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CMA Intermediate · Direct and Indirect Taxation · Composition Levy

Kaveri Foods, a composition dealer, ceases to satisfy a condition of the composition scheme on 12 August. Under the CGST Rules, 2017, what is the consequence?

The dealer becomes liable to pay normal tax from the very day it stops satisfying the condition, must issue tax invoices for later supplies, and must file the withdrawal intimation in FORM GST CMP-04 within seven days of that event.

  1. AIt stays in the scheme until the end of the financial year
  2. BIt becomes liable to pay tax under the normal provisions from the day it ceases to satisfy the condition and must file FORM GST CMP-04 within seven days of the eventCorrect
  3. CIt becomes liable to normal tax only from the next financial year and files CMP-04 within thirty days
  4. DIt pays tax under normal provisions but need not file any intimation

Explanation

Rule 6(2) makes the person liable under normal provisions from the day the condition ceases to be met. It must issue tax invoices thereafter and file CMP-04 within seven days of the event. Continuing till year end or a thirty-day filing window finds no support in the rule.

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