To avoid GST to become a burden for taxpayers the model GST legislation, the model GSST law contains several provisions to ensure that the proposed tax system takes care of sales return transactions, which are made before appointed date (date on which GST will come into force) but returned on or after the appointed date without prejudice to the interest of the taxpayers. Transition provisions (Chapter XXVII) of the model GST law (revised in November 2016) deals with the sales returns of goods, goods removed from job order and price revision by issue of various documents on or after the appointed date which was supplied before the appointed date, which are briefly discussed below:
How the Existing Tax System Conversed in new GST System
Sales return of goods exempted under any previous law (Sec. 173)
If the sale was made not before six months and goods are returned within six months of the appointed date then no tax shall be levied on the returned goods. However if the goods are returned after six months from the appointed date, tax shall be payable by the person returning the goods if the said goods are liable to tax.
Sales return of goods taxable under any previous law (Sec. 174)
If the sale was made not before six months and goods are returned within six months of the appointed date then the seller, provided he is a registered taxable person shall get a refund of the tax paid under any previous law on the returned goods on sale. However, for getting the refund, the person who is a returning the goods shall not be a registered taxable person. However, if the goods are being returned after six months from the appointed date, tax paid by the seller on returning the goods at the time of sale of the goods under previous law shall not be refunded and it would amount to cost in case the person is not registered under GST. If the person who is a returning the goods is a registered taxable person, tax shall be payable by the person returning the goods if the said goods are liable to tax. If the goods are returned after six months from the appointed date, tax shall be payable by the person returning the goods if the returning person is a taxable person, provided that the said goods are liable to tax.
Inputs removed for job work and returned on or after the appointed day (Sec. 175)
In case Inputs as such or removed for Job work after partially processing under the provisions of previous tax laws (Excise/VAT etc.) for further processing, testing, repair etc. and are returned after processing within a period of 6 months from the date on which GST Act comes into force, then NO Tax shall be payable. Tax shall be payable by manufacturer if the inputs are not received back within a period of 6 months or extended period from the date when GST comes into force OR Tax is to be paid by Job Worker if the goods after processing are returned back after a period of 6 months after the GST enactment date. If registered person shows sufficient cause, then the period of 6 months may be extended by another 2 months by the competent authority.
Semi-finished Goods for job work and returned on or after the appointed day (Sec. 176)
In case goods as such or removed for Job work after partially processing under the provisions of previous tax laws (Excise/VAT etc.) for further processing, testing, repair etc. and are returned after processing within a period of 6 months from the date on which GST Act comes into force, then NO Tax shall be payable. Tax shall be payable by manufacturer if the inputs are not received back within a period of 6 months or extended period from the date when GST comes into force OR Tax is to be paid by Job Worker if the goods after processing are returned back after a period of 6 months after the GST enactment date. If registered person shows sufficient cause, then the period of 6 months may be extended by another 2 months by the competent authority. Further, a declaration has to be filed by the job worker as well as principal to the department to avail the benefit of section 176. Finished Goods removed for job work and returned on or after the appointed day (Section 177) In case finished goods are removed for carrying out certain processes not amounting to manufacture under the provisions of present tax law and are returned after processing within a period of 6 months from the date on which GST Act comes into force, then NO Tax shall be payable. Tax shall be payable by manufacturer if the inputs are not received back within a period of 6 months from the date when GST comes into force OR Tax is to be paid by person returning the goods if the goods after processing are returned back after a period of 6 months after the GST enactment date. If registered person shows sufficient cause, then the period of 6 months may be extended by another months by the competent authority. Further, a declaration has to be filed by the job worker as well as principal to the department to avail the benefit of section 177. Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract (Sec. 178) In case the price of goods are revised upwards after their clearance from the supplier premises, the taxable person issuing the goods has to issue supplementary Invoice or Debit Note containing such particulars as may be prescribed under the GST Rules within a period of THIRTY DAYS of such price revision. In case the price of goods are revised downwards after their clearance from the supplier premises, the taxable person issuing the goods has to issue supplementary Invoice or Credit Note containing such particulars as may be prescribed under the GST Rules within a period of THIRTY DAYS of such price revision. Such Debit Note / Supplementary Invoice shall be deemed to have been issued as document in respect of Outward supply under GST Act. Such Credit Note / Supplementary Invoice shall be deemed to have been issued as document in respect of Inward supply under GST Act. Provided that the taxable person shall be allowed to reduce his tax liability on account of issue of the said invoice or credit note only if the recipient of the invoice or credit note has reduced his input tax credit corresponding to such reduction of tax liability. By – Anil Ghimire Recommended Articles
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