Understanding GST Composition Scheme Forms

Governing notices and orders related to the GST Composition Scheme, the Goods and Services Tax (GST) framework in India includes standardized forms to ensure clear communication between tax authorities and taxpayers. This article provides a comprehensive overview of Form GST CMP-05, Form GST CMP-06, and Form GST CMP-07, detailing their purpose and the procedures involved.

Form GST CMP-05: Show Cause Notice

Form GST CMP-05 is utilized by a GST officer to issue a Show Cause Notice to a taxpayer registered under the Composition Scheme. This notice requires the dealer to provide an explanation regarding their eligibility to continue availing the scheme's benefits. Common grounds for issuing such a notice include:

• The dealer having incorrectly opted into the Composition Scheme despite not meeting the eligibility criteria.
• The dealer violating specific rules of the Composition Scheme.

The jurisdictional GST officer issues this notice. It is important to note that a notice pertaining to one GSTIN under a common PAN will extend its applicability to all other GSTINs registered under that same PAN. Similarly, any subsequent order issued to a business linked to a specific GSTIN will automatically apply to all other GSTINs sharing the same PAN.

The notice must clearly articulate the reasons for the proposed denial of the composition scheme benefits. The taxpayer is then expected to respond using Form GST CMP-06. The officer may also schedule a personal appearance for the taxpayer on a specified date.

Form GST CMP-06: Taxpayer's Reply

Form GST CMP-06 serves as the official response from the dealer to the Show Cause Notice received via Form GST CMP-05. Taxpayers must submit this reply through the GST Portal. The form requires clear evidence demonstrating compliance with all conditions of the Composition Scheme. The deadline for submitting this reply is within fifteen days from the date of receiving Form GST CMP-05. The reply should include:

1. The GSTIN of the business that received the notice.
2. The reference number and date of the original notice.
3. The trade name of the taxpayer's business.
4. The business address of the taxpayer.
5. A detailed explanation justifying the dealer's eligibility for the Composition Scheme.
6. A list of supporting documents attached as PDF files.

If the explanation exceeds 500 words, it must be uploaded as a separate document. The taxpayer is required to sign a verification confirming the accuracy and truthfulness of the declared information. Upon receiving Form GST CMP-06, the GST Officer is mandated to issue an Order to the dealer using Form GST CMP-07.

Form GST CMP-07: Officer's Final Order

Form GST CMP-07 represents the GST officer's final decision regarding the acceptance or rejection of the taxpayer's reply submitted in Form GST CMP-06. This order is issued after the officer reviews the dealer's explanation and, if applicable, considers any in-person clarifications provided.

If the officer finds the reply satisfactory, the order will permit the taxpayer to continue under the Composition Scheme. Conversely, if no reply is received within the stipulated period, or if the reply is deemed unsatisfactory, the officer can issue Form GST CMP-07, withdrawing the taxpayer's enrollment in the Composition Scheme.

The officer must issue this order within thirty days of receiving Form GST CMP-06. In cases where no reply is received, the order should be issued within thirty days following the expiry of the fifteen-day response period for the show cause notice.

Action After Composition Scheme Withdrawal Order

If the GST officer issues an order to withdraw the Composition Scheme benefits, the dealer must electronically file Form GST ITC-01 within 30 days from the date of the Form GST CMP-07 order. This form is used to declare details of any eligible Input Tax Credit.