Question1:

 A Chartered Accountant has sent me the following queries. Could you please examine them and furnish your views. It would be useful if you kindly point out any contraventions and or the demands of tax, penalty, etc., involved for further action. ISSUE 1 Assessee having 3 crores of turnover in FY 16-17, wrongly registered as composite dealer wants to convert into regular dealer from July 2017. Can it be done? Ans: ISSUE 2 A dealer migrated as regular dealer opted for composition as per latest option given in GST portal. Does he need to file GSTR 1, 2 & 3. What about the GST collected by him and claimed by his customers till the date of conversion. Still the portal shows regular and the supplier had opted for composition scheme. Ans: ISSUE 3 Provisional ID issued to a partnership firm basing on partner PAN. The Dealers accountant created login id and password but didn’t submit the form with full particulars in GST portal. He was issued provisional GST Number automatically in June. The dealer issued invoices based on the GST number till date and found the accountant had not submitted for migration. If I register now will I be able to file for July 2017. The dealer had Excess input and need not pay tax for July & August.

Answer:

 ISSUE 1-Assessee having 3 crores of turnover in FY 16-17, wrongly registered as composite dealer wants to convert into regular dealer from July 2017. Can it be done?  

Answer on issue no. 1 – As the turn over during preceding FY is over Rs. seventy five lakh, the person concerned was not eligible to be registered under Composition Levy. The wrong registration obtained for the said levy will have to be surrendered which will be cancelled by the proper officer under the provisions of Section 29 of CGST Act, 2017. After cancellation of the said registration, the person concerned will have to apply afresh for registration under Section 22 of the Act ibid. After registration, the registered person would be liable to pay tax under GST on the supplies already made under composition levy scheme along with interest as per provisions of Section 50 of the Act. In respect of supplies already made he will not be entitled to avail ITC on corresponding inward supplies whether goods or services because Section 16 permits ITC only to registered persons and this person being registered under Section 10 during earlier period is not entitled to avail ITC.o From date of new registration he would be able to claim ITC on the inputs lying in stock and would make the supplies on payment of appropriate GST. For suppressing facts, provisions of Section 74 are attracted.

ISSUE 2-A dealer migrated as regular dealer opted for composition as per latest option given in GST portal. Does he need to file GSTR 1, 2 & 3. What about the GST collected by him and claimed by his customers till the date of conversion. Still the portal shows regular and the supplier had opted for composition scheme.

Answer on issue no. 2 – The person concerned, according to Rule 3 of CGST Rules, 2017 was required to give his option in FORM GST CMP-01 for composition levy scheme before the appointed date i.e. 01.07.2017 but not later than thirty days after the appointed day further extended period by Commissioner. Assuming the above limitations has been kept in view. Assuming that this person remained registered under Section 22 of the Act during July, 2017 then he is required to furnish all the mandatory returns i.e. first GSTR-3B and then GSTR-1, 2 and 3 by due dates. For the duration during which he remained registered under Section 22, he is required to pay GST at appropriate rate and there is no problem in claiming of ITC by buyer of goods from this person during that period. As per Rule 4 option to pat tax under Section 10 would become effective from the appointed day if intimation was given as per the provisions of sub-rule (1) explained above.  As Common Portal is not showing changed status, it appears that the  aforesaid provisions of Rule 3 either have not been kept in view or the status would under go the required change after the authorities verify the premises and make changes in the Portal. A quarry in this regard can also be made to help desk regarding change of status in the portal.

ISSUE 3- Provisional ID issued to a partnership firm basing on partner PAN. The Dealers accountant created login id and password but didn’t submit the form with full particulars in GST portal. He was issued provisional GST Number automatically in June. The dealer issued invoices based on the GST number till date and found the accountant had not submitted for migration. If I register now will I be able to file for July 2017. The dealer had Excess input and need not pay tax for July & August?

Answer on quarry no. 3 -  As on date all persons migrated under GST are having provisional registration. Option for regular registration is not yet operative. As and when option becomes operative, you can obtain regular registration. There is no problem on effecting supplies against provisional registration. (Reply dt. 28/09/2017)