Transitional Provisions-Part-XII

  1. Transitional provisions for availing Cenvat credit in certain cases

This provision has been added to as to provide for treatment of such cenvat which was reversed before the appointed day due to non-payment of consideration within a period of 3 months. This provision states that in such situation such credit can be reclaimed provided that the taxable person has made the payment of the consideration for that supply of services within a period of three months from the appointed day.

This provision may be a welcome step but it’s also difficult to implement and brings with it restrictions. Currently a period of 9 months is available to avail such cenvat on payment of consideration if it’s reversed earlier. It is because the total time limit to avail the cenvat is 1 year from the date of invoice. Now many business entities may not be able to pay the consideration within the period of 3 months from the appointed day due to various reasons, so this provision will hamper the rightfully availed cenvat by them.

In other instance where the services receiver generally retains a certain amount of contract value as retention charges and does not avail the cenvat on account of non-payment, he will also have to suffer due to this provision because the retention charges are paid generally at the completion of the contract.

In other cases, certain entities avail the cenvat only after the payment of consideration to the service provider. There is no specific provision in the revised GST draft to cover such situations where until the appointed day, the cenvat was not availed due to non-payment of consideration. It should be clarified too.

Thus this provision should be simplified by increasing the time limit of availing such cenvat and the necessity of payment to the service provider should be relaxed other many assessees are bound to lose their rightfully availed cenvat.    

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