What is CMP-05 Notice?
CMP-05 is a show cause notice issued under Rule 6 of the CGST Rules, 2017, asking a taxpayer registered under the Composition Scheme (Section 10, CGST Act 2017) to explain why their composition option should not be denied.
The officer typically sends CMP-05 when they suspect:
- Aggregate annual turnover has crossed the composition threshold (₹1.5 crore, or ₹75 lakh for special category states)
- The business has made an inter-state outward supply, which disqualifies composition eligibility
- Supply of goods or services that are not eligible under the Composition Scheme (e.g. certain notified services)
- The taxpayer collected tax from customers while under composition, which is not permitted
- CMP-08 quarterly statements or GSTR-4 annual return not filed properly
📋 Key Facts About CMP-05
| Parameter | Details |
|---|---|
| Legal Basis | Rule 6(5), CGST Rules 2017 (Section 10, CGST Act 2017) |
| Issued By | GST Officer |
| Reply Format | FORM GST CMP-06 (filed on GST portal) |
| Reply Deadline | 15 days from notice date |
| If Not Satisfied | Composition option denied in FORM GST CMP-07 (may be retrospective) |
| Consequence of Denial | Regular-rate GST applies from date of denial; ITC reversal may apply |
How to Reply CMP-05 — Step by Step
Identify the exact ground raised
CMP-05 will specify why the officer believes you're ineligible — turnover breach, inter-state supply, or ineligible goods/services. Your reply strategy depends on which ground applies.
Compute your aggregate turnover
Calculate your aggregate annual turnover across all registrations on the same PAN and confirm it is within the ₹1.5 crore limit (₹75 lakh for special category states).
Confirm no disqualifying supply
Review your outward supplies for the period to confirm there was no inter-state supply and no supply of goods/services excluded from the Composition Scheme.
Draft your reply citing Section 10 and Rule 6
Present your turnover computation, confirm CMP-08 and GSTR-4 filings are up to date, and address the specific ground raised point-by-point.
Submit FORM CMP-06 within 15 days
File on the GST Portal against the CMP-05 reference, attach your turnover computation and return filing proof, and submit before the 15-day deadline.
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AI-drafted reply with Section 10 citations, turnover eligibility framing, and proper legal format.
Generate My Free Reply →Key Legal Provisions for CMP-05 Reply
- Section 10, CGST Act 2017 — Composition levy
- Section 11, CGST Act 2017 — Power to grant exemption
- Rule 3, CGST Rules 2017 — Intimation for composition levy
- Rule 5, CGST Rules 2017 — Conditions and restrictions for composition levy
- Rule 7, CGST Rules 2017 — Rate of tax under composition scheme