GST WEEKLY UPDATE : 24/2022-23 (11.09.2022), By CA Vipul Khandhar

By CA Vipul khandhar

1. Trans-1 /Trans-2 will be made available by GSTN during the period from October 01, 2022 to November 30, 2022:

Guidelines for the applicant for filing TRAN-1/TRAN-2 or revising earlier filed TRAN-1/TRAN-2:

• The applicant may file declaration in FORM GST TRAN-1/TRAN-2 or revise earlier filed TRAN-1/TRAN-2 duly signed or verified through electronic verification code on the common portal.
• In cases where the applicant is filing a revised TRAN-1/TRAN-2, a facility for downloading the TRAN-1/TRAN-2 furnished earlier by him will be made available on the common portal.
• The applicant shall at the time of filing or revising the declaration in FORM GST TRAN1/TRAN-2, also upload on the common portal the pdf copy of a declaration in the format as given in Annexure ‘A’of this circular.
• The applicant claiming credit in table 7A of FORM GST TRAN-1 on the basis of Credit Transfer Document (CTD) shall also upload on the common portal the pdf copy of TRANS-3, containing the details in terms of the Notification No. 21/2017- CE (NT) dated June 30, 2017.
• No claim for transitional credit shall be filed in table 5(b) & 5(c) of FORM GST TRAN-1 in respect of such C-Forms, F-Forms and H/I-Forms which have been issued after the due date prescribed for submitting the declaration in FORM GST TRAN-1 i.e. after December 27, 2017.
• Where the applicant files a claim in FORM GST TRAN-2, he shall file the entire claim in one consolidated FORM GST TRAN-2, instead of filing the claim tax period wise as referred to in sub-clause (iii) of clause (b) of sub-rule (4) of rule 117 of the Central Goods and Services Tax Rules, 2017. In such cases, in the column ‘Tax Period‘ in FORM GST TRAN-2, the applicant shall mention the last month of the consolidated period for which the claim is being made.
• The applicant shall download a copy of the TRAN-1/TRAN-2 filed on the common portal and submit a self-certified copy of the same, along with declaration in Annexure ‘A’and copy of TRANS-3, where ever applicable, to the jurisdictional tax officer within 7 days of filing of declaration in FORM TRAN-1/TRAN-2 on the common portal.
• The applicant shall keep all the requisite documents/records/returns/invoices, in support of his claim of transitional credit, ready for making the same available to the concerned tax officers for verification.
• It is pertinent to mention that the option of filing or revising TRAN-1/TRAN-2 on the common portal during the period from October 01, 2022 to November 30, 2022 is a one-time opportunity for the applicant to either file the said forms, if not filed earlier, or to revise the forms earlier filed.
• The applicant is required to take utmost care and precaution while filing or revising TRAN1/TRAN-2 and thoroughly check the details before filing his claim on the common portal.
• In this regard, it is clarified that the applicant can edit the details in FORM TRAN-1/ TRAN-2 on the common portal only before clicking the ‘Submit’ button on the portal. The applicant is allowed to modify/edit, add or delete any record in any of the table of the said forms before clicking the “Submit” button. Once ‘Submit’ button is clicked, the form gets frozen, and no further editing of details is allowed. This frozen form would then be required to be filed on the portal using ‘File’ button, with Digital signature certificate (DSC) or an EVC. The applicant shall, therefore, ensure the correctness of all the details in FORM TRAN-1/ TRAN-2 before clicking the ‘Submit’ button. GSTN will issue a detailed advisory in this regard and the applicant may keep the same in consideration while filing the said forms on the portal.
• It is further clarified that pursuant to the order of the Hon‘ble Apex Court, once the applicant files TRAN-1/TRAN-2 or revises the said forms filed earlier on the common portal, no further opportunity to again file or revise TRAN-1/TRAN-2, either during this period or subsequently, will be available to him.
• It is clarified that those registered persons, who had successfully filed TRAN-1/TRAN-2 earlier, and who do not require to make any revision in the same, are not required to file/ revise TRAN-1/TRAN-2 during this period from October 01, 2022 to November 30, 2022.
• If adjudication /appeal pending then registered person will not allow to file: In this context, it may further be noted that in such cases where the credit availed by the registered person on the basis of FORM GST TRAN-1/TRAN-2 filed earlier, has either wholly or partly been rejected by the proper officer, the appropriate remedy in such cases is to prefer an appeal against the said order or to pursue alternative remedies available as per law. Where the adjudication/ appeal proceeding in such cases is pending, the appropriate course would be to pursue the said adjudication/ appeal. In such cases, filing a fresh declaration in FORM GST TRAN-1/TRAN-2, pursuant to the special dispensation being provided vide this circular, is not the appropriate course of action.
• The declaration in FORM GST TRAN-1/TRAN-2 filed/revised by the applicant will be subjected to necessary verification by the concerned tax officers. The applicant may be required to produce the requisite documents/ records/ returns/ invoices in support of their claim of transitional credit before the concerned tax officers for verification of their claim. After the verification of the claim, the jurisdictional tax officer will pass an appropriate order thereon on merits after granting appropriate reasonable opportunity of being heard to the applicant. The transitional credit allowed as per the order passed by the jurisdictional tax officer will be reflected in the Electronic Credit Ledger of the applicant on the common portal.

 Details required for the filing of TRANS-1 form:

1. Amount of tax credit carried forward in the return filed under existing laws: A registered person under GST regime other than a person opted for composition scheme, is entitled to take credit of the amount of carried forwarded tax in the return relating to the period ending with the day immediately preceding the appointed day i.e. 30th June 2017.

5(a)Amount of Cenvat credit carried forward to electronic credit ledger as central tax (Section 140(1) and Section 140(4)(a))- This part will be filed by those persons who want to avail credit of carried forwarded Cenvat Credit relating to Pre-GST regime under GST regime in electronic credit ledger as CGST.

5(b) Details of statutory forms received for which credit is being carried forward- Here, details of Statutory forms i.e. “Form C/F/H/I” for the period of April 2015 to June 2017 are required to be given.

(c) Amount of tax credit carried forward to electronic credit ledger as State/UT Tax (For all registrations on the same PAN and in the same State) – To avail input tax credit of carried forwarded VAT, this part will be filled. In GST regime, Carried forwarded Credit of VAT is allowed after deducting deferential tax payable for the pending statutory forms.

2. Details of capital goods for which unavailed credit has not been carried forward under existing law (section140 (2)): This part is required to be filed to avail benefit of credit of unavailed tax credit in respect of capital goods, not carried forward in a return, furnished under the existing law e. Pre GST regime, for the period ending as on 30th June 2017. This benefit is only be available if credit is admissible under Pre-GST regime as well as Post GST regime. This part is further divided into 2 part-

6(a). Amount of unavailed cenvat credit in respect of capital goods carried forward to electronic credit ledger as central tax- This part is required to be filled to claim unavailed CENVAT credit of Excise duty, CVD and SAD in respect of capital goods.

6(b)Amount of unavailed input tax credit carried forward to electronic credit ledger as State/UT tax- This part will be filled to claim unavailed input tax credit of VAT/Entry Tax in respect of capital goods for all the registrations on the same PAN and in the same state.

3. Details of the inputs held in stock in terms of sections 140(3), 140(4)(b) and 140(6)- This part is to be filled to avail credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semi- finished goods and finished goods held in stock as on 30th June, 2017 by a registered person, who was not liable to be registered under old regime or who was engaged in supply of exempted or tax free goods/services or goods which have suffered tax at the first point of their sale or who was either paying tax at fixed rate or paying a fixed amount in lieu of tax payable under old regime. This part is further divided into 3 sub-parts-

7(a).Amount of duties and taxes on inputs claimed as credit excluding the credit claimed under Table 5(a)- This section is applicable for claiming credit other than Cenvat Credit of Excise/Service tax already claimed in table 5(a).

Part 7A- Where duty paid invoices or other documents are available for inputs or inputs contained in semi- finished and finished goods with a manufacturer or service provider. This part will be used to claim input tax credit of such excise duty or service tax as input tax credit of CGST and invoices/documents of inputs or inputs contained in semi-finished and finished goods evidencing payment of tax are available.

Part 7B- This part is to be filled only by those who are not manufacturer or service provider who was unregistered in the old regime and are not in possession of invoices/documents of inputs evidencing payment of tax. This part would be filled by dealers or traders where duty paid invoices or documents are not available.

7A Where duty paid invoices or any other document are available: Inputs & Inputs contained in semi-finished and finished goods

7B Where duty paid invoices are not available (Applicable only for person other than manufacturer or service  provider) – Credit in terms of Rule 1 (4):Inputs

7(B).Amount of vat and entry Tax paid on inputs supported by invoices/documents evidencing payment of tax carried forward to electronic credit ledger as SGST/UTGST- This part will be used to claim credit of inputs and inputs contained in semi-finished and finished goods in such situation where invoices of Pre-GST regime has been recorded after appointed day and tax has already been paid under old regime.

7(C). Stock of goods not supported by invoices/documents evidencing payment of tax (credit in terms of rule 1 (4))- This part is applicable only for those persons who were unregistered under the Pre-GST regime and not having invoices/documents evidencing payment of tax. Such persons must be engaged in supply of goods, which have suffered tax at the first point of their sale i.e. single point of taxation must be there in their respective state.

4. Details of transfer of Cenvat Credit for registered person having centralized registration under existing law (Section 140(8))- This part is for those persons who, were having centralized registration under Pre-GST Carried forwarded Cenvat Credit in return furnished under Pre-GST regime for the period ending on 30 th June, 2017 shall be available as credit in GST regime. Such credit may be transferred to any of the registered persons having the same Permanent Account Number for which the centralized registration was obtained.

5. Details of goods sent to job-worker and held in his stock on behalf of principal under section 141- This part is applicable to those persons who are registered under GST, acting as job-worker/principal and where inputs/semi-finished goods/excisable goods is lying with job-worker on behalf of principal. This section is only for declaration of goods and not claiming any transitional credit. By declaration of such goods, principal and job- worker both can get relief of no taxation of GST on such returned goods subject to some conditions.

9(a). Details of goods sent as principal to the job worker under section 141- This part is to be filled by the principal mentioning details of goods lying with all job-workers on his behalf as on 30th June, 2017.

9(b). Details of goods held in stock as job worker on behalf of the principal under section 141- This part is to be filled by the job-worker, if registered under GST regime mentioning following details of goods lying in stock as on 30th June, 2017 held on behalf of each principal-

6. Details of goods held in stock as agent on behalf of the principal under section 142 (14) of the SGST Act- This part is applicable to those persons who are registered under GST, acting as an agent/principal and where goods/capital goods is lying with agent on behalf of principal. As per Sec 142(14) of SGST Act, agent can avail credit of the tax paid on goods or capital goods lying with such agent on 30th June, 2017 when principal and agent both declare details of stock of goods and capital goods and principal has either reversed or not availed input tax credit in respect of such goods or capital goods issued within 12 months immediately preceding appointed day. This part is further divided in two parts-

10(a). Details of goods held as agent on behalf of the principal- This part is to be filled by an agent, mentioning details of goods lying in stock as on 30th June, 2017 held as an agent on behalf of each principal.

10(b). Details of goods held by the agent- This part is to be filled by the principal mentioning details of goods lying in stock as on 30th June, 2017 with his agents on his behalf.

8. Details of credit availed in terms of Section 142 (11 (c))- This section is for those work contractors who have paid both taxes- VAT and Service tax on supply. Credit of VAT/Service Tax paid under old regime shall be available to the extent of supplies made after the appointed day. Following details are required to be given to claim said credit:
9. Details of goods sent on approval basis six months prior to the appointed day (section 142(12))- This section is not for those who are claiming any transitional credits rather, it is a statement of goods sent on approval basis under Pre-GST regime within 6 months from appointed day. Following details are required to be mentioned in this part.

2. AAR & Judicial Decisions:

(i) AAAR On classification and said that flavoured milk is not milk but a beverage containing milk:

(Applicant – Vadilal)

The company had approached the AAAR after an Authority for Advance Ruling (AAR) had said that GST should be applicable on flavored milk.

Gujarat AAAR affirmed the AAR ruling on classification and said that flavoured milk is not milk but a beverage containing milk.

The AAAR ruled that the flavored milk is not the natural form of milk but was obtained after the application of specific processes on the milk.

(ii) Decision of Hon’ble Madhya Pradesh Highcourt On Expiration of e- way bill and “minor negligence” will not amount to tax evasion:

(Applicant – M/S Daya Shanker Singh)

• Allowed the writ petition and set aside the Impugned notice/ order imposing penalty. Further, directed that the penalty paid by the Petitioner to be refunded back within the period of 30 days failing the interest of 6% would be liable to be paid on the given amount till the actual payment.
• Moreover, the Court observed that the Respondents could not establish that there exist any element of evasion of tax, fraudulent intent, or negligence on the part of the Petitioner. The principles of natural justice, which is part of the statutory requirement of Section 126 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”)have not been followed which provides that no penalty should be imposed for ‘minor breaches’ or procedural requirements or omission, etc. Noted that the principles of natural justice were statutorily recognized and ingrained in Section 126(1) and (3) of the CGST Act. Further, the law makers have taken care of the doctrine of proportionality while bringing Section 126(1) of the CGST Act. The punishment should be commensurate with the breach is the legislative mandate as per sub-section (1) of Section 126(1) ibid.
• The delay of almost 4:30 hours before which E-way Bill stood expired appears to be bonafide and without establishing fraudulent intent and negligence on the part of the Petitioner, the Impugned notice/order could not have been passed.
• Directed the assessing authority to refund back the penalty charged from the assessee because of the mere expiration of the e-way bill just by few hours as it did not amount to tax evasion, fraudulent intent or gross negligence.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

(Author is a well known Chartered Accountant Practicing at Ahmedabad in the field of Direct and Indirect Taxes)