EXAMPLE-98

Food Garage restaurant supplies food and non alcoholic drinks and other articles for human consumption, aggregate supply of turnover in the preceding FY is Rs. 45 lakh. said restaurant opted for composition scheme from current year. Earlier they are paying tax @ 12 % as non AC restaurant. Input tax paid on input from the month of April to June quarter is RS 124000. Supply in  First  quarter is 1248500.

Determine whether Food Garage is eligible for composition scheme and determine the liability of tax under the scheme for first quarter.

Answer

 Schedule II, paragraph 6(b), specifies Composite supply relating to supply by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration, shall be treated as supply of services.

In case of persons engaged in making above supplies, Section 10 allows him to opt to pay central tax under composition scheme as two and a half per cent of the turnover in State or turnover in Union territory and 2.5% of the turnover in State or turnover in Union territory as  State tax , whose aggregate turnover in the preceding financial year did not exceed rs. 75 lakh.

Hence Food Garage restaurant is eligible for composition scheme.

Tax liability in composition scheme  Central tax = 2.5% of 1248500 = Rs. 31200 Rs.  

                                                       State tax = 2.5% of 1248500 = Rs. 31200 Rs.

As per section 39, person under composition scheme required to file return for each quarter and pay tax on or before 18th day after the end of the relevant quarter.

Thus last date of filling return for first quarter is 18^th July.