Non filing of ITC-03 by composition dealer

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....on filing of ITC-03 by composition dealer<br> Query (Issue) Started By: - MAHTAB KHAN Dated:- 22-10-2025 Last Reply Date:- 23-10-2025 Goods and Services Tax - GST<br>Got 1 Reply<br>GST<br>The party had opted for the Composition Scheme under Section 10 of the CGST Act, 2017 by filing Form GST CMP-02 for FY 2019-20 and 2020-21 but failed to file Form GST ITC-03. Subsequently, the applicant shifted t....

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....o the regular scheme from FY 2021-22. During the composition period, the applicant discharged tax liability at the rate of 1% on outward supplies. A Show Cause Notice (SCN) has been issued by the CGST authorities alleging that Form GST ITC-03 was not filed and, therefore, ITC reversal as per Section 18(4) read with Rule 44(4) was not done, rendering the applicant ineligible for the Composition Sc....

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....heme. The SCN further states that during FY 2019-20 and 2020-21, due to violation of Section 18(4) read with Rule 44(4), the applicant was not entitled to composition benefits. However, the applicant continued to pay tax at 1% under the Composition Scheme, thereby contravening the provisions of Section 10(4) read with Rule 3(4) of the CGST Rules, 2017. Accordingly, the SCN proposes: * Recovery....

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.... of short-paid tax @ 17% under Section 74(1) with interest under Section 50(1), as the applicant paid only 1% under the Composition Scheme; * Penalty under Section 122(2)(b) amounting to Rs. 27,904 (CGST Rs. 13,952 + SGST Rs. 13,952); and * Penalty under Section 125 amounting to Rs. 50,000 (CGST Rs. 25,000 + SGST Rs. 25,000) for non-filing of Form ITC-03. What should be the proper defense or ....

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....reply in such cases Reply By Shilpi Jain: The Reply: You should reverse the applicable tax that was supposed to be done in ITC-03 now. If this form is available well and good. Do that payment with interest. If this form in not available then do it by DRC-03. Once this is done, composition scheme should not be disentitled.<br> Discussion Forum - Knowledge Sharing ....