in your return furnished for the month of June, 2017.

(ii) Your case is not covered under the provisions of Section 140(2) of the CGST Act, 2017 because it is meant for such registered persons who had already availed 50% of the eligible credit and the remaining was to be carried forward.

(iii) Invoice is more that one year old. 

4. Please clarify for the finished goods cleared on payment of Excise Duty & VAT and returned back (Sales Return) after the appointed day of GST and the buyer of the goods is not registered under GST. What are the provisions of the Cenvat Credit of Goods Return under the CGST Act, 2017?

Answer – Under such circumstances you are to file refund claim in respect of Excise duty and VAT paid under relevant provisions of Old Laws within the lime limitation applicable under those laws. Refund of Duty/VAT paid under earlier laws is not available under CGST/SGST Act.  In case goods are returned against tax invoice/Debit Note by a registered person, then the returned goods are to be treated as fresh purchase and avail ITC on return of goods and pay tax when clearing again.

5. Please clarify in case of Service Tax- VAT invoice received after 30/6/2017, can we avail credit for the same in GST for the duties /taxes paid in earlier regimes?

Answer – In case of tax invoices are issued before the appointed day and goods are received after the appointed day, transition of credit of old regime can be migrated by furnishing details of such consignments in TRAN-1 return. Section 140(5) of CGST Act, 2017 provides for transition of credit of Service Tax and VAT and the same can be done by furnishing details in column no. 7(a) and 7 b) of TRAN-1 return respectively.

6. Is there provision in the CGST Act to amend the TRAN-1 filed earlier if we file the same with readily available details and some details are under preparation which we intend to file after submission of TRAN-1, can we amend the TRAN-1 FILED EARLIER?

Answer – As on date, there is no provision to amend TRAN-1 after filing of the same. Many registered persons have made mistakes in furnishing the said return and some have already approached the Government for creating facility to rectify the defective return. It is not an intention of law to harm the trade if some mistake takes place in filing TRAN-1 during initial stages of implementation of GST. It is hoped that the Government will come out with some Notification/Circular providing way out for this problem. Accordingly, you are advised to wait for some time in this regard. However, if you have not filed the said return yet, the last date for filing the return has been extended to 31.10.2017.   (Reply dt. 03/10/2017)