Conditions and restrictions for composition levy [ Section 10(2) Read with Rule 5 of CGST Rules ] - GST Ready Reckoner - GST

Conditions and restrictions for composition levy [ Section 10(2) Read with Rule 5 of CGST Rules ] The registered person shall be eligible to opt if: (a) save as provided in section 10(1), he is not engaged in the supply of services; (b) he is not engaged in making any supply of goods or services which are not leviable to tax under this Act; [ in other words does not involve in supply of exempt category goods or services ] (c) he is not engaged in making any inter-State outward supplies of goods or services; (d) he is not engaged in making any supply of services through an electronic commerce operator who is required to collect tax at source under section 52 ; (e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council; (f) he is neither a casual taxable person nor a non-resident taxable person: (g) the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under rule 3(1) of CGST Rule 2017 ; (h) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he pays the tax under section 9(4) ; (i) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both; (j) he shall mention the words composition taxable person, not eligible to collect tax on supplies at the top of the bill of supply issued by him; and (k) he shall mention the words composition taxable person on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business. The registered person paying tax under section 10 may not file a fresh intimation every year and he may continue to pay tax under the said section subject to the provisions of the Act and these rules. [ Rule 5(2) of CGST Rules ] Further where more than one registered persons are having the same Permanent Account Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under section 10(1) unless all such registered persons opt to pay tax under that sub-section. [ First proviso of Section 10(2) ] Important Clarification 1. Issue :- whether supply of food and beverages at cinema halls is taxable as restaurant service which attract GST at the rate of 5% or not. Clarification :- Provided in Circular No. 201/13/2023-GST Dated 01.08.02023 Supply of food or beverages in a cinema hall is taxable as restaurant service as long as: a) the food or beverages are supplied by way of or as part of a service, and b) supplied independent of the cinema exhibition service. where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.