INDUSTRY WANTS TO KNOW

GST Update-26.11.2016

INDUSTRY WANTS TO KNOW – PART 5

Daily Dose of GST update on FAQ in seminar with Industries

INDUSTRY WANTS TO KNOW – PART 5

Here is the 5th installment to the series where we try to find answers to the unanswered questions and queries coming from the trade and industry.
In line with earlier updates, we put forth the questions raised in Seminar with Paint Industry as well as Plastic Bags Industry.

Question: Can Credit be availed according to Transitional Provisions on stock transferred to Depot?

Answer: Under the current regime, stock transferred to Depot is only chargeable to Excise Duty and not taxed under VAT. No provision of availing credit on such transferred stock in GST Draft Law.

Question: If the provisions are lined in this manner, our businesses will suffer a great loss, in that case what shall we do about it?

Answer: In this respect, we suggest that representation should be sent through your trade associations to ensure that this issue reaches to relevant authorities as well as GST Council.

Question: Currently we pay excise duty on MRP; will this provision continue to be applicable under GST?

Answer: No such provision is there in Model GST Law.

Question: At what value will GST apply on goods transferred to Depot?

Answer: There is no transaction value at the time of transfer of goods to Depot but GST shall be applicable. GST shall thus be levied on value computed as per Valuation Rules. Accordingly, GST shall be levied on the same value at which we transfer goods to other customers.

Question: But how can these two values be treated at par where in one case goods are sold to a nearby place in the same State and in another case transferred to Depot in some another state incurring heavy transportation cost?

Answer: The said rule shall be applicable logically and we will take assessees of same region and supply of same volume and then compute the transaction value.

Question: As you said that GST shall be levied on every supply including transfer to Depot, then what’s the need of applying Valuation Rules? Suppose we transfer foods to Depot at lower value applying GST but when we sell those goods further to another customer from Depot, we will be paying GST on full amount. The government shall be getting GST on entire value by this mechanism, then what is the need of complicating it further?

Answer: This is a very good suggestion and it shall be conveyed to the Government, since it is a case of revenue neutralization and thus there is no need to complicate the provisions. Also this would be helpful in avoiding unnecessary litigations.

Comments

GST Update-26.11.2016

Post a Comment

Query