March 27, 2023

What are the Transitional Provisions in Certain Cases under GST

The introduction of the GST on July 1st, 2017, would bring about a new India. Companies are concerned about the procedures for making the transition from the VAT/excise regime to the new GST regime as well as the regulations that will apply. Here, we go over a few GST transitional rules that may apply in specific circumstances. In accordance with a works contract signed before the specified day, products and services provided after that date are subject to GST.

When a works contract includes both items (such as iron bars and cement) and services (such as labor), both service tax and VAT are applicable (laborers, engineers). On the portion of a supply for which VAT or service tax was paid prior to the implementation date of the GST but the delivery was made after that date, an ITC will be applicable. Within ninety days of the designated day, the taxpayer must electronically make a declaration in the form GST TRAN-1 with the necessary information.

Explanation with an Example

For the construction of a blast furnace for which it had submitted an invoice, Care Constructions received an advance payment from XYZ Ltd. on June 27. On July 5th, 2017, it provided products and services. Will GST be used in this instance? The supply was made before the introduction of the GST, hence it will not be applicable. Also, if XYZ Ltd. electronically uploads a declaration in the form GST TRAN-1 with the necessary information within 90 days of July 1st, it is permitted to claim ITC on the supply made on July 5. Also, the supply took place on June 20, which was before the application of GST (invoice date).

Periodic Supply under Goods and Service Tax

When the consideration for the supply is received before the designated day AND the tax has already been paid under the former law, GST will not be due on the supply for ongoing provision of goods or services after GST implementation. Whether the supply consideration has been paid in full or in part is irrelevant.


1. Mr. S consistently provides Mr. B with items. Mr. B gave an advance payment to Mr. S on June 27 for items worth Rs. 1,000,000 that Mr. S sent on July 15. Would GST be used? Some products are exempt from GST since payment was made before the adoption of the GST and tax was charged in accordance with the former law.

2. In June, Mr. B only provided an advance payment of Rs. 50,000 based on the aforementioned scenario. As the tax was imposed in accordance with former law, GST will still not be applicable. Whether the consideration was partially paid is irrelevant.

Carried forward tax or tariff credits under any applicable law or on products that were in stock on the designated day:

(1) Within 90 days of the appointed day, every registered person entitled to an input tax credit under Section 140 shall electronically submit a declaration in Form GST TRAN1, duly signed, on the Common Portal, specifying therein, separately, the amount of input tax credit to which he is entitled under the provisions of Said Section: Provided, That the Commissioner may, on the recommendations of the Council, extend the period of 90 days by a further period. The credit shall be awarded to the extent specified in sub-rule (7) of rule 3 of the CENVAT Credit Regulations, 2004 if the inputs have been acquired from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park:

Service Tax Credit Allocation by Input Service Provider

Every service that an input service distributor received prior to the implementation of GST is eligible for an input tax credit that can be distributed as a credit under the GST. Whether or if the invoices for these services are received on the designated day or later is irrelevant. This supersedes the time of service supply regulations of the GST.

For instance, ABC Ltd. serves as the corporate headquarters for A, B, and C. On June 25, it received services worth Rs. 1,000,000. On July 5th, I received the invoice for this service. ABC Ltd. is permitted to distribute Rs. 1,000,000 as a Tax credit. That won't be viewed as credit that can be carried forward.


GST return provision

Bank audit GST

GST payments procedureDetermination of tax & adjudication of demand– Sec 73 CGST Act, 2017