TRANSITIONAL CREDIT as per proviso to Section 140(3)

[GAURAV SHARMA]

Namaskar to all,

M/s.A has two business in same PAN. For one segment he had VAT Registration (Trader in ready-made garments) & for the other he had Service Tax (ST) Registration (Supplier of Service- Business Auxillary). M/s. A claimed Trans Credit of Excise Duty as CGST as per proviso to section 140(3) on stock as on 30.06.2017 after filing TRANS-1 & TRANS-2.

Proviso to Section 140(3) states: 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.

Now the department is contending that to claim the RTP must be other than a manufacturer or a supplier of service and in this case although M/s. A was not a manufacturer but was a supplier of service hence cannot claim credit.

Requesting all my learned friends to share their knowledge.

Thanks in advance

AI Summary

Transitional credit eligibility for goods-stock hinges on whether trader activity qualifies under the proviso, despite separate service registration.
Whether a person carrying distinct business activities under the same PAN can claim transitional credit for goods-stock depends on whether the proviso to Section 140(3) applies. The proviso allows a registered person who is not a manufacturer or supplier of services and who lacks invoices evidencing duty payment to take credit subject to prescribed conditions including passing on benefit. One view treats prior service registration as barring the proviso; another treats trader activity as separately eligible where it was not liable to registration under the existing law.