Validity of Composition Levy

Rule 4(4) of draft GST Composition Rule provides that where the proper officer has reasons to believe that the registered person was not eligible to pay tax under Section 10 or has contravened the provisions of the Act or these rules, he may issue a notice to such person in FORM GST CMP-05 to show cause within 15 days of the receipt of such notice as to why option to pay tax under Section 10 should not be denied.

Issue

There shall be a limitation period beyond which the proper officer may not issue the notice for showing cause as to why the option shall not be denied. If it is not specified, there is always an uncertainty upon the person as to his eligibility for the concessional tax status.

Suggestion

It is suggested that a time limit be provided beyond which the proper officer may not issue a notice to the person who is not eligible to pay tax under Section 10 or has contravened the provisions of the Act or these rules.

Source ICAI Suggestions on GST Rules Submitted to Govt of India