Composition Scheme Dealer, Goods and Services Tax - GST

[Vikas Kapoor]

Pls suggest on the following GST related problem.

1) A person was registered under Composition Scheme

2) However due to lack of knowledge he issued B2B TAX Invoices charging 5% GST

3) He did not paid the GST Amount to the Government

4) No GST return was filed since begining July 2017

5) Due to non filing of GST Return his registeration was cancelled in March, 2019

Now the problems:

1) Revocation can not be applied unless all the returns are filed

2) He can file only GSTR 4 since he is registered under Composition Scheme

3) But if GSTR 4 is filed than GST Input will not be available because it will not apear in GSTR 2 of buyer and GSTN of the assessee will show he is a composition dealer and thus could not issue TAX Invoice

4) If composition return is filed than what will be the amount of TAX to be paid

a) 1% of Turnover OR (b) 5% that is charged in TAX invoice issued

Now my Question is, "WHAT PROCESS IS TO BE FOLLOWED TO CORRECT THE ABOVE SITUATION"

Posts / Replies

[KASTURI SETHI]

First of all you must ensure whether account of the party in GSTN is still open or closed. (If not open, you will have to get it opened by lodging your request with Redressal Grievance Cell or contact helpdesk of Common Portal System.) If it is still open, you can go ahead with the following steps:-

1. Deposit the GST amount collected (which was not to be collected from the buyer) along with interest @24% under Section 50(3) of CGST Act, 2017.Penalty equal to the amount tax not paid is payable under Section 74 (1) of CGST Act. This amount is Govt. money and cannot be kept by the assessee even for a single day.This 5% is separate from 1% of turnover.

2. Deposit GST 1% of turnover (CGST 0.5%+SGST 0.5%) along with interest @18% under Section 50(1) of CGST Act. It has to be paid separately. No link with 5% which was collected.

3.Deposit late fee for filing returns.

4. After paying all above Govt. dues, the party will file all GSTR-4 returns.

5. Thereafter, you will apply for revocation of cancelled registration on the common portal system in Form REG-21 under Section 30 read with Rule 23.

[KASTURI SETHI]

In continuation of my reply dated 16.6.19, it is added that if whole tax along with interest is paid within thirty days from the due date of payment no penalty is required to be paid.

[Ganeshan Kalyani]

Detailed reply from Sri Kasturi Sir. Detailed analysis you did Sir. Time invested will be substantial. Thanks for enriching us.