Violation of sec 10(2)c) not eligible inter -state transaction

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A GST officer has issued a notice to a composite scheme dealer for alleged inter-state outward supply, which is not permitted under Section 10(2)(c) of the GST Act. The dealer is seeking advice on whether the officer's actions are correct and how to proceed with penalties. The advice includes reviewing e-way bills, responding to the notice with supporting documentation, and potentially withdrawing from the composition scheme and paying applicable taxes and penalties.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)

31 May 2024 Sir,
A registered composite scheme dealer notice issued for State gst officer details mentioned below
S.no. e-way biils no. Doc.no.dt: bill amount
1. Xxxxxxxx. 4. 21-04-20 31585
2. Xxxxxxxx. 10. 20-05-20 98520
Sec 10(2)c) gst act composite dealer is not eligible to inter-state outward supply
Question;
Dealer notice received after procedure

Jaspal Singh

Jaspal Singh (Expert)

01 June 2024 Due process by officer is correct..penal procedure should be complied with and necessary penalties need to be paid

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

13 August 2025 Review e-Way Bills and Invoices:
Confirm whether inter-state supply actually occurred
Respond to the Notice:
If it was a genuine error, explain the situation
Show any supporting documentation (e.g., if the transaction was intra-state by mistake in e-way bill)
File an application for withdrawal from composition scheme, if still active
Pay differential tax, interest, and penalty, if applicable
Consult a GST practitioner or CA to:
Rectify returns
Update registration (from composite to regular)

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