Section 142 at a Glance
Contents
1. Statutory Text of Section 142
(1) Where goods on which duty had been paid under the existing law at removal, not earlier than six months before the appointed day, are returned to a place of business on or after the appointed day, the registered person is eligible for refund of the old-law duty where the goods are returned by a person other than a registered person within six months from the appointed day and are identifiable to the satisfaction of the proper officer. If returned by a registered person, the return is deemed to be a supply.
(2) For a contract entered into before the appointed day, if the price of goods or services or both is revised upward after the appointed day, the supplier shall issue a supplementary invoice or debit note within thirty days of the price revision; it is treated as relating to an outward supply under GST. If the price is revised downward, the supplier may issue a credit note within thirty days, and reduction of tax liability is allowed only subject to the recipient reducing corresponding ITC.
(3) Refund claims filed before, on or after the appointed day for CENVAT credit, duty, tax, interest or other amount paid under the existing law are disposed of under the existing law and amounts eventually accruing are paid in cash, subject to the statutory provisions. Rejected CENVAT credit refund lapses, and duplicate benefit is prevented where the balance was carried forward into GST.
(4) Refund claims filed after the appointed day for duty or tax paid under the existing law in respect of goods or services exported before or after the appointed day are disposed of under the existing law, subject to the statutory rules preventing double benefit through carried-forward CENVAT credit.
(5) A claim filed after the appointed day for refund of tax paid under the existing law in respect of services not provided is disposed of under the existing law and any amount eventually accruing is paid in cash.
(6) Proceedings of appeal, review or reference relating to CENVAT credit under the existing law continue to be disposed of under the existing law. Admissible credit is refunded in cash; rejected amounts are not available as GST ITC. Recovery of credit arising from such proceedings is treated under the GST transition mechanism as specified.
(7) Proceedings of appeal, review or reference relating to output duty or tax liability under the existing law continue under the existing law. Amounts becoming recoverable are recovered as arrears under the applicable GST transition mechanism; amounts found refundable are refunded in cash and rejected CENVAT credit is not converted into GST ITC.
(8) Where an assessment or adjudication proceeding under the existing law results in tax, interest, fine or penalty becoming recoverable, the amount is recovered as an arrear of tax under the CGST Act unless recovered under the old law, and the recovered amount is not admissible as GST ITC. Where an amount becomes refundable, it is refunded in cash under the old-law framework subject to the provision.
(9) If an old-law return is revised after the appointed day and the revision creates a recoverable amount or makes CENVAT credit inadmissible, the amount is recovered as an arrear of tax under GST unless recovered under the old law. If the revision creates a refund or admissible CENVAT credit within the permitted revision period, it is refunded in cash under the old law.
(10) Unless otherwise provided in Chapter XX, goods or services supplied on or after the appointed day pursuant to a contract entered into before the appointed day are liable to GST under the CGST Act.
(11) Special relief is provided where goods or services were already subject to VAT or service tax under the old law. To the extent old-law tax was leviable, GST is not payable on the same portion; where both VAT and service tax had been paid, GST applies with corresponding credit of old-law VAT/service tax for post-appointed-day supplies, calculated as prescribed.
(12) Goods sent on approval basis not earlier than six months before the appointed day and rejected/not approved by the buyer and returned after the appointed day are not subject to GST if returned within six months, subject to extension by the Commissioner of up to two additional months for sufficient cause. Late return can shift the tax liability to the person returning or the person who sent the goods, depending on the statutory situation.
(13) Where a supplier made a sale before the appointed day on which State/UT VAT TDS was applicable and issued the invoice before the appointed day, Section 51 TDS is not deducted when payment is made after the appointed day.
Explanation: For Chapter XX, specified expressions including capital goods, CENVAT credit, first stage dealer, second stage dealer and manufacture carry their meanings from the Central Excise Act, 1944 or rules made under it.
2. Section 142 Explained in Simple Language
GST did not erase all transactions that existed on 30 June 2017. Companies had goods being returned, contracts awaiting price adjustments, old refund applications, export claims, tax disputes, revised returns and goods sent on approval.
Section 142 provides the rules for these “unfinished” transactions.
| Problem | Section 142 route |
|---|---|
| Goods sold before GST are returned | 142(1) |
| Old contract price changes after GST | 142(2) |
| Old-law refund claim | 142(3) |
| Export-related old-law refund | 142(4) |
| Service tax paid for services not provided | 142(5) |
| Old CENVAT credit appeal | 142(6) |
| Old output-duty appeal | 142(7) |
| Old assessment demand | 142(8) |
| Old return revised after GST | 142(9) |
| Pre-GST contract fulfilled after GST | 142(10) |
| VAT/service-tax overlap | 142(11) |
| Goods sent on approval before GST | 142(12) |
| Old VAT TDS situation | 142(13) |
3. Section 142 Roadmap
The provision is easiest to understand by asking one question: What happened before GST, and what happened after 1 July 2017? The answer determines which transition rule needs to be examined.
4. Section 142(1): Goods Returned After GST
This provision applies where goods had been removed under the old law with duty paid, and the goods are subsequently returned after GST commenced.
Key conditions
- The old-law duty must have been paid at the time of removal.
- The goods must have been removed not earlier than six months before the appointed day.
- The goods must be returned on or after the appointed day.
- If returned by a person other than a registered person, the return must occur within six months from the appointed day.
- The goods must be identifiable to the satisfaction of the proper officer.
5. Section 142(2): Price Revision Under Pre-GST Contracts
Businesses frequently had long-term contracts entered into before GST where the final price was adjusted after GST started. Section 142(2) creates a mechanism for handling those upward and downward revisions.
Upward price revision
If the price increases after the appointed day, the supplier issues a supplementary invoice or debit note within 30 days of the price revision. For GST purposes, it is treated as relating to an outward supply under GST.
A pre-GST contract fixed a price of ₹1 crore. A contractual escalation clause increases the price by ₹5 lakh after GST begins. The supplier should examine Section 142(2)(a) and issue the required supplementary invoice/debit note within the statutory 30-day period.
Downward price revision
If the price decreases, the supplier may issue a credit note within 30 days of the revision. The supplier can reduce tax liability only if the recipient correspondingly reduces the input tax credit related to that reduction.
A pre-GST contract price is reduced by ₹2 lakh after GST. The supplier issues the transition credit note. The supplier's tax reduction is linked to the recipient's corresponding ITC reduction.
6. Section 142(3): Old-Law Refund Claims
Section 142(3) keeps many refund claims connected with the old law under the old-law procedure even though GST has commenced.
This includes claims for CENVAT credit, duty, tax, interest or other amounts paid under the existing law.
Anti-double-benefit rule
If CENVAT credit was already carried forward into GST, a separate cash refund of the same balance is not permitted. Where a CENVAT refund claim is fully or partly rejected, the rejected amount lapses rather than becoming GST ITC.
7. Section 142(4): Refunds Relating to Exports
Export-related refund claims for duty or tax paid under the existing law continue to be disposed of under the existing-law provisions.
The provision covers goods or services exported before or after the appointed day where the refund relates to the old-law tax/duty. The same anti-double-benefit principle applies to CENVAT credit that was carried forward into GST.
An exporter had an old-law refund claim connected with eligible CENVAT credit. GST starts before the refund is finally processed. Section 142(4) keeps the claim under the existing-law mechanism and provides cash treatment for the amount ultimately allowed, subject to the statutory conditions.
8. Section 142(5): Service Tax Paid for Services Not Provided
Suppose service tax was paid under the old regime for a service that ultimately was not provided. The refund claim may arise after GST has commenced.
Section 142(5) provides that such a claim is disposed of under the existing law, with any amount ultimately accruing paid in cash.
A customer paid service tax under the Finance Act, 1994 for a service contract. The service was cancelled and the amount became refundable. The refund claim filed after GST commencement is handled under the old-law framework, subject to its conditions.
9. Section 142(6): Appeals, Reviews and References About CENVAT Credit
Old CENVAT-credit disputes did not automatically disappear when GST started. Section 142(6) provides continuity under the existing law.
Where an appeal, review or reference concerns a CENVAT credit claim, it continues to be disposed of under the old law. If credit is found admissible, the amount is refunded in cash. If rejected, it does not become GST ITC.
Recovery side
If an appeal, review or reference results in CENVAT credit becoming recoverable, Section 142(6)(b) provides for recovery as an arrear of tax under GST if it is not recovered under the existing law, and the recovered amount is not admissible as GST ITC.
10. Section 142(7): Appeals About Output Duty or Tax
Section 142(7) deals with old-law appeals, reviews and references relating to output duty or tax liability.
| Result of old-law proceeding | Transition treatment |
|---|---|
| Additional output duty/tax becomes recoverable | Recovered as an arrear under the applicable GST transition mechanism if not recovered under old law. |
| Amount becomes refundable | Refunded in cash under the existing-law framework. |
| Old CENVAT credit rejected | Not converted into GST ITC. |
11. Section 142(8): Old Assessments and Adjudication Orders
This is one of the most important provisions for companies that still face historical Central Excise or Service Tax disputes.
142(8)(a) – Amount becomes recoverable
If an assessment or adjudication proceeding under the existing law results in tax, interest, fine or penalty becoming recoverable, and it is not recovered under the old law, the amount is recovered as an arrear of tax under the CGST Act.
The amount recovered is not admissible as GST ITC.
An adjudication proceeding relating to the pre-GST period concludes after GST commencement and determines ₹20 lakh of service tax plus applicable amounts as recoverable. If it is not recovered under the old law, Section 142(8)(a) provides the GST-era recovery route.
142(8)(b) – Amount becomes refundable
If the old-law assessment/adjudication instead determines that tax, interest, fine or penalty is refundable to the taxable person, the amount is refunded in cash under the old-law framework, subject to the provision.
12. Section 142(9): Revision of Pre-GST Returns
An old-law return could sometimes be revised after GST commenced. Section 142(9) addresses the consequences.
| Result of revision | Treatment |
|---|---|
| More tax/amount becomes recoverable | Recovered as arrear of tax under GST if not recovered under old law. |
| CENVAT credit becomes inadmissible | Recovered; amount is not available as GST ITC. |
| Amount becomes refundable | Refunded in cash under old-law framework, if revision is within the old-law permitted period. |
| CENVAT credit becomes admissible | Refunded in cash under old-law framework, not converted into GST ITC. |
13. Section 142(10): Contracts Entered Before GST but Supplies Made After GST
Section 142(10) establishes a broad default rule: unless another Chapter XX provision specifically provides otherwise, goods or services supplied on or after the appointed day under a contract entered into before the appointed day are liable to GST.
A five-year service contract was signed in March 2017. Services continue to be supplied after 1 July 2017. The mere fact that the contract was signed before GST does not keep later supplies outside GST. Section 142(10) must be read along with the other transitional provisions and the nature of the supply.
14. Section 142(11): VAT and Service-Tax Overlap
Section 142(11) is designed to avoid taxing the same portion of a transaction twice when the old VAT/service-tax system and GST overlap.
142(11)(a) – Goods
Where VAT was leviable on the goods under a State VAT law, GST is not payable under Section 12 to the extent of that old-law VAT levy.
142(11)(b) – Services
Where service tax was leviable under Chapter V of the Finance Act, 1994, GST is not payable on the same service to that extent under Section 13.
142(11)(c) – Both VAT and service tax paid
Where tax was paid under both VAT and service tax on a supply, GST is leviable, but the taxable person is entitled to credit of VAT or service tax paid under the existing law to the extent of supplies made after the appointed day, calculated in the prescribed manner.
A composite construction-related transaction had a pre-GST tax treatment involving both VAT and service tax. The transition must be split according to the portion already taxed under the old laws and the portion supplied after GST, applying Section 142(11) and the prescribed calculation.
15. Section 142(12): Goods Sent on Approval Basis
Businesses often sent goods to prospective customers on approval before GST. Section 142(12) addresses goods sent on approval not earlier than six months before the appointed day and returned after GST because the buyer rejected or did not approve them.
Basic protection
No GST is payable on the return if the goods are returned within six months from the appointed day.
The Commissioner may extend the period by up to two additional months where sufficient cause is shown.
Late return
If goods liable to GST are returned after the permitted period, tax may become payable by the person returning the goods. If goods are not returned within the permitted period, tax may become payable by the person who sent them.
A manufacturer sent machinery to a customer on approval in February 2017. The customer rejected it and returned it in September 2017. The business should test the six-month condition from 1 July 2017 and verify whether a valid extension existed if necessary.
16. Section 142(13): TDS on Pre-GST Sales
State and Union Territory VAT laws could require tax deduction at source on certain sales. Section 142(13) prevents GST TDS under Section 51 in a specific transition situation.
If the supplier made the sale before the appointed day and issued the invoice before the appointed day, then payment made on or after GST commencement does not attract deduction under Section 51 merely because the payment happened after GST started.
A supplier made a qualifying VAT-TDS sale on 25 June 2017 and issued the invoice before 1 July 2017. The customer pays in August 2017. Section 142(13) prevents deduction under the GST TDS mechanism for that historical sale.
17. Detailed Practical Examples
Goods removed with old-law duty paid are returned by an unregistered person within the transition period. Check 142(1), identification and the six-month condition.
The customer is registered under GST. The return is deemed to be a supply under 142(1), so the treatment differs from an unregistered customer's return.
A pre-GST contract contains an escalation clause activated after GST. The supplier issues a supplementary invoice/debit note within 30 days of price revision.
A pre-GST contract price is revised downward. The supplier issues a credit note and coordinates the recipient's corresponding ITC reduction.
An old CENVAT refund claim is decided after GST. The allowed amount is paid in cash, subject to the old-law refund provisions.
An export-related refund claim under the old law remains pending after GST. Section 142(4) preserves the old-law disposal route.
Service tax was paid before GST for a service that was cancelled. A refund claim after GST is handled under 142(5).
An old appeal establishes that ₹10 lakh of CENVAT credit was admissible. The transition rule provides cash refund treatment rather than GST ITC.
A pre-GST adjudication confirms duty and penalty after GST. If not recovered under the old law, Section 142(8)(a) provides the GST arrear route.
A revised excise/service-tax return creates additional liability. Section 142(9)(a) applies to recovery.
A service contract signed before July 2017 continues after GST. The later service is generally taxable under GST under 142(10), unless another transition provision applies.
A transaction was already subject to State VAT for a portion before GST. Section 142(11) prevents GST from applying to the same old-law-taxed portion.
Goods sent on approval before GST are rejected and returned within the statutory period. Section 142(12) can protect the return from GST.
A qualifying sale and invoice existed before GST; payment is made later. Section 142(13) prevents GST TDS under Section 51 for that transaction.
18. Finance & Tax Team Workflow
- Identify the transaction date: Record the date of removal, supply, contract, payment, return, refund filing or appeal.
- Identify the old law: Central Excise, Service Tax, State VAT or another applicable pre-GST law.
- Classify the transition event: Match it to Section 142(1)–(13).
- Check the deadline: Many provisions contain six-month or thirty-day conditions.
- Check old documents: invoices, returns, challans, refund applications, assessment orders, appeal orders and contracts.
- Check double-benefit risk: Especially where old CENVAT credit was carried forward into GST.
- Assess cash vs GST credit: Several successful old-law refund/credit proceedings result in cash rather than GST ITC.
- Map old demands: Determine whether recovery must be made as an arrear under GST.
- Document the tax bridge: Prepare a working paper showing pre-GST event → transition provision → post-GST consequence.
19. Suggested Section 142 Working-Paper Format
| Field | Suggested information |
|---|---|
| Transaction reference | Invoice/contract/order number |
| Old-law date | Date before or around 1 July 2017 |
| Nature | Return / refund / price revision / demand / appeal / contract / approval etc. |
| Old law | Excise / Service Tax / VAT |
| Section 142 clause | 142(1) to 142(13) |
| Amount | Tax / duty / credit / refund / penalty |
| Relevant deadline | Six months / 30 days / other applicable period |
| Documents | Invoices, returns, orders, contracts, challans |
| GST consequence | GST supply / cash refund / GST arrear / ITC restriction |
| Double-benefit check | Yes / No |
| Status | Open / settled / disputed |
20. Common Mistakes
“A pre-GST contract is always outside GST.”
No. Section 142(10) generally taxes supplies made after the appointed day unless another transitional provision provides otherwise.
“Old refunds become GST ITC.”
Many Section 142 refund provisions specifically provide cash treatment under the old-law framework.
“All returned goods are treated the same.”
No. Section 142(1) distinguishes returns by registered and unregistered persons and imposes identification and timing conditions.
“An old demand cannot be recovered after GST.”
Section 142(8)(a) provides a GST arrear recovery route for qualifying old-law demands.
“If an old appeal succeeds, the refund is GST credit.”
Section 142(6) provides cash refund treatment for admissible CENVAT credit.
“A credit note automatically reduces GST liability.”
Under 142(2)(b), the supplier's reduction is conditional on the recipient reducing corresponding ITC.
“Approval goods can be returned at any time.”
No. Section 142(12) contains a six-month period and a possible Commissioner extension of up to two additional months.
“Old VAT TDS must be deducted under GST if payment happens later.”
Section 142(13) addresses a specific pre-GST sale/invoice situation where GST TDS under Section 51 is not deducted.
22. Questions People Commonly Search
- What is Section 142 of the CGST Act?
- What are miscellaneous transitional provisions under GST?
- What is Section 142(1) GST?
- What happens when goods sold before GST are returned?
- What is Section 142(2) price revision?
- How to treat price escalation in pre-GST contracts?
- What is Section 142(3) refund?
- What is Section 142(5) service tax refund?
- What is Section 142(8) old service tax demand?
- Can old excise demand be recovered under GST?
- What is Section 142(9) revised return?
- What is Section 142(10) pre-GST contract?
- What is Section 142(11) VAT and service tax transition?
- What happens to goods sent on approval before GST?
- What is Section 142(13) GST TDS transition?
- Section 142 CGST Act explained with examples
23. Frequently Asked Questions
1. What is Section 142 of the CGST Act?
It contains miscellaneous transitional rules for transactions, refunds, disputes and contracts crossing from the pre-GST tax regime into GST.
2. What does Section 142(1) cover?
It covers specified goods returned after GST where old-law duty had been paid and the statutory conditions are satisfied.
3. What happens if returned goods are returned by a GST-registered person?
The return is deemed to be a supply under Section 142(1).
4. What is the price-revision rule under Section 142(2)?
It provides mechanisms for supplementary invoices/debit notes for upward revisions and credit notes for downward revisions under pre-GST contracts.
5. Is the 30-day period important under 142(2)?
Yes. The supplier is required to issue the relevant supplementary invoice/debit note or credit note within thirty days of the price revision.
6. What is Section 142(3)?
It deals with old-law refund claims for CENVAT credit, duty, tax, interest and other amounts.
7. Are successful old-law refund claims paid in cash?
Section 142 contains several provisions providing cash treatment for amounts that become refundable under the old-law framework.
8. What is Section 142(5)?
It deals with refund claims for old-law tax paid in respect of services that were not provided.
9. What is Section 142(6)?
It deals with appeals, reviews and references concerning CENVAT credit under the existing law.
10. What is Section 142(8)?
It deals with old-law assessment/adjudication outcomes. Recoverable tax, interest, fine or penalty can become a GST arrear if not recovered under the old law.
11. Does old recovered tax become GST ITC?
No. Section 142(8)(a) specifically states that the amount recovered is not admissible as ITC under the CGST Act.
12. What is Section 142(9)?
It addresses revision of old-law returns after the appointed day and the resulting recovery or refund consequences.
13. What is Section 142(10)?
It generally makes post-GST supplies under pre-GST contracts liable to GST unless another Chapter XX provision provides otherwise.
14. What is Section 142(11)?
It provides transition rules where goods/services were subject to VAT or service tax under the old regime, preventing specified double taxation and allowing prescribed credit in the overlap situation.
15. What is Section 142(12)?
It covers goods sent on approval before GST and returned after GST, subject to the six-month period and possible Commissioner extension.
16. What is Section 142(13)?
It prevents GST TDS under Section 51 in a specified case involving a pre-GST sale and pre-GST invoice where payment is made after GST commencement.
17. Is Section 142 still relevant in 2026?
It is primarily a historical transitional provision, but old assessments, appeals, refunds, contracts and disputes can continue to require its application depending on the facts and procedural history.
18. Should Section 142 be read with Section 140?
Yes, where transitional ITC and old-law disputes overlap. Section 140 concerns transition of eligible credit, while Section 142 covers broader miscellaneous transition events.
24. Quick Revision – Section 142
- 142(1): returned goods and old-law duty refund / deemed supply.
- 142(2): upward/downward price revision under pre-GST contracts.
- 142(3): old-law refund claims.
- 142(4): export-related old-law refunds.
- 142(5): refund for services not provided.
- 142(6): CENVAT-credit appeals/reviews/references.
- 142(7): output-duty/tax appeals/reviews/references.
- 142(8): old assessment/adjudication recovery or refund.
- 142(9): revised old-law returns.
- 142(10): post-GST supplies under pre-GST contracts generally taxable under GST.
- 142(11): VAT/service-tax overlap.
- 142(12): approval-basis goods returned after GST.
- 142(13): specified pre-GST VAT TDS transition.
- Always identify the exact historical date and transaction before applying a transition clause.
25. Legal Disclaimer
This page is provided for general educational and compliance-workflow purposes. Section 142 concerns historical transition events and its application can depend on the exact dates, documents, old-law provisions, amendments, rules, notifications and judicial decisions applicable to the transaction. Before taking a tax, accounting, refund, litigation or recovery decision, verify the law applicable to the relevant period and obtain professional advice where appropriate. This page is not a substitute for professional legal advice.