Anyone please answer only if sure.
8 Replies
Pankaj Rawat
(GST Practitioner)
(55052 Points)
Replied 09 November 2019
No not eligible for composition scheme As per Rule 5 of CGST Act , Composition dealer cannot Supply Interstate . And Export as per Section 7 & 16 of IGST Act is interstate supply (Means IGST is applicable)
Shivam RC
(Student)
(23683 Points)
Replied 09 November 2019
(Mr. Zafar is not eligible to opt for COMPOSITION SCHEME.)
DETAILED EXPLANATION :
INTRODUCTION/PROVISION OF THE LAW :
According to the Provision of Section 10(2) of the CGST Act 2017, certain restrictions and conditions are imposed on dealer opting for Composition Scheme such as " cannot do INTER STATE OUTWARD SUPPLY, not engaged in making supply of goods which are not leviable to Tax under the CGST Act ( for example - Alcoholic liquor for human consumption, 5 Petroleum products ) etc.
The prescribed threshold limit to opt for COMPOSITION SCHEME is Rs. 1.5 crore ( and Rs. 75 lakhs in case of 8 SPECIAL CATEGORY STATES being Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand ). "ASSAM, Jammu & Kashmir and Himachal Pradesh has opted for higher threshold limit of Rs. 1.5 crore. " Notification No. 14/2019 - CT, dated 07.03.2019 has been issued regarding this matter.
Now, the methodology to compute Aggregate Turnover is given in Section 2(6) of the CGST Act 2017. However, since Composition Scheme is applicable only to suppliers making Intra-State supplies, 'aggregate turnover' means 'Value of all taxable supplies ( excluding the value of inward supplies on which tax is payable by a person on reverse charge basis ), exempt supplies, export of goods or services or both or inter state supplies of person having the same PAN to be computed on all India basis but excludes CGST, SGST, UTGST, IGST and Cess.
Moreover as per Order No. 01/2017, dated 13.10.2017, issued by CBIC, it was clarified that while computing Aggregate Turnover for a Composition Taxpayer, any "INTEREST INCOME", which is earned by way of supply of services such as extending deposits, etc, where such interest or discount is exempted under GST Law , shall not be "included" while computing Aggregate Turnover.
FACTS and ANALYSIS of the CASE :
In the given case, the Aggregate Turnover limit to opt for COMPOSITION SCHEME is Rs. 1.5 crore since Mr. Zafar is doing business in the state of Assam. Now the Aggregate Turnover as defined u/s 2(6) of the CGST Act 2017 of the person will be :
Taxable Supplies - Rs. 40 lakhs.
+
Inter State Outward Supplies - Rs. 10 lakhs.
+
EXEMPT Supplies - Rs. 40 lakhs. ( 70 - 30 )
+
Value of EXPORTS - Rs. 5 lakhs.
Value of Tax payable on RCM basis i.e. Rs. 5 lakhs will not be taken into consideration.
Therefore, Aggregate Turnover of the Person is Rs. 95 lakhs ( 40+10+40+5 ), which is within the limit of Rs. 1.5 crore.
CONCLUSION :
By analysing the above said Provisions and facts from the case , we see that although Mr. Zafar of Assam is within the Aggregate Turnover limit of Rs. 1.5 crore ( i.e. Rs. 95 lakhs ), he is "NOT ELIGIBLE" to opt for COMPOSITION SCHEME u/s 10 of the CGST Act 2017, because he is dealing in INTER STATE OUTWARD SUPPLY OF GOODS, which a restriction imposed u/s 10(2) of the CGST Act 2017 read with Rule 5(1) of the CGST Rules 2017.
Hence, Mr. Zafar has to opt for "REGULAR SCHEME" and pay GST as per the Provision of Section 9 of the CGST Act 2017.
Regards
Shivam .
DETAILED EXPLANATION :
INTRODUCTION/PROVISION OF THE LAW :
According to the Provision of Section 10(2) of the CGST Act 2017, certain restrictions and conditions are imposed on dealer opting for Composition Scheme such as " cannot do INTER STATE OUTWARD SUPPLY, not engaged in making supply of goods which are not leviable to Tax under the CGST Act ( for example - Alcoholic liquor for human consumption, 5 Petroleum products ) etc.
The prescribed threshold limit to opt for COMPOSITION SCHEME is Rs. 1.5 crore ( and Rs. 75 lakhs in case of 8 SPECIAL CATEGORY STATES being Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand ). "ASSAM, Jammu & Kashmir and Himachal Pradesh has opted for higher threshold limit of Rs. 1.5 crore. " Notification No. 14/2019 - CT, dated 07.03.2019 has been issued regarding this matter.
Now, the methodology to compute Aggregate Turnover is given in Section 2(6) of the CGST Act 2017. However, since Composition Scheme is applicable only to suppliers making Intra-State supplies, 'aggregate turnover' means 'Value of all taxable supplies ( excluding the value of inward supplies on which tax is payable by a person on reverse charge basis ), exempt supplies, export of goods or services or both or inter state supplies of person having the same PAN to be computed on all India basis but excludes CGST, SGST, UTGST, IGST and Cess.
Moreover as per Order No. 01/2017, dated 13.10.2017, issued by CBIC, it was clarified that while computing Aggregate Turnover for a Composition Taxpayer, any "INTEREST INCOME", which is earned by way of supply of services such as extending deposits, etc, where such interest or discount is exempted under GST Law , shall not be "included" while computing Aggregate Turnover.
FACTS and ANALYSIS of the CASE :
In the given case, the Aggregate Turnover limit to opt for COMPOSITION SCHEME is Rs. 1.5 crore since Mr. Zafar is doing business in the state of Assam. Now the Aggregate Turnover as defined u/s 2(6) of the CGST Act 2017 of the person will be :
Taxable Supplies - Rs. 40 lakhs.
+
Inter State Outward Supplies - Rs. 10 lakhs.
+
EXEMPT Supplies - Rs. 40 lakhs. ( 70 - 30 )
+
Value of EXPORTS - Rs. 5 lakhs.
Value of Tax payable on RCM basis i.e. Rs. 5 lakhs will not be taken into consideration.
Therefore, Aggregate Turnover of the Person is Rs. 95 lakhs ( 40+10+40+5 ), which is within the limit of Rs. 1.5 crore.
CONCLUSION :
By analysing the above said Provisions and facts from the case , we see that although Mr. Zafar of Assam is within the Aggregate Turnover limit of Rs. 1.5 crore ( i.e. Rs. 95 lakhs ), he is "NOT ELIGIBLE" to opt for COMPOSITION SCHEME u/s 10 of the CGST Act 2017, because he is dealing in INTER STATE OUTWARD SUPPLY OF GOODS, which a restriction imposed u/s 10(2) of the CGST Act 2017 read with Rule 5(1) of the CGST Rules 2017.
Hence, Mr. Zafar has to opt for "REGULAR SCHEME" and pay GST as per the Provision of Section 9 of the CGST Act 2017.
Regards
Shivam .
Priya Kashyap
(Student)
(7053 Points)
Replied 10 November 2019
Thanks Shivam for the asnwer and Pankaj sir tooo :)
Shivam RC
(Student)
(23683 Points)
Replied 17 November 2019
You're Welcome Priya Ma'am...
Iām happy to help you Priya
Iām happy to help you Priya
HARISH G
(2 Points)
Replied 01 December 2019
Is composition dealer is eligible to supply exempted goods ?
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