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Transitional Provisions –
Was it a smooth ride?
Presentation by
Sushil Solanki
Ex- Principal Commissioner of Service Tax
Partner, TLC Legal
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Repeal and Saving vs. Transitional Provisions TLC Legal Advocates
• Sec. 174 of CGST Act provides for repeal and saving provisions
• It is broadly based upon Sec. 6 of General Clauses Act
• Sec. 174(2)(c) provides that the repeal of Central Excise Act or Service
Tax provisions shall not affect any right, privilege, obligation or liability
acquired, accrued or incurred under the repealed Act
• Section 6 of General Clauses Act – Effect of Repeal
“Where this Act, or any (Central Act) or Regulation made after the
commencement of this Act, repeals any enactment hitherto made or hereafter to
be made, then, unless a different intention appears, the repeal shall not
(a) …. (b) ….
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred
under any enactment so repealed, or …”
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Repeal and Saving vs. Transitional Provisions TLC Legal Advocates
Provision– Is it legal?
• Issue:
• Consultancy services provided in June but invoice raised in July/Aug.
• Import of service completed in June, but payment made in July/Aug.
• Whether ST or GST payable ? If ST is paid, how to avail credit?
• Whether Saving Provisions permit taking of credit ?
• SC in Wazir Sultan Tobacco (1996 83 ELT 3) held that even though collection of tax is
postponed and the tax law was repealed on the date of liability to pay, still tax under old
law is required to be paid on the last date of old law.
• Sec. 142(11)(a) & (b) provides that if goods/services were LEVIABLE to VAT/ST, no GST is
payable.
• Therefore, if Service was provided prior to AD, service tax liability would fructify on 30th
June irrespective of date of issuing invoice/ making payment.
• Even availment of ST credit would be available in terms of the Saving clause
• However, GOI tweets clarify that GST is to be paid in both cases, perhaps to overcome
drafting lacunae. 6
Repeal and Saving vs. Transitional Provisions TLC Legal Advocates
• Job work – Raw material sent for commercial job work on payment of
excise duty under old law and job worker was allowed to pay excise
duty on full value of material. GST law does not provide for the same.
Is it accrued or acquired right?
• The provisions of the new Act can not infringe or relegate the right of
appeal granted under the old Act (Md. Makibar Rahman v. Islam Ali,
AIR 1994 Gau 4.) – Sec 142(3) & 142(4) provide for lapsing of CENVAT
credit if the refund is rejected without any appeal remedy
• Clean Energy Cess paid on coal produced in June but sold after AD,
liable to Compensation Cess – Can it be argued as a case of Double
levy on same taxable event?
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TLC Legal
Carry forward of credit of KKC Advocates
• Under Section 161 of the Finance Act 2016, Krishi Kalyan Cess (KKC) is a
cess to be levied and collected as Service Tax.
• Rule 3(1a) of the CENVAT Credit Rules, 2004 provides for availment of KKC
as CENVAT Credit – the expression ‘CENVAT Credit’ appears in brackets in
Rule 3(1) at the beginning.
• Explanation at the end of Section 142 of CGST Act, (which applies to the
whole of Chapter XX on Transitional Provisions) defines CENVAT Credit to
mean CENVAT Credit as defined in the Central Excise Act, 1944 or the
Rules.
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TLC Legal
Construction industry related issues Advocates
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TLC Legal
Construction industry related issues Advocates
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TLC Legal
Other Transitional Issues Advocates
• In case of post GST price revision for services, there is no provision to pay
SGST on differential price in the State GST laws on the lines of Sec.
142(2)(a) of CGST
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TLC Legal
Other Transitional Issues Advocates
• As per CENVAT Credit Rules, if the payment was not made for the services
within 3 months period, the ITC was reversed and subsequently it was
allowed to be taken whenever payment was made, without any time
limit. However, Sec. 140(9) stipulates a time-period up to 30th September
to take credit. If payment is not made by that time, ITC is lost. Is it
infringement of right accrued to a person in violation in Savings clause?
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TLC Legal
Contradictory Tweets of GoI Advocates
Q.1: Service tax paid under RCM on 6 July & credit in GST under transitional
provision?
A : If payment for RCM services is after 01/07/2017, GST will be applicable
(not Service Tax). So not under transition [2nd August, 2017]
Q.3: Ser Tax collected after appointed day. Bill and service already served.
Whether to pay as cgst or to be paid as ser tax
A : If point of taxation before 1 July 2017, Service tax will be applicable. If
time of supply after 1 July 2017, GST. [16th July, 2017]
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TLC Legal
Contradictory Tweets of GoI Advocates
Q.2: Service tax paid under RCM on July 06,17 which will not reflect in June,
17 return are eligible for transition credit or not.
A : Pls see POT Rule 7 for service tax & sec 13 CGST. Payment for RCM
services, made after 01/07/2017 would be under GST [1st August, 2017]
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TLC Legal
Advocates
QUESTION- ANSWER
TIME
Contact details:
E-mail: sushil@tlclegal.in
Tel: 022 – 61708500/400
Tel (Dir.): 022- 22823142
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TLC Legal
Advocates
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