Chapter VIII - Transitional provisions
Section 20
Section 20: Miscellaneous transitional provisions
Section 20 resolves how pre-GST transactions and proceedings are treated under the UTGST Act. It covers goods returned after the appointed day, price revisions under earlier contracts, pending refund claims, appeals and assessments under the existing law, revised returns, continuing contracts, goods sent on approval, and tax deduction at source on earlier invoices.
On this page
Need advice on Section 20?
This article is for general information. Refer to the Union Territory Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where any goods on which tax, if any, had been paid under the existing law at the time of sale thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the tax paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer:
Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply.
(2) (a) Where, in pursuance of a contract entered into prior to the appointed day, the price of any goods is revised upwards on or after the appointed day, the registered person who had sold such goods shall issue to the recipient a supplementary invoice or debit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act, such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under this Act.
(b) Where, in pursuance of a contract entered into prior to the appointed day, the price of any goods is revised downwards on or after the appointed day, the registered person who had sold such goods may issue to the recipient a credit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act:
Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability.
(3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of input tax credit, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be refunded to him in cash in accordance with the provisions of the said law:
Provided that where any claim for refund of the amount of input tax credit is fully or partially rejected, the amount so rejected shall lapse:
Provided further that no refund shall be allowed of any amount of input tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(4) Every claim for refund filed after the appointed day for refund of any tax paid under the existing law in respect of the goods exported before or after the appointed day shall be disposed of in accordance with the provisions of the existing law:
Provided that where any for refund of input tax credit is fully or partially rejected, the amount so rejected shall lapse:
Provided further that no refund shall be allowed of any amount of input tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(5) (a) Every proceeding of appeal, revision, review or reference relating to a claim for input tax credit initiated whether before, on or after the appointed day, under the existing law shall be disposed of in accordance with the provisions of the existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash in accordance with the provisions of the existing law and the amount rejected, if any, shall not be admissible as input tax credit under this Act:
Provided that no refund shall be allowed of any amount of input tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
(b) Every proceeding of appeal, revision, review or reference relating to recovery of input tax credit initiated whether before, on or after the appointed day, under the existing law shall be disposed of in accordance with the provisions of the existing law, and if any amount of credit becomes recoverable as a result of such appeal, revision, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
(6) (a) Every proceeding of appeal, revision, review or reference relating to any output tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and if any amount becomes recoverable as a result of such appeal, revision, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and amount so recovered shall not be admissible as input tax credit under this Act.
(b) Every proceeding of appeal, revision, review or reference relating to any output tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and any amount found to be admissible to the claimant shall be refunded to him in cash in accordance with the provisions of the existing law and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
(7) (a) Where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
(b) Where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day under the existing law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
(8) (a) Where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of input tax credit is found to be inadmissible, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
(b) Where any return, furnished under the existing law, is revised after the appointed day but within the time limit specified for such revision under the existing law and if, pursuant to such revision, any amount is found to be refundable or input tax credit is found to be admissible to any taxable person, the same shall be refunded to him in cash under the existing law and the amount rejected, if any, shall not be admissible as input tax credit under this Act.
(9) Save as otherwise provided in this Chapter, the goods or services or both supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act.
(10) (a) Notwithstanding anything contained in section 12 of the Central Goods and Services Tax Act, no tax shall be payable on goods under this Act to the extent the tax was leviable on the said goods under the existing law.
(b) Notwithstanding anything contained in section 13 of the Central Goods and Services Tax Act, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994.
(c) Where tax was paid on any supply, both under any existing law relating to sale of goods and under Chapter V of the Finance Act, 1994, tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed.
(11) Where any goods sent on approval basis, not earlier than six months before the appointed day, are rejected or not approved by the buyer and returned to the seller on or after the appointed day, no tax shall be payable thereon if such goods are returned within six months from the appointed day:
Provided that the said period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months:
Provided further that the tax shall be payable by the person returning the goods if such goods are liable to tax under this Act and are returned after the period specified in this sub-section:
Provided also that tax shall be payable by the person who has sent the goods on approval basis if such goods are liable to tax under this Act, and are not returned within the period specified in this sub-section.
(12) Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under any existing law relating to sale of goods and has also issued an invoice for the same before the appointed day, no deduction of tax at source under section 51 of the Central Goods and Services Tax Act, as made applicable to this Act, shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day.
Explanation.—For the purposes of this Chapter, the expression "capital goods" shall have the same meaning as assigned to it in any existing law relating to sale of goods.
Introduction
Sections 18 to 20 came into force on 1 July 2017 under Notification No. 3/2017-Union Territory Tax (Section 17 on 22 June 2017 under Notification No. 1/2017-Union Territory Tax). Their practical relevance today is mainly to legacy claims, assessments and disputes from the move to GST.
A common thread runs through sub-sections (3) to (8): refund claims, appeals and assessments under the existing law are decided under that law; amounts found refundable are paid in cash; and amounts found recoverable are recovered as arrears of tax under the UTGST Act without being admissible as GST credit.
Key takeaways
Returns and price revisions
Sub-sections (1) and (2): goods sold up to six months before the appointed day and returned within six months by an unregistered buyer give a refund of existing-law tax; price revisions under earlier contracts are handled by supplementary invoices, debit notes or credit notes issued within thirty days.
Legacy claims and proceedings
Sub-sections (3) to (8): refunds, appeals, revisions, assessments and revised returns under the existing law are decided under that law, with cash refunds or recovery as arrears of UTGST, and rejected credit lapses or is not admissible.
Continuing supplies
Sub-sections (9) to (12): supplies on or after the appointed day under earlier contracts are taxable under the Act, with no double tax to the extent tax was leviable under the existing law, and specific rules for approval goods and tax deduction at source.
Goods returned and price changes
Under sub-section (1), if goods sold under the existing law (not earlier than six months before the appointed day) are returned by an unregistered person within six months of the appointed day and are identifiable to the proper officer, the registered person can get a refund of the existing-law tax. A return by a registered person is treated as a supply.
Under sub-section (2), an upward price revision under a pre-appointed-day contract needs a supplementary invoice or debit note within thirty days. A downward revision may be shown by a credit note within thirty days, and the seller can reduce his tax liability only if the recipient has reduced the corresponding input tax credit.
Refunds, appeals and assessments under the existing law
Sub-sections (3) and (4) require refund claims under the existing law, including those for exports, to be decided under that law. Rejected credit lapses, and no refund is allowed of credit whose balance was carried forward under the UTGST Act.
Sub-sections (5) to (8) apply the same approach to appeals, revisions, reviews and references about credit or output tax, to assessments and adjudications, and to returns revised after the appointed day. Amounts found admissible are refunded in cash under the existing law. Amounts found recoverable, unless recovered under the existing law, are recovered as arrears of tax under the UTGST Act and are not admissible as input tax credit.
Continuing contracts, approval goods and TDS
Sub-section (9) makes supplies on or after the appointed day under earlier contracts taxable under the Act, unless the Chapter says otherwise. Sub-section (10) prevents tax under the Act to the extent tax was already leviable under the existing law or under Chapter V of the Finance Act, 1994, and allows credit where a supply bore both VAT and service tax.
Sub-section (11) covers goods sent on approval (not earlier than six months before the appointed day): no tax if returned within six months, extendable by two months, with tax payable by the returning person or the sender if the time limits are missed. Sub-section (12) removes tax deduction at source under CGST section 51, as applied, where the invoice was issued before the appointed day and payment is made on or after it.
Practical checklist
Do
- For a legacy refund, appeal or assessment, identify which sub-section of Section 20 governs the outcome before computing amounts.
- Keep evidence of the original sale date, return date and identification of goods for any sub-section (1) refund claim.
Glossary
- Existing law
- Defined in Section 2(5): any law, notification, order, rule or regulation on levy and collection of duty or tax on goods or services made before the Act commenced.
- Appointed day
- Defined in Section 2(1): the date on which the provisions of the Act come into force.
Frequently asked questions
Is a pending VAT refund decided under GST law?
No. Sub-section (3) requires it to be decided under the existing law, with any amount due refunded in cash under that law, subject to the provisos on rejected and carried-forward credit.
Does a pre-GST contract escape UTGST for supplies made after the appointed day?
No. Sub-section (9) makes those supplies taxable under the Act, subject to sub-section (10), which avoids tax to the extent tax was already leviable under the existing law.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026