CGST Section 142 — Miscellaneous transitional provisions
CGST Act · Miscellaneous transitional provisions
Quick Answer
Section 142 of the CGST Act, 2017 governs Miscellaneous transitional provisions. It provides the core statutory basis, outlining the essential legal principles, rights, and liabilities under Indian indirect tax law. Section 142 GST: Miscellaneous transitional provisions — eligibility, conditions, case laws and compliance impact under Indian tax law.
Plain-English Explanation
Plain English Summary
Section 142 of the CGST Act, 2017 contains various transitional provisions designed to handle specific scenarios that arose when the GST regime replaced the previous indirect tax system. It mainly addresses issues related to goods returned, price revisions in pre-GST contracts, and the treatment of refund and appeal/review/reference claims filed under the old laws.
This section applies to businesses and individuals registered under GST who were also subject to the pre-GST indirect tax laws (like excise duty, service tax, VAT, etc.). The provisions are relevant primarily during the initial transition period following the "appointed day" (the date GST came into effect, i.e., July 1, 2017). Here’s a breakdown of the key aspects:
Goods Returned After GST Implementation (Sub-section 1)
- Scenario: Goods on which excise duty or other taxes were paid under the old laws before GST was implemented are returned after GST came into effect. Specifically, the goods must have been removed from the business no earlier than six months before the "appointed day".
- Who it affects: Registered GST taxpayers receiving returned goods.
- Key Conditions:
- The goods are returned by someone not registered under GST within six months from the appointed day.
- The goods are identifiable as those on which duty was originally paid under the old law, to the satisfaction of the GST officer.
- Outcome: The registered person (receiving the returned goods) is eligible for a refund of the duty already paid under the pre-GST regime.
- Exception: If the goods are returned by a registered GST taxpayer, the return is treated as a "supply" under GST, meaning GST is applicable on the returned goods.
- Example: A manufacturer sold excise-duty paid goods in March 2017. If a non-registered customer returns these goods in August 2017, the manufacturer can claim a refund of the excise duty paid earlier, subject to verification. If, instead, a registered dealer returned the goods, it would be considered a supply under GST, and the dealer would need to issue a tax invoice.
Price Revisions in Pre-GST Contracts (Sub-section 2)
- Scenario: Contracts entered into before GST came into effect have price revisions (upward or downward) after GST implementation.
- Who it affects: Registered GST taxpayers who are either suppliers or recipients in such contracts.
- Key Conditions:
- The price revision must be in pursuance of a contract entered into prior to the appointed day.
- Upward Revision: The supplier must issue a supplementary invoice or debit note to the recipient within 30 days of the price revision. This is considered an outward supply under GST.
- Downward Revision: The supplier may issue a credit note to the recipient within 30 days of the price revision.
- Caveat on Credit Notes: The supplier can only reduce their GST liability on account of the credit note if the recipient has reduced their corresponding input tax credit.
- Example: A construction company agreed to build a factory for a client before GST. After GST, the price of raw materials increased, leading to a price revision. The construction company must issue a supplementary invoice to the client, which will be subject to GST. Conversely, if material prices fell, the construction company could issue a credit note, but the client would have to reverse the corresponding ITC.
Refund Claims and Pending Proceedings Under Existing Law (Sub-sections 3 to 8)
- Scenario: Addresses refund claims, appeals, reviews, and references initiated under the pre-GST laws that are pending or filed after GST implementation.
- Who it affects: Taxpayers who had refund claims or were involved in legal proceedings related to pre-GST taxes.
- Key Principles:
- All such claims and proceedings are to be disposed of according to the existing laws (i.e., the laws in force before GST).
- If a refund is eventually granted, it will be paid in cash, even if the pre-GST law specified otherwise.
- If any amount of CENVAT credit refund is rejected, the rejected amount will lapse and cannot be carried forward as input tax credit under GST.
- No refund of CENVAT credit is allowed if the balance of that amount as on the appointed day has been carried forward under GST.
- Any amount recoverable as a result of appeals/reviews/references will be recovered as arrears of tax under GST and not be admissible as input tax credit under GST.
- Example: A service provider filed a service tax refund claim before GST. Even if the claim is processed after GST, it will be governed by the service tax laws, and any refund will be paid in cash.
Important points:
- Section 11B of the Central Excise Act, 1944 is repeatedly mentioned as an exception to the general rule regarding refund disposal. This section deals with claims for refund, specifically those related to time limits.
- The overarching aim of Section 142 is to ensure a smooth transition to GST by addressing unresolved issues from the previous tax regime.
- There have been amendments to GST laws since 2017, but Section 142 has not undergone significant changes in terms of its core principles. However, it's crucial to consult the latest notifications and circulars issued by the CBIC for updated interpretations and clarifications.
This explanation provides a broad overview. Taxpayers should always consult with a tax professional for advice specific to their circumstances.
(1)Where any goods on which duty, if any, had been paid under the existing 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, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, 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 the proper officer: Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply.
(2)
(a)where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised upwards on or after the appointed day, the registered person who had removed or provided such goods or services or both shall issue to the recipient a supplementary invoice or debit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under this Act;
(b)where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised downwards on or after the appointed day, the registered person who had removed or provided such goods or services or both may issue to the recipient a credit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act: Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability.
(3)Every claim for refund filed by any person before , on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of
section 11B of the Central Excise Act, 1944 (1 of 1944): Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse: Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(4)Every claim for refund filed after the appointed day for refund of any duty or tax paid under existing law in respect of the goods or services exported before or after the appointed day, shall be disposed of in accordance with the provisions of the existing law: Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse: Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(5)Every claim filed by a person after the appointed day for refund of tax paid under the existing law in respect of services not provided shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of
section 11B of the Central Excise Act, 1944 (1 of 1944).
(6)(a) every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of
section 11B of the Central Excise Act, 1944 (1 of 1944) and the amount rejected, if any, shall not be admissible as input tax credit under this Act: Provided that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act;
(b)every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, 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.
(7)
(a)every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and if any amount becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of duty or tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
(b)every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and any amount found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of
section 11B of the Central Excise Act, 1944 (1 of 1944) and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
(8)
(a)where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, 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;
(b)where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of
section 11B of the Central Excise Act, 1944 (1 of 1944) and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
(9)
(a)where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible, the same shall, unless recovered under the existing law, 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;
(b)where any return, furnished under the existing law, is revised after the appointed day but within the time limit specified for such revision under the existing law and if, pursuant to such revision, any amount is found to be refundable or CENVAT credit is found to be admissible to any taxable person, the same shall be refunded to him in cash under the existing law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of
section 11B of the Central Excise Act, 1944 (1 of 1944) and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
(10)Save as otherwise provided in this Chapter, the goods or services or both 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.
(11)(a) notwithstanding anything contained in
section 12 , no tax shall be payable on goods under this Act to the extent the tax was leviable on the said goods under the Value Added Tax Act of the State;
(b)notwithstanding anything contained in
section 13 , no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994 (32 of 1994);
(c)where tax was paid on any supply both under the Value Added Tax Act and under Chapter V of the Finance Act, 1994 (32 of 1994), tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed.
(12)Where any goods sent on approval basis, not earlier than six months before the appointed day, are rejected or not approved by the buyer and returned to the seller on or after the appointed day, no tax shall be payable thereon if such goods are returned within six months from the appointed day: Provided that the said period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that the tax shall be payable by the person returning the goods if such goods are liable to tax under this Act, and are returned after a period specified in this sub-section: Provided also that tax shall be payable by the person who has sent the goods on approval basis if such goods are liable to tax under this Act, and are not returned within a period specified in this sub-section.
(13)Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under any law of a State or Union territory relating to Value Added Tax and has also issued an invoice for the same before the appointed day, no deduction of tax at source under
section 51 shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day.
Explanation .-For the purposes of this Chapter, the expressions " capital goods", " Central Value Added Tax (CENVAT) credit " , " first stage dealer " , " second stage dealer " , or " manufacture " shall have the same meaning as respectively assigned to them in the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder.
No case laws found for this section yet.
Browse all case laws →Frequently Asked Questions
What does CGST Section 142 cover, and how does it relate to transitional provisions under GST?
CGST Section 142 encompasses various miscellaneous transitional provisions to ensure a smooth transition from the previous indirect tax regime (e.g., VAT, Service Tax) to the Goods and Services Tax (GST) regime. It addresses specific scenarios and challenges that arise during the transition, such as the treatment of pending assessments, refund claims, and ongoing contracts.
How does CGST Section 142(11) address pending refund claims under the old regime?
CGST Section 142(11) states that where any refund claim relating to service tax or excise duty is pending as on the appointed day (i.e., the date GST became effective), such claim shall be disposed of in accordance with the provisions of the pre-GST laws, and any refund arising from such disposal shall also be paid in accordance with those laws.
What is the implication of CGST Section 142(6) regarding ongoing works contracts?
CGST Section 142(6) addresses the taxability of works contracts that were in progress before the implementation of GST. Generally, the tax treatment depends on whether the work was completed before or after the GST implementation date. The rules dictate how to segregate the value of supplies made before and after the appointed day, determining which tax regime (pre-GST or GST) applies to each portion.
How are pending assessments or audits under the pre-GST laws handled under CGST Section 142?
CGST Section 142 clarifies that pending assessments and audits initiated under the erstwhile tax laws will continue to be governed by those laws, even after the implementation of GST. This means that the authorities will complete the assessment or audit procedures as per the old rules and regulations, and any resulting demands or refunds will also be handled accordingly.
What happens to the amount recoverable as arrears of tax, cess, or duty under the pre-GST regime as per CGST Section 142?
Under CGST Section 142, any amount recoverable as arrears of tax, cess, or duty under the repealed enactments will be recovered as if they were arrears of tax under the CGST Act. This simplifies the recovery process by bringing all outstanding dues under a unified recovery mechanism.
Does CGST Section 142 provide any relief for goods returned to the factory after GST implementation where the duty was paid under the previous regime?
CGST Section 142 addresses this situation indirectly through provisions related to transitional credit and other specific scenarios. The exact relief and procedure depend on the specific circumstances of the return, the nature of the goods, and whether the original duty was paid under excise law. Proper documentation and adherence to prescribed procedures are crucial for availing any applicable relief.
Where can I find the detailed rules and notifications relating to the implementation of CGST Section 142 for specific scenarios?
Detailed rules and notifications related to CGST Section 142 can be found on the official website of the Central Board of Indirect Taxes and Customs (CBIC) and through authorized GST portals. Consult with a tax professional to interpret these rules and notifications correctly for your specific business context.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Goods Returned (Not by Registered Person) | Goods on which duty was paid under existing law, no earlier than six months before the appointed day, are returned to a place of business on or after the appointed day. The registered person is eligible for a refund of duty paid if the goods are returned by a person OTHER than a registered person, within six months from the appointed day, and the goods are identifiable to the satisfaction of the proper officer. |
| Goods Returned (By Registered Person) | If the returned goods (meeting the criteria above) are returned by a REGISTERED person, the return is deemed a supply. |
| Upward Price Revision (Contract Pre-GST) | Price of goods/services revised upwards on or after the appointed day, pursuant to a pre-appointed day contract. The registered person must issue a supplementary invoice or debit note within 30 days of the revision. |
| Downward Price Revision (Contract Pre-GST) | Price of goods/services revised downwards on or after the appointed day, pursuant to a pre-appointed day contract. The registered person MAY issue a credit note within 30 days of the revision. |
| Downward Price Revision - ITC Reversal Required | For the registered person to reduce their tax liability on account of a credit note issued for a downward price revision, the recipient of the credit note MUST reduce their input tax credit corresponding to the reduction in tax liability. |
| Refund Claims Filed Before/On/After Appointed Day | Refund claims for CENVAT credit, duty, tax, interest, or any other amount paid under the existing law, filed before, on, or after the appointed day, are disposed of under existing law, and any amount accruing is paid in cash. (Subject to exceptions in existing law, particularly Section 11B(2) of the Central Excise Act, 1944). |
| Rejection of CENVAT Credit Refund Claim | If a refund claim for CENVAT credit is fully or partially rejected, the rejected amount LAPSES. |
| No Refund of Carried Forward CENVAT | No refund is allowed for any amount of CENVAT credit where the balance of that amount, as of the appointed day, has been carried forward under the GST Act. |
No related notifications found for this section.
Browse all notifications →Amendment History
Enforced w.e.f. 1st July, 2017 .
No numbered amendments recorded for this section.