DEAR SIR,

 I HAD ONE QUERY RELATED TO GST APPLICABILITY UNDER COMPOSITE SCHEME. MY ONE OF THE CLIENT HAS MADE INTER STATE SALE IN BETWEEN JULY TO SEPTEMBER. CONSULTANT HAS APPLIED FOR COMPOSITE SCHEME AND MY CLIENT ARE NOW PAYING GST UNDER COMPOSITE SCHEME. MY CLIENT IS DOING BUSINESS OF ELECTRONIC ITEM OF TV AC AND REFRIGERATOR.

AS PER MY OPINION AS HE HAS ALREADY MADE INTERSTATE SALE. HE IS NOT ELIGIBLE FOR COMPOSITE SCHEME.

 I WANT TO KNOW ABOUT CONSEQUENCE FOR ABOVE SCENARIO.

 KINDLY GUIDE ME ON THE SAME WHETHER HE IS ELIGIBLE FOR COMPOSITE SCHEME OR NOT

Reply

Dear Sir,

I agree with your opinion, a person engaged in providing inter-state supply of goods is not eligible for composition scheme.

Now your client has to surrender Registration under composition scheme by filing GST CMP-04 and move to normal scheme, after complying with required provisions, and by paying differential tax amount, penalty amount, etc.

And also has to file GST ITC-01 regarding details of input and input containing in Semi finished and Finished goods held in stock on the date of Withdrawn within a period of 30 days of withdrawal to claim ITC which can be utilised for set off of output tax liability due to GST.

 Therefore, if a small taxpayer who has limited knowledge of tax laws and compliance makes any mistake under composition scheme, he shall be liable to pay tax at standard rate on his total turnover along with a penalty which will be equal to the total tax liability.