Definition First and second stage dealer in GST
We are continuing our discussion on the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:-
Section 2(46): First Stage Dealer: The new definition reads as follows:
First Stage Dealer means a dealer, who purchases the goods directly from : –
(i) the manufacturer under the cover of an invoice issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or
(ii) an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice;
Section 2(91) second stage dealer “means a dealer who purchases the goods from a first stage dealer as defined in sub-section (46);”
Said definition has been newly added in the revised draft law. The reasons behind this addition are the transitional provisions. Section 169 of the revised draft provides that upon transition, cenvat will be allowed on the inputs lying in stock to certain eligible persons which includes a first stage dealer or a second stage dealer or a registered importer.
Prior to this amendment, no transitional provision was there in Model GST law for the dealers. As the cenvat credit of excise duty was not allowed to dealers, it would have also resulted in heavy burdening in terms of cost for them. The trade associations were demanding the transitional provision for the same. This is welcome step on behalf of the Government that they have adhered to the same.
But it is interesting to note that no mechanism has been prescribed to avail the cenvat for the dealers. They are maintaining RG 23 D register and there is clear cut balance of credit can be worked out for them. Even they need not to follow the FIFO method. They can clearly tell which inputs are lying with them and invoice relating to them as well as the credit available for the same. This details can easily be worked out from RG 23D register.
For other dealers which are not registered with Central Excise department, the transitional provision is incorporated in Section 169 only. Even those dealers who do not possess the duty paying documents can take the credit on the basis of formula which may be prescribed by the Government.
The Excise duty is paid at the end of manufacturer and then it goes to depot or wholesale dealer and after passing through many hands, it comes to retailers. If this product is not industrial product then nobody issues cenvatable invoices and such dealers normally do not have duty paying documents. Hence, this is also welcome step on the part of Government to allow the credit of such inputs to these dealers.Ads by Eonads