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GST Cancellation

06 October 2020

A Composition Registered Dealer want to cancel his GST registration however while filling cancellation application the form states to pay tax on stock in hand at the time of cancellation the query is how much tax he needs pay on stock in hand 1% or regular applicable gst??

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5 Replies

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 06 October 2020

1% on amount of stock in hand

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Vinay Jaindani (184 Points)
Replied 06 October 2020

Thanks but can't get the logic why should the tax be paid i wont be able to recover the same from my buyers after my gstn is cancelled

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 06 October 2020

Sec. 29(5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher, calculated in such manner as may be prescribed :

the above stated is law..

but your point of view is also correct, as you also not caliming ITC on that goods thus it looks like subject matter of litigation where one plead that when I am not claiming ITC on goods as I am a composition dealer then why I need to pay tax on stock at the time of cancellation of GST

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Vinay Jaindani (184 Points)
Replied 06 October 2020

Yes sir....thnks for considering my query

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 06 October 2020

@ Mr.Vinay Jaindani
just want to add something,
If you are Composition dealer, than if registered than also you can not charge GST from buyer.
(i.e if you are registered than also can not recover GST from buyer, you have to pay that 1% from your own pocket only, whether Registered or cancelling Registration) So, it's not extra burden for you

This provision is for curbing malpractices, otherwise tax evasion is possible