SEC 140 transitional credit

[giri gattupalli]

respected sir

whether, transitional credit availed under Sec 140 (3) (credit claim relates to goods held in stock on appointed day, covered by tax invoices evidencing payment of tax) should pass on to buyers or in other wards subjected to anti profiteering provisions, please discuss

thanking you

[Yash Shah]

Dear Sir,

Referring to Provisio to Sec. 140(3), it clearly mentions -

Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such manner as may be prescribed.

Hope it answered your query.

[giri gattupalli]

respected sir,

thanks for your response. please clarify that we have invoice evidencing payment of central duty on goods held in stock . if we claim tax credit , then we will have to pass on the benifit to byer.

thanking you

[Yash Shah]

As per my view, Yes Sir.

[giri gattupalli]

respected sir,

thanks for your reply .one of my client is a taxable person dealing in MRF TYRES & TUBES exlcusively. my dealer is second stage retail dealer.total purchases were covered by VAT INVOICES raised by first stage wholesaler. collection of state vat was evident from invoices. but there is no any evidence of payment of central duties in invoices raised by whole sale dealer . he had goods laid in stock amounting to rs 20,00,000 (as per audit statement) on 30-06-2017. input tax credit of central duties or taxes were not claimed previously in 2017. now i want to claim input tax credit as per sec140 (3). please suggest precautions and safe guards to avoid further risks from central gst department. kindly discuss.

thanking you

[giri gattupalli]

please discuss

[KASTURI SETHI]

It appears to me you are talking of TRANS-2. If so, it is deemed credit and no documentary evidence of payment of duty is required to claim such deemed credit. You will not claim in full.

AI Summary

Transitional GST credit may require passing benefit to recipients when claimed without invoice evidence under prescribed conditions. Transitional credit under Section 140(3) may be allowed where invoice evidence of central duty is absent, but such claims are subject to prescribed conditions, limitations and safeguards and require that the taxable person pass on the benefit by way of reduced prices; the TRANS 2 deemed credit mechanism may apply and can be limited, so claimants should maintain stock records, reconcile purchases, follow prescribed rates and document that benefits were passed to recipients.