Central Goods and Services Tax Rules, 2017

Notification No. 3/2017-Central Tax (Dated 19th June 2017)

22nd June, 2017

These rules may be called the Central Goods and Services Tax Rules, 2017 to implement the Central Goods and Services Tax Act, 2017 for the levy and collection of tax as and from the 1st July, 2017 and further amended up to 01st June, 2021.

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R.1 Short title and Commencement

(1) These rules may be called the Central Goods and Services Tax Rules, 2017.

(2) They shall come into force with effect from 22nd June, 2017.

R.2 Definitions

In these rules, unless the context otherwise requires,-

(a) “Act” means the Central Goods and Services Tax Act, 2017 (12 of 2017);
(b) “FORM” means a Form appended to these rules;
(c) “section” means a section of the Act;
(d) “Special Economic Zone” shall have the same meaning as assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
(e) words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act.

R.3 Intimation for composition levy

(1) Any person who has been granted registration on a provisional basis under clause (b) of sub-rule (1) of rule 24 and who opts to pay tax under section 10, shall electronically file an intimation in FORM GST CMP-01, duly signed or verified through electronic verification code, on the common portal, either directly or through a Facilitation Centre notified by the Commissioner, prior to the appointed day, but not later than thirty days after the said day, or such further period as may be extended by the Commissioner in this behalf:

Provided that where the intimation in FORM GST CMP-01 is filed after the appointed day, the registered person shall not collect any tax from the appointed day but shall issue bill of supply for supplies made after the said day.

(2) Any person who applies for registration under sub-rule (1) of rule 8 may give an option to pay tax under section 10 in Part B of FORM GST REG-01, which shall be considered as an intimation to pay tax under the sai

R.4 Effective date for composition levy

(1) The option to pay tax under section 10 shall be effective from the beginning of the financial year, where the intimation is filed under sub-rule (3) of rule 3 and the appointed day where the intimation is filed under sub-rule (1) of the said rule.

(2) The intimation under sub-rule (2) of rule 3, shall be considered only after the grant of registration to the applicant and his option to pay tax under section 10 shall be effective from the date fixed under sub-rule (2) or (3) of rule 10.

R.5 Conditions and restrictions for composition levy

(1) The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely:-

(a) he is neither a casual taxable person nor a non-resident taxable person;
(b) the goods held in stock by him on the appointed day have not been purchased in the course of inter-State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State, where the option is exercised under sub-rule (1) of rule 3;
(c) the goods held in stock by him have not been purchased from an unregistered supplier and where purchased, he paysthetax under sub-section (4) of section 9;
(d) he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;
(e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the preceding finan

R.6 Validity of composition levy

(1) The option exercised by a registered person to pay tax under section 10 shall remain valid so long as he satisfies all the conditions mentioned in the said section and under these rules.

(2) The person referred to in sub-rule (1) shall be liable to pay tax under sub-section (1) of section 9 from the day he ceases to satisfy any of the conditions mentioned in section 10 or the provisions of this Chapter and shall issue tax invoice for every taxable supply made thereafter and he shall also file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days of the occurrence of such event.

(3) The registered person who intends to withdraw from the composition scheme shall, before the date of such withdrawal, file an application in FORM GST CMP-04, duly signed or verified through electronic verification code, electronically on the common portal.

(4) Where the proper officer has reasons to believe that the registered person was not eligible to

Legal Commentary on Central Goods and Services Tax Rules, 2017 – Rule 6

Introduction

Rule 6 of the Central Goods and Services Tax (CGST) Rules, 2017, forms part of the foundational procedural framework for the implementation of the Goods and Services Tax (GST) regime in India. The CGST Rules, 2017 were notified on 19 June 2017 and came into force on 1 July 2017, alongside the CGST Act, 2017. Rule 6 specifically deals with the validity of composition levy and the conditions subject to which a registered person may opt for the composition scheme under Section 10 of the CGST Act, 2017. The composition scheme is a simplified tax payment mechanism designed for small taxpayers, allowing them to pay tax at a fixed rate without the complexity of full GST compliance.

What Does Section 6 Says

Section 6 of the CGST Act, 2017, deals with the authorisation of officers of State tax or Union territory tax as proper officers in certain circumstances. It provides a framework for the Central Government to authorise State or Union Territory tax officers to act as "proper officers" for the purposes of the CGST Act, subject to conditions and limitations as may be specified. The Rule 6 of the CGST Rules, 2017, supplements this by laying down procedural conditions for the validity of composition levy and the circumstances in which a registered person can exercise the option to pay tax under the composition scheme.

The key provisions of Rule 6 include:

Validity of composition levy: Rule 6(1) states that the option exercised by a registered person to pay tax under Section 10 (composition levy) shall remain valid so long as the conditions specified in the rule are fulfilled.
Conditions for composition: The rule prescribes that the registered person must not be engaged in the supply of goods or services that are exempt from tax or nil-rated, and must not have any outstanding tax liability.
Revocation of composition: The rule also provides for the revocation of the composition option in certain circumstances, such as when the registered person's turnover exceeds the threshold specified under the Act.

Essential Ingredients

The essential ingredients for the validity of composition levy under Rule 6 include:

Registration under CGST: The person must be a registered taxable person under the CGST Act, 2017.
Option to pay tax under Section 10: The registered person must have exercised the option to pay tax at the composition rate.
Compliance with conditions: The person must comply with all conditions specified in Rule 6 and any other rules made thereunder.
No exemption or nil-rated supplies: The person must not be engaged in the supply of goods or services that are exempt or nil-rated under the Act.
Turnover threshold: The person's aggregate turnover must not exceed the limit prescribed under the Act and Rules.

Scope of Section

The scope of Rule 6 is limited to the procedural and conditional aspects of the composition levy scheme. It does not deal with the substantive rates of tax, which are prescribed under the CGST Act and notified by the Government from time to time. The rule applies to all registered persons who have opted for the composition scheme and is applicable across all States and Union Territories.

Punishment for Section

The CGST Act, 2017, and the CGST Rules, 2017, provide for penalties for non-compliance with various provisions, including those related to the composition scheme. Under Section 122 of the CGST Act, 2017, penalties can be imposed for offences such as:

Failure to furnish information or returns
Incorrect furnishing of returns or information
Fraud or willful misstatement
Suppression of facts to evade tax

The quantum of penalty varies depending on the nature and gravity of the offence. For minor offences, the penalty may extend to ₹10,000, while for more serious offences involving tax evasion, the penalty can be equivalent to the tax evaded, up to ₹25,000 or more, along with imprisonment in severe cases.

Legal Comments

"Composition Levy Validity" - The option to pay tax under the composition scheme remains valid as long as the conditions under Rule 6 are fulfilled, and the registered person continues to comply with the prescribed turnover limits and other conditions. [Source: CGST Rules, 2017, Rule 6(1)]
"Proper Officer Authorization" - Section 6 of the CGST Act empowers the Central Government to authorize State or Union Territory tax officers as proper officers, ensuring uniform enforcement of GST provisions across jurisdictions. [Source: CGST Act, 2017, Section 6]
"Penalty for Non-Compliance" - Penalties under Section 122 of the CGST Act can be imposed for failure to comply with composition levy conditions, including fines and imprisonment for serious offences. [Source: CGST Act, 2017, Section 122]
"Refund of Excess Tax" - Where a registered person under the composition scheme pays excess tax, they may claim a refund under Sections 53 and 54 of the CGST Act, subject to the procedural requirements under Rule 89(5) of the CGST Rules. [Source: CGST Act, 2017, Sections 53 and 54; CGST Rules, 2017, Rule 89(5)]
"Input Tax Credit Restriction" - Registered persons under the composition scheme are generally not eligible to claim input tax credit, except in limited circumstances as provided under Section 140 of the CGST Act and Rule 117 of the CGST Rules. [Source: CGST Act, 2017, Section 140; CGST Rules, 2017, Rule 117]
"E-Way Bill and Composition" - Even under the composition scheme, registered persons are required to comply with e-way bill requirements under Rule 138 of the CGST Rules for inter-state movement of goods exceeding specified thresholds. [Source: CGST Rules, 2017, Rule 138]
"Audit and Inspection" - Proper officers authorized under Section 6 of the CGST Act can conduct audits and inspections of registered persons under the composition scheme to ensure compliance with procedural and conditional requirements. [Source: CGST Act, 2017, Section 65; CGST Rules, 2017, Rule 101]
"Registration Validity" - A registered person under the composition scheme must maintain a valid registration certificate under the CGST Act, and any violation of the conditions of composition can lead to cancellation of registration under Section 29 of the CGST Act. [Source: CGST Act, 2017, Section 29]
"Natural Justice and Hearing" - Before taking any action under Section 73 or Section 74 of the CGST Act, including revocation of composition status, the proper officer must afford an opportunity of hearing to the registered person, as mandated by principles of natural justice. [Source: CGST Act, 2017, Sections 73 and 74]
"GST Council Recommendations" - The GST Council plays a pivotal role in recommending changes to the composition scheme, including turnover limits and tax rates, which are then notified by the Central Government under Section 164 of the CGST Act. [Source: CGST Act, 2017, Section 164; GST Council recommendations]
"Legal Challenges to Rule 6" - Several writ petitions have challenged the constitutional validity and procedural fairness of various rules and notifications under the CGST framework, including those relating to the composition scheme. Courts have generally upheld the validity of Rule 6 while emphasizing the need for procedural fairness and access to remedies. [Source: Various High Court judgments, including Writ Petitions under Article 226 of the Constitution of India]
"One-Time Revision of TRAN-1" - Rule 117 of the CGST Rules provides for a one-time revision of the TRAN-1 form for availing input tax credit, which is relevant for registered persons who initially opted for the composition scheme but later wish to claim credit for eligible inputs. [Source: CGST Rules, 2017, Rule 117]
"Procedural Fairness in Refund Claims" - Rule 92(3) of the CGST Rules mandates that any application for refund must be granted a hearing before rejection, ensuring procedural fairness in the adjudication of refund claims by registered persons under the composition scheme. [Source: CGST Rules, 2017, Rule 92(3)]
"E-Commerce and Composition" - Registered persons under the composition scheme engaged in e-commerce must comply with additional requirements under Rule 54 of the CGST Rules, including the collection and remittance of tax at the rate of 1% or such other rate as may be notified. [Source: CGST Rules, 2017, Rule 54]
"Cross-Jurisdictional Issues" - The composition scheme under Rule 6 applies uniformly across all States and Union Territories, but the implementation and enforcement may vary depending on the specific State GST Acts and Rules, requiring coordination between Central and State authorities. [Source: CGST Act, 2017, Section 164; Various State GST Acts, 2017]
"Technical Glitches and Relief" - Courts have provided relief to registered persons facing technical difficulties in filing forms or availing benefits under the composition scheme, directing authorities to accept filings and grant benefits where genuine hardship is demonstrated. [Source: Various High Court orders, including Writ Petitions under Article 226]
"Exports and Composition" - Registered persons under the composition scheme exporting goods or services may be eligible for refund of unutilized input tax credit under Section 54 of the CGST Act, subject to the conditions and procedures prescribed under Rule 96 of the CGST Rules. [Source: CGST Act, 2017, Section 54; CGST Rules, 2017, Rule 96]
"Penalty for Fraudulent Claim" - Any fraudulent or willful misrepresentation in availing benefits under the composition scheme can attract penalties under Section 122 of the CGST Act, including imprisonment and fines up to the amount of tax evaded. [Source: CGST Act, 2017, Section 122]
"Validity of Notifications" - The constitutional validity of various notifications and rules under the CGST framework, including those relating to the composition scheme, has been tested in courts, with the general principle being that such notifications must be in conformity with the parent Act and the Constitution of India. [Source: Various constitutional challenges under Article 226]
"Amendment of Rules" - The Central Government has the power to amend the CGST Rules, including Rule 6, from time to time, subject to the recommendations of the GST Council and the provisions of Section 164 of the CGST Act. [Source: CGST Act, 2017, Section 164]
"Judicial Precedents" - Various High Court and Supreme Court judgments have shaped the interpretation and application of Rule 6 and related provisions, emphasizing the principles of natural justice, procedural fairness, and the harmonious construction of the CGST Act and Rules. [Source: Multiple judicial pronouncements, including Writ Petitions, Civil Appeals, and Special Leave Petitions]

R.7 Rate of tax of the composition levy

The category of registered persons, eligible for composition levy under section 10 and the provisions of this Chapter, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table:-

| --- | --- | --- | --- |

| (1) | (1A) | (2) | (3) |

| 1. | Sub-sections (1) and (2) of section 10 | Manufacturers, other than manufacturers of such goods as may be notified by the Government | half per cent. of the turnover in the State or Union territory |

| 2. | Sub-sections (1) and (2) of section 10 | Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II | two and a half per cent. of the turnover in the State or Union territory |

| 3. | Sub-sections (1) and (2) of section 10 | Any other supplier eligible for composition levy under sub-sections (1) and (2) of se

R.8 Application for registration

(1) Every person, other than a non-resident taxable person, a person required to deduct tax at source under section 51, a person required to collect tax at source under section 52 and a person supplying online information and database access or retrieval services from a place outside India to a non-taxable online recipient referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) who is liable to be registered under sub-section (1) of section 25 and every person seeking registration under sub-section (3) of section 25 (hereafter in this Chapter referred to as “the applicant”) shall, before applying for registration, declare his Permanent Account Number, mobile number, e-mail address, State or Union territory in Part A of FORM GST REG-01 on the common portal, either directly or through a Facilitation Centre notified by the Commissioner:

[Provided that a person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer

R.9 Verification of the application and approval

(1) The application shall be forwarded to the proper officer who shall examine the application and the accompanying documents and if the same are found to be in order, approve the grant of registration to the applicant within a period of [seven]¹¹ working days from the date of submission of the application.

[Provided that where-

(a) a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for authentication of Aadhaar number; or

(b) the proper officer, with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner, deems it fit to carry out physical verification of places of business,

the registration shall be granted within thirty days of submission of application, after physical verification of the place of business in the presence of the said person, in the ¹²

manner provided u

R.10 Issue of registration certificate

(1) Subject to the provisions of sub-section (12) of section 25, where the application for grant of registration has been approved under rule 9, a certificate of registration in FORM GST REG-06 showing the principal place of business and additional place or places of business shall be made available to the applicant on the common portal and a Goods and Services Tax Identification Number shall be assigned subject to the following characters, namely:-

(a) two characters for the State code;
(b) ten characters for the Permanent Account Number or the Tax Deduction and Collection Account Number;
(c) two characters for the entity code; and
(d) one checksum character.

(2) The registration shall be effective from the date on which the person becomes liable to registration where the application for registration has been submitted within a period of thirty days from such date.

(3) Where an application for registration has been submit

R.11 Separate registration for multiple places of business within a State or a Union territory

[(1) Any person having multiple places of business within a State or a Union territory, requiring a separate registration for any such place of business under sub-section (2) of section 25 shall be granted separate registration in respect of each such place of business subject to the following conditions, namely:-

(a) such person has more than one place of business as defined in clause (85) of section 2;
(b) such person shall not pay tax under section 10 for any of his places of business if he is paying tax under section 9 for any other place of business;
(c) all separately registered places of business of such person shall pay tax under the Act on supply of goods or services or both made to another registered place of business of such person and issue a tax invoice or a bill of supply, as the case may be, for such supply.

Explanation. - For the purposes of clause (b), it is hereby clarified that where any place of business of a registere

R.162 Procedure for compounding of offences

(1) An applicant may, either before or after the institution of prosecution, make an application under sub-section (1) of section 138 in FORM GST CPD-01 to the Commissioner for compounding of an offence.