1. You can take that ground but it is not always correct.
2. For govt department it's 3 years.
3. Aggregate turnover for gstr 1 is 1.5 cr.
4. As per 3
5. It's correct
6. As per 3
7. It's correct
Composition tax applicability
I am running a proprietorship eye clinic and I am an eye specialist and surgeon. I also have an optical outlet and pharmacy where my patients buy the glasses and drugs prescribed by me. I applied for composition tax registration in 2016 and I have been filing qtrly returns and annual returns since then. The system is also accepting the returns without any problem since 2016. I pay 12% gst on my purchases like frames, lenses, consumables, eye drops medicines. I do not collect any tax from patients on sales. I pay 1% tax to the govt on sales of pharmacy and sunglasses. I do not pay any tax to the govt on sales of prescription opticals & consumables as it is considered as a part of composite healthcare supply. The understanding is since healthcare is nil rated, no tax is payable on composite healthcare supply like opticals and consumable sales but only on mixed supply like pharmacy sales and sunglasses where the pt has an option of buying wherever he wants as it is available as a finished product outside. I had a GST raid last year in june and I made the same submission to them. They have not reverted back to me yet and are silent. My question is 1. If they are silent, does it mean they have accepted my submission. 2. Can they reopen the case any time in future and if, yes, is there any time limit 3. I have received a email from them this year saying that since my aggregate turn over gas crossed 50L, I should migrate to full regular GST. I am under the impression that that upper limit of aggregate turnover is 1.5 cr. 4. My CA says that for businesses dealing with both trade of goods & service, the limit prescribed is 50L aggregate turnover only and not 1.5cr. Is this true 5. When I read the GST act, it says in clause(b), para 6, schedule 2 that businesses engaged in services and related composite supply goods including articles of human consumption, the composite supply of goods is also to be considered as services. The only exception given is sale of alcoholic beverages. Can it be argued that since pts are classified as consumers, prescription opticals, consumables will also be articles of human consumption and when supplied in composite to principal supply healthcare will attract nil GST or in case of pharmacy and sunglasses 1% GST on such mixed supply sales 6. If sale of goods composite to healthcare service is also considered as service, then will the limit of 1 5 cr apply? 7. If the dept has fixed the upper limit of 50L aggregate turnover to those businesses dealing with services supply along with unrelated goods supply for inclusion under composition tax, can the dept interpret our business also similarly and insist that we go for full GST although clause(b) para 6 schedule 2 clearly says that businesses like ours involved in related composite supply has to be classified as services only and so by logical reasoning be given the full benefit of the upper limit of 1.5cr before full gst is demanded by the dept.
Asked 5 years ago in Taxation
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4 Answers
1. You cannot take their silence for granted that they have accepted your submission.
It may be in a dormant state, which can be reopened at any stage in future.
2. The time limit cannot be prescribed here for reopen, even they may not reopen.
Nothing is predictable because it depends on the discretion of the authorities.
3. The composition scheme is applicable to manufacturers or traders whose taxable business turnover is up to ₹1.5 crore (₹75 lakh in case of North-Eastern States).
Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore*
The composition scheme is an alternative method of tax levy under GST designed to simplify compliance and reduce compliance costs for small taxpayers. The main feature of this scheme is that the business or person who has opted to pay tax under this scheme can pay tax at a flat percentage of turnover every quarter, instead of paying tax at normal rate every month.
Advantages of Composition Scheme:
- Less Tax & High Liquidity
- Lower Tax Payment (Like 1%, 2%, 5%, 6%* )
- Less Compliance involved in the Composition Scheme.
Dis-Advantages of Composition Scheme:
-
Inter-State sales are not permitted. - Cannot collect the Tax Payment.
- Few Taxpayers are preferred the Composition Scheme
Now you can decide.
4. Service Providers Cannot opt for Composition Scheme but in Budget 2019, Government announced to have Service providers whose turnover is up to Rs. 50L can opt for Composition Scheme
The composition scheme for service providers gives an option to taxpayers rendering services having aggregate annual turnover up to Rs. 50 lakh to pay tax at a nominal rate, subject to conditions.
The following persons can opt into this scheme:
- Supplier of services only (i.e., service providers)
- Suppliers of goods and services (i.e., those suppliers who were not eligible for composition scheme earlier)
5. The optical are not human consumption.
It is an utility.
Your arguments do not justify the interpretation of law.
6. Read the point three and four above.
7. The tax department has given service providers with turnover of up to Rs 50 lakh time till April 30 to opt for the composition scheme and pay 6 per cent GST.
Service providers opting for the composition scheme can charge a lower tax rate of 6 per cent from customers, as against the higher rates of 12 and 18 per cent for most services under GST.
The GST composition scheme was so far available to traders and manufacturers of goods with an annual turnover of up to Rs 1 crore.
This threshold too has increased to Rs 1.5 crore from April 1.
Under the scheme, traders and manufacturers are required to pay only 1 per cent GST on goods which otherwise attract a higher levy of either 5, 12 or 18 per cent. Such dealers are also not permitted to charge GST from the purchaser.
Many thanks for your replies. Some of you have opined that "prescription spectacles" cannot be considered as articles for human consumption. Only things that enter the human body are eligible to be considered .Examples given are food & water. Some of you have said that even cigarettes can be considered as articles of human consumption. Medicines given orally or Medicines administered through intravenous plastic tubes r also articles of human consumption even though the Intravenous tubes are discarded at the end of the administration. Hence consumables involved in the administration of Intravenous medicines are also considered as articles of human consumption although they are discarded because they are required to deliver the medicine in a particular method as treatment. Without that the medicine cannot be delivered. In that sense, prescription opticals although not entering the body directly, act to modify the light Ray's that enter the human eye in a particular method so that the disease affecting the eye causing blurred vision due to out of focus image can be rectified. The analogy with IV sets is apt here because IV sets serve to deliver drugs in a particular fashion while prescription specs serve to deliver essential light Ray's in a particular modified fashion to cure disease. If IV sets are articles for human consumption, why are prescription spectacles a utility. I can understand cosmetic sun glasses labelled as utility but why prescription spectacles?
Asked 5 years ago
Is water used for bathing considered as article for human consumption? If yes, Here water does not enter the body also.. ? If no, then all definitions of human consumption in google search mention water for bathing or drinking as the foremost example. So, if water which when bathing is considered as article for human consumption, why not prescription glasses that is a treatment for delivering light in a manner that the eye can consume light normally and cure focussing errors?
Asked 5 years ago
Your technical inference and interpretation of law in your favor on the basis of your justification may not have a place in law which has already clearly defined the meaning of human consumption.
Besides properly understanding the concept, if you still would like to proceed with your own argument based on your justification, you may give a try.
You are absolutely correct in your above stand