The Manufacturer Bar: Which Goods Knock You Out of Composition

Manufacturer Bar explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Section 10(2)(e) is one line long and delegates everything. The content sits in a notification that has been amended four times, and it is a manufacturing bar, not a trading bar — a distinction that decides whether an ice cream parlour is in or out.

Section 10(2)(e) disqualifies a manufacturer of goods notified by the Government on the Council's recommendation. The list lives in Notification No. 14/2019-CT dated 07.03.2019, as amended by 43/2019-CT, 4/2022-CT and 16/2022-CT, and covers ice cream and other edible ice, pan masala, tobacco and manufactured tobacco substitutes, aerated water, fly ash bricks, blocks and aggregate, bricks of fossil meals or similar siliceous earths, building bricks, and earthen or roofing tiles. It bars manufacture, not trade — and it also appears in s.10(2A)(d), extended there to notified services.

What the notification covers, and when each entry arrived

The fly ash entry has one amendment worth keeping. As notified by 4/2022-CT it read "fly ash bricks or fly ash aggregate with 90 per cent. or more fly ash content; fly ash blocks". Notification No. 16/2022-CT dated 13.07.2022 removed the 90 per cent condition.

So the content test is gone. Before 13 July 2022 a manufacturer could argue that its aggregate fell below 90 per cent fly ash and stayed eligible. After that date, fly ash bricks and aggregate are caught whatever the content.

Manufacture, not trade

Section 10(2)(e) says "he is not a manufacturer of such goods as may be notified". Every word of the disqualification is about who makes the goods.

An ice cream parlour that buys ice cream and sells it is not a manufacturer, and clause (e) does not reach it. A dairy that makes the ice cream is out.

A brick trader is eligible; a brick kiln is not. After 1 April 2022 the bar caught building bricks and roofing tiles, so a kiln lost the scheme — but the merchant who buys and resells the same bricks did not.

Where the line actually bites is the borderline manufacturer. A sweet shop that churns its own ice cream on the premises is manufacturing ice cream, whatever else it does. Rule 5(1)(e) puts the test in the past tense as a continuing condition — "he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the preceding financial year" — so last year's activity governs this year's eligibility.

The same list, in a different notification, doing a different job

The ₹40 lakh registration exemption for exclusive suppliers of goods under Notification No. 10/2019-CT dated 07.03.2019 is denied to persons making supplies of a very similar list: ice cream and other edible ice, pan masala, tobacco and manufactured tobacco substitutes, fly ash bricks and blocks (added by Notification No. 3/2022-CT, the 90 per cent condition removed by 15/2022-CT), bricks of fossil meals or similar siliceous earths, building bricks, and earthen or roofing tiles.

Two differences decide cases.

Aerated water is on the composition list and not on the registration list. An aerated water manufacturer is barred from composition by 43/2019-CT but is not excluded from the ₹40 lakh exemption by 10/2019-CT.

And the operative verb differs. The composition bar is on manufacture; the registration exclusion is on making supplies of those goods. So a trader in pan masala keeps composition but loses the ₹40 lakh exemption — the reverse of the intuition most people carry.

The notification numbers run in pairs and are easily mixed up. 14/2019-CT is composition, 10/2019-CT is registration; 4/2022-CT amends composition, 3/2022-CT amends registration; 16/2022-CT drops the fly ash condition for composition, 15/2022-CT for registration. Registration thresholds →

The 10(2A) version reaches services too

Section 10(2A)(d) disqualifies a person who is "a manufacturer of such goods or supplier of such services as may be notified by the Government on the recommendations of the Council".

Section 10(2)(e) has no services limb, and it does not need one — a person under s.10(1) is barred from supplying services beyond the second proviso anyway. The service scheme, which exists to permit services, needed the power to carve some out.

No services have been notified under that limb. So in practice s.10(2A)(d) currently operates on the same goods list. Section 10(2A) →

What happens if a composition dealer starts manufacturing a notified good

Rule 6(1) and (2) apply. The option remains valid only so long as every condition in the section and the Chapter is satisfied. From the day manufacture begins, the person is liable to tax under s.9(1), must issue a tax invoice for every taxable supply thereafter, and must file FORM GST CMP-04 within seven days of the event.

Rule 6(6) then permits FORM GST ITC-01 — a statement of the stock of inputs, and inputs contained in semi-finished or finished goods, held on the date the option is withdrawn — within thirty days of withdrawal. That is how a re-entrant to the regular scheme recovers credit on stock in hand. Rule 6 and the CMP-04 chain →

Key takeaways

• The notified list is in Notification No. 14/2019-CT, amended by 43/2019-CT, 4/2022-CT and 16/2022-CT.
• Nine categories: ice cream, pan masala, tobacco, aerated water, fly ash bricks, blocks and aggregate, fossil-meal bricks, building bricks, earthen or roofing tiles.
• The 90 per cent fly ash content condition was removed from 13.07.2022.
• The bar is on manufacture; traders in the same goods remain eligible.
• The near-identical 10/2019-CT registration list omits aerated water and bars making supplies, not manufacture.
• s.10(2A)(d) extends the power to notified services, though none have been notified.

Read next

• Section 10(2)(a) to (f): The Six Gates
• Rule 5: Seven Conditions and Restrictions
• Rule 6: Lapse, Withdrawal and the CMP-04 to CMP-07 Chain
• Section 10(2A): The 3% Scheme for Service Providers

Disclaimer: Positions stated as on 5 September 2026, based on section 10(2)(e) and section 10(2A)(d) of the CGST Act, 2017, Notification No. 14/2019-CT dated 07.03.2019 as amended by Notification Nos. 43/2019-CT, 4/2022-CT and 16/2022-CT, and Notification No. 10/2019-CT dated 07.03.2019 as amended, as recorded in the ICAI Handbook on Composition Scheme under GST (February 2026, 3rd edition).