We explore the phase behavior of a binary colloidal system under external spatially periodic modulation. We perform Monte Carlo simulations on a binary mixture of big and small repulsive Lennard-Jones particles with a diameter ratio of 2:1. We characterize structure by isotropic and anisotropic pair correlation functions, cluster size distribution, bond angle distribution, order parameter, and specific heat. We observe the demixing of the species in the absence of external modulation. However, the mixing of the species gets enhanced with increasing potential strength along with the alignment of the particles transverse to the modulation. The de-mixing order parameter shows discontinuity with increasing modulation strength, characterizing a first order phase transition. The peak in specific heat increases linearly with the size of the system. We also look into the dynamical behavior of the system via computing Mean Square Displacement (MSD) along both parallel and perpendicular directions to the modulation. We observe a decrease in the diffusion coefficient for both types of particles as we increase the strength of the modulation.