Indirect Tax Laws · Miscellaneous Provisions (GST)

Goods Returned, Supplies and Contracts across Transition (Section 142 CGST)

Updated 5 October 2026 · Fact-checked

These are the Section 142 CGST transitional rules for goods and contracts that straddle 1 July 2017, the appointed day. Fix the removal, return, invoice and payment dates. Apply the six-month window for approval or returned goods. For price revisions, issue the document within 30 days of the revision. Make sure a supply is taxed once.

Understand Goods Returned, Supplies and Contracts across Transition

GST started on 1 July 2017, the appointed day. Many deals began under the old laws (excise, VAT, service tax) and finished under GST. Section 142 decides which law applies to each such deal, so that nothing is taxed twice or escapes tax.

There are three groups of cases. First, goods sent on approval: the seller sends goods before the appointed day, and the buyer may approve or return them. Second, goods sold earlier and returned later: tax was paid under the old law, and the goods come back after the appointed day. Third, contracts and supplies that span the transition: the price under a contract entered into before the appointed day is revised on or after it, or the invoice, payment and delivery fall on different sides of the date.

The logic is simple. If goods sent on approval come back within the allowed time, the earlier movement is undone and no new GST arises. If they do not come back in time, the movement is treated as a supply and the person who removed the goods pays tax. For goods sold earlier and returned within 6 months, the treatment depends on whether the person returning them is registered. If a person who is not registered returns them, the seller is not liable to GST on that return and the old-law tax is refunded on proof of the return. If a registered person returns them, the return is treated as a supply by that person under GST. For price revisions under a contract entered into before the appointed day, the debit note or supplementary invoice is treated as issued in respect of an outward supply under GST. For spanning supplies, Section 142(11) has two parts. Under (a), no GST is payable on a supply to the extent tax was paid on that supply under the old law. Under (b), where tax was paid on a supply under both the old law and GST, the old-law tax is refunded under the old law, and the GST paid stays.

Cases of this kind carry dates. Place every date on the correct side of 1 July 2017 and then apply the stated time limit.

Learn the rules below in words, with their conditions, because each rule applies only when its conditions are met.

Key rules to remember

Appointed day: Appointed day = 1 July 2017; Every transition question is solved by comparing dates with this date.
Goods sent on approval, returned in time: Removed not earlier than 6 months before the appointed day, and returned within 6 months from the appointed day → no tax payable; The goods must have been rejected or not approved by the buyer. The Commissioner may extend the period by up to 2 more months for sufficient cause, on request.
Goods on approval, not returned in time: Not returned within 6 months (or the extended period) → tax payable by the person who removed the goods; The removal is treated as a supply. The removing person bears the liability.
Goods sold earlier, returned after the appointed day: (c) Returned within 6 months from the appointed day by a person who is not registered → the seller is not liable to GST on the return, and the old-law tax is refunded on proof of the return. (d) Returned within 6 months by a registered person → treated as a supply by that returning person under GST.; First check who returns the goods. The refund in (c) is conditional: the return must be proved. In (d), the law treats the return as a supply by the returning registered person. Check the conditions given in the question.
Upward price revision under a pre-GST contract: Price revised upward on or after the appointed day under a contract entered into before it → supplementary invoice or debit note within 30 days of the date of price revision, treated as issued in respect of an outward supply under GST; The rule applies only where the revision is made in terms of a contract entered into before the appointed day and happens on or after it. The 30 days run from the date of price revision.
Downward price revision under a pre-GST contract: Price revised downward on or after the appointed day under a contract entered into before it → credit note within 30 days of the date of price revision; The credit note reduces the supplier's tax liability only if the recipient reduces the ITC taken on that supply to the same extent, as the law provides.
Supply spanning both laws: Section 142(11)(a): no GST is payable on a supply to the extent tax was paid on that supply under the old law. Section 142(11)(b): where tax was paid on a supply under both the old law and GST, the old-law tax is refunded under the old law, and the GST paid stays.; Check what tax was paid on the supply under the old law and under GST. Then apply (a) or (b) to the extent of the tax paid.

How to solve Goods Returned, Supplies and Contracts across Transition questions

Use this method for any transition question on goods returned, approval sales or spanning supplies.

1List every date in the case: removal or supply, invoice, payment, return, price revision. Mark each as before or on or after 1 July 2017.
2Identify the type: goods on approval, goods returned after sale, price revision, or a supply with dates on both sides.
3For goods on approval, check that the removal was within the 6 months before the appointed day. Then count 6 months from 1 July 2017, which ends on 31 December 2017. Add the 2-month extension only if the case says the Commissioner allowed it. The extended period ends on 28 February 2018 at the latest.
4For goods sold earlier and returned, check that the return is within 6 months from 1 July 2017, and then check who returns them. If a person who is not registered returns them, the seller is not liable to GST on the return and gets a refund of the old-law tax on proof of the return. If a registered person returns them, treat it as a supply by that person under GST.
5For a price revision, first confirm the revision is made on or after 1 July 2017 under a contract entered into before it. Then count 30 days from the date of price revision. Choose a supplementary invoice or debit note for an increase, and a credit note for a decrease. Compute GST on the revised amount only. The supplementary invoice or debit note is treated as issued in respect of an outward supply under GST. For a decrease, the supplier's liability falls only if the recipient reduces ITC.
6For a spanning supply, check what tax was paid under the old law and under GST. Apply Section 142(11)(a): no GST to the extent tax was paid on that supply under the old law. Apply Section 142(11)(b): if tax was paid under both the old law and GST, the old-law tax is refunded under the old law and the GST paid stays.
7State the conclusion: who pays, how much, by when, and what document is issued. Show your working in provision, facts, conclusion form.

Quickest way: Date-line method

When to use it: Use it when you have little time and the case has many dates.

Draw a line with 1 July 2017 in the middle and place each event on it.
Ask one question: did anything happen after the line that reverses or adds to something before it?
If goods on approval are back within 6 months (31 December 2017), plus any approved extension up to 28 February 2018, say no tax. If not, say the remover pays tax.
If the price under a pre-GST contract changed on or after the line, say 30 days from the date of revision, then pick the document and compute tax on the difference.
For a supply spanning the line, apply Section 142(11): no GST to the extent tax was paid on that supply under the old law. If tax was paid under both the old law and GST, say the old-law tax is refunded under the old law and the GST paid stays.
Close with one line: the same tax paid on a supply is not charged twice.

Common mistakes in Goods Returned, Supplies and Contracts across Transition

Applying the old Act's terms and rates to a post-appointed-day event.
Students see an old-law deal and assume the old law governs everything.
Fix: Decide the law by the date of each event. A price revision or return after 1 July 2017 of a supply made before it is dealt with under Section 142 and GST.
Counting the 6-month window from the date of removal.
Students mix up the removal condition with the return condition.
Fix: Removal must be within 6 months before the appointed day. The return must be within 6 months after the appointed day, that is, by 31 December 2017.
Forgetting that the 2-month extension needs the Commissioner's permission.
Students treat the extension as automatic.
Fix: Allow the extension only if the case mentions a request and sufficient cause. Otherwise, use 6 months. Even with an extension, the period ends by 28 February 2018.
Treating every return of earlier-sold goods alike, whether the returning person is registered or not.
Students remember only the refund and ignore who returns the goods.
Fix: Return within 6 months by a person who is not registered: the seller is not liable to GST on the return, and the old-law tax is refunded on proof of the return. Return within 6 months by a registered person: treated as a supply by that person under GST.
Charging GST on the full contract value after a price revision.
Students forget that only the revised difference is a fresh document.
Fix: Compute GST on the amount of the revision shown in the supplementary invoice or debit note, as the case requires.
Using a debit note for a price decrease, or a credit note for an increase, or applying the revision rule to a contract entered into after the appointed day.
The two documents are confused, and the condition on the contract date is overlooked.
Fix: The rule covers only price revisions made on or after 1 July 2017 under a contract entered into before it. Increase: supplementary invoice or debit note. Decrease: credit note, which reduces the supplier's liability only if the recipient reduces ITC. Both within 30 days of the date of price revision.
Taxing a spanning supply under both laws.
Students tax the invoice under one law and the payment under the other.
Fix: Apply Section 142(11). Under (a), no GST is due to the extent tax was paid on that supply under the old law. Under (b), if tax was paid under both the old law and GST, the old-law tax is refunded under the old law and the GST paid stays.

Worked examples

Example 1

Rao Traders sent goods on approval to a buyer on 20 April 2017. The buyer rejected the goods, and they were returned to Rao on 15 November 2017. No extension was sought. Is GST payable by Rao on the goods? What if they had been returned on 10 February 2018 with no extension?

Show the solution

Appointed day is 1 July 2017. Removal on 20 April 2017 is within 6 months before the appointed day, so the removal condition is met.
The 6-month window after the appointed day ends on 31 December 2017. A return on 15 November 2017 falls inside it.
The goods were rejected and returned in time, so no tax is payable.
For the return on 10 February 2018: it is after 31 December 2017 and no extension was allowed. An extension of up to 2 months could run only to 28 February 2018 at the latest, and it applies only if the Commissioner allowed it. Without it, the window has lapsed.
So the tax is payable by Rao, the person who removed the goods, because the movement is treated as a supply.

Answer: For the return on 15 November 2017, no tax is payable. For the return on 10 February 2018 with no extension, Rao is liable to pay tax on the goods. If the Commissioner had extended the period by up to 2 months for sufficient cause, a return on 10 February 2018 would also be in time.

Example 2

Mehta Industries supplied machine parts to Nair Ltd in March 2017 for ₹5,00,000 under a contract entered into before 1 July 2017. On 10 August 2017, the parties agreed to raise the price by ₹40,000. Assume GST at 18%. What must Mehta do, by when, and what is the GST on the revision?

Show the solution

The contract was entered into before the appointed day, and the price was revised upward after it. The price-revision rule of Section 142(2) therefore applies.
Mehta must issue a supplementary invoice or debit note to Nair within 30 days of the date of price revision.
30 days from 10 August 2017 is 9 September 2017.
GST is on the revised amount only: ₹40,000 × 18% = ₹7,200.
The document is treated as issued in respect of an outward supply under GST.

Answer: Mehta must issue a supplementary invoice or debit note by 9 September 2017. The GST on it is ₹7,200 on the ₹40,000 increase.

Exam tips

Write the date line first. Placing events on the correct side of 1 July 2017 settles most of the case.
Quote the time limits exactly: 6 months for approval and returned goods (ending 31 December 2017), a 2-month extension on the Commissioner's permission (ending 28 February 2018 at the latest), and 30 days for price revision documents.
In MCQs, check for a return just outside 6 months, an extension that the case never mentions, or a price revision on a supply made after the appointed day.
In written answers, give the rule in words, apply the facts, and end with a clear conclusion on who pays and how much.
For returned goods, always state whether the person returning them is registered, since the result differs.

Practice questions from Miscellaneous Provisions (GST)

Goods Returned, Supplies and Contracts across Transition: frequently asked questions

What is the appointed day for transition under CGST?

It is 1 July 2017, the date GST came into force. All transition rules compare the dates of events with this day.

Is tax payable if goods sent on approval come back after GST?

If the goods were removed not earlier than 6 months before the appointed day, were rejected or not approved, and came back within 6 months from the appointed day, no tax is payable. The period can be extended by up to 2 months by the Commissioner for sufficient cause. If the goods are not returned in time, the person who removed them pays the tax.

What if the invoice was before GST and payment is after GST?

Check what tax was paid on the supply under the old law and under GST. Under Section 142(11)(a), no GST is payable on a supply to the extent tax was paid on it under the old law. Under Section 142(11)(b), if tax was paid on the supply under both the old law and GST, the old-law tax is refunded under the old law and the GST paid stays.

Which document is issued for a price revision under a pre-GST contract?

This applies only where the price is revised on or after 1 July 2017 under a contract entered into before it. For an increase, issue a supplementary invoice or debit note, which is treated as issued in respect of an outward supply under GST. For a decrease, issue a credit note, which reduces the supplier's liability only if the recipient reduces the ITC taken. Issue the document within 30 days of the date of price revision.

What happens if goods sold before GST are returned after 1 July 2017?

Look at who returns them and when. If a person who is not registered returns them within 6 months from 1 July 2017, the seller is not liable to GST on the return and gets a refund of the old-law tax on proof of the return. If a registered person returns them within 6 months, it is treated as a supply by that person under GST.