COMPOSITION PERSON : WHETHER CLOSING STOCK IS TO BE TAXED AT THE TIME OF CANCELLATION OF REGISTRATION

[Deepak Garg]

Sir

One of my client applied for cancellation of registration who was registered under composition scheme. At the time of application for cancellation he has a stock of ₹ 5,00,000/- no ITC was claimed. Please give your expert opinion regarding tax on closing stock. Whether the registered person is liable to tax under section 29(5).

AI Summary

Composition scheme closing stock not taxable on cancellation where no input tax credit was availed.
A composition registrant who has not availed input tax credit is not required under Section 29(5) to pay tax on closing stock at the time of cancellation; because composition dealers cannot claim input tax credit, the reversal/payment obligation for inputs held in stock does not arise where no ITC was claimed.