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A better late than never GST move

Govt has allowed claim of transitional credit before payment of tax for the month of July

T N C Rajagopalan 

A better late than never GST move

In a huge relief to trade and industry, the government has allowed claim of before payment of for the month of July, due by August 20. They may pay the on the basis of own calculations and then file the form GST-TRAN-01 claiming transitional credit, and the summary of outward and inward supplies in form GST-TRAN-3B, by August 28. And, may discharge any difference in liability thrown up by the returns, along with interest.
 
The laws allow carryover of Cenvat credit balances and even the credit balances under value added laws as on June 30, to the regime as input credit by filing the form GST-TRAN-01 online. The Network, however, did not have the facility to file this form online. So, were not able to claim this credit. On August 8, the government notified August 20 as the last date for filing of the summary statement of outward and inward supplies during July in form GSTR-3B online and to discharge the liability. faced the prospect of having to pay the on the basis of a summary statement of outward and inward supplies in form GSTR-3B alone. This form gives no facility to take into consideration the credit carried over from the earlier regime. So, the liability had to be determined only on the basis of summary of outward and inward supplies made during July and reported in form GSTR-3B.

 
This created a situation where had to suddenly find extra cash to discharge the liability determined without taking into account the input credit they were entitled to carry over from the earlier regime. In other words, although they had huge credit balances, they could not utilise these. They were faced with a sudden demand for cash to discharge a liability that could be met only from working capital. This threatened to deplete the working capital for carrying on day-to-day work, which could have been quite disruptive.
 
The latest notification, 23/2017-Central Tax, dated August 17, relieves them of this unexpected burden. However, exporters, who were promised refunds within seven days of payment, will have to wait longer. For export made in July, they now have to pay the by August 20 and report in form GSTR-3B. But, they cannot get refunds unless they file the GSTR-1 and GSTR-2 returns next month. It is after Network tallies invoice details withe shipping bills that the refund claims can be processed. So, the refund could be delayed by over a month.
 
This means unexpected blockage of working capital.  As it is, exporters are reeling under the demand to pay on their import under advance authorisations, EPCG authorisations and duty credit scrips. They also have to pay on all  domestic procurements of inputs and input services.  Their working capital, already depleted, will get reduced even more. 
 
The government was aware of these problems and was expected to issue notifications extending the deadlines and allowing carryover of the credit well in time before the is required to be paid. Anyway, after causing enough anxieties, the government has done the right thing. 

 E-mail: tncrajagopalan@gmail.com

First Published: Mon, August 21 2017. 00:40 IST
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