SECTION 10(2) - Conditions needs to be fulfilled for previous financial year also?

[CHINTAPALLI MANIKANTA]

Sir, do we need to fulfill the conditions mentioned in 10(2) for previous financial year also or only for current financial year i.e. after opting the composition scheme.

I read an article regarding this topic, that is why I'm posting this query?

https://www.taxtmi.com/tmi_notes?id=295

[Shilpi Jain]

I think you have misunderstood the post. There is no such conclusion there. Also the post mentioning that there should not have been any inter-State supplies in the previous FY (where no composition scheme is availed) seems to be unfounded in the law.

[KASTURI SETHI]

Conditions mentioned in Section 10(2) of CGST Act are to be followed after opting for Composition scheme. How these conditions can be correlated to the preceding financial year when you were not under Composition Scheme ?

[CHINTAPALLI MANIKANTA]

Thanks you Shilpi Jain and KASTURI SETHI for your reply

Then why it is said that "The registered person shall be eligible to OPT if he is not engaged in the following supplies".It does not explicitly said he is disqualified if engaged in these supply after opting the composition scheme.

Section 10(2) says ELIGIBLE TO OPT - The language seems talking about past rather than future i.e. while opting we check Aggregate Turnover in previous year. The focus is on the word "OPT".

[KASTURI SETHI]

Dear Querist, I respect difference of opinions. But here do not drag past into present forcibily.

[CHINTAPALLI MANIKANTA]

Ok Sir

[KASTURI SETHI]

See Rule 5 (1)(e) of CGST Rules and also read Notification No.8/17-CT dated 28.6.17 for preceding year as condition. Threshold limit is also for preceding year. This makes it clear that all other conditions mentioned in Section 10(2) are for current year after opting for composition scheme under Section 10.

AI Summary

Composition scheme eligibility clarified: conditions apply after opting, with turnover threshold assessed from preceding year. Eligibility criteria for the composition scheme should be assessed at the time of opting, while most operative conditions apply during the current year after opting. Turnover-based threshold requirements are assessed with reference to the preceding year, but prohibitions on certain categories of supplies and other compliance obligations govern conduct after the scheme is chosen.