1. Combination of Sub section ten and eleven
Section 142 (10), provides that product provided when the GST date, shall suffer GST notwithstanding whether or not the contract of the same provides were entered before the GST date. The contract may either means that a contract of promise or it may additionally mean a contract of execution viz. Invoice.
Take for AN example, suppose AN assesses World Health Organization raises AN invoice on 28/6/2017 for offer of products, however the particular provides area unit accomplished by the provider 4/7/2017, shall suffer GST. This looks fine, if the invoice of 28/6/2017 was a tax free invoice, but if the invoice had born the tax part of current regime, it’d be absurd to charge GST once more on the “to be provided goods”.
Therefore Section 142 (11) (a) has been incorporated, (which clearly over rides sub section ten (starts with “save as otherwise provided”), to produce AN exception to the higher than twin taxation anomaly. Sub section eleven (a), says that no GST shall not be due on the products to the extent the tax was leviable on the same goods below the worth additional Tax Act of the State.
2. Respect to VAT Levy, why?
Interestingly, a Central Legislation, provides tax ability subject to the tax ability event of a State Legislation, why? Seeing the larger image, the intention of the availability is to prevent second time taxation of products i.e. once product area unit subject to Excise Duty and VAT, they shouldn’t be subject to CGST and SGST (or IGST). Clearly, only each Excise Duty and VAT area unit paid, then solely GST liability would vanish.
In traditional circumstances, out of (1) Leviability of Excise Duty (‘Event 1’) and (2) Leviablity of VAT (‘Event 2’), the Event a pair of would succeed Event one, thus the reference has been place Event a pair of. The respect to Event a pair of would make sure that, each Excise Duty and VAT area unit being paid on a dealings, solely then exemption from GST is provided.
3. Anomalies with relevance VAT levy;
Convincingly, it are often aforementioned that sub section 142 (11) (a) presumes that each dealings that has suffered VAT, should have suffered Excise Duty. But this presumption isn’t true for a few dealings like below;
Scenario 1:
Facts- A manufacturer factory-made Tools and Dies (‘T&D’) for his client on 10/6/2017. The manufacturer oversubscribed the T&D to client, however maintained them for additional producing of products. The manufacturer raised VAT invoice for federal agency a hundred and charged VAT @ 15 August 1945 – federal agency fifteen, but the Excise Duty wasn’t charged, availing exemption below Notification No. 67/95-CE (Captive Consumption). The T&D are going to be equipped finally to client say, once three years.
GST Implications-Because, the T&D were leviable to VAT, there would be no GST liability as and once the products are going to be finally sent to the purchasers, per Section 142 eleven (a). The products on the loose of the Excise Duty portion (that should’ve been paid by then).
Scenario 2:
Facts- Taking same state of affairs as in one on top of, aside from the very fact that the T&D square measure oversubscribed inter-state, and manufacturer charged federal agency a hundred from client beside CST @ two – federal agency two.
GST Implications- Since, sub section eleven (a) is applicable only VAT levy is triggered, and not leviablity of CST Act, GST are going to be applicable as and once the T&D are going to be sent to the client, per section 142 (10). In effect, the T&D have twin taxation – each below the present law still as below GST Law.
This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST software, GST Return Filing, gst registration, section 8 company registration, nidhi company registration, IEC registration, fssai license..
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