GST
Notice that you were not eligible for composition
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
If the officer believes you were not eligible, he issues CMP-05. You reply in CMP-06 within 15 days. He then passes an order in CMP-07 allowing or denying composition.
Provisions and law
- Rule 6, CGST Rules 2017Validity of composition, withdrawal in CMP-04, intimation within 7 days on losing eligibility, and CMP-05 to CMP-07 for denial
- Sec 10(5), CGST Act 2017Wrongly paying under composition attracts tax, interest and penalty
Analysis
If denied, you pay tax at normal rates for the period with interest, and penalty under Sec 10(5). Example: officer finds Rs 1.7 crore turnover last year; if your books show Rs 1.45 crore, reply with sales ledgers and returns. If he finds inter-State sales, show they were stock transfers or that the buyer was in-State. Reply on time.
Conclusion
- Read the reason in CMP-05
- Collect turnover and sales records
- Reply in CMP-06 within 15 days
- Pay any tax with interest if denial is final
- Appeal against CMP-07 if wrong
A Savvy can do this for you
Opting into composition, CMP-02
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