Transitory provisions relating to stock with traders on ‘appointed day’ (hopefully 1-7-2017) :
The dealers (traders) are not liable to pay excise duty at present. If they are not eligible to get input tax credit of excise duty paid by them on stock with them on 30-6-2017, they would try to reduce their inventory as on 30-6-2017.
This would have been more so in case of second or third stage buyers, as they would not be in possession of excise invoice (for credit of central excised duty paid on inputs) or tax invoice (for credit of State Vat paid on goods in stock with them).
Similarly service providers who were not registered with State Vat would have stock of goods as on 30-6- 2017, on which they will be liable to pay GST after 1-7-2017. They also would have tried to reduce their stock as on 30-6-2017.
Now, section 140 of CGST Act (parallel provision would be in SGST Act) is quite clear that such dealers can avail input tax credit in respect of goods in stock with them as on 1-7-2017 on which Vat and/or excise duty has been paid and for which they have duty paying documents, which are less than 12 months old i.e. invoices issued on or after 1-7-2016 will be eligible for input tax credit.
There is provision for ‘deemed credit’ even where the trader or dealer does not have excise duty paying document or Vat paying document.
Even then, there is likely to be tendency to reduce inventory by dealers on 1-7-2017.