Opening stock under Composition Scheme

[Kavita Sharma]

Under composition rules, a dealer can not opt for composition scheme if his stock on the appointed day contains 2% CST Stock.

My query is this, whether there is any way that he can opt for Composition scheme by paying the difference tax as in the case of stock purchased from unregistered dealer?

Regards

Kavita Sharma

[Ganeshan Kalyani]

A registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed subject to some condition. In my veiw there is no condition as mentioned in your query. Please mentioned the provision to which you are referring.

[KASTURI SETHI]

Dear Querist, There is restriction. It is not disputed. There is no provision for payment of CST for seeking eligibility for such scheme. However, your idea is good and full of stance. You may make representation to Chairperson GST Council and email to the Council. Next meeting is on 5.8.2017. Council may take up your point being full of reason and logic.

[Kavita Sharma]

The dealer's aggregate turnover did not exceed seventy five lakhs Rupees in the previous year. Now under GST, he wants to opt the composition scheme. His stock on the appointed day contains inter-state purchases i.e. on 2% CST.

In terms of Rule 3(1) of the Composition Rules, the person exercising the option to pay tax u/s 10 i.e Composition levy, he has to comply with the certain cumulative conditions, out of which one condition is:-

The Goods held in stock by him on the appointed day have not been purchased in the course of inter-state trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of Rule 1

In view of above rule , please review my query

Regards

[KASTURI SETHI]

After going through the above provisions cited by you, my reply is same.

[MADAN RAHEJA]

On the basis of facts quoted by you, it appears that you may not be eligible for Composition Scheme at present. But you can plan opting for the scheme from next financial year by ensuring fulfillment of conditions. In such a case you have to make application in FORM CMP 02 prior to commencement of financial year. For the present, you can think acting on the advise of Sh. Kasturi Sethi because a provision for such payment exists in case of goods purchased from unregistered dealer.

AI Summary

Composition scheme eligibility limited where opening stock includes inter state purchases or imports, preventing immediate option. Opening stock purchased in the course of inter state trade, imported, or received from an out of state branch or agent disqualifies a person from exercising the option to pay tax under the Composition Scheme; no provision exists to cure such ineligible opening stock by paying inter state tax akin to the mechanism for purchases from unregistered dealers, and prospective eligibility requires ensuring compliant opening stock and filing the prescribed option application before the financial year.