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CMA Intermediate · Direct and Indirect Taxation · Composition Levy

A composition taxable person ceases to satisfy one of the conditions for the scheme on 12 August. Under the CGST Rules, 2017, what must he do?

He becomes liable to regular tax from the day the condition fails, must issue tax invoices for later supplies, and must file FORM GST CMP-04 within seven days of that event. He cannot continue under composition until year-end or wait for an officer's notice.

  1. AContinue paying composition tax until the end of the financial year and then file a withdrawal
  2. BPay tax under the regular provisions from the day the condition fails, issue tax invoices for later supplies, and file FORM GST CMP-04 within seven daysCorrect
  3. CFile FORM GST CMP-04 within thirty days and issue a bill of supply meanwhile
  4. DWait for the proper officer to issue a show-cause notice before changing the mode of payment

Explanation

Rule 6(2) makes the person liable to regular tax under section 9(1) from the day he stops satisfying a condition. He must issue tax invoices for taxable supplies made thereafter and file an intimation in FORM GST CMP-04 within seven days of the event. Waiting for year-end or for an officer's notice is not provided for.

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