What are the penalties applicable on Composition Dealer in case of any default in tax payment

Composition Scheme and Regular Scheme

What are the penalties applicable on Composition Dealer in case of any default in tax payment?

If the tax administration has reason to believe that a composition dealer has wrongly availed the benefit under the composition scheme, then such a person shall be liable to pay all the taxes which he would have paid under the normal scheme. Also, he will be liable to pay a penalty equivalent to an amount of tax payable. This penalty will not be levied without giving a show cause notice to the dealer.

What are the transition provisions if a business transits from Composition Scheme under current regime to Regular Taxation under GST?

Taxpayers registered under composition scheme under the current regime will be allowed to take credit of input held in stock, or in semi-finished goods or in finished goods on the day immediately preceding the date from which they opt to be taxed as a regular tax payer.

What are the conditions for availing input credit on stock lying at the time of transition?

Following are the conditions which must be addressed by the taxpayer to avail credit on input at the time of transition from composition scheme to the normal scheme: 

Such inputs or goods are intended to be used for making taxable supplies under GST law.

*Taxpayer was eligible for CENVAT Credit on such goods under the previous regime, however, couldn’t claim it being under composition scheme.

*Such goods are eligible for input tax credit under GST regime. The taxpayer has legal evidence of input tax paid on such goods.

*Such invoices were issued within a period of 12 months from GST applicable date.

What is the treatment for input credit availed when transitioning from normal scheme to Composition Scheme?

When switching from normal scheme to composition scheme, the taxpayer shall be liable to pay an amount equal to the credit of input tax in respect of inputs held in stock on the day immediately preceding the date of such switchover. The balance of input tax credit after payment of such amount, if any lying in the credit ledger shall lapse.