Composition Scheme for Scrap dealers., Goods and Services Tax - GST

[BVC&Co CharteredAccountants]

A dealer who buys all types of scrap from unregistered suppliers and sells it to registered/unregistered persons. Query is whether such dealer can opt for composition scheme ( subject to threshold limit Rs.1.5 Crores ) and pay output tax at 1% irrespective of the rate of tax applicable for each type of scrap items. and also RCM is NOT applicable on his purchases from unregistered dealers u/s 9(3) of CGST Act.

Posts / Replies

[Amit Agrawal]

There is no restriction under sub-section (1), read with sub-section 2, of Section 10 of the CGST, 2017 to opt for composition scheme merely because the person is trader / dealer in 'scrap'.

And registered person - who has opted for above said composition scheme - is also not liable to pay gst under RCM u/s 9 (3) of the CGST Act, 2017 against purchase of scrap from unregistered suppliers unless & until the supplier is 'Central Government, State Government, Union territory or a local authority' as per Notification No.4/2017-Central Tax (Rate) (as amended from time to time, till date).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

A composition dealer cannot purchase goods from unregistered person.

[Amit Agrawal]

Dear Shri Kasturi Sethi Ji,

I am not aware about blanket restriction (if any) upon a composition dealer to purchase goods from unregistered person.

Request you to kindly let me know relevant provision / rules / notification in this regard.

Thanks and regards

[KASTURI SETHI]

Dear Sir, Re-examined the issue. I agree with your reply entirely.

[BVC&Co CharteredAccountants]

Thank you Amith sir for clarifying the issue with applicable provisions and also Kasturi sir.

[Padmanathan Kollengode]

Considering the facts in this case, there is no bar/ restriction in opting for composition scheme. However once composition scheme is opted, the dealer cannot make any inter-state supply. Thus, dealer can opt for composition scheme provided his scrap sale is within the state only. Regarding RCM, purchases from unregistered suppliers is not liable to RCM basis.