Sch II clause 4(c)

[SHARAD ANADA]

A composite supplier (sec 10) is having turnover of RS. 39 lakh in FY 18-19. And expect his turnover less than 40lakh in 19-20. He wants to cancel his registration today as his turnover was and will be less than 40 lakh. He is having stock and other assets on hand as on today is RS 10 lakh. As he is composite delear he has not availed ITC on input, input services and capital goods. Whether he has to pay GST on stock and other assets while he cancelling his GST registration? Pl refer sch II clause 4(c) of CGST ACT 2017 and sec 7 after CGST amnedment act 2018 applicable from 1.02.2019

[KASTURI SETHI]

Dear Sh.Sharad Anada Ji,

In my view, in the scenario explained by you, the stock is not liable to GST. Such stock is not transfer of business assets..Clause 4 of Schedule-II is not applicable here. After withdrawal from composition scheme on the ground of turnover being below threshold limit, the dealer comes out of GST network. The stock lying with the dealer is tax paid stock and that the said dealer is entitled to enjoy threshold exemption of ₹ 40 lakhs. The phrase, "business Assets" has different meaning which is not applicable here.

[Ganeshan Kalyani]

In my view NO.

AI Summary

Composition scheme threshold: exiting suppliers need not tax on held tax paid stock when cancelling registration.
Whether a composite supplier cancelling GST registration because turnover falls below the composition threshold must pay GST on closing stock and other assets. The dealer did not claim input tax credit on inputs, input services or capital goods and holds tax paid stock. The advised position is that Schedule II clause 4(c) does not apply and the closing stock is not a taxable transfer on cancellation; the dealer may rely on the threshold exemption and need not discharge GST on such stock and assets.