Comprehensive Guide to Credit Transfer Documents (CTD) under GST
Credit Transfer Documents (CTDs) are crucial under the GST regime for manufacturers supplying goods cleared before July 1, 2017, to excise-unregistered but GST-registered dealers. These documents serve as proof of Excise Duty payment, enabling dealers to claim CENVAT credit. Strict conditions apply to CTD issuance, including goods identifiability, proper record-keeping, and avoiding duplicate credit claims. Manufacturers and dealers must adhere to specific timelines and documentation, like Forms TRANS 3, 3A, and 3B, to ensure compliance and prevent liabilities arising from incorrect credit availment.
For dealers who were not registered under the Excise Act but received goods cleared prior to July 1, 2017, the question of CENVAT credit continuity arises. Within the GST framework, manufacturers are mandated to issue a Credit Transfer Document (CTD) in these specific scenarios. This article will provide a detailed explanation of CTDs. A CTD serves as an official document issued by a manufacturer, verifying the payment of Excise Duty on goods produced and dispatched before July 1, 2017. These goods must have been supplied to an individual not registered under the Central Excise Act but who holds GST registration as a trader.
Criteria for Issuing a Credit Transfer Document
The goods in question must be clearly identifiable, for example, by their brand, chassis number, or engine number for vehicles. Additionally, the value of each manufactured item or unit must exceed INR 25,000. Manufacturers are required to maintain detailed documentation outlining the clearance of goods and the associated duty payments. These records must be presented for verification upon request by a Central Excise Officer. Each CTD must feature a unique serial number and include specific information. This includes the Central Excise registration number and the address of the Central Excise Division. It also requires the name, address, and GSTIN of the recipient, a detailed description and classification of the goods, the invoice number with the date of dispatch, the mode of transportation, and the vehicle registration number. Furthermore, the document must specify the duty rate, quantity, value, and the excise duty paid. Manufacturers must ensure that the trader receiving the Credit Transfer Document possesses the goods in the identical state as when they were originally cleared by the manufacturer. Dealers claiming credits via CTDs are obligated to retain all purchase and sale invoices from the manufacturer. A CTD must not be issued to a dealer who already received an invoice for the same goods before July 1, 2017. Issuing a CTD in such a case would lead to a dual claim of input tax credit, as the dealer would carry forward ITC based on the initial invoice. Furthermore, a dealer claiming credit using a Credit Transfer Document for manufactured goods cannot simultaneously avail credit under the Transition Rules of the CGST Act, 2017, for identical goods from the same manufacturer that are already in their stock. This restriction prevents duplicate credit claims. When supplying goods, the dealer utilizing credit based on a Credit Transfer Document must include the relevant CTD number in the invoice they issue.
Procedure for Issuing a Credit Transfer Document (CTD)
Manufacturers were required to issue a CTD within 30 days of July 1, 2017, specifically by July 30, 2017. Additionally, all pertinent invoices needed to be attached to the Credit Transfer Document.
Consequences of Duplicate CENVAT Credit Claims with CTDs
If a manufacturer issues a CTD and the CENVAT credit is claimed twice for the same goods, both the manufacturer and the dealer will be held jointly and severally responsible. This liability includes any excess credit claimed, along with applicable interest and penalties as per the CENVAT Credit Rules, 2004.
Required Documents for Filing
To facilitate the CTD process, specific documents must be filed by designated parties within certain timeframes:
| Document | Due Date for filing | Who should issue the document |
|---|---|---|
| Table 1 of TRANS 3 | 60 days from 1st July 2017 | Manufacturer issuing the CTD |
| Table 2 of TRANS 3 | 60 days from 1st July 2017 | Dealer availing the credit based on the CTD |
| TRANS 3A | No due date | Manufacturer issuing the CTD. Records have to be made available to the appropriate Central Excise Officer on demand |
| TRANS 3B | No due date | Dealer availing the credit based on the CTD. Records have to be made available to the appropriate Central Excise Officer on demand |
Overview of Forms TRANS 3, 3A, and 3B
The forms TRANS 3, 3A, and 3B are crucial for both manufacturers issuing a CTD and dealers claiming credit through it. While the visual formats are not displayed here, these forms outline the required data for compliance.
It is important to note that these regulations were initially draft rules, and the final versions had not yet been released by the CBEC.