EXAMPLE-95

M/s Robust (trader) earlier registered in VAT holding provisional registration certificate under GST having turnover below Rs.1 crore in the financial year 2016-17. Raw material held in stock on the day before the appointed day is Rs 18 lakh and input tax paid on that is Rs.180000.

(a)                Determine whether M/s Robust eligible for Composition levy. Specifies the procedure for applying for this scheme.

(b)               Specify the applicable rate under composition scheme.

(c)                If the raw materials held in stock include Rs 300000 goods purchased from his agent outside the state. Determine whether eligible for scheme.

Answer  

(a)               According to the provision of section 10 M/s Robust having aggregate turnover below Rs.1 crore in the preceding financial year. Thus, eligible to opt for composition levy under GST. Person opting for composition levy from regular tax payer shall be liable to pay an amount equal to the credit of input tax in respect of inputs held in stock on the day immediately preceding the date of appointed day. The balance of input tax credit after payment of such amount, if any lying in the credit ledger shall lapse.

Procedure for opting for composition levy by existing tax payer holding provisional registration certificate.

Step 1:- Intimation for Composition Levy is to be filed within 30 days of appointed date in FORM GST CMP -01.

Step 2:- Details relating to inputs lying in stock or as the case may be capital goods held on the day preceding the appointed day shall be furnished on the Common Portal in FORM GST CMP-03 within 90 days from the date on which option of composition is exercised. (Rule 3(4) of Chapter II of CGST Rules)

Thus the detail of input of 18 Lakh shall be submitted in FORM GST CMP -03.

  Step 3:- Effective date of scheme:- Scheme would be effective from appointed date.

(b)                Traders opting under scheme eligible to pay tax  ' % of turnover as CGST + @ ' % of turnover as SGST and not eligible for input tax credit. [Section 10(1)(c)]

(c)                Rule 5(1)(b) of Chapter II of CGST Rules specifies that if the existing tax payer is opting for composition levy, the goods held in stock on the appointed day should not have been purchased in the course of inter-state trade or imported from outside India or from his agent or principal outside the State.

In view of the above, trader given in example is not eligible for composition levy.

 

Note: As per Press release dt. 10.11.2017 the Annual Turnover Eligibility for opting the composition scheme will be extented to 1.5 cr.However the same has not been implemented as no notification has been issued by the govt yet.