Understanding GST Transition Credit And Recovery Of Inadmissible

MCQ SELF CHALLENGE #0091

GST Transition Credit And Recovery Of Inadmissible

Dear Professional Seniors & Friends,

Warm Greetings!

Here is the Next post of #MCQ on concept based practical professional knowledge on transition of amount standing in PLA under excise and mechanism of recovery of inadmissible transitional credit in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

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MCQ 91.1: Mr. X is having Rs 10,000 in PLA maintained with excise as on 30th June 2017. Can he forward this to GST credit ledger?

A. Yes, by filing Trans 1.

B. No, same has to be refunded under excise law.

C. Yes, no need to file Trans 1.

D. None of the Above

MCQ 91.2: If the credit of PLA is not allowed to be carry forward to GST, what will have to be done if the same is by mistake carry forwarded to GST?

A. Same has to be paid by cash (with interest & penalty) by making separate challan to GST authorities

B. Same has to be paid by cash with interest & penalty) by making separate challan to GST authorities.

C. Same has to be reverse back by crediting electronic credit ledger & making payment of interest & penalty subsequently.

D. None of the above since the credit of PLA is allowed to be carry forward to GST

Answer MCQ Self Challenge #0091

This post of MCQ is on provisions relating to professional misconduct in relation to members generally.

Answer MCQ 91.1: 6)

No, same has to be refunded under excise law.

electronic credit ledger & making payment of interest & penalty subsequently,

Practical Analysis for MCQ 91.1:

• GST act allow credit of earlier laws to be carry forward to GST account on filing of Form Trans 1
• There being a confusion circulated in the minds of people that whether the amount deposited in PLA under excise law will be allowed to be carry forward to GST account
• Since the amount deposited under PLA is not in the form of input Tax credit, it should not be allowed to be carry forward to GST account The same has been clarified by the CBIC in their FAQ's that the amount of PLA will not be transitioned to GST since it has not been appropriated to the government account which will be determined post completion of the pending assessment under excise laws

Based on the above analysis, Correct answer to MCQ 91.1 B) 5) No, same has to be refunded under excise law

Answer MCQ 91.2: C)

Same has to be reverse back by crediting

Practical Analysis for MCQ 91.2

• The question pertains to situation of inadmissible transitional credit (as explained in Que 1)
• Certain officers are demanding the wrongly transition of PLA amount as a demand to be paid in cash under GST
• Rather many officers are demanding the same to be paid as demand under excise laws
• Breaking at the rumor's and confusions on subject topic, CBIC has issued circular no 58/CGST dated 4 Sep, 2018 regarding mechanism of recovery of arrears of wrongly availed CENVAT credit under the existing law and inadmissible transitional credit.
• It is clarified that as an alterative method, taxpayers may reverse the wrongly availed CENVAT credit under the existing law and admissible transitional credit through Table 4(8)(2) of FORM GSTR-38. The applicable interest and penalty shall apply on all such reversals which shall be paid through entry in column 9 of Table 6.1 of FORM GSTR-38

Based on the above analysis, correct answer to MCQ 91.2: C) Same has to be reverse back by crediting, electronic credit ledger & making payment of interest penalty subsequently.

(Disclaimer: The objective of the MCQ post is just to discuss the concept. It may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion: you can definitely have your own opinion)

Sincere Regards,

CA Sanjay Kumar Agrawal

Mobile: 9810116321