TRANSITIONAL PROVISIONS UNDER DRAFT MODEL GST LAW

The long journey of Good & Service Tax law which is flagged off during the captainship of
Sh. Atal Bihari Vajpayee Ji, the then prime minister of India, in 2000 via setting up of a
committee headed by the then finance minister of West Bengal, Sh. Asim Dasgupta Ji, to
design the GST model and put in place the back-end technology and logistics for its
implementation; is now appearing to be completed during the leadership of Sh. Narendra
Modi Ji.
During the implementation phase of this new taxing statute, the transitional period would be
the most crucial time period wherein various impugned Central Laws/State Laws shall be
subsumed in a single statute viz. GST and the books of accounts that have been maintained
rely upon the principle of 'Going Concern' would be ushered towards the era of GST.
Extending support from the Draft Model GST Law, the various legal provisions contained in
Chapter-XXV of this draft model vis--vis metamorphosis from the existing regime of
various indirect taxes towardsthe umbrella of GST has been discussed as follows:
A. GST Officers or Competent Authorities
The person already appointed, for discharging the functions entrusted by the Central Law or
State Law which are now being subsumed in GST, shall be deemed to be the GST Officers or
the Competent Authorities under the legal provisions of CGST/SGST/IGST Law
B. Migration of Existing Taxpayers to GST
Prior to getting final registration under this new taxing statute, the existing registered person
under Central Law/State Law shall be issued a provisional registration certificate for a period
of six (6) months during which various prescribed information are required to be submitted
before the GST Officers.
Post receipt of requisite information, the final registration certificate shall be issued by
Central/State Government. Contrary to this, no final certificate of registration shall be issued,
if an application has been made by the existing taxpayer submitting the fact of their nontaxing supply under the pool of GST ambit which make them non-liable to take registration.
C. Treatment of balance of CENVAT Credit Availed or Unavailed on Appointed Date
C.1. Treatment of Availed CENVAT Credit
Registered taxable person shall be eligible to take credit of the CENVAT Credit/VAT-ITC
carried forward by them in the return furnished for the period ended with the day
immediately preceding the appointed date.
This eligibility is connected with the vital condition that such impugned CENVAT
Credit/VAT-ITC is admissible for creditboth under provisions of the earlier law as well as
eligible as ITC under the proposed bag of GST.
C.2. Treatment of Unavailed CENVAT Credit

Unavailed CENVAT Credit/Vat-ITC on capital goods which is not carried forward in the last
return submitted in the earlier law by virtue of covenant vis--vis availing full credit in the
same F.Y., shall be admissible as ITC in the eyes of GST subject to the fulfilment of condition
that this transferred ITC is eligible as credit both under the earlier law as well as under GST.
D. Treatment of Duties/Taxes in respect of Stock Available on Appointed Date
The credit of eligible 'duties and taxes' in respect of:

Inputs held in stock,

Inputs contained in semi-finished goods in stock or

Inputs contained in finished goods in stock on the appointed date Shall also
beavailable to below mentioned three (3) categories of assessee subject to the
compliance of infra mentioned conditions:
o a. Person who was not liable to be registered under the earlier law but falls
under the charging section of proposed GST or
o b. Person who was engaged in the manufacture of exempted goods under the
earlier law but in GST, falls under the taxable supply of goods.
o c. Person who has opted for composition scheme in the earlier law but
registered as normal taxable person in the GST regime.

Now, below mentioned conditions are sine qua non for this registered taxable person
under GST to take credit, in their electronic credit ledger, of these eligible 'duties and
taxes' on inputs-goods held in opening stock:
o Use for Taxing Supply Such goods are used or intended to be used for
making taxable supply under GST,
o Competent ITC Under both law i.e. in the earlier law as well as in the
upcoming GST, credit concomitant with such stock falls under the category of
competent ITC.
o Documentary Evidence of Payment Credit would be admissible subject to
the possession of requisite invoice or other prescribed documents evidencing
payment of duty/tax under earlier law.
o Time Limitation Such invoice must be issued not earlier than one (1) year
preceding to the appointed date of GST.
o GAAP Computation of credit shall be done as per GAAP.

E. Switching from Normal Taxpayer to Composition

One If any registered taxpayer under existing statute opted forcomposition scheme in GST,
the amount equivalent to credit of input tax in respect to:

Inputs held in stock,

Inputs contained in semi-finished goods in stock or

Inputs contained in finished goods in stock on the appointed date

Is required to paid via debit in electronic credit ledger and post debit of this amount, if any
balance of tax still prevails then such lying balance shall be lapsed in GST.
F. Return of Goods on or after Appointed Date
Return of goods which were originally removed/sent not earlier than six (6) months before
the appointed date shall not attract tax under GST legal provision subject to the condition that
such goods are returned within a period of six (6) months of GST applicability.
Post completion of six (6) months' time period from appointed date, return of any goods
would raise obligation on the person returning the goods to tax such return of goods as supply
provided that supply of such goods falls under the taxing room of GST.
G. Price Revisions on or after Appointed Date
Issuance of supplementary invoices in pursuance of price revision shall be deemed to have
been issued in respect of an outward supply made under the net of GST subject to the
compliance of below mentioned conditions:

a. Contract for supply of goods entered prior to appointed date of GST,

b. Price revision takes place after the implementation of GST and

c. Such supplementary invoices must be issued within a period of thirty (30) days
from such revision.

Upward Revision Supplier of goods shall be liable to charge CGST/SGST/IGST on such

supplementary invoice raised within the stipulated time period.
Downward Revision Supplier of goods shall be liable to reduce their CGST/SGST/IGST
liability in lieu of issuance of such supplementary invoice provided that the receiver of such
supplementary invoices has also correspondingly reduced their input tax credit.
H. Recovery or Refund pursuant to Assessment or Adjudication
Below mentioned is the treatment of the amount to be recovered or to be refunded in lieu of
assessment or adjudication undertaken for any year ended prior to the appointed date.

Calling Recovery
If any amount of tax, interest, fine or penalty becomes recoverable from the taxable person
then the same shall be recovered as an arrear of tax under this GST Act and the amount so
recovered shall not be admissible as input tax credit.
Calling Refund
If any amount of tax, interest, fine or penalty becomes refundable to the taxable person then
the same shall be refundable to them under the earlier law and not under this GST Act.
I. Recovery or Refund pursuant to Revision of Returns
Below mentioned is the treatment of the amount to be recovered or to be refunded in lieu of
revision of return filed for the period ended prior to the appointed date.
Calling Recovery
If any amount becomes recoverable from the taxable person, then the same shall be recovered
as an arrear of tax under this GST Act and the amount so recovered shall not be admissible as
input tax credit.
Calling Refund
If any amount becomes refundable to the taxable person, then the same shall be refundable to
them under the earlier law and not under this GST Act.
J. Treatment of Long-term Construction or Work Contracts
Pursuant to contract executed before the introduction of GST regime, the supply of goods or
services on or after the appointed date of GST shall be considered as supply made under the
web of GST and consequently, the liability to tax arises as per the legal provision of
CGST/SGST/IGST law.
K. Progressive or Periodic Supply of Goods or Services
Supply of good and/or service does not attract GST liability:

a. If consideration in lieu of such supply has been received prior to the appointed date
and

b. Duty or tax liability thereon has already been paid under earlier law.

L. Return of Goods Sent on Approval Basis on or after Appointed Date

Return of goods which were sent on approval basis not earlier than six (6) months before the
appointed date shall not attract tax under GST legal provision subject to the condition that
such goods are returned within a period of six (6) months of GST applicability.
Obligation on Person Returning the Goods

Post completion of six (6) months' time period from appointed date, return of any such goods
would raise obligation on the person returning the goods to tax such return of goods as supply
provided that supply of such goods falls under the taxing room of GST.
Obligation on Person Originally Sent Goods on Approval Basis
Person who has sent the goods on approval basis is liable to pay tax under GST: o If such
goods are liable to tax under GST and o Goods are not returned within a period of six (6)
months from the appointed date.
M. Deduction of Tax at Source
No deduction of tax at source under thecave of GST shall arise on makingthe payment tothe
supplier subject to the compliance of following three (3) limbs:

a. Payment made is in pursuance of saleexecuted in the earlier law,

b. Such sale attracts tax deduction at source under the legal provision of earlier law
and

c. Event of issuance of invoice also occurs before this appointed date