Central Government vide Circular No. 77/51/2018-GST dated31st December, 2018 clarified the issue related to the effective date of withdrawalfrom the composition scheme as per Rule 6 of the CGST Rules, 2017 in case of :-
A. Where the composition taxpayer has exercised such option to withdraw.
The effective date shall be the date indicated by him in his intimation/application filed in FORM GST CMP-04 but such date may not be prior to the commencement of the financial year in which such intimation/application for withdrawal is being filed.
If at any stage it is found that he has contravened any of the provisions of the CGST Act or the CGST Rules, action may be initiated for recovery of tax, interest and penalty.
B. Where action has been initiated by the tax authorities to deny such option
The effective date of such denial shall be from a date, including any retrospective date as may be determined by tax authorities, but shall not be prior to the date of contravention of the provisions of the CGST Act or the CGST Rules.
As per section 10(5) of the CGST Act, the proceedings would have to be initiated under the provisions of section 73/ 74 of the CGST Act for determination of tax, interest and penalty for the period starting from the date of contravention of provisions till the date of issue of order in FORM GST CMP-07. It is also clarified that the registered person shall be liable to pay tax under section 9 from the date of issue of the order in FORM GST CMP-07.Provisions of section 18(1)(c) of the CGST Act shall apply for claiming credit on inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the date immediately preceding the date of issue of the order