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CMA Intermediate · Direct and Indirect Taxation · Composition Levy

Sharma Traders, a composition taxable person in Indore, ceases to satisfy a condition of the scheme on 12 August. Under the CGST Rules, 2017, what must it do?

Sharma Traders becomes liable to normal tax under section 9(1) from the day it fails the condition, must issue tax invoices for later supplies, and must file FORM GST CMP-04 within seven days of that event.

  1. AContinue paying composition tax until the financial year ends and then withdraw
  2. BPay tax under section 9(1) from that day, issue tax invoices thereafter, and file FORM GST CMP-04 within seven days of the eventCorrect
  3. CPay tax under section 9(1) from the next financial year and file CMP-04 within thirty days
  4. DFile FORM GST ITC-01 within seven days and continue composition tax until the officer's order

Explanation

Rule 6(2) text provides that the person becomes liable to normal tax from the day he ceases to satisfy any condition, must issue tax invoices for later supplies, and must file CMP-04 within seven days of the event. Waiting until year end or 30 days misstates the timing. ITC-01 is a stock statement filed within thirty days, not the withdrawal intimation.

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