The Notice to Composition Dealer in GST is a formal communication from the tax department when a composition dealer fails to follow GST rules. Authorities use it to ensure that businesses under the Composition Scheme stay compliant with filing, tax payment, and eligibility requirements. Therefore, every dealer should know why such notices are issued and how to respond effectively.
Why Do Authorities Issue a Notice to Composition Dealer in GST?
The department issues a Notices for several reasons. Most commonly, dealers receive it when they cross the turnover threshold of ₹1.5 crore (₹75 lakh in specific states). In addition, notices are sent if a dealer:
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Makes inter-state sales of goods or services.
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Sells through e-commerce operators.
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Fails to file returns such as CMP-08 or GSTR-4 on time.
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Uses the Composition Scheme despite being ineligible.
As a result, the notice acts as a warning and demands clarification or tax payment.
Types of Notice to Composition Dealer in GST
Different types of notices serve different purposes.
| Type of Notice | Purpose | Example |
|---|---|---|
| Show Cause Notice | Seeks reasons for cancellation of the scheme | Non-filing of CMP-08 |
| Demand Notice | Demands payment of tax, penalty, or interest | Late payment of GST |
| Intimation Notice | Informs about discrepancies in returns | Turnover mismatch |
Furthermore, each notice contains a specific deadline, so prompt action becomes essential.
How Should a Dealer Respond to Notice to Composition Dealer in GST?
If you receive a Notice to Composition Dealer in GST, you should:
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Read the notice carefully to understand the reason and section of law.
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Log in to the GST portal and check the notice under Services > User Services > View Notices and Orders.
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Submit a reply online with explanations and supporting documents.
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Pay any pending dues such as tax, interest, or penalty without delay.
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Consult a GST expert if the issue is complex or unclear.
By acting quickly, you can avoid escalation.
Consequences of Ignoring Notice
Failing to respond to a notice brings serious consequences. For instance, the tax department may cancel the GST registration. Moreover, the dealer may need to switch to the regular scheme and pay higher taxes. Finally, penalties and interest add a financial burden that can disrupt business operations.
Conclusion
The Notice to Composition Dealer in GST should never be ignored. Timely responses, correct filings, and professional guidance help businesses stay safe from penalties.
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