CMP-05 GST Composition Dealer Notice - How to Respond

If you're registered under the GST Composition Scheme, a CMP-05 notice is specifically targeted at you, and it means the department has reason to believe you may have violated the scheme's conditions. What Is CMP-05? Form CMP-05 is a show-cause notice issued under Rule 6(4) of the CGST Rules, 2017. It's issued when the proper officer has reasons to believe that a composition taxpayer: - Is not eligible for the Composition Scheme (exceeded turnover limit, dealing in non-eligible goods/services) - Has contravened the scheme's conditions - Has issued tax invoices instead of bill of supply (which composition dealers are not allowed to do) - Has engaged in inter-state supply (not permitted under the scheme) What You Need to Do CMP-05 gives you the opportunity to show cause meaning you must explain why you should not be denied the benefits of the Composition Scheme or why the penalty shouldn't be imposed. Your reply should: - Acknowledge the notice and the grounds raised - Provide your response to each alleged violation - Attach documentary evidence turnover records, bill of supply copies, state-wise sales data - If eligible, demonstrate continued compliance with the scheme conditions If the violation is genuine (e.g., turnover has actually crossed the limit), the practical course is to accept the withdrawal from the scheme, pay the applicable tax, interest, and penalty, and migrate to the regular taxpayer category. Common Defence Points If you're contesting the notice: - The turnover figure cited includes exempt supplies not counted for Composition threshold purposes - All supplies made were intra-state in nature, as evidenced by the attached sales register - No tax invoices were issued; all invoices were bills of supply as required under Rule 49 Noticesahayak drafts your CMP-05 reply correctly, referencing the applicable CGST rules and addressing each ground raised in the notice.