GST CMP-05 explained: notice questioning your composition eligibility

Why CMP-05 is issued

Rule 6(4) allows the officer to issue CMP-05 where there are reasons to believe that a composition taxpayer was not eligible or has contravened the Act or Rules.

• Turnover exceeding the limit in the previous or current year
• Inter-state supplies of goods
• Supplies outside the scheme, such as excluded goods
• Collecting tax on bills or issuing tax invoices
• Not displaying composition status on bills or signboard

What is at stake

If eligibility is denied, the option can be withdrawn from the date of the option or from the date of the event. The business then becomes liable to tax at normal rates for that period. Section 10(5) also provides for penalty, and the tax and penalty are determined through the demand provisions applicable to the period concerned.

How to reply

File CMP-06 within 15 days. Address each allegation with numbers and documents. For a turnover allegation, give a reconciliation showing which receipts are excluded from aggregate turnover. For an inter-state allegation, show the place of supply with invoices and e-way bills. Request a personal hearing.

What happens next

The officer passes an order in CMP-07 within 30 days of the reply, either accepting it or denying the option from the date stated. A denial order can be appealed in APL-01 within 3 months.

Use the hearing to walk the officer through the reconciliation and leave a written note of the points made.

Professional support

Turnover calculations under composition are often disputed. An authorised representative can prepare the reconciliation, the reply and represent you at the hearing.

Get it handled for you

Received a notice like this? Our chartered accountants draft the reply from your records and an authorised representative follows up with the officer, so you do not have to visit the department. Call or WhatsApp +91 63677 44602, or use the form below.

This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.