Switching over from composition scheme to normal dealer under GST [CENVAT Cases]

Switching over from composition scheme to normal dealer –

Switching over from composition scheme to normal dealer is explained in this article. It may so happen that a dealer is covered under Composition Scheme under present laws either Excise or VAT. That person may switch over from composition to normal scheme under GST. How he will switch over and how to input credit held in stock will be dealt with is provided by section 146 of MGL.

Accordingly, A registered taxable person presently paying tax under Composition Scheme under Excise Laws shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed date. The appointed date will be date for implementation of GST.

It is provided that the above credit shall be subject to the following conditions:

1. The taxable person shall use such goods for making taxable supply under GST.

2. Such a person shall not opt for Composition under GST.

3. The said taxable person was eligible for cenvat credit on receipt of such inputs and/or goods under the earlier law but could not do so for being covered by Composition Scheme.

4. The said taxable person is eligible for an input tax credit under GST. [Sec section 16 for conditions as to ITC under GST]

5. The said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty/tax under the earlier law in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day and such invoices and /or other prescribed documents shall have been issued not earlier than twelve months immediately preceding the appointed day. Means ITS will be restricted to only those invoices which are not older than twelve months. Means ITC on invoices older than 12 months will be lost.

6. ITC so availed of may be recovered later as arrears of tax if it is found to be recoverable as a result of proceedings initiated under Central Excise Act.

Compiled by
CA Manoj Gupta
Jodhpur
9828510543
gm2104@gmail.com
© CA Manoj Gupta