Indian Tax Solution

Goods imported or locally procured by EOUs are not exempt from GST

We have an EOU. We import capital goods and raw materials duty-free against procurement certificates issued by our excise authorities, and get some machines and inputs from domestic manufacturers without excise duty payment against CT-3. Can we continue to do so under theGST regime?

Right now, there is no exemption of GST on goods imported or procured from local sources by EOUs. However, I expect the position to be clear once the Foreign Trade Policy is announced and related exemption notifications are issued by the Revenue Department.

We are importers and suppliers of raw materials to various manufacturers. We pay BCD, CVD, SAD, etc. while importing, and pass on MODVAT to the manufacturers by charging them. What will be the impact on stock in hand as on June 30, 2017? Will we get input credit of BCD, CVD and SAD on the stock lying with us as on June 30, 2017?

I believe you are registered with Central Excise and pass on CVD and SAD component to the buyers under your own invoice and file regular returns. Besides, I expect that you might be getting registered under the GST laws also and not be a dealer paying GST under the composition scheme. In that case, you will be entitled to take, in your electronic credit ledger, the amount of Cenvat credit carried forward in the last return furnished by you under the Central Excise laws - i.e. the return relating to the period ending with the appointed day, i.e. the day immediately preceding the day when GST laws comes into force. However, you cannot take this credit if the said amount of credit is not admissible as input tax credit under GST laws or where you have not furnished all the returns required under the Central Excise laws for the period of six months immediately preceding the appointed date. As per draft Transition Rules, you have to submit, within 60 days of the appointed day, an application electronically in form GST TRAN- 1, duly signed, on the Common Portal specifying therein, the details called for. For detailed procedures, I suggest you see the draft Transition Rules that are put up in the public domain. These are not finalised at the time of writing this reply to your query.

We print chest/front part of "baba suits" and give these back to the garments manufacturer. We charge five per cent VAT on 60 per cent of printing charge. We use our own chemicals and colours, and pay VAT on chemicals and colours @ five per cent and 14 per cent. We pay rent including service tax @ 15 per cent. What will be our obligations under the GST regime?

Assuming that you get registered under GST laws and that the chemicals and colour that you use from your own stock are not of insignificant value, and that you are sending printed garments to the garments manufacturer within your state, you have to pay CGST and SGST at notified rates. On rent for commercial purposes, the GST rate is 18 per cent.

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