What is the reason behind filling Table 5(b) of TRAN 1?


In Table 5(b) of TRAN 1, GST department seeks details of statutory forms received for which credit is being carried forward

As per erstwhile Central Sales Tax Act, 1956 (in short “CST”), concessional rate of tax was charged on following sale transactions:-

  • Inter-state sales (Section 3 and Section 6 of CST Act)
  • Export of goods out of India (Section 5(3) of CST Act)
  • Inter- state stock transfer (Section 6A of CST Act)
  • Sale to SEZ developer or SEZ unit (Section 8(8) of CST Act)

For the eligibility of charging concessional rate, buyer would have to submit statutory forms (issued by their jurisdictional VAT/CST tax officer) to their suppliers. These forms include Form ‘C’, Form ‘F’, Form ‘E’, Form ‘H’ and Form ‘I’.

Then suppliers have to submit these forms with their respective jurisdictional tax officers.

By following this process, buyers and sellers get the following benefits:-

> For Buyers, ineligible tax credit restricts to lower tax rate (e.g. on Inter-state sales, there was concessional rate of tax @ 2% which was not allowed as ITC in buying state/UT)

> For Sellers, accumulated ITC on purchase of such goods(which are sold at lower rate) can be used against other VAT liability. Even if some credit remains un-utilized, refund could be claimed from tax authorities.

Now, in GST, government want to ensure that buyers have submitted all their forms to their suppliers to remove bogus ITC in the account of suppliers. It has become mandatory for suppliers to report in form GST Tran-1 {Table 5(b)} to report all aforementioned sale transactions due to which ITC is being carried forward in GST under Transitional provisions. ITC credit will only be allowed in GST if such transactions and Forms matched to the database of respective state tax authorities.

Following is the replica of transitional rule under State/UT GST for above said provisions:

“Provided further that in the case of a claim under sub-section (1) of section 140, the application shall specify separately—

(i) the value of claims under section 3, sub-section (3) of section 5, sections 6 and 6A and sub-section (8) of section 8 of the Central Sales Tax Act, 1956 made by the applicant; and

(ii) the serial number and value of declarations in Forms C or F and certificates in Forms E or H or Form I specified in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 submitted by the applicant in support of the claims referred to in sub-clause (i).”;

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