Indirect

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Indirect Taxation

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 INTRODUCTION OF GST

BASICS OF INDIRECT TAXES

Question 1: Differentiate between direct and indirect taxes.

Answer:

Sr. No. Direct Taxes Indirect Taxes

1 It is levied on income earned activities conducted. It is levied on product or
services
2 It is paid, directly by person concerned It is paid by one person but he
recover the same from another
person i.e. person who actually
bear the tax ultimate consumer.
3 It is paid after the income reaches in the hands of tax It is paid before goods/service
payer reaches the tax payer
4 Tax collection is difficult Tax collection is relatively easier
5 e.g. Income tax, wealth tax etc. e.g. GST, excise duty, custom
duty, sale tax, service tax etc.

Question 2: Explain the salient features of indirect taxes.

Answer:

(i) An important source of revenue: Indirect taxes are a major source of tax revenues for
Governments worldwide and continue to grow as more countries move to consumption
oriented tax regimes. In India, indirect taxes contribute more than S0% of the total tax
revenues of Central and State Governments.
(ii) Tax on commodities and services: It is levied on commodities at the time of supply,
manufacture or purchase or sale or import/export thereof, Hence, it is also known as
commodity taxation. It is also levied on provision of services.
(iii) Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes. For
example, GST which is paid by the seller of the goods is recovered from the buyer by
including the tax in the cost of the commodity.
(iv) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the price
of the commodity, most of the time the tax payer pays the same without actually knowing
that he is paying tax to the Government. Thus, tax payer does not perceive a direct pinch
while paying indirect taxes.
 (v) Inflationary: Tax imposed on commodities and services causes an all- round price spiral. In
other words, indirect taxation directly affects the prices of commodities and services and
leads to inflationary trend.
(vi) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base, Majority of the
products or services are subject to indirect taxes with low thresholds.
(vii) Promotes social welfare: High taxes are imposed on the consumption of harmful products
(also known as „sin goods) such as alcoholic products, tobacco products etc. This not only
checks their consumption but also enables the State to collect substantial revenue.
(viii) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich and the
poor have to pay the same rate of indirect taxes on certain commodities of mass
consumption. This may further increase the income disparities between the rich and the
poor.

GOODS & SERVICES TAX

Question 3: Explain concept & principle of GST? Answer:

➢ GST is a Broad -Based Value added tax

➢ GST is a Destination based tax
➢ GST is technically paid by supplier but it is actually borne by consumers
➢ GST is a collected at multiple stage of production and distribution of goods and services in which
taxes paid on inputs are allowed as set off against taxes payable on output.
➢ GST is a tax on the consumption of products from business sources, and not on personal or
hobby activities
➢ Under GST, input tax credit is provided throughout the value chain for creditable acquisition.

Question 4: List the taxes subsumed in GST? (MTP -ICAI) (CA Inter Suggested Nov 18)

Answer:

Central levies subsumed State levies subsumed

• Central Excise Duty & Additional Excise • State surcharges and cesses in so far as
Duties they relate to supply of goods & services
• Service Tax • Entertainment Tax (except those levied
• Excise Duty under Medicinal & Toilet by local bodies)
Preparation Act • Tax on lottery, betting and gambling
• CVD & Special CVD • Entry Tax (All Forms) & Purchase Tax
• Surcharges and Cesses in so far as they • VAT/ Sales tax
relate to supply of goods & services • Luxury Tax
• Taxes on advertisements
• Central Sales Tax
Question 5: What are the taxes that will continue post GST?

Answer:
The taxes that will continue after GST are.
a. Basic Customs Duty
b. Export Duties
c. Stamp Duties & Property Tax
d. Electricity Duties
e. Taxes on professions, trades, callings and employments
f. Excise duty on alcohol for human consumption, petrol, diesel

Question 6: Explain the concept of 'Dual GST' (Nov 17 - CA final)

Answer:
Under dual GST model, GST is imposed concurrently by the Centre and States, i.e. Centre and States
simultaneously tax goods and services. Centre has the power to levy GST on inter-state supplies of
goods and /or services.

Question 7: What does CGST / SGST / IGST mean?

Answer:
CGST: CGST stands for Central Goods & Service tax, it is levied& collected by the central government.
SGST: SGST Stands for State Goods & Service tax, it is levied & collected by the state government.
IGST: IGST stands for Integrated Goods & Service tax, it is levied & collected by the central government.
It is basically charged on inter-state supply of goods or services.

Question 8: Is it required to distinguish whether a particular supply involves supply of goods or services
or both?

Answer:
Yes, The CGST Act, 2017 specifies certain provisions separately for supply of goods and supply of services
viz., Section 12 and Section 13 provides for ascertaining time of supply of goods and time of supply of
services respectively;
Similarly separate provisions have been specified for ascertaining place of supply of goods and place of
supply of services. Further, the rate of tax applicable to supply of goods and supply of services may be
different.

Question 9: What exactly is the concept of destination based tax on consumption?

Answer:
The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which
is also termed as place of supply.

Question 10: Which are the commodities kept outside the purview of GST?

Answer:
i) Supply of alcoholic liquor for human consumption
ii) Petroleum products:- petroleum crude, motor spirit (petrol), high speed diesel
iii) Natural gas
iv) Aviation turbine fuel

Question 11: Who will decide rates for levy of GST?

Answer:
The CGST & SGST would be levied at rates to be jointly decided by the Centre & States. The rates would
be notified on the recommendations of the GST Council.

Question 12: Write a short note on Goods and Services Tax Council. (RTP - ICAI)

Answer:
Article 279A of the Constitution empowers the President to constitute a joint forum of the Centre and
States namely, Goods & Services Tax Council (GST Council).
➢ The provisions relating to GST Council came into force on 12th September, 2016, President
constituted the GST Council on 15th September, 2016.
➢ The Union Finance Minister is the Chairman of this Council and Ministers in charge of
Finance/Taxation or any other Minister nominated by each of the States & UTS with Legislatures
are its members. Besides, the Union Minister of State in charge of Revenue or Finance is also its
member.
➢ The function of the Council is to make recommendations to the Union and the States on
important issues like tax rates, exemptions, threshold limits, dispute resolution etc. The GST
Council has decided the threshold exemption, composition threshold, GST rates, GST legislations
including rules and notifications.

Question 13: What is the guiding principle of GST council?

Answer:
The mechanism of GST council would ensure the following:-
➢ Harmonization of different aspects of GST between Centre & the State as well as among states
➢ Discharge of various functions
➢ Make recommendations on various aspects of GST
➢ Development of harmonized national market for goods & services.
Question 14: Mention the various components under GST Act ?

Answer:
➢ Central Goods & Service Tax Act 2017
➢ State Goods & Service Tax Act 2017
➢ Integrated Goods & Service Tax Act 2017
➢ Union Territory Goods & Service Tax Act 2017

Question 15: What would be the rate structure under GST?

Answer:
The rate structure consists for goods & services will be 0.25, 3, 5, 12, 18 and 28 per cent + cess besides
goods which are taxed at nil rate (fully exempt).
GST Tariff may be referred to, to know tax rate for respective goods and services.

Question 16: What is GSTN?

Answer:
GSTN stands for Goods and Service Tax Network (GSTN). A Special Purpose Vehicle called the GSTN has
been set up to cater to the needs of GST, The GSTN shall provide a shared IT infrastructure and services
to Central and State Governments, tax payers and other stakeholders for implementation of GST.

Question 17: What are the functions performed by the GSTN ?

Answer:
The functions of GSTN are as follows:
➢ Facilitating registration
➢ Forwarding the returns to Central & State authorities
➢ Computation & settlement of IGST
➢ Matching of tax payment details with banking network
➢ Providing various MIS reports to the Central & the State Governments based on the taxpayer
return information
➢ Providing analysis of taxpayers profile
➢ Running the matching engine for matching, reversal & reclaim of input tax credit.

Question 18: Which states have been categorized as special category states under GST?

Answer:
Special provision in GST have been made with respect to states of Arunachal Pradesh, Assam, Jammu
and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and
Uttarakhand.

Question 19: What does Inward Supply mean in GST?

Answer:
Inward Supply in relation to a person shall mean receipt of goods or services or both whether by
purchase, acquisition or both or by any other means with or without consideration.

Question 20: What does Outward Supply mean in GST?

Answer:
Outward supply in relation to a taxable person, means supply of goods or services or both, whether by
sale, transfer, barter, exchange, license, rental, lease, or disposal or any other mode, made or agreed to
be made by such person in the course or furtherance of business.

Question 21: Bring out the salient features of cross utilization of Input Tax Credit (ITC) under the GST
law? (Nov 17 - CA final)

Answer:
Input Tax Credit (ITC) of CGST and SGST/UTGST is available throughout the supply chain,
➢ But cross utilization of credit of CGST and SGST/UTGST is not possible, i.e. CGST credit cannot
be utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be utilized for payment
of CGST.
➢ However, cross utilization is allowed between CGST/SGST/UTGST and IGST, i.e. credit of IGST
can be utilized for the payment of CGST/SGST/UTGST and vice versa.

Question 22: Write a short note on various Lists provided under Seventh Schedule to the Constitution
of India. (ICAI Material)

Answer:
List -I List-II List-III
Union List State List Concurrent List
It contains the matters in It contains the matters in It contains the matters in
respect of which the parliament respect of which the State respect of which both
(Central Government) has the Government has the exclusive Government have the exclusive
exclusive right to make laws. right to make laws. right to make laws.
Question 23: Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws.
(ICAI material)

Answer:

Input Tax Credit (ITC) of CGST and SGSTNTGST is available throughout the supply chain,

➢ A comprehensive tax structure: To cover both goods and services viz. Goods and Service Tax
(GST) addresses these problems. Simultaneous introduction of GST at both Centre and State
levels has integrated taxes on goods and services for the purpose of set-off relief and ensures
that both the cascading effects of CENVAT and service tax are removed and a continuous chain
of set-off from the original producer's point/ service provider's point up to the retailer's level
consumer's level is established.
➢ One Single tax: In the GST regime, the major indirect taxes have been subsumed in the ambit of
GST. The erstwhile concepts of manufacture or sale of goods or rendering of services are no
longer applicable since the tax is now levied on "Supply of Goods andlor services".

Questions from MTP, RTP of ICAI

Question 24: ITC Ltd. is a company manufactures Cigarette and supplies it to the distributor Mr. 2 for
Rs.2, 00,000 on which charged excise as well as GST. Mr. 2 further supplied to the retailer Mr. R for Rs.2,
20,000 and charged GST. Explain whether treatment by ITC Ltd. & distributor Mr. 2 is correct or not

Answer:
In case of Tobacco and Tobacco product manufacture would be subject to GST in addition, the center
would have the power to levy central excise duty on these product. Therefore treatment by ITC Ltd on
supply of the tobacco & tobacco product is correct. Recipient of supply (i.e. Mr. 2) can take ITC only of
GST.
In case of further supply by Mr. 2 to the retailer Mr. R would be subject to GST only, therefore treatment
by Mr. 2 is correct.

Question 25: List any six state levies, which are subsumed in GST. (CA IPC May 18 New)

Answer:
The taxes levied by State and now subsumed under GST are as follows:-
• VAT / Sales tax
• Entertainment tax (unless it is levied by the local bodies)
• Luxury tax
 • Taxes on lottery, betting and gambling
• State Cesses and Surcharges in so far as they relate to supply of goods and services
• Octroi and Entry Tax
• Purchase Tax

Question 26: How does the new payment system benefit the taxpayer & the Commercial Tax
Department?

Answer:
The new payment system benefits the taxpayer and the commercial tax department in the following
ways:-
Benefits to Taxpayer: -
• No more queues and waiting for making payments as payments can be made online 24 X 7
• Electronically generated challan from GSTN common portal in all modes of payment and no use
of manually prepared challan. Paperless transactions.
• Instant online receipts for payments made online.
• Tax consultants can make payments on behalf of the clients.
• Single challan form to be created online, replacing the three or four copy Challan.
• Greater transparency.
Benefits to the Commercial Tax Department:
• Revenue will come earlier into the Government Treasury as compared to the old system.
• Logical tax collection data in electronic format.
• Speedy accounting and reporting.
• Electronic reconciliation of all receipts.
• Warehousing of digital challan.

Question 27: regular scheme and provides the following information for the month of Mr. Ajay a
registered supplier of goods, pays GST under August 2017:

Particulars Rs.
Inter-State taxable supply of goods 10,00,000
Intra-State taxable supply of goods 2,00,000
Intra-State purchase of taxable goods 5,00,000

He has the following Input tax credit at the beginning of August 2017:

Nature ITC Amount in(Rs.)

CGST 20,000
SGST 30,000
 IGST 25,000

Rate of CGST, SGST and 1GST are 9%, 9% and 18% respectively. Both Inward and outward supplies are
exclusive of taxes wherever applicable. All the conditions necessary for availing the ITC have been
fulfilled. Compute the net GST payable by Mr. Ajay for the month of August 2017.

Answer:

Note 1: - Computation of total ITC

Particulars CGST @9% (Rs.) SGST@9% (Rs.) IGST @ 18%(Rs.)

Opening ITC 20,000 30,000 25,000

Add: ITC on Intra-State 45,000 45,000

purchases of taxable goods
valuing Rs.5,00,000

Total ITC 65,000 75,000 25,000

Computation of Net GST payable by Mr. Ajay for the month of August, 2017

S. Particulars Value of CGST 9% SGST 9% IGST 18%

No. supply
1. Intra-State Supply of 2,00,000 18,000 18,000 -
goods
2. Inter-state supply of 10,00,000 - - 1,80,000
goods
Total GST Payable 18000 18000 1,80,000
3. Less : ITC (Note – 1) 18,000 - GST 18,000 - SGST (25,000) –
IGST
(47,000) –
CGST
(57,000) –
SGST
Net GST Payable Nil Nil 51,000

Question 28: Mr. Nimit, a supplier of goods, pays GST under regular scheme. He is not eligible for any
threshold exemption. He has made the following outward taxable supplies in the month of August,
2017:

Intra state supplies of goods Rs.6,00,000

Inter state supplies of goods Rs.2,00,000

He has also furnished following information in respect of purchases made by him from registered
dealers during August, 2017 :-

Intra state purchase of goods Rs.4,00,000

Inter state purchase of goods Rs.50,000

Balance of ITC available at the beginning of the August 2017:-

CGST Rs.15,000

SGST Rs.35,000

IGST Rs.20;000

Note:

(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and
outward supplies.
(ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled. Compute the net GST
payable by Mr. Nimit for the month of August, 2017.

Answer:

Computation of total ITC:

Particulars CGST @ 9%(Rs.) SGST @ 9%(Rs.) IGST @ 18%(Rs.)

Opening ITC 15,000 35,000 20,000

Add: ITC on Intra-State 36,000 36,000
purchases of goods
valuing Rs.4,00,000

Add: ITC on Inter-State 9,000

purchases of goods
valuing Rs.50,000
Total ITC 51,000 71,000 29,000

Computation of net GST payable by Mr. Nimit for the month of August,2017

S. No. Particulars Value of CGST 9% SGST 9% IGST 18%

supply
1. Intra-State supply of 6,00,000 54,000 54,000 -
goods
2. Inter-State supply of 2,00,000 - - 36,000
Goods
 Total GST Payable 54,000 54,000 36,000
3. Less: ITC (Note – 1) 51,000 - CGST 54,000 - SGST 29,000- IGST
7000 - SGST
Net GST Payable 3,000 Nil Nil

Note: - ITC of SGST has been used to pay SGST & IGST, As per order prescribed.

Q 29: Mr. C of Chennai purchased goods at intra state as well at inter-state level by paying SGST Rs.
6000, CGST Rs. 6000 and IGST Rs. 12000. Subsequently Mr. C sold these goods to Mr. H of Hyderabad
(Trader) for Rs. 200000 (IGST applicable @ 18%). Find the net GST liability of Mr. C and Mr. H . Also find
net revenue to the state and state and central government.

Ans:

Mr C of Chennai Mr. H Mr. S

Input tax credit Goods sold = 200000 Hyderabad Secunderabad
(ITC) Goods sold = 300000
IGST 18 % = 36000 (trader) (consumer)
CGST 9% = Rs 27000
SGST= Rs. 6000
SGST 9% = Rs. 27000
CGST=Rs. 6000
IGST= Rs. 12000

Particulars of Mr. C of Chennai Value in Rs. ITC ALLOWED

Output tax IGST 36000
Less: input tax credit (ITC)
IGST 12000 1st IGST
CGST 6000 2nd CGST
SGST 6000 3rd SGST
Net tax paid to central 12000
government by Mr. C

Since, dealer has used SGST of tamil nadu to the extent of Rs. 6000/- in payment of IGST, Tamil nadu
state (i.e. exporting state ) has to transfer Rs. 6000/- to the credit of the centre.
IGST of Rs. 36000/- is availed as credit by Telangana buyer (i.e. Mr. H of Hyderabad ).

Particulars of Mr. H of CGST Rs SGST Rs. ITC ALLOWED

Hyderabad
Output tax 27000 27000
Less: Input Tax Credit
(ITC)
IGST (27000) (9000) 1st IGST
 2nd CGST
3rd SGST
Net tax Paid to state NIL 18000
government by Mr. H
Since, dealer has used IGST of Rs. 9000/- to pay the SGST of Telangana state,the centre has to transfer
Rs. 9000/- to the Telangana state (i.e. importing state).
Revenue to the centre = Rs. 36000-9000=Rs. 27000(i.e. 9%)
Revenue to the state= Rs. 18000+ 9000= Rs. 27000(i.e. 9 %)
Total revenue to the government= 18 % (one nation- one tax)

Q30 :Mr. A registered person under GST located in tamil nadu, sold goods worth Rs. 10000 after
manufacture to Mr. C of Chennai. Subsequent, Mr. C sold these goods to Mr. Hyderabad for Rs
17500, Mr. H being a trader finally sold these goods to customer Mr. S of secunderabad for Rs. 30000.
Applicable rates of CGST = 9%, SGST = 9% and IGST = 18%.
Find the net tax liability of each supplier of goods and revenue to the government.
Ans:
Since, Mr A supplied goods to Mr. C in tamil nadu itself, it is an intra-state sale and both CGST @ 9% and
SGST @ 9% will apply.
Mr. C of Chennai supplied goods to Mr. H of Hyderabad. Since, it is intra-state sale, IGST@18% will
apply.
Mr. H of Hyderabad (Telangana) supplied goods to Mr. S of secunderabad (telangana). Once again it is
an intra-state sale and both CGST @ 9% and SGST@9% will apply.

Statement showing net tax liability of Mr. And revenue to government:

Particulars Value in Rs. CGST in Rs. SGST in Rs. IGST in Rs. Remarks
Mr. A to Mr. C 10000 900 900 NIL Value addition
Rs. 10000
Less :ITC Nil Nil Nil Nil
900 900 Nil
Revenue to Revenue to
centre Rs. 900 tamil nadu Rs.
900

Statement showing net tax liability of Mr. C and revenue to government

Particulars Value in Rs. CGST in Rs. SGST in Rs. IGST in Rs. Remarks
Mr. C to Mr. H 17500 Nil Nil 3150
Less : ITC (900) (900) (1800) 1st CGST
2nd SGST
Net liability of Nil Nil 1350 Value added
Mr. C Rs. 7500 *18%
Since, Mr. C a dealer has used SGST of tamil naidu to the of extent of Rs. 900/- in payment of IGST,
Tamil nadu state (i.e. exporting state) has to transfer Rs. 900/- to the credit of the centre.
Tamil nadu (exporting state) revenue = Rs. 0 (i.e. 900-900)
Total revenue to the centre =Rs. 3150
 (i.e. Rs. 1350+ 900 received from TN + 900 CGST already collected from Mr. A in 1st intra-state
supply)

Statement showing net tax liability of Mr. H and revenue to the government
Particulars Value in Rs. CGST in Rs. SGST in Rs. IGST in Rs. Remarks
Mr. H to S 30000 2700 2700 Nil
Less : ITC (2700) (450) (3150) IGST credit 1st adjust
against IGST, next CGST
and next SGST
Net liability of Nil 2250 Nil
Mr. H
Since, Mr. H a dealer has used IGST of Rs. 450/-to pay the SGST of telangana state, the centre has to
transfer Rs. 450 to the telangana state (i.e. importing state).
Net revenue to the telangana state =Rs. 2700 (i.e. 2250 + 450)
Net revenue to the centre= Rs. 2700 (i.e. 3150-450)
Total revenue to the government =Rs. 5400 (i.e.30000 * 18%)
This is called as one nation one tax.

Q31: Ganesh trading has head office in Telangana and two branches (i.e. Branch office-1 in Telangana
and branch office-2 in Andhra Pradesh). Stock transfer between head office and branch office within the
same state where no separate registrations, GST is not levied. Whereas stock transfer between head
office and branch office at interstate level, IGST will be levied.
Conclusion:
From the above it is evident that revenue of inter-state sale will not accrue to the exporting state and
the exporting state will be required to transfer to the centre the credit of SGST/UTGST used in payment
of IGST.
The centre will transfer to the importing state the credit of IGST used in payment of SGST/UTGST.
The inter-state adjustment will be made by central clearing agency, hence assesses will not be
concerned with such adjustment at all.

Practical problems:
Q 32: Mr. C of Chennai supplied goods /services for Rs. 20000 to Mr. M of Madurai. SGST and CGST rate
on supply of goods and services is 9% each. IGST rate is 18%. Find the following:
a) Total price charged by Mr. C.
b) Who is liable to pay GST?
Ans:

Particulars Value in Rs.

Supply of goods /services 20000
Add: CGST 9% 1800
Add: SGST 9% 1800
a) Total price charged by Mr. C from Mr. M for local supply 23600
of goods or services.
b) Mr. C is liable to pay GST.

1) Location of supplier and place of supply both within the same state of tamil nadu. Therefore,
CGST & SGST applicable.
2) The CGST & SGST charged on Mr. M for supply of supply of goods/services wil be remitted by
Mr. C to the appropriate account of the central and state government respectively.
Q33: Mr. M of Madurai supplied goods /services for Rs. 24000 to Mr. S of Salem. Mr. M purchased
goods /services for Rs. 23600 (inclusive of CGST 9% and SGST 9%) from Mr. C of Chennai. Find the
following:

a) Total price charged by Mr. M for supply of goods/services; and

b) Who is liable to pay GST?
c) Net liability of GST.

Ans

Particulars Value in Rs.

Value charged for supply of goods /services 24000
Add: CGST 9% 2160
Add: SGST 9% 2160
a) Total price charged by Mr. M from Mr. S 28320
for local supply of goods/services.
b) Mr. M is liable to pay GST

Particulars CGST (Rs) SGST(Rs)

Output tax 2160 2160
Less: input tax credit (ITC) (1800) (1800)
(c) 360 360

Note:

1) By giving input tax credit government is not looser of revenue.

Particulars Revenue to central Revenue to state

government (Rs) government (Rs)
Supply of goods/services by 1800 1800
Mr. C to Mr. M
Add: supply of goods 360 360
/services by Mr. M to Mr. S
Total 2160 2160
Inter-state supply of goods or services or both:

Q34 Mr. C of Tamilnadu supplied goods/services for Rs. 20000 to Mr. M of Maharashtra. SGST and CGST
rate on supply of goods and services is 9% each. IGST rate is 18%. Find the following:
a) Total price charged by Mr. C
b) who is liable to pay GST?
Ans:
Particulars Value in Rs.
Supply of goods / services 20000
Add: IGST 18 % 3600
a) Total price charged by Mr. C from Mr. M 23600
for inter-state supply of goods or
services.
b) Mr. C is liable to pay GST
Note:
1) Location of supplier and place of supply are in different states. Therefore, IGST is applicable.
2) The IGST charged on Mr. M for supply of goods/services will be remitted by Mr. C to the account
of the central government.

Q35: Mr. M of Maharashtra supplied goods/ services for Rs. 35000 to Mr. P of Pune. Mr. M purchased
goods and services is 9% each. Find the following:
a) Total price charged by Mr. M for supply of goods/ services and
b) Who is liable to pay GST?
c) Net liability of GST.

Ans:
Particulars Value in Rs.
Value charged for supply of goods/services 35000
Add: CGST 9% 3150
Add: SGST 9% 3150
a) Total price charged by Mr. M from Mr. P 41300
for local supply of goods /services.
b) Mr. M is liable to pay GST

Particulars CGST (Rs.) SGST (Rs.) Remarks

Output tax 3150 3150 IGST credit 1st adjusts
Less: Input Tax Credit (ITC) (3150) (450) against CGST and next
IGST SGST
c) Net tax liability of Nil 2700
Mr. M

Note:
1) By giving input tax credit government is not looser of revenue.

Particulars Revenue to central Revenue to Revenue to

government (Rs.) Tamilnadu state Maharashtra state
government (Rs.) government (Rs.)
(Exporting state) (Importing state)
Supply of goods/services 3600 - -
by Mr. C to Mr. M
 Add: supply of Nil - 2700
goods/services by Mr. M
to Mr. P
Add: Transfer by centre (450) - 450
to Maharashtra state
Total 3150 - 3150

Q 36. Mr. NY, a supplier of goods pays GST under regular scheme. Mr. NY is not eligible for any threshold
exemption. He has made the following outward taxable supplies during September 2017:

Particulars Rate of tax Amount (Rs.)

CGST SGST IGST
Intra state supply of goods
Product A 6% 6% - 800000
Product B 9% 9% - 200000
Interstate supply of goods
Product A - - 12% 300000
Product B - - 18% 150000

He has also furnished the following information in respect of supplies received by him during September
2017:
Particulars Rate of tax Amount (Rs.)
CGST SGST IGST
Intra state supply
of goods
Product A 6% 6% - 200000
Product B 9% 9% - 100000
Interstate supply
of goods
Product A - - 12% 150000
Product B - - 18% 80000

Mr. NY has following ITCs with him at the beginning of September 2017:

Particulars Rs.
CGST 40000
SGST 28000
IGST 44600

NOTE:
1) Both inward and outward supplies are exclusive of taxes, wherever applicable.
2) All the conditions necessary for availing the ITC have been fulfilled.
Compute net GST payable by Mr. NY for the month of September 2017.
Make suitable assumptions wherever required.

Ans: statement showing Net GST liability of Mr. NY for the month of September 2017
 Particulars CGST SGST IGST
Output tax liability 66000 66000 63000
Less: ITC 61000 49000 77000
Net GST liability 5000 17000 Nil
Excess ITC Nil Nil 14000
Adjustment of IGST
credit
1st CGST (5000) (9000) (14000)
2nd SGST
Net GST liability Nil 8000 Nil
Excess ITC c/f Nil Nil Nil

Working note:
1) Statement showing ITC on inward supplies
Particulars CGST SGST IGST
Opening balance 40000 28000 44600
Intra state supply of goods
Product A (6% + 6%) 12000 12000 Nil
Product B (9% + 9%) 9000 9000 Nil
Intra state supply of goods
Product A (12%) Nil Nil 18000
Product B (18%) Nil Nil 14400
Total 61000 49000 77000

2) Statement showing output tax:

Particulars CGST SGST IGST

Intra state supply of goods
Product A (6% + 6%) 48000 48000 Nil
Product B (9% + 9%) 18000 18000
Intra state supply of goods
Product A (12%) Nil Nil 36000
Product B (18%) Nil Nil 27000
Total 66000 66000 63000
 CHAPTER 3 REVERSE CHARGE & PAYMENT BY ECO

Q1. Mr. X being a farmer cultivated cashew nuts not shelled or peeled in the State of Kerala. These goods are
sold to M/s Raj Industries for Rs.250000, a registered person in the State of Kerala. Applicable rate of GST 5
%. M/s Raj Industries has input tax credit CGST Rs.5250 and SGST Rs.5250.
You are required to answer the following:
a) Who is liable to pay GST?
b) Net liability of GST.
Ans:
a) GST is liable to pay by recipient. In the given case M/s Raj Industries is liable to pay GST.
b) Net liability of GST:

Particulars CGST (Rs.) SGST (Rs.) Remarks

Output tax 6250 6250 ITC is not allowed
Less: Input Tax Credit (ITC) NA NA to utilize by recipient
CGST while paying GST
under RCM.
SGST
Net tax liability of M/s Raj
Industries 6250 6250

Q2. Mr. X being an agent of cashew nuts (peeled) in the State of Kerala registered under GST, These goods are
sold to M/s Raj Industries for Rs.250000 a registered person in the State of Kerala. Applicable rate of GST
5%. Mr. X has input tax credit CGST Rs.5250 and SGST Rs.7250.
You are required to answer the following:
a) Who is liable to pay GST?
b) Net liability of GST.

Ans:
a) GST is liable to pay by supplier of goods. In the given case Mr. X is liable to pay GST.
b) Net liability of GST:
Particulars CGST (Rs.) SGST (Rs.) Remarks
Excess credit of SGST is not
Output tax 6250 6250 allowed to adjust against
Less: Input Tax Credit (ITC) (5250) (7250) CGST and vice versa
CGST
SGST
Net tax liability of Mr. X 1000 Nil
Excess credit c/f Nil 2000

Q3. Mr. X being farmer cultivated Bidi wrapper leaves (tendu) in the State of Telangana. These goods are sold to
M/s Sri Vijaya Industries for Rs.212500 a registered person in the State of Kerala. Applicable rate of GST 5%.
You are required to answer the following:
a) Who is liable to pay GST?
 b) Net liability of GST.

Ans:
a) GST is liable to be paid by recipient of goods, in the given case M/s Sri Vijaya Industries.
b) Net liability of M/s Sri Vijaya Industries:

Particulars IGST (Rs.) Remarks

ITC is not allowed to utilize by
Output tax 10625 recipient while paying GST
Less: Input Tax Credit (ITC) NA under RCM.
Net tax liability of M/s Sri Vijaya
Industries 10625

Q4. Mr. Raj being an agriculturist cultivated tobacco leaves in the State of West Bengal and also registered under
GST. These goods are sold to M/s RR Industries for Rs.575000 a registered person in the State of Andhra
Pradesh. Applicable rate of GST 5%. M/s RR Industries has input tax credit CGST Rs.3250 and SGST Rs.3250.
You are required to answer the following:
a) Who is liable to pay GST?
b) Net liability of GST.
Ans:
a) GST is liable to pay by recipient of goods. In the given case M/s RR Industries is liable to pay IGST.
b) Net liability of M/s RR Industries:

Particulars IGST(Rs.) Remarks

output tax 28750 ITC is not allowed to utilized by
Less: Input Tax Credit (ITC) NA recipient while paying GST
under RCM.
Net tax liability of M/s RR 28750
Industries

Q5. M/s Martin Pvt. Ltd. is a distributor or selling agent of lottery tickets, authorized by the State of Kerala. Who
is liable to pay GST and also find GST liability from the following:

Particulars Maha Lakshmi (Printed) Bhaghya Lakshmi (Online)

(Lottery run by State Govt.) (Lottery authorized by State
Govt.)
No. of tickets proposed 250000 300000
Face value of ticket Rs. 10 each Rs.500 each
Guaranteed prize payout @ 60% @ 90%
No. of tickets sold 200000 235000

Ans:

a) M/s Martin Pvt. Ltd. is liable to pay GST.

b) GST liability of M/s Martin Pvt. Ltd. is as follows:
 Particulars Maha Lakshmi (Printed) Bhaghya Lakshmi (Online)
(Lottery run by State Govt.) (Lottery authorized by State
Rs. Govt.)
Rs.
Taxable value of lottery ticket 2232143 91796875
sold
(250000*Rs. 10)* 100/12;
(235000*Rs.500)* 100/128
6% CGST 6% SGST 14% CGST 14% SGST
GST liability 133928.5 133928.5 12851562.5 12851562.5

Note: In case of Maha Lakshmi (printed) State Govt. Sold to agent 250000 tickets.

Q6. M/s Dinesh Industries (registered person under GST) manufacturer cum seller of silk yarn in Coimbatore. In
the month of Oct 2017 supplied 2000 kgs of silk yam at Rs.250 per kg. to M/s Annapoorma Pvt. Ltd. located
in Chennai. Applicable GST rate @ 5%.
You are required to answer
a) Who is liable to pay GST?
b) Net liability of GST.
Ans:

a) GST is liable to pay by recipient of goods. In the given case M/s Annapooma Pvt. Ltd. is liable to pay GST.
b) Net liability of GST.

Particulars 2.5% CGST (Rs.) 2.5% SGST (Rs.)

Output tax 12500 12500
Less: Input Tax Credit (ITC) NA NA
Net tax liability of M/s
Annapooma Pvt. Ltd. 12500 12500

Q7. The customs authority confiscated the gold from Mr. Rafi, at the time of import from Dubai.
Subsequently sold these goods through auction to M/s C Ltd. of Chennai for Rs.2225000. Applicable rate of
GST 18%. You are required to answer the following:
a) Person liable to pay GST.
b) GST liability.
Ans:
a) The person liable to pay GST is M/s C Ltd.
b) GST liability is Rs.400500/-.

Q8. Senior Advocate supplied services of Rs. 150000/- to business entity for Legal services. Business entity has
ITC of Rs.7,000. Senior Advocate has registered office in Chennai. Business entity is located in Madurai.
Find the following:

a) Who is liable to pay GST?

b) Net GST liability?
 Note:
i. All services rendered in the month of Oct 2017.
ii. Turnover of business entity in the previous year Rs.43 lakh.
iii. Applicable rate of GST @ 18%
Ans:
a) Business entity being recipient of service is liable to pay GST.
b) Net GST liability of the business entity:
CGST 9% on Rs.150000 = Rs.13500/-
SGST 9% on Rs.150000 = Rs.13500/-

Note: Recipient is not allowed to utilize ITC against his GST liability. However, after payment of GST
under RCM, the same can be availed as ITC against his outward supplies.

Q9. With reference to the provisions of GST law (w.e.f. 1-7-2017), briefly explain as to who is the person
responsible to pay GST in the following:
(i) Legal services are provided by Senior Advocates to business entities.
(ii) Representation services are provided by Senior Advocates to any business entity.
(iii) Were contracts for representation service provided by the Senior Advocates to any business entity has
been entered into through another advocate or firm of advocates.
Ans:
Service provider Service recipient Nature of service Taxability Person
responsible
1 & 2 Senior Business Entity Representation Taxable supply of Recipient of
Advocate (whose turnover services service service, which is
exceeds Rs. 20 the business
Lakh in P.Y) entity, who is
litigant, applicant
or petitioner.
3) Recipient of service that is the business entity, who is the litigant, applicant or petitioner, is
liable to pay GST.
Note:-Previous year turnover more than Rs.20 lacs (in case of special category States is Rs.10
lakh).

Q10. GT Jewellers Ltd, paid Rs.50 lakhs for sponsorship of Miss India beauty pageant in Mumbai to Stylish &
Co., a partnership firm. It is taxable supply, if so who is liable to pay GST.

Ans: Yes. It is taxable supply of service. GST is liable to pay recipient of supply of service namely GT Jewellers Ltd.
under RCM.

Q11. M/s Shakshi Associates a recovery agent (located in Chennai) empanelled by State Bank of India, Local
Head Office, Nungambakkam, Chennai. The following service supplied M/s Shakshi Associates in the month
of Nov 2017 are as follows:
1) Fee of Rs. 225825 for supply of services in relation to recovery of dues from the defaulting Borrowers at
the place of business/occupation and if such Borrowers is/are unavailable at the place of business then
 at his/her residence.
2) Supply of services with regard to demand for recovery or taking possession of the security from
defaulting Borrowers, for which separate fee charge from the bank Rs.55175/-
Find the following:
a) Is it supply of service.
b) If so, who is liable to pay GST.
c) Find the GST liability
Note: Assume applicable rate of GST for recovery agent services @18%.
Ans:
a) Yes. It is taxable supply of service
b) State Bank of India being recipient of service is liable to pay GST under RCM.
c) GST liability = Rs.50580 (i.e.Rs.225825 + 55175) * 18%)

Q12. Mr. Rafi has written a book on Indirect Taxes which is published by M/s Bharat Law
Publications of New Delhi.
You are required to find the following:
a) Who is liable to pay GST?
b) Rework, if publisher is located in New York, then who is liable to pay GST?
Ans:
a) M/s Bharat Law Publications of New Delhi being recipient of service is liable to pay GST under RCM.
b) If M/s Bharat Law Publications located in New York then it is treated as export of service provided
payment received in convertible foreign currency.
Otherwise, tax will be payable by the author.

Q13. Mr. A.R. Rehaman being a music director (registered person under GST). He made following supplies:
(a) Indigenous handmade musical instruments for Rs.200000.
(b) Composted hello tune and transferred permanently for Rs.3000000.
(c) Pianos for Rs.150000
(d) Percussion musical instruments (like drums, xylophones) for Rs.500000.
Find the GST liability. Applicable rate GST 28%. All transactions took place within the state of Tamil Nadu.

Ans:

Particulars Value in Rs. Remarks

Indigenous handmade musical
instruments Nil Exempted supply of goods.
Composted hello tune and
transferred permanently 3000000 Taxable supply of goods
Sale of Pianos 150000 Taxable supply of goods
Sale of Drums, xylophones 500000 -do-
Total taxable supply of goods 3650000
CGST 14% 511000 (3650000* 14%)
SGST 14% 511000 (3650000 * 14%)
Q14. CA Ram received Rs. 205200 (after TDS @ 10%) from client on 1st Nov., 2017 for taxable services
rendered in the month of July 2017. Find the GST liability. Applicable rate of CGST 9% and SGST 9%.
Ans:
Payment received net of TDS u/s 192J 205200
Add: TDS u/s 194J 19000
Gross value of Bill (i.e. inclusive of GST) 224200
CGST (224200*9/118) 17100
SGST (224200*9/109) 17100

Assume taxable value of supply X

Add: CGST & SGST 0.18x
VALUE OF BILL 1.18x
LESS: TDS @ 10% ON X (u/s Sec 194J of the -0.1X
Income Tax Act, 1961)
NET PAID 1.08X
X (i.e. 205200/1.08)(i.e. taxable value of supply) 190000
TDS u/s 194J 10% on 190000 19000

Q15. Uber operating radio taxi services in India. In the month of Nov 2017, the following services are
rendered by it.
a) Free services provided to new customers who travelled for the first time. However, payment made to
taxi drivers Rs. 1000000.
b) Hire charges collected from customers Rs. 1225500. Payment made to taxi drivers Rs. 1100000.
Uber appointed X Pvt. Ltd., as their representative in India.
You are required to find
a) Who is liable to pay GST.
b) Taxable value of supply.
c) Net GST liability
Note: charges include GST @ 5%.
Ans:
a) X Pvt. Ltd., being recipient of service is liable to pay GST.
b) & (c) Taxable value of supply:

Particulars Value in Rs. Remarks

Free services provided to new 1000000 Reverse charge applicable
customers. However, payment
made to taxi drivers
Hire charges 1225500 Gross value is subject to GST.
Gross value of Bills 2225500
CGST 2.5% 52988 (2225500* 2.5/105)
SGST 2.5% 52988 (2225500*2.5/105)
 Taxable value of supply 2119524

Q16. Raman Hotels supplying only accommodation services in Chennai. Turnover of Raman Hotels is less than
20 Lakhs. Raman Hotels listed hotel on online platform namely Makemytrip.
The following categories of rooms get booked by the Makemytrip company who pay to Raman Hotels after
deducting their commission.
a) Declared Tariff per room (category 1), Non AC Room Rs.950 per Night
b) Declared Tariff per room (category 2), AC Room Rs.1800 per Night.
c) Declared Tariff per room (category 3), AC Room Rs.7000 per Night, where additional bed Rs. 1800 per
Night.
d) Declare Tariff per room (category 4), AC Room Rs.10000 per Night, but amount charged is Rs.7000.
You are required to answer:
(a) who is liable to pay GST and (b) Net GST liability
Ans:
(a) ECO namely MakeMyTrip is liable to pay GST

(b) Particulars Value in Rs. GST Rs. Remarks

a) Declared tariff Nil
Rs. 950
b) Declared tariff Taxable supply. GST @ 12% is
Rs.1800 1800 216 applicable
c) Declared tariff 8800 1584 Taxable supply. Since, declared
Rs.7000 tariff not exceeds Rs.7500,
applicable rate is 18%. However,
GST will be charged on transaction
value.
d) Declared tariff 7000 1960 Taxable supply. Since, declared
value Rs.10000 tariff exceeds Rs.7500, applicable
rate is 28%. However, GST will be
charged on transaction value.
Total 3760
Housekeeping services notified under Section 9(5) of the CGST Act, 2017:

The GST council on January 18th, 2018 announced, reduction of GST rate for housekeeping services from 18% to
5%. This comes as a big relief to Online housekeeping service providers.

Prior to this, the ecommerce platforms offering housekeeping services were mandated to discharge the GST
liability of 18% on behalf of the service providers like electricians, plumbers etc making the services more
expensive on the platform, as compared to offline services. This is because, services provided offline do not have
to pay GST if the total revenue of the service provider is less that Rs.20 lakhs and therefore there are no
registration requirements.

In November 2017, the benefit of revenue threshold limit of Rs.20 lakhs was extended to persons providing
services through e-commerce platforms except housekeeping services provided by unregistered persons on
online platforms as they were covered by another provision under the GST.
w.e.f. 25.1.2018, Small housekeeping service providers such as plumbing, carpentering etc., notified under
section 9(5) of CGST Act, who provide housekeeping services through ECO - GST rate of 5% without input tax
credit.

Q17. Mr. A, a taxable service provider, provided taxable supply of services to Mr. B. The contract of service
entered into between them stipulated that Mr. A will bear all the taxes, duties and other liabilities in
connection with discharge of his obligations. While the service was being provided, an amendment in the
law shifted the liability to pay GST in case of such taxable supply of services from service provider to service
receiver retrospectively, i.e. reverse charge provisions were made applicable.
You are required to answer the following questions with the help of the decided case law(s), if any:

i. Can Mr. B, who is the person liable to pay GST under reverse charge, shift the burden of such GST on Mr.
A by deducting the same from the payment made against the bills raised by Mr. A?
ii. Can Mr. B ask the Revenue to recover GST from Mr. A since the contract of service stipulates that Mr. A
will bear all the taxes, duties and other liabilities in connection with discharge of his obligations?
(CA Final RTP May 2016 modified)
Ans:
i. Yes. As per the Rashtriya Ispat Nigam Ltd, y Dewan Chand Ram Saran 2012 (260) STR 289 (SC), Mr. B can
shift the burden of GST on Mr. A by deducting the same from the payment made against the bills raised
by Mr. A.
ii. No. As per the Delhi Transport Corporation v Commissioner Service Tax 2015 (038) STR 673 (Del), Mr. B
cannot ask the Revenue to recover GST from Mr. A since the contract of service stipulates that Mr. A will
bear all the taxes, duties and other liabilities in connection with discharge of his obligations.

Q18. What does the payment of tax under reverse charge mean?

Answer:
As per section 2(98) of CGST Act, 2017, "reverse charge" means the liability to pay tax by the recipient of supply
of goods or services or both instead of the supplier of such goods or services or both under sec 9(3) or sec 9(4)
of CGST Act or under sec 5(3) or sec 5(4) of the Integrated Goods and Services Tax Act.

Q19. Who is responsible to pay taxes?

Answer:
Generally, the supplier is liable to pay taxes. However, following are certain exceptions:
(a) Reverse charge: Supply of goods or services or both, as may be notified by the Government on the
recommendations of the Council under sec 9(3) or as per sec 9(4) on supplies made by unregistered
person, the tax on which shall be paid by the recipient under reverse charge; and
(b) E-Commerce: Categories of services as may be notified by the Government on the recommendation of
Council the tax on which shall be paid by the electronic commerce operator if such services are supplied
through it.
Q20. What are the different types of supplies which are liable to tax under reverse charge mechanism?
Answer:
As per Section 9 of the CGST Act, 2017 there are two types of supplies which are liable to tax under reverse
charge mechanism which are:-
1. Specified categories of supply of goods or services or both as notified by government on
recommendation of the council as per sec 9(3).
2. Supply of specified category of goods or services or both by a supplier, who is not registered, to a
specified class of registered person as per sec 9(4).

Q21. In accordance with the provisions of GST Act, Give answers to the following pertaining to Reverse
Charge:
(i) Is GST payable for both the components - CGST and SGST (or UTGST)?
(ii) Is GST on reverse charge basis payable on inter-State supply also?
(iii) Is reverse charge applicable on supply of goods also or is it only on supply of services?
(iv) In case supplier eligible to threshold exemption, is reverse charge applicable?

Answer:

(i) Yes, GST in India is a dual-tax and the provisions of the CGST Act are mirrored in SGST/UTGST Act.
(ii) Yes, provisions identical to section 9(3) and 9(4) of the CGST Act are available in section 5(3) and
5(4) of the IGST Act
(iii) Payment of tax on reverse charge is applicable on both goods & services.
(iv) Supplier may not have paid tax due to threshold benefit but this does not excuse recipient from
liability under section 9(4) which is attracted if 'supplier is not registered & recipient is registered.
Thus, even though the supplier is eligible under threshold exemption reverse charge is applicable.
Q22. State person liable to pay GST in the following independent cases provided recipient is located in the
taxable territory: (ICAI Study Material)
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to a business entity.

Answer:
(a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity
located in the taxable territory is payable under reverse charge, in the given case, GST is payable by the
recipient business entity.
(b) GST on sponsorship services provided by any person to any body corporate or partnership firm located
in the taxable territory is payable under reverse charge. Since in the given case, services have been
provided to an individual, reverse charge provisions will not be attracted, GST is payable under forward
charge by the supplier - company.
(c) GST on services provided or agreed to be provided by the Central Government, State Government,
Union Territory, or local authority to any registered person located in the taxable territory is payable
 under reverse charge. Therefore, in the given case, reverse charge provisions will be attracted. GST is
payable under reverse charge by the recipient as per entry No SA of N/N 3/2018- CT (Rate)

Q23. CASE STUDY

From the following information determine the person liable to pay Goods & Service tax both Supplier and
Recipient are located in India -
1) Mr. Atul is an agent of Life Insurance Co. The insurance company pays commission (excluding tax) 6 Lakh
to him. Mr. Atul claims that no GST is leviable on services provided by him as his value of taxable service
does not exceed Rs.20 lakhs.
2) XY2 Ltd. availed services of Vimal Goods transport agency for transportation of goods by road from
factory located in New Delhi to its Jaipur depot and paid freight of Rs.1, 00,000.
3) Ranka Jewellers Ltd. paid So lakhs for sponsorship of Miss India beauty pageant for sponsorship services.
4) Legal services provided by VHB & Co., a partnership firm of New Delhi to Tata Motors Ltd, Mumbai. :
Rs.70, 00,000.
5) Service provided by a director of a company (not in capacity of employee) to the company: 10 Lakh.
6) Infrastructural support services provided by Government to a business entity: 14 Lakh
7) Renting of immovable property services provided by Government to business entity: Rs.18 Lakh.

Answer:
The provisions applicable are as per section 9(3) of CGST Act and 5(3) of IGST Act, the Government via
notification I17/2017 CT and Notification No. 14/2017 of IGST Act.
1. In this case Life Insurance Company will be liable to pay GST on reverse charge basis. Hence, GST
liability shall be Rs.6, 00,000 i.e., on the value of commission. Mr. Atul’s claim that his turnover does not
exceeds Rs.20 Lakhs has no relevance here, because under reverse charge threshold limit is not
available.
2. If GTA pays tax @ 12% with ITC: In such case normal charge is applicable and GTA is liable to pay tax
If GTA pays tax @ S% without benefit of ITC:- Then reverse charge shall be applicable and GST shall be
paid by XY2 Ltd. since it is liable to pay freight for transportation of goods.
3. In this case sponsorship services are received by Ranka Jewellers Ltd. Hence, it will be liable to pay goods
& service tax under reverse charge mechanism.
4. In this case goods & service tax shall be paid by Tata Motors Ltd. as the liability to pay tax is on the
business entity under reverse charge mechanism.
5. In case of any service provided by director of company or body corporate to company the goods &
service tax is payable by company or body corporate.
6. Any service provided by Government or local authority to business entity in a taxable territory the
goods & service tax is payable by business entity.
7. Any service by way of renting of immovable property provided by Government or local authority to
unregistered business entity then goods & service tax is payable by Government.
Q24. CASE STUDY
Vsmart Pvt. Ltd. Pune had appointed a senior advocate Ms Pooja for representation of company's legal matter at
Delhi as regarding to representation of the matter there. Determine the GST liability as who is liable to pay?
Would your answer differ if VSmart Pvt. Ltd. appoints local advocate Mr. Sagar if further appoints Ms. Pooja for
representation.
Answer:
As per section 9(3) of CGST Act, In case of services provided by an individual advocate including a senior
advocate by way of legal services directly or indirectly to any business entity located in the taxable territory. The
liability to pay GST shall be upon the recipient i.e. reverse charge is applicable.
In the given case the business entity to whom the services is rendered shall be liable to pay taxes i.e. Vsmart
Pvt. Ltd. (Pune).
No, liability to pay tax is on Vsmart Pvt. Ltd. Pune even though Ms. Pooja appointed through another advocate
Mr. Sagar.

Q25. CASE STUDY

Yes Bank located in Nagpur, appointed Mr. Mahesh as a recovery agent for collecting outstanding balance
amount of loan from one of its customer. Mr. Mahesh provided service to Yes Bank for which it charged a fee.
Determine the tax implications as per GST Act.
Answer:
As per section 9(3) of CGST act read with Notification No. 13/2017 Central tax (Rate) and Notification
No.10/2017 IGST Act Services supplied by a recovery agent to a banking company in such a case reverse charge
shall be applicable. Thus the liability to pay GST shall be upon the recipient. In the given case Yes Bank shall be
liable to pay GST for services provided by Mr Mahesh as a recovery agent.

Q26. CASE STUDY

Chetan Bhagat a renowned writer and author of 2 States transferred the copyright of his published book 2
States to Balaji telefilm productions Itd for a consideration. Examine the tax implications as per GST Act?

Answer:
As per section 9(3) of CGST Act read with Notification No. 22/2019 Central tax (Rate) and Notification
No.21/2019 IGST Act, Services supplied by an author by way of transfer or permitting the use or enjoyment of a
copyright covered under sec 13(1)(a) of the Copyright Act, 1957 relating to original literary works to a publisher
reverse charge shall be applicable.
Thus in the given case the liability to pay GST shall be upon Balaji Telefilms Productions Ltd. as it is the recipient
of service.

Q27. Mr. Vishal want a loan Rs.10,00,000 & taken a service of individual Mr. Rudra who is a Direct Selling
agent of HDFC bank & bank pay the commission to Mr. Rudra 2% of loan granted to Mr. Vishal for giving a
customer to the bank. Calculate the amount of GST payable if GST @18% & who is liable to pay GST?
Answer:
As per sec 9(3) of CGST Act, In the case of services provided by an individual Direct Selling Agent (DSA) other
than body corporate, partnership or limited liability partnership firm to any banking company or non-banking
financial company, located in a taxable territory, the liability to pay GST shall be upon recipient i.e. reverse
charge is applicable.
In a given case the HDFC bank to whom service is render shall be liable to pay tax.
Calculation of GST payable = Rs.10,00,000 x 2% x 18% = Rs.3,600

Q28. CASE STUDY PMC being a local authority registered under Central Goods and Service Tax Act, 2017 only
for the purpose of deducting tax u/s SI and not engaged in making any taxable supply of goods or services.
PMC availed the transport goods service of RV Transport Company for transportation of goods in a carriage
by road. Determine the tax implications as per GST Act.

Answer:
As per section 9(3) of CGST Act, 2017 read with N/N 13/2017 CT (R) & N/N 10/2017 of 1GST Act, Supply of
service by a goods transport agency (GTA) in respect of transportation of goods by road to- "any person
registered under CGST/SGST/UTGST/IGST Act"
Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by
way of transport of goods in a goods carriage by road to- "local authority which has taken registration under the
CGST Act, 2017 only for the purpose of deducting tax u/s SI and not for making a taxable supply of goods or
services (N/N 29/2018 CT (R) dt. 31/12/2018)" Generally the liability to pay GST in case of service provided by
GTA to notified registered person shall lie on the recipient of service as per reverse charge mechanism, But in
the given case, PMC being a local authority even though registered under CGST Act, not liable to pay tax on
service provided by GTA under reverse charge mechanism as per N/N 29/2018 CT (R) dt. 31/12/2018

Q29. CASE STUDY

The Professionals Security-Pune, a firm of security agency providing services by way of supply of security
personnel to following categories of persons:
i) XY2 Pvt. Ltd., (company registered under CGST Act, 2017), valuing Rs.10 lakhs
ii) Sindh Co-operative Credit Society, Mumbai which is not registered under CGST Act, 2017, worth
Rs.78 lakhs
iii) Department of Central Government located at Bangalore which has taken registration under CGST
Act, 2017 only for the purpose of deducting tax u/s 51 and not for making any taxable supply of
goods or services, valuing Rs.12 lakhs
iv) Pune Municipal Corporation registered under CGST Act, 2017 for the purpose of making taxable
supply of goods or services. The value of service provided was Rs.4 lakhs.
v) Mr. Altaf, from Gujarat (registered under section 10 of CGST Act, 2017) of Rs.2 lakhs
vi) Service provided to Star Industries Ltd., USA, value being 37 lakhs. Determine the taxable value as
well as tax liability of The Professionals Security-Pune assuming CGST @ 9% or SGST @ 9% and 1GST
@ 18%
Answer:

S. No. Category of Person Taxability Taxable Reasons

value
(Rs.)
i. XYZ Pvt. Ltd. Reverse - As per N/N 29/2018; any other than body
(Registered) charge corporate providing security service to
registered person, then registered person
located in taxable territory shall be liable to pay
tax on such service
ii. Sindh Co-op. Credit Forward 8 lakhs Reverse charge will be applicable only if service
Society, Mumbai Charge recipient is registered person and Sindh Co-op.
(Un-Registered) Credit Society, Mumbai is not registered under
CGST Act. Hence The Professionals Security-
Pune will be liable to pay tax on such service

iii Department of Forward 12 lakhs This entry covered in the exception part of N/N
Central Charge 29/2018 and hence tax liability will be on the
Government, - Professionals Security- Pune under forward
Bangalore (reg. charge
only for educting
TDS)
iv Municipal Reverse - RCM will apply if establishment of department
Corporation Charge of CG or SG registered under CGST Act for
(registered and making taxable supply of goods or services.
making taxable
Supply)
v Mr. Altaf, Gujarat Forward 2 lakhs This entry covered in the exception part of N/N
(registered u/s 10) charge 29/2018 and hence tax liability will be on The
Professionals Security –Pune under forward
charge.
vi Star Industries Ltd., Forward 7 lakhs RCM will apply only if service provided to
USA charge registered person located in taxable territory.
As Star Industries located in USA which falls
outside the taxable territory, The Professionals
Security –Pune will be liable to pay tax on such
service
Total 29 lakhs

Tax liability of The Professionals Security - Pune will be as follows:-

S. No. Particulars (Rs. In Lakhs) CGST @ 9% SGST @9% IGST @18%

1. Intra-State Supply 8 72,000 72,000 -
2. Inter-State Supply 14 - - 2,52,000
3. Export 7 - - 1,26,000"
 Total Tax Liability 72,000 72,000 3,78,000

*Note: If The Professionals Security - Pune satisfies the conditions laid down in section 16 of IGST Act, 2017,
then they can avail the benefit of zero-rated supply in case of export service provided to Star Industries Ltd. USA

Q30. Does tax liability u/s 9(5) come within reverse charge? Can any person other than the supplier or
recipient be liable to pay tax under GST?

Answer:
No, definition of reverse charge given in section 2(98) refers only to section 9(3) and section 9(4). Tax payment
by ecommerce operator in case of specified services under section 9(5) would not be a case of reverse charge
but new specie because the ecommerce operator facilitates the supply through the digital network and collects
payment from recipient and passes it on to supplier.
Ecommerce Operator is not a supplier / recipient but he is liable to pay tax u/s 9(5) for notified cases.

Q31. CASE STUDY

A hotel owner provided accommodation in Haryana, through an electronic commerce operator Cool Trips. The
hotel owner is not liable to get registered as per the provisions of section 22(1) of the CGST Act. Who is the
person liable to pay GST in this case? Would your answer be different if the Electronic Commerce Operator Cool
Trips does not have a physical presence in India? (ICAI Study Material)

Answer:
Government may notify [on recommendations of the GST Council] specific categories of services the tax on intra
state or Inter State supplies of which shall be paid through the electronic commerce operator if such services are
supplied through it.
Services by way of providing accommodation in hotels through electronic commerce operator are specified
service for the said purpose.(N/N 17/2017CT).
Thus, person liable to pay GST in this case is the Electronic Commerce Operator Cool Trips. All the provisions of
the GST law shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in
relation to the supply of such services.
Cool Trips does not have a physical presence in India, person liable to pay tax is the person representing the
Electronic Commerce Operator -Cool Trips for any purpose in India.

Q32. CASE STUDY

Mr. X, a Delhi resident, submits a cab request to Speed Cabs for travelling from Delhi to Gurgaon. Speed Cabs is
a mobile application owned and managed by Smart Cab Technologies Ltd. located in India. The application
facilitates a potential customer to connect with persons providing cab service under the brand name of Speed
Cabs.
After Mr. X pays the cab charges using his debit card, he gets details of the driver, Mr. Y and the cab's
registration number. With reference to the Goods & service tax act, discuss who is liable to pay GST in this case.
Will your answer be different, if Speed Technologies Ltd. is located in New York and does not have a
representative in India?
Answer:

As per section 9(5) of CGST Act and S(S) of IGST Act, the Government via notification 17/2017 CT and
Notification No. 14/2017 of IGST Act has notified services the tax on such supplies shall be paid by electronic
commerce operator if such services are supplied through it. Services by way of transportation of passengers by a
radio-taxi, motor cab, maxi cab, and motorcycle is one such service among the notified category.

➢ In the given case above the liability to pay GST shall be upon Smart cab technologies Ltd. located in
India.
➢ In 2nd case if Smart Cab technologies Ltd. located in New York i.e. a non-taxable territory and also does
not have a representative in India then he shall appoint a person in the taxable territory i.e. India for the
purpose of paying tax and such person shall be liable to pay tax.

Q33. Royal Sweet Co., Delhi a registered supplier, has furnished the details of the following few transaction
which took place in November, 20XX:

S. No. Date Particulars Date of invoice Amount (Rs.)

(i) 11.11.20XX Payment made to an advocate in 07.07.20XX 1,25,000
Delhi
(ii) 20.11.20XX Paid sitting fee to Director from 15.10.20XX 75,000
Haryana for meeting held in Delhi
(Inter-State on 15.10.20XX
Supply)

Assume the rates of taxes to be as under: -

Particulars Rate
CGST 9%
SGST 9%
IGST 18%
You are required to compute GST [CGST & SGSTIGST, as the case payable for the month of November, 20XX
along with time of supply of the aforementioned activities] (RTP 2018)

Answer:
Computation of GST payable for the month of November, 20XX
S. No. Particulars Time of supply CGST SGST (Rs.) IGST (Rs.) Interest (Rs.)
(Rs.)
(i) Services from 06.09.20XX 11,25,0 11,25,0 - 244 [Note –
an advocate in [Note – 1 &3 ] 4]
Delhi
(ii) Director’s siting 20.11.20XX [ Note - - 13,500
fee – 2 & 3]
Notes:

1. Services supplied by an individual advocate to any business entity located in the taxable territory is a
notified service on which tax is payable on reverse charge basis by the recipient of services.
2. Services supplied by a director of a company to the said company is a notified service on which tax is
payable on reverse charge basis by the recipient of services.
3. As per section 13 of the CGST Act, 2017, the time of supply of services in case of reverse charge is
earliest of the following:-
(a) Date of payment as entered in the books of account of the recipient or the date on which the
payment is debited to his bank account, whichever is earlier, or
(b) Date immediately following 60 days since the date of issue of invoice. Provisions of time of supply as
provided under section 13 of the CGST Act are also applicable for inter-State supply vide section 20
of the IGST Act.
In view of the aforesaid provisions, the time of supply and due date for payment of tax in the given
cases would be determined as under:
(1) Time of supply of the services is the date immediately following 60 days since the date of issue
of invoice, i.e. 06.09.20XX. The due date for payment of tax is 20.10.20XX with return of
September, 20XX.
(2) Time of supply of service is 20.11.20XX and due date for payment of tax is 20.12.20XX with
return of December, 20XX.
4. The due date for payment of tax in case (i) is 20.10.20XX with return of September, 20XX. However, the
payment of tax is actually made on 11.11.20XX. Thus, payment of tax is delayed by 22 days. In case of
delayed payment of tax, interest @ 18% per annum is payable for the period for which the tax remains
unpaid starting from the day succeeding the day on which such tax was due to be paid [Section 50 of the
CGST Act, 2017 read with Notification No. 13/2017 CT dated 28.06.2017]. In view of the same, in the
given case, interest payable would be as follows:
Amount of interest payable = Rs.22,500 x 18% x 22/365 = Rs.244 (rounded %3D off)

Q34. M/s X & Sons, tax consultant of Zenson Ltd., have advised them that reverse charge mechanism is
applicable only to services. Examine the validity of the advice given by M/s X & Sons.

Answer:

The advice given by MIs X & Sons is not valid in law. The reverse charge mechanism applies to supplies of both
goods and services, as notified by the Government on the recommendations of the GST Council vide section
9(3)/5(3) of CGST/IGST Act, 2017. Notification No. 4/2017-Central Tax (Rate) and 13/2017- Central Tax (Rate)
both dated 28/06/2017 have been issued. Similar notifications have been issued under IGST Act also. Reverse
charge also applies to supplies or specified category of goods or services received by a registered person from
unregistered persons under section 9(4)/5(4) of CGST/IGST Act, 2017.
Q35. Explain the meaning of the term "recipient of supply of goods and/or services" under the CGST Act,
2017.

Answer:

Recipient of supply of goods or services or both, means-

(a) where a consideration is payable for the supply of goods or services or both, the person who is liable to
pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered
or made available, or to whom possession or use of the goods is given or made available; and
(c) where no consideration is payable for the supply of a service, the person to whom the service is
rendered, and
(i) any reference to a person to whom a supply is made shall be construed as a reference to the
recipient of the supply, and
(ii) shall include an agent acting as such on behalf of the recipient in relation to the goods or
services or both supplied.

Q36. State, with reason, person liable to pay GST in each of following independent cases. Assume recipient is
located in taxable territory.
(1) Rental income received by Tamil Nadu State Government from renting an immovable property to
Mannappa Pvt. Ltd. (Turnover of the company was Rs.22 lakhs in the preceding F. Y.)
(2) Legal Fees received by Mr. Sushrut, a senior advocate, from M/s. Tatva Trading Company having
turnover of 50 lakhs in preceding F. Y.

Answer:

(i) GST is payable on reverse charge basis on services supplied by the State Government to a registered
business entity located in taxable territory. However, reverse charge is applicable on supply of
renting of immovable property service by the State Government. Therefore, in the given case,
person liable to pay GST is the recipient of services, i.e., Mannappa Pvt. Ltd.
(ii) GST on legal services supplied by a senior advocate [Mr. Sushrut] to any business entity [M/s. Tatva
Trading Company] located in the taxable territory is payable on reverse charge basis. Therefore, in
the given case, person liable to pay GST is the recipient of services, i.e., M/s. Tatva Trading
Company.

Q37. Mr. Vivek Goyal, director of A22 Pvt. Ltd. Company has received sitting fee amounting to Rs.1 lakh from
AZZ Pvt. Ltd for attending the Board meetings.

Answer:
Notification No. 13/2017 CT (R) dated 28.06.2017 inter alia provides that GST on supply of services by director
of a company to the said company located in the taxable territory is payable on reverse charge basis.
Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., A22 Pvt. Ltd. Company.

Q38. Decide which person is liable to pay GST in the following independent cases, where the recipient is
located in the taxable territory. Ignore the Aggregate Turnover and Exemption available.
(i) Mr. Raghu provided sponsorship services to WE-WIN Cricket Academy, an LLP.
(ii) 'Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm which is
not registered under GST. (CA Inter Suggested Nov 19 New)

Answer:
(i) In case of services provided by any person by way of sponsorship to any body corporate or
partnership firm / LLP, GST is liable to be paid under reverse charge by such body corporate or
partnership firm / LLP located in the taxable territory. Therefore, in the given case, WE-WIN Cricket
Academy is liable to pay GST under reverse charge.
(ii) In case of services provided by Goods Transport Agency (GTA) in respect of transportation of goods
by road to, inter alia, any partnership firm whether registered or not under any law; GST is liable to
be paid by such partnership firm.
Therefore, in the given case, Kapil & Co. is liable to pay GST under reverse charge.
 QUESTION BANK: SUPPLY

Q1. Equipment and instrument sent to manufactures’ factory for repairs and calibration within India
on a returnable basis. Is it supply?
Answer: It is not supply. Since, no sale has taken place. It is enough to issue a challan for
movement of goods without supply.

Q2. X Ltd. Supplied spare parts freely to replace during warranty period. Is it supply and chargeable
to GST?
Answer: It is not supply.
GST is not chargeable if free replacement is provided by a business to customers without
consideration under warranty.

Q3. Penalties levied on late or delayed payment of loans and advances are taxable supply?
Answer: yes. These are taxable under GST.

Q4. There are 4 members in the JV including the operating member and each one contributes Rs.
100 as part of their share. A total amount of Rs. 400 is collected. The operating member
purchases machinery for the JV to be used in oil production.
ANSWER: In given case, the money paid for purchase of machinery is merely in the nature of
capital contribution and is therefore a transaction in money.
It will not be the subject matter of GST.

Q5. There are 4 members in the JV including the operating member and each one contributes Rs.
100 as part of their share. A total amount of Rs. 400 is collected. The operating member
thereafter uses its own machine and performs exploration and production activities on behalf
of the JV.
Answer: The operating member uses its own machinery and is therefore providing ‘service
‘within the scope of supply CGST Act, 2017.This is because in this scenario, the operating member is
recovering the cost appropriated towards machinery and services from the other JV members in
their participating interest ratio.
Therefore, it will attract GST in the hands of operating member.
Conclusion: any transaction involving supply of goods or services or both without consideration is
not a supply unless it is deemed to be a supply under GST law (i.e. Schedule 1 of the CGST Act,
2017, Activities to be treated as supply even if made without consideration).

Q6. Online information and data base access or retrieval services, where import of free services
from google and Facebook by Mr. Ram located in India, without any consideration. Is it subject
to GST?
Answer: these are not considered as supply and hence not attract GST.
Note: GST will be levied only when services are provided with consideration.
Q7. Import (Downloading) of a song for consideration for personal use by Mr. Bharath. Is it supply of
service?
Answer: yes. It is supply of service and IGST will be levied.
Note: Services may be in the course or furtherance of business or not.

Q8. Mr. C of Chennai paid fees for online coaching obtained from a teacher located in USA for
coaching of Accountancy course for his son.
Is it supply? If so, who is liable to pay GST
Answer: Yes. It is supply. Even if receipt of this service is not for business or furtherance of
business.
Mr. C is not liable to pay GST under reverse charge mechanism.
Is it exempt from GST? Since, it is not OIDAR service.

Q9. Ramesh apparel’s in Chennai, Tamil nandu, avails fashion designing services of Rs 500000 from
suresh designs in Singapore.
Is it supply? If so, who is liable to pay GST?
Answer: Yes. it is supply (i.e. import of service).
Ramesh apparels in Chennai being recipient of service is liable to pay IGST.

Q10. Import of some services by an Indian branch from their parent company, in the course or
furtherance of business, without consideration. Is its taxable supply in India?
Answer: Yes. It is a taxable supply in India and hence IGST will be levied.
Note: Import of services by a taxable person from a related person or from any of his other
establishments outside India, in the course or furtherance of business will be subject to GST
even if made without consideration (as per Schedule 1 of CGST Act, 2017 i.e. point no. 4).

Q11. Mr. Raj purchased a car for Business for personal use and after a year sold it to a dealer for
Rs. 2 lacs. Will the transaction be a supply in terms of GST Act?
Answer: This transaction is not a supply. Moreover, supply is made by the individual is not in
the course or furtherance of business. Further, no input tax credit was admissible on such car at
the time of its acquisition as it was meant for non-business use.

Q12. Mr Rahim purchased a car for business use and after 2 years transferred car for personal
consumption to use at home. Will the transaction be a supply in terms of GST Act?
Note: ITC not availed by Mr. Rahim.
Answer:
No, because supply is not made by the individual in the course or furtherance of business.
Further, input tax credit will not be admissible on such car at the time of its acquisition and it is
not be a supply under GST as per Schedule 1.
Q13. M/s A & Co., a sole proprietor, is in the business of selling furniture. Its owner took a set of
furniture to furnish his house permanently. Will the transaction be a supply in terms of GST Act?
Note: ITC on such furniture not availed.
Answer: No, the transfer of the furniture by the owner without consideration is not a supply of
goods, because credit is not allowed in case of personal consumption of business assets under
section 17 (5)(g) of CGST Act.

Q14. M/s B Ltd., is in the business of hotel. He purchases AC for business purpose and after 2
years, he transfers the AC to director without consideration. Will the transaction be a supply in
terms of GST Act?
Note: AC machines on which ITC availed.
Answer: Yes, it shall be a deemed supply (as per schedule 1).

Q15. Pragian has received a sum of Rs. 500000 from his employer on premature termination of
his contract of employment. Pragian needs your advice as to whether such receipts are liable to
GST.
Answer: It is not a supply. As per section 7(2)(a) of CGST Act, 2017 supply excludes services
provided by the employee to the employer in the course of employment (covered under
Schedule 3 of CGST Act, 2017).
Hence, amounts so paid would not be chargeable to GST.

Q16. Mr. Raju, an employee provides his service on contract basis to an associate company of
Vikram enterprises, the employer.
The above activity is being carried out in lieu of specific monetary consideration. Is it supply? If
so, who is liable to pay GST?
Answer: Yes. It is supply of service.
Liable to pay GST is in the hands of associate company of Vikram Enterprises (as per section 9(4)
of the CGST Act, 2017.
Note:
1) Since, Mr. Raju supplied services for consideration to associate company of Vikram
Enterprises but not to his employer.
2) However, section 9(4) of the CGST Act, 2017 is suspended till 31st march, 2018.

Q17. M/s C Ltd. Has 3 branches A, B & C in different states. A in Telangana has run out of stock
and B from Andhra Pradesh transfers its excess stock.
Is it supply of goods? GST will be levied?
Answer: Yes. It is supply of goods and liable to IGST.

Q18. M/s M Ltd. being a garment manufacturer appoints Mr. Ram as an agent, who stores
garments manufactured by M Ltd. and sends to dealers whenever M Ltd. asks Mr. Ram to do so.
Is it a supply?
 Answer: Yes. Transfer of garments from M Ltd. to Mr. Ram is taxable supply under GST.
GST will be levied.

Q19. You are required to answer the following:

1) Whether transfer of tenancy rights to an incoming tenant, consideration for which is in the
form of tenancy premium, shall attract GST when stamp duty and registration charges is
levied on the said premium, if yes what would be the applicable rate?
2) Further, in case of transfer of tenancy rights, a part of the consideration for such transfer
accrues to the outgoing tenant, whether such supplies will also attract GST?
Answer:
1) The activity of transfer of ‘tenancy rights’ is squarely covered under the scope of supply and
taxable per-se. Transfer of tenancy rights, to a new tenant against consideration in the form
of tenancy premium is taxable.
However, renting of residential dwelling for use as residence dwelling against tenancy
premium or periodic rent or both is exempt.
2) As regards services provided by outgoing tenant by way of surrendering the tenancy rights
against consideration in the form of a portion of tenancy premium is liable to GST.

Q20. crown beers India Pvt Ltd., supplies raw material to a job worker Karenna Ltd. for
manufacture of alcoholic liquor for human consumption. After completing the job-work, the
finished product of 5000 beer bottles are returned to crown beers India Pvt Ltd., putting the
retail sale price as Rs. 200 on each bottle (inclusive of duties and taxes).
Karena Ltd., charged Rs. 100 per bottle as job work charges of carrying out of intermediate
production process of alcoholic liquor for human consumption from crown beers India Pvt. Ltd.
Find the GST liability if rate is 18 % (CGST 9 % and SGST 9%) any in the hands of Karenna Ltd.
Answer: carrying out of intermediate production process of alcoholic liquor for human
consumption on job work basis attract GST.

CGST = Rs. 45000

(5000 bottles * 100 * 9%)
SGST =Rs. 45000
(5000 bottles * 100*9%)
Total tax liability of Karenna =Rs. 90000
Ltd.

Note: GST not attract on manufacture of alcoholic liquor. Since, it is the State subject, which will
attract State Excise duty.

Q21. Mr. J, a registered person supplied the following goods to Miss N for further processing on
job work basis:
 S. No. Goods Particulars
1 A Taxable goods under GST
2 B Exempted vide an exemption notification under CGST Act, 2017
3 C Non- taxable under GST

You are required to examine whether the provisions of job work will be applicable to all categories
of goods.
Answer:

S.No. Goods Particulars Job work provisions

1 A Taxable goods under GST Applicable
2 B Exempted vide an exemption notification Not applicable
under CGST Act, 2017
3 C Non-taxable under GST Not applicable

Q22. Renting of vacant land to a stud farm for 150000. It is a supply of service. GST will be
leviable.
Answer: It is supply of service.
GST is liable to pay.

Q23. Leasing of vacant land to a poultry farm for Rs. 76000. It is a supply of service. However,
specifically exempted from GST. It is an agricultural activity.
Answer:
However, specifically exempted from GST.
Note: It is an agricultural activity.

Q24. A builder has entered into agreement to sale a flat (carpet area 1900 sq. ft) to customer. The
additional information is as follows:
a) Price of flat (including apportioned value of cost of land): Rs. 4200000 (includes Prime
Location Charges namely charges for getting sea view Rs. 200000).
b) Charges for providing space for covered parking: 125000.
c) Stamp duty paid for Rs. 360000
The builder received part payment before construction was completed and balance amount was
received after obtaining completion certificate from the corporation. Find the GST liability (CGST 6%
and 6%)?
Answer: It is supply of service. Builder is liable to pay GST.

CGST (4200000+125000+360000) *6% =281100

SGST (4200000+125000+360000) *6% =281100
Total liability = 562200
Note: stamp duty is form part of value of supply u/s 15 (2) (a) of CGST Act, 2017

Q25. ABC Consultancy, registered in Delhi, supplies technical consultancy services to its clients. It
has been providing technical services to CBA Ltd., Delhi since, past two years. Consideration is
settled by CBA Ltd. assignment wise. CBA Ltd. paid Rs. 45 lakhs to ABC Consultancy on 10th
January, 20XX and ABC consultancy agreeing to not provide similar technical services to any
other entity in India or abroad for a period of 8 years. ABC Consulting is of the view that Rs. 45
lakhs are not chargeable to GST.
You are required to examine whether the view taken by ABC Consultancy is valid in law.
Calculate GST liability of ABC Consultancy, if any. The technical services provided by ABC
Consultancy is otherwise chargeable to GST at the of rate 18%. It may be noted that CBA Ltd. is not
ready to pay any further amount to ABC Consultancy in addition to the amount already agreed.
ANSWER:
The view taken by ABC consultancy of Delhi is not valid in law.
As per the paragraph 5(e) of Schedule 2 provides that agreeing to the refrain from an act, or to
tolerate an act or a situation, or to do an act is treated as supply of service.
Thus, any consideration received for agreeing to the obligation to refrain from an act, is subject to
GST.
Since, GST is not separately collected, it will be assumed that it is included in Rs. 45 lakhs.
Rule 35 of CGST Rules, 2017 provides that where the value of supply is inclusive of GST, the tax
amount is determined in the following manner.

Value of taxable supply (Rs.45 Lakhs * 100/118) = Rs. 3813559/-

GST liability CGST = Rs. 45 lakhs * 9/118 =Rs. 343220/-

SGST= Rs. 45 lakhs * 9/118= Rs. 343220/-

Q26. A contract awarded by Bombay Municipal Corporation (BMC) for repair of a particular road
to M/s B Ltd. with terms and conditions that the entire work should be completed within 30
days. However, there is a delay of 10 days to complete the work. BMC charged liquidated
damages of Rs. 120000 and the same recovered from M/s B Ltd. Applicable rate of CGST 9 %
and SGST 9%. Previous year turnover of M/s B Ltd. Rs. 2 crores.
Find the following:
a) Who is liable to pay GST on what account?
b) Total tax liability if any?

Answer:

a) It is supply of service.
b) M/s B Ltd. being recipient of service is liable to pay GST on Rs. 120000 (i.e. Reverse Charge
applicable).

Since, the contractor has performed the contract, but there is a delay of 10 days.

Note:

1) It appears the liquidated damages recovered by local authority for delay in performance in
contract will not be covered under exemption list of GSTs. The contract has been performed
in such cases; GST will be payable on the same.
2) Services provided by Government or a local authority by way of tolerating non –
performance of a contract for which consideration in the form of fines or liquidated
damages is payable to the Government or the local authority under such contract; is
exempted from GST.

Q27. Sham has given his tempos on hire to Mohan Brothers for transportation of foodstuff for Rs.
4000000. He has also transferred the right to use such tempos to Mohan Brothers. Discuss
whether Sham is liable to pay GST on the said transaction.

Answer: It is treated as supply of service. Sham is liable to pay GST.

Q28. Shambhu Pvt. Ltd. was awarded a contract in July 2017 for providing flooring and wall tiling
services in respect of a building located in Delhi by Nath Ltd. As per the terms of contract,
Shambhu Pvt. Ltd. was to provide all the required material for execution of the contract.
However, Nath Ltd. also provided a portion of the material.

Whether the services provided by Shambhu Pvt. Ltd. are subject to GST? If yes, determine the
GST liability of Shambhu Pvt. Ltd. from the following particulars-

Particulars Rs.

1) Gross amount charged by the Shambhu Pvt. Ltd. 600000

2) Fair market value of the material supplied by Nath Ltd. 100000

3) Amount charged by Nath Ltd. for the material (included in (1) above) 60000

Answer: works contract is treated as supply of service.

Gross amount charged by the Shambhu Pvt. Ltd. 600000

Add: fair market value of the 100000

Less: amount charged by Nath Ltd. for the material (60000)

Total value subject to GST 640000

 CGST 9% * 640000 =57600
SGST 9% * 640000 =57600
Total GST liability =115200

Note: The value would have to be in tune with Section 15 (4) of CGST Act, 2017 read with Rule 27 of
CGST Rules, 2017 (i.e. open market value of service) as consideration is not in monetary terms.

Composite and mixed supplies

Q29. Mr. Ram being a dealer in laptops. Sold a laptop bag along with the laptop to a customer,
for Rs.55000. CGST and SGST for laptop @ 18% and for laptop bag 28%. What would be the rate
of tax leviable? Also find the GST liability.

Answer: If the laptop bag is supplied along with the laptop in the ordinary course of business,
the principal supply is that of the laptop and the bag is an ancillary. Therefore, it is a composite
supply and the rate of rate of tax would that as applicable to the laptop.
Hence, applicable rate of GST 18 % on 55000.
CGST is Rs. 4950 and SGST is Rs. 4950.

Q30. Mr. A booked a Rajdhani train ticket, which includes meal. Is its composite supply or mixed
supply?

Answer: Mr. A bundle of supplies. It is a composite supply where the products where the
products cannot be sold separately. The transportation of passenger is, therefore, the principal
supply.
Rate of tax application to the principal supply will be charged to the whole composite bundle.
Therefore, rate of GST applicable to transportation of passengers by rail will be charged by
IRCTC on the booking of Rajdhani ticket.

Q31. Big Bazar offers a free bucket with detergent purchased. Is its composite supply or mixed
supply? Assume rate of GST detergent @ 28 % and bucket @ 18%.

Answer: This is a mixed supply. These items can be sold separately.

Product which has the higher rate, will apply on the whole mixed bundle.

Q32. When does a particular activity attract GST? Explain the scope?
Answer:
As per section 9 of CGST act, GST is leviable on supply of goods / services or both& also
As per section 7 of CGST act, supply includes
 (1) All forms of supply of goods or services or both such as sale, transfer, barter, exchange,
license, rental, lease, or disposal - made or agreed to be made for a consideration by a
person - in the course or furtherance of business
(2) import of services for a consideration whether or not in course or furtherance of business
and
(3) the activities specified in Schedule I, made or agreed to be made without a consideration &
(4) the activities to be treated as supply of goods or supply of services as referred in Schedule II
Thus, all the activities specified above falling under the scope of supply shall attract
GST excluding
(a) those activities as specified in Schedule III.
(b) such activities or transactions undertaken by the Central Government, a State Government
or any local authority in which they are engaged as public authorities, as may be notified by
the Government on the recommendations of the Council,
Shall be treated neither as a supply of goods nor a supply of services.
Services by way of any activity in relation to a function entrusted to a Panchayat under article
243G OR to a Municipality under article 243W of constitution.
Service by way of grant of alcoholic liquor license, against consideration by the State
Government in which they are engaged as public authorities.

Q33. Mention the necessary elements that shall constitute supply under CGST Act? (CA Final
2018)
Answer:
For any activity to qualify as a 'supply', the following elements are required to be satisfied, i.e. –
i) the activity involves supply of goods or services or both
ii) the supply is for a consideration unless otherwise specifically provided under Schedule I
iii) the supply is made in the course or furtherance of business
iv) the supply is made in the taxable territory

Q34. Whether transfer of title and/or possession is necessary for a transaction to constitute
supply of goods? (ICAI Material)
Answer:
Under sec 7(IA) Supply include sale, transfer, barter, exchange, lease, license, rental or disposal
for a consideration in the course of business. Thus, any transaction without transfer of title in
goods also treated as supply. Therefore, Title as well as possession both have to be transferred
for a transaction to be classified as a supply of goods. In case title is not transferred, the
transaction would be classified as supply of service in terms of Schedule II (1)(b) of the CGST
Act.

Author Note: - As per GST Amendment Act, as now clause (d) of sec 7 has been omitted & now
the role of schedule II is only for the purpose of classification of a supply goods or services.
 Thus, only when as per sec 7(1) if it is a supply then schedule II shall be referred for its
classification.

Q35. State the impact of amendment in CGST Act 2018 to sec 7 after insertion of sub-sec (IA) to
sec 7.

Answer:
Before Amendment After Amendment

Sec 7(1) (d) The activities to be treated as Omitted & newly inserted as sub-sec (IA) to
supply of goods or supply of services as sec 7 of CGST Act.
referred to in schedule II.

Including in the definition of supply which Role of Schedule II Only for the purpose of
meant that any activity or transaction in classification as a supply of goods or supply of
schedule II was deemed to be treated as services i.e. once satisfied as a supply in the
supply term of sec 7(1) (a/b/c) of CGST Act.

Person & Deemed Distinct Person

Q36. Explain the term of 'Deemed Distinct Person'

Answer:
The term has not been specifically defined under GST but as per clause (4) & clause (5) of
section 25 of CGST Act, has categorized certain person who shall be treated as distinct persons
which states that:
• A person who has obtained or is required to obtain more than one registration,
✓ whether in one State or Union territory or
✓ more than one State or Union territory shall,
✓ in respect of each such registration, be treated as distinct persons for the
purposes of this Act.
• Where a person who has obtained or is required to obtain registration in a State or
Union territory in respect of an establishment, has an establishment in another State or
Union territory, then such establishments shall be treated as establishments of distinct
persons for the purposes of this Act.

Q37. CASE STUDY: Smart Pvt. Ltd. has head office located in Bangalore (Karnataka). However,
the branch of Smart Pvt. Ltd. is located in state of Gujarat. Will they fall under the ambit of
deemed distinct person under GST Act?
 Answer:
As per clause (4) of section 25 of CGST Act, Smart Pvt. Ltd. shall be required to obtain a
separate registration in State of Karnataka & Gujarat in respect of its head office & branch
respectively. Thus, head office & branch shall be treated as distinct persons.

Q38. CASE STUDY: Shreya Ltd. is having an establishment in Goa. It has another establishment in
the Union Territory of Chandigarh. Will they be treated establishments of distinct persons under
GST Act?
Answer:
As per clause (S) of section 25 of CGST Act, Shreya Ltd. shall be required to obtain separate
registration in Goa & Chandigarh in respect of both the establishments & shall be treated as
distinct establishments.

Supply in the Course of Business

Q39. CASE STUDY: An individual buys a car for personal use and after a year sells it to a car
dealer. Will the transaction be a supply in terms of CGST/SGST Act? Give reasons for the
answer. (CBIC FAQ)
Answer:
No, because supply is not made by the individual in the course of furtherance of business
further, no input tax credit was admissible on such car at the time of its acquisition as it was
meant for non-business use.

Q40. Whether following activities treated as supply.

(a) Sundaram Acharya, a famous actor, paints some paintings and sells them. The consideration
from such sale is to be donated to a Charitable trust 'Kind Human'.
(b) A Resident Welfare Association provides the service of depositing the electricity bills of the
residents in lieu of some nominal charges.
Answer:
(a) As per sec 2(17) Business includes vocation, Hence the sale of paintings by the actor
qualifies as supply even though it is a onetime occurrence.
(b) As per sec 2(17) Business includes provision by club association society of the facilities or
benefit to its members for a subscription or any other consideration. Hence Provision of
service by a club or association or society to its members is treated as supply his is included
in the definition of "business'.

Goods or Service Under GST

Q41. Define the following term as in accordance with GST

 i) Goods
ii) Services

Answer:
As per section 2(52) of CGST Act, 2017 as under: -
i) Goods: - "Goods" means every kind of movable property
➢ Other than
✓ money &
✓ securities
➢ but includes
✓ actionable claim
✓ Growing crops, grass and things attached to or forming part of the land
which are agreed to be severed before supply or under a contract of
supply.
ii) As per section 2(102) of CGST Act, 2017 "services" means
➢ anything other than goods, money and securities
➢ But includes activities relating to the use of money or its conversion by cash or by any
other mode, from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged.
➢ Explanation: - For removal of doubts, it is hereby clarified that the expression
"Services" includes facilitating or arranging transaction in securities.

Consideration for Supply

Q42. Explain the term consideration?

Answer:
As per section 2(31) of CGST Act, 2017, "consideration" in relation to the supply of goods or
services or both includes
(a) Any payment made or to be made, whether in money or otherwise, in respect of, in
response to, or for the inducement of, the supply of goods or services or both, whether by
the recipient or by any other person but shall not include any subsidy given by the Central
Government or a State Government;
(b) The monetary value of any act or forbearance, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient or by any
other person but shall not include any subsidy given by the Central Government or a State
Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be
considered as payment made for such supply unless the supplier applies such deposit as
consideration for the said supply.
Q43. Determine whether the following terms fall under the ambit of 'Consideration'
i) Reliance JIO offers free mobile handset on payment of security deposit worth Rs.1500/-
which is fully refundable.
ii) Ishan a customer purchases a gold necklace weighing 275 gms from PN gadgil jewel
showroom in exchange sells her old gold articles weighing 200 gms and pays differential
amount in cash.
iii) RC cricket association Chennai, gifts a motor bike to Rahul as inducement to join their
cricket club.
iv) XYZ Ltd. is manufacturing fertilizers used for agriculture purpose. State govt. has given
30% subsidy on sale of such fertilizer.
v) ABC and Co. a trading concern, has supplied the product X to Mr. Y at subsidize rate of
Rs.30,000 (Open market value of such goods is Rs.45,000). The supplier of ABC and Co.
has given the subsidy to it to compensate for the price difference.

Answer:
i) No, As the amount of deposit in the given case is not applied by the supplier towards the
mobile handset provided. No levy of GST
ii) In this case there exist two forms of supply i.e. Sale of gold necklace by jeweller to the
customer - This falls under the ambit of supply as such sale by the jeweller is in course of
his business, thus the consideration here is partly in kind & in money for differential gms
i.e. 75 gms paid by customer. GST shall be levied on the value determined as per open
market value for 275 gms of gold necklace.
Sale of old gold articles by customer to jeweller - This falls out of purview of supply as the sale
by customer is not in course of business. Thus, does not fall under the ambit of consideration
hence no GST
iii) Yes, as supply of motorbike is in response to an offer to join the cricket club. GST shall be
levied
iv) As per section 2(31) of CGST Act, pertaining to 'consideration' clearly excludes the value
of subsidy received from the Central Government or State Government. Thus, in the
given case the amount of subsidy shall be excluded from the value of consideration.
v) As per section 2(31) of CGST Act, pertaining to 'consideration' clearly excludes the value
of subsidy received from the Central Government or State Government. But in given
case subsidy is given by the supplier and not by Govt. Hence subsidy is treated as
consideration.

Schedule - I: Deemed supply without consideration

Q44. Whether supply of goods or services without consideration is liable to tax?

Answer:
Normally as per Sec 7(1) (a) supply of goods or services for consideration is liable to GST. The
activities enumerated in Schedule I will qualify as supply even if made without consideration,
Accordingly, such supplies in the absence of consideration are liable to tax. To illustrate, following
are the activities which will qualify as supply in the absence of consideration and eventually would
be liable to tax:
1. Permanent transfer or disposal of business assets where input tax credit has been availed on
such assets.
2. Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, when made in the course or furtherance of business: Provided that
gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both.
3. Supply of goods-
(a) by a principal to his agent where the agent undertakes to supply 3. such goods on behalf
of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf
of the principal. Import of services by a person from a related person or from any of his
other establishments outside India, in the course or furtherance of business.

Q45. Whether following transaction treated as supply.

a) A cloth retailer gives clothes from his business stock to his friend free of cost.
b) A dealer of air conditioners permanently transfers an air conditioner from his stock in trade,
for personal use at his residence.

Answer:
a) As per para 1 of schedule I v/s 7 (I) (c) permanent transfer or disposal of business assets
where ITC has been availed on such assets. Business assets also include stock in trade.
Hence In this case, transfer of business stock would amount to 'supply' if he had claimed
input tax credit on his purchase of the business asset.
b) The transaction will constitute a supply as it is a permanent transfer disposal of business
assets. The only condition is that input tax credit should have been availed on such assets.

Q46. Daksh gold Pvt. Ltd. On occasion of Diwali distributes gift hamper to its employee worth
Rs.3, 00,000. Does it qualify as supply? Would your answer be different if gifts of Rs.42,000 have
been given to an employee?
Answer:
As per section 7(1) (c) read with Schedule I of CGST Act, 2017, Supply of goods or services
between related persons is treated as supply even if it is without consideration. As per
explanation to section IS of CGST Act 2017, persons shall be deemed to be as "related persons"
if such persons are employer and employee. Thus, Diwali gifts to employee worth Rs.3,00,000,
will qualify as supply and such supply would be leviable to GST. If gift of 42,000 is given instead
of Rs.3,00,000, the same will not qualify as supply since it has been specifically provided that
 gifts not exceeding Rs.50,000 in value in a financial year by an employer to an employee shall
not be treated as supply of goods or services or both.

Q47. Raghu Bir transfers 1000 shirts from his factory located in Lucknow to his retail showroom
so that the same can be sold from there. The factory and retail showroom of Raghu Bir Fabrics
are registered in the States where they are located Although no consideration is charged, supply
of goods from factory to retail showroom constitutes supply.
Answer:
As per para 2 of schedule I uls 7(1) Supply of goods or services between distinct person vs. 25
made in the course or furtherance of business without consideration shall be treated as supply.
Hence, the factory and retail showroom of Raghu Bir Fabrics are registered in the States where
they are located Although no consideration is charged, supply of goods from factory to retail
showroom constitutes supply.

Q48. Mr. Veer is a supplier of goods located in Mumbai has appointed Mr. Rudra to procure
goods based on a specification given by him. As the same kind of goods are not available in area
of Mr. Veer & So on his behalf Mr. Rudra buys the specified goods from M/s XY2 Ltd. and for
this activities invoice is issued in the name of principal. Whether it is to be treated as a supply
under GST? Would your answer differ if invoice is issued in name of an agent Mr. Rudra?
Answer:
Legal Provision: - As per sec 7 read with Para 3 of Schedule I of CGST Act, 2017
Supply of goods-
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of
the principal. All the activity carried by agent where agent issues their own invoice are
included. Is covered under the scope of supply, however as per recent clarification issued by
CBIC via Circular No. 57/31/2018-GST
where invoice for further supply is being issued by agent in his name, then it would
be covered under schedule I para 3.
Discussion: -
As per the aforesaid provisions in the given case above, Mr. Rudra has been appointed just to
procure the goods on behalf of Mr. Veer (Principal) and is issuing invoice also in name of Mr. Veer &
and has in no way involved himself in the supply or receipt of the goods. Hence, in accordance with
the provisions of this Act, Mr. Rudra is not an agent of Mr. Veer for supply of goods in terms of
Schedule I.

Schedule II: Activity to be treated as supply of goods or supply

of services

of services
Q49. Is it important to distinguish between supply of goods and services?
Answer:
Yes. The CGST Act, 2017 specifies certain provisions separately for supply of goods and supply
of services viz., Section 12 and Section 13 provides for ascertaining time of supply of goods and
time of supply of services respectively; similarly separate provisions have been specified for
ascertaining place of supply of goods and place of supply of services.

Further, the rate of tax applicable to supply of goods and supply of services may be different.
Accordingly, it is important to distinguish whether a particular transaction involves supply of
goods or supply of services.

Q50. State whether the following supplies would be classified as supply of goods or supply of
services as per Schedule Il of the CGST Act:
(a) Renting of immovable property
(b) Goods forming part of business assets are transferred or disposed of by/under directions of
person carrying on the business, whether or not for consideration.
(c) Transfer of right in goods without transfer of title in goods.
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a
future date.
Answer:
The above activities are in relation to goods or services or both but in order to be classified as
supply it must be included in the scope of supply as per sec 7 of CGST Act
(a) Supply of services
(b) Supply of goods
(c) Supply of services
(d) Supply of goods

Q51. Whether goods supplied on hire purchase basis will be classified as supply of goods or
supply of services? Give reason
Answer:
As per sec 7, goods supplied on hire purchase basis shall be treated as supply of goods as there
is transfer of title and the classification as "supply of goods" shall be as per Schedule II.

Schedule III: Activity not treated as Supply

Q52. Enumerate the activities or transactions which shall be treated neither as a supply of goods
nor a supply of services. (MTP - ICAI)
Answer:
 Schedule III in the CGST Act is akin to the negative list under the service tax regime. This
schedule specifies transactions/ activities which shall be neither treated as supply of goods nor
a supply of services.
1. Services by an employee to the employer in the course of or in relation to his
employment.
2. Services by any court or Tribunal established under any law for the time being in force.
3. (a) Functions performed by the Members of Parliament, Members of State Legislature,
Members of Panchayats, Members of Municipalities and Members of other local
authorities
(b) Duties performed by any person who holds any post in pursuance of the provisions
of the Constitution in that capacity; or
(c) Duties performed by any person as a Chairperson or a Member or a Director in a
body established by the Central Government or a State Government or local authority
and who is not deemed as an employee before the commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the
deceased.
5. Sale of land and, subject to paragraph 5(b) of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling.

Q53. CASE STUDY

Determine whether the following activities fall under the purview of supply as per section 7 of CGST
Act, 2017: -
i) Mr. Raj hires an ambulance for transport facility of a deceased person for performing
funeral rituals
ii) Mr. S enters its an agreement for sale of land to Mr. R for a consideration
iii) M/s ABC developers sold fully furnished building to Mr. Sagar for a valuable
consideration
Answer:
i) As per section 7 read with Schedule III para 4 of CGST Act, Services of funeral including
transportation of the deceased are out of scope of supply. Thus, there shall be no levy of
GST on such activity.
ii) As per section 7 read with Schedule III para 5 of CGST Act, Sale of land is out of scope of
supply and hence there shall be no levy of GST on such activity.
iii) As per section 7 read with Schedule III para 5 of CGST Act, Sale of building is out of
scope of supply and hence there shall be no levy of GST on such activity.

Q54. Mr. Raj purchase goods from MIs XYZ Ltd. The goods received by Mr. Raj is not as per his
specification given by him to M/s XYZ Ltd. Mr. Raj files a complaint in customer disputes
redressal commission and pays fee of 2000 for registration of his complaint. Explain whether
GST leviable on the fee charged for registration of complaint?
 Answer:
Legal Provision: - As per sec 7 of CGST act read with schedule III of CGST Act, Services by any
court or Tribunal established under any law for the time being in force is neither a supply of
goods nor services

Clarification: - As per circular no. 32/06/2018 GST dt 12/02/2018 Consumer Disputes Redressal
Commissions (National/ State/ District) may not be tribunals literally as they may not have been
set up directly under Article 323B of the Constitution. However, they are clothed with the
characteristics of a tribunal.
In view of the aforesaid, it is hereby clarified that fee paid by Mr. Raj in the Consumer
Disputes Redressal Commissions are not leviable to GST. Any penalty imposed by or amount
paid to these Commissions will also not attract GST.

Import of Services

Q55. Discuss the taxability of import of services under GST. (RTP - ICAI)
Answer:
As per section 7(1)(b) of CGST Act, 2017 supply includes the importation of services for a
consideration whether or not in the course or furtherance of business. Thus, import of services
with consideration is taxable in both of the following situations:
• in course or furtherance of business
• not in course or furtherance of business
Further, Schedule I of CGST Act, inter alia, stipulates that import of services by a taxable person
from a related person or from his establishments located outside India is treated as "supply"
even if made without consideration if it is provided in the course or furtherance of business.

Q56. Ramaiya, a proprietor, has received the architect services for his house from an architect
located in New York at an agreed consideration of$ 5,000 Whether treated as import service?
Answer:
As per 7(1) (b) of CGST act, 2017 supply includes import of service for consideration whether or
not in the course or furtherance of business. Hence the import of services by Ramaiya is supply
under section 7(1) (b)though it is not in course or furtherance of business.

Q57. Examine whether the following activities would amount to supply under section 7 of the
CGST Act:
(a) Damodaran Charitable Trust, a trust who gets the eye treatment of needy people done free
of cost, donates clothes and toys to children living in slum area.
(b) Surekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these
establishments are registered in respective States. Finished goods are sent from factory in
Delhi to the Mumbai depot without consideration so that the same can be sold.
 (c) Raman is an Electronic Commerce Operator in Chennai. His brother who is settled in London
is a well-known lawyer. Raman has taken legal advice from him free of cost with regard to
his family dispute.
(d) Would your answer be different if in the above case, Raman has taken advice in respect of
his business unit in Chennai?

Answer:
(a) Section 7 of the CGST Act, inter alia, provides that supply must be made for a consideration
except the activities specified in Schedule I and in course or furtherance of business. Since,
both these elements are missing, donation of clothes and toys to children living in slum area
would not amount to supply under section 7 of the CGST Act.
(b) Schedule I of CGST Act, inter alia, stipulates that supply of goods or services or both
between related persons or between distinct persons as specified in section 25, is supply
even without consideration provided it is made in the course or furtherance of business.
Further, where a person who has obtained or is required to obtain registration in a State in
respect of an establishment, has an establishment in another State, then such
establishments shall be treated as establishments of distinct persons [Section 25 of the
CGST Act). In view of the same, factory and depot of Surekha Manufacturers are
establishments of two distinct persons. Therefore, supply of goods from Delhi factory of
Surekha Manufacturers to Mumbai Depot without consideration, but in course/furtherance
of business, is supply under section 7 of the CGST Act.
(c) Schedule I of CGST Act, inter alia, stipulates that import of services by a person from a
related person located outside India, without consideration is treated as supply if it is
provided in the course or furtherance of business. Explanation to section 15, inter alia,
provides that persons shall be deemed to be "related persons" if they are members of the
same family. Further, as per section 2(49) of the CGST Act, 2017, family means –
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or
mainly dependent on the said person. In the given case, Raman has received free of
cost legal services from his brother. However, in view of section 2(49) (ii) above,
Raman and his brother cannot be considered to be related as Raman's brother is a
well- known lawyer and is not wholly/mainly dependent on Raman. Further, Raman
has taken legal advice from him in personal matter and not in course or furtherance
of business. Consequently, services provided by Raman's brother to him would not
be treated as supply under section 7 of the CGST Act read with Schedule I.
(d) In the above case, if Raman has taken advice with regard to his business unit, services
provided by Raman's brother to him would still not be treated as supply under section 7 of
the CGST Act read with Schedule I am although the same are provided in course or
furtherance of business, such services have not been received from a related person.

Composite & Mixed supply

Q58. What is the tax treatment of composite supply and mixed supply under GST?
Answer:
Composite supply shall be treated so supply of the principal supply. Mixed supply would be
treated as supply of that particular goods or services which attracts the highest rate of tax.

Q59. Determine whether the following supplies amount to composite supplies:

(a) A hotel provides 4 days-3 nights package wherein the facility of breakfast and dinner is
provided along with the room accommodation.
(b) A toothpaste company has offered the scheme of free toothbrush along with the
toothpaste. (ICAI Material)
Answer:
Under composite supply, two or more taxable supplies of goods or services or both, or any
combination thereof, are naturally bundled and supplied in conjunction with each other, in the
ordinary course of business, one of which is a principal supply [Section 2(30) of the CGST Act].
In view of the same,
(a) since, supply of breakfast and dinner with the accommodation in the hotel are naturally
bundled, said supplies qualify as 'composite supply'.
(b) since supply of toothbrush along with the toothpaste are not naturally bundled, said
supplies do not qualify as 'composite supply'.

Q60. A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these
items can be supplied separately and is not dependent on any other. It shall not be a mixed
supply if these items are supplied separately
Answer:
As per sec 2(74) mixed supply means two or more individual supplies of goods or services or
any combination thereof supplied together where such supply does not constitute a composite
supply. Each of these items can be supplied separately and is not dependent on any other. It
shall not be a mixed supply if these items are supplied separately.

Q61. A shopkeeper selling storage water bottles along with refrigerator. Bottles and the
refrigerator can easily be priced and sold independently and are not naturally bundled. So, such
supplies are mixed supplies.
Answer:
As per sec 2(74) mixed supply means two or more individual supplies of goods or services or
any combination thereof supplied together where such supply does not constitute a composite
supply. Bottles and the refrigerator can easily be priced and sold independently and are not
naturally bundled. So, such supplies are mixed supplies.
 Questions from RTP & MTP of ICAI

Q62. Sahib Sales, an air-conditioner dealer in Janakpur, Delhi, needs 4 air-conditioners for his
newly constructed house in Safdarjung Enclave. Therefore, he transfers 4 air- conditioners [on
which ITC has already been availed by it] from its stock, for the said purpose. Examine whether
the said activity amounts to supply under section 7 of the CGST Act, 2017.
Further, a Janakpur resident, Aakash, approached Sahib Sales. He sold an air- conditioner to
Sahib Sales for Rs.5,000. Aakash had bought the said air-conditioner six months before, for his
residence. Does sale of the air conditioner by Aakash to Sahib Sales amount to supply under
section 7 of the CGST Act, 2017? (RTP 2018)
Answer:
Section 7 of the CGST Act, 2017 stipulates that in order to qualify as supply:
(a) Supply should be of goods and/or services.
(b) Supply should be made for a consideration.
(c) Supply should be made in the course or furtherance of business.
Further, Schedule I of the CGST Act, 2017 illustrates the activities to be treated as supply
even if made without consideration. One such activity is permanent transfer or disposal of
business assets where input tax credit has been availed on such assets, i.e. said activity is to
be treated as supply even if made without consideration. In view of said provisions,
permanent transfer of air conditioners by Sahib Sales from its stock for personal use at its
residence, though without consideration, would amount to supply.
However, sale of air-conditioner by Aakash to Sahib Sales will not qualify as supply under
section 7 of the CGST Act, 2017 as although it is made for a consideration, but it’s not in the
course or furtherance of business.

Q63. State whether the following supplies would be treated as supply of go0ods or supply of
services as per Schedule II of CGST Act:
i) Works contract services
ii) Temporary transfer of permitting use or enjoyment of any intellectual property right
iii) Sale of personal car to dealer. (CA Inter Suggested Nov 18 Old)

Answer:
i) As per Schedule-Il of CGST Act, 2017, works contract services would be classified as
supply of services.
ii) As per Schedule-Il of CGST Act, 2017, temporary transfer of permitting use or enjoyment
of any intellectual property right would be classified as supply of services.
iii) As per Schedule-Il of CGST Act, 2017, sale of personal car to dealer would be classified as
supply of goods as any transfer of the title in goods is a supply of goods.
 However, it is also possible to take view that sale of personal car to dealer is not a supply per se
as supply is not made by the individual in the course or furtherance of business.

Author Note: - As per GST Amendment Act, as now clause (d) of sec 7 has been omitted &
now the role of schedule II is only for the purpose of classification of a supply goods or
services. Thus, only when as per sec 7(1) if it is a supply then schedule II shall be referred
for its classification.

Q64. "State Government has exclusive power to notify a transaction to be supply of goods or
services." Discuss the correctness of the statement. (CA Final 2018)
Answer:
The said statement is not correct. State Government can notify a transaction to be supply of
goods or services but only on the recommendations of the GST Council. Further, Central
Government or State Government, both on the recommendations of the GST Council, can notify
an activity to be the supply
of goods and not supply of services or supply of services and not supply of goods or neither a
supply of goods nor a supply of services.

Questions from RTP &MTP of CMA

Q65. M/s. ABC Ltd. provides the following relating to information technology software. Compute
the value of taxable service and GST liability (Rate of CGST 9% and SGST 9%)?
1. Development and Design of information technology software: Rs.15 lakhs;
2. Sale of pre-packaged software, which is put on media; 52 lakhs. (RTP - Jun 2018)
Answer:
(1) it will be treated as supply & as per schedule II will be classified as supply of service
Value of Taxable supply of service is, Rs. 15Lakhs
CGST @ 9% of Rs.15 lacs = Rs.1.35 lacs & SGST @ 9% of Rs.15 lacs Rs.1.35 lacs
(2) It will be treated as supply & as per schedule II will be classified as supply of goods Value
of Taxable supply of goods is Rs.52 lacs
CGST @ 9% of Rs.52 lacs = Rs.4.68 lacs & SGST @9% of Rs.52 lacs = Rs.4.68 lacs

Q66. "Exchange is a form of supply of goods or services or both, made or agreed to be made for a
consideration by a person in the course or furtherance of business." (RTP- Jun 2018) Explain it
with help of an Example.
Answer:
When two persons mutually transfer the ownership of one thing for the ownership of another,
neither thing nor both things being money only, the transaction is called an exchange.
Exchange offers on products such as televisions, mobile phones and refrigerators are leviable under
GST.

Example: Mr. X is a dealer of new cars. He sells new cars for Rs.8,25,000 agrees to reduce
Rs.1,25,000 on surrendering of old car. Mr. Y who intends to buy new car worth Rs.8,25,000 agreed
to exchange his old car with new car. Under GST law, it will be treated as Mr. Y has made supply of
old car to dealer Mr. X and Mr. X has made supply of new car to Mr. Y. If Mr. Y is registered person,
he will be liable to pay GST on Rs.1,25,000 Mr. X will be liable to pay GST on Rs.8,25,000 whether
Mr. Y is a registered person or not.

Q67. M/s M Ltd. being a garment manufacturer appoints Mr. Ram as an agent, who stores
garments manufactured by M Ltd. and sends to dealers whenever M Ltd. asks Mr. Ram to do so.
Is it a supply? Justify. (RTP - Jun 2018)

Answer:
Legal Provision: -As per sec 7 read with Para 3 of Schedule I of CGST Act, 2017 Supply of goods-
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of
the principal. All the activity carried by agent where agent issues their own invoice are
included.
Is covered under the scope of supply, however as per recent clarification issued by CBIC via
Circular No. 57/31/2018-GST All the activity carried by agent where agent issues their own
invoice are included. Yes. Transfer of garments from M Ltd. to Mr. Ram is taxable supply
under GST. GST will be levied.

Q68.
(a) MIs X Ltd. paid penalty under section 49 of the CGST Act, 2017 Rs.20,00,000 to the
Government Department in the month of Oct 2017. Is its taxable supply under the GST law?
Give reason. (RTP - Jun 2018)
(b) X Ltd, covered under the Factories Act, 1948. Inspector of Factories certified the factory is
safe for the workers to carry their work and charged Government fee of Rs.10,000. X Ltd.
owned one more factory at another place, which is not covered under Factories Act, 1948.
However, X Ltd. obtained safety certificate for the factory from the Inspector of Factories by
paying Rs.15,000 voluntarily. Is its taxable supply? Attract GST? If so, who is liable to pay
GST. Applicable rate of GST 18%.
Answer:
(a) It is not a supply of service. The fine or penalty chargeable by Government or local authority
imposed for violation of statute, bye-laws, rules or regulations are not leviable to GST. Such
fines or penalty are not recovered for tolerating non-performance of a contract.
 (b) X Ltd. being recipient of service from the Inspector of Factories is not liable to pay GST.
Since, certification relating safety of workers required under the Factories Act, 1948
covered under entry 47 [exemption].
Another factory which is not covered under Factories Act, 1948 for which fee paid by X Ltd.
voluntarily is liable to pay GST under reverse charge mechanism. CGST 9% on? I5,000 = 1,350
SGST 9% on Rs.15,000 = Rs.1,350.

Q69. Mrs. Pragati received legal advice for her personal problems & paid 1,000 pound as a legal
fee to Miss Unnati of U.K. (London). Explain whether the above activity of import of service
would amount to supply u/s 7 of the CGST Act, 2017? If in above case both of them are real
sisters & no consideration is paid then will it change your answer?

Further in the above case if both of them are real sisters & Mrs. Pragati receives legal advice for
her business & she doesn't pay any consideration then what will be your answer? (CA IPC May 18
Old)
Answer:
Supply, under section 7 of the CGST Act, 2017, inter alia
• includes import of services for a consideration
• even if it is not in the course or furtherance of business.

Thus, although the import of service for consideration by Mrs. Pragati is not in course or
furtherance of business, it would amount to supply.

Further, import of services by a person from a related person located outside India, without
consideration is treated as supply if it is provided in the course or furtherance of business.
In the given case, import of service without consideration by Mrs. Pragati from her real sister -
Miss Unnati [real sister, being member of the same family, is a related person] will not be
treated as supply as it is not in course or furtherance of business.

However, import of service without consideration by Mrs. Pragati from her sister - Miss Unnati
(related person) will be treated as supply if she receives legal advice for her business, i.e. in
course or furtherance of business.

Q70. Examine whether the activity of import of service in the following independent cases would
amount to supply under section 7 of the CGST Act, 2017?
(i) Miss Trinity Kaushik received Vaastu consultancy services for her residence located at
Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid for the said
service is 5,000 Australian dollars.
(ii) Miss Trinity Kaushik received Vaastu consultancy services for her residence located at
Bandra, Mumbai from her son, Mr. Varun residing in Sydney (Australia). Further,
Macrinite did not pay any consideration for the said service.
 (iii) Miss Trinity Kaushik received Vaastu consultancy services for her business premises
located at Bandra, Mumbai from her son, Mr. Varun residing in Sydney (Australia).
Further, Miss Trinity did not pay any consideration for the said service. (CA IPC RTP Nov
18)
Answer:
(i) Supply, under section 7 of the CGST Act, 2017, inter alia,
• includes import of services for a consideration
• even if it is not in the course or furtherance of business.
Thus, although the import of service for consideration by Miss. Trinity Kaushik is not in course
or furtherance of business, as the Vaastu consultancy service has been availed in respect of
residence, it would amount to supply.
(ii) Section 7 of the CGST Act, 2017 read with Schedule I provides that import of services
by a taxable person from a related person located outside India, without
consideration is treated as supply if it is provided in the course or furtherance of
business.
In the given case, import of service without consideration by Miss Trinity from her
son-Mr. Varun [son, being member of the same family, is a related person] will not
be treated as supply as it is not in course or furtherance of business.
(iii) Section 7 of the CGST Act, 2017 read with Schedule provides that import of services
by a taxable person from a related person located outside India, without
consideration is treated as supply if it is provided in the course or furtherance of
business.
Thus, import of service without consideration by Miss Trinity from her son Mr. Varun (son,
being member of the same family, is a related person) will be treated as supply as she
receives Vaastu consultancy service for her business premises, i.e. in course or furtherance
of business.

Q71. Explain the services provided by way of tolerating non- performance of a contract and its
chargeability under the provisions of the CGST Act, 2017. (CA Final Exam. May 19 Old)
Answer:
Non-performance of a contract is the failure to fulfil the obligations under a contract. It is
generally one of the conditions stipulated in any contract for supply of goods/services.

The agreement entered into between the parties stipulates that both the service provider and
service recipient abide by the terms and conditions of the contract. In case any of the parties
breach the contract for any reason including non-performance of the contract, then such
person is liable to pay damages in the form of fines or penalty to the other party.

Tolerating non-performance of a contract in lieu of damages or fines is a supply in terms of

section 7 of the CGST Act, 2017 as it is made for a consideration by a person in the course or
 furtherance of business. Further, tolerating non-performance of a contract is treated as a supply
of service in terms of section 7 read with Schedule II of CGST Act, 2017.

However, in case of supplies to Government, non-performance of contract by the supplier of

service for which consideration in the form of fines or liquidated damages is payable is exempt
from GST.

Q72. Discuss whether the following are supply of goods or supply of services-

1. Renting of vacant land to a stud farm for `1,50,000.

2. Sale of office computer.
3. M/s X ltd. provided car to one of its directors for his personal use and charge fee
Rs.30,000.
4. A director takes a computer home for his private use. This computer is the company’s
business asset.
5. Salary paid to partners by partnership firm.
6. Restaurant and catering. [6M]
Answer:

1.) Renting of vacant land to a stud farm for Rs. 1,50,000. Supply of service

2.) Sale of office computer Supply of goods

3.) M/s X ltd. provided car to one of its directors for his personal use Supply of service
charge fee Rs. 30,000 &

4.) A director takes a computer home for his private use. This computer is Supply of service
the company’s business asset

5.) Salary paid to partners partnership firm. It is not a supply.

It is merely an
appropriation of
profit.

6.) Restaurant and catering Supply of service

Q73. Discuss whether the following events can be considered as supply:

1. Import (Downloading) of a song for consideration for personal use by Mr. Sen.
2. X Ltd. supplied spare parts freely to replace during warranty period.
3. Goods sent for a demonstration on returnable basis.
4. Micro Apparels in Chennai, Tamil Nadu, avails fashion designing services of `50,00,000 from
Prabhu Designs in Singapore. [2×4]
Answer:

1. Import (Downloading) of a song for consideration for personal use by Mr. Sen — It is
supply of service and IGST will be levied. Services may be in the course or furtherance of
business or not.
2. X Ltd. supplied spare parts freely to replace during warranty period — It is not supply.
GST is not chargeable if free replacement is provided by a business to customers without
consideration under warranty.
3. Goods sent for a demonstration on returnable basis — It would not be considered as
supply, as there is no transfer of title involved.
4. Micro Apparels in Chennai, Tamil Nadu, avails fashion designing services of `50,00,000
from Prabhu Designs in Singapore — It is supply (i.e. import of service).

Q74. Mr. Alok, a supplier registered in Hyderabad (Telangana), procures goods from China and
directly supplies the same to a customer in US. With reference to the provisions of GST Law,
examine whether the supply of goods by Mr. Alok to customer in US is an inter-state supply.[3]

Answer:

The transaction undertaken by Mr. Alok is neither import nor export of goods in terms of Customs
Act, 1962. However, it is an inter-state supply in terms of provision of section 7(5)(a) of the IGST
Act, 2017 which provides that when the supplier is located in India and the place of supply is
outside India, supply of goods or services or both, shall be treated to be a supply of goods or
services or both in the course of inter-state trade or commerce.
 QUESTION BANK: VALUE OF SUPPLY

Q1. Admission to True Theater is Rs. 90 per ticket for a Tamil Movie as well as for a Hindi Movie plus
entertainment tax 10% on Tamil Movie and 20% on other languages. In the month of November,
true Theater sold 2000 tickets of Tamil movie and 1500 tickets of Hindi Movie. Find the value of
taxable supply of service. Applicable rate of GST 18% & 28%. Find the GST liability if any?

Ans: Statement showing value of taxable supply of service and GST liability:

Value of taxable services:

Tamil Movie Rs. 198000 (Rs. 99* 2000 tickets)
Hindi Movie Rs. 162000 (Rs. 108 * 1500 tickets)

Particulars 9% CGST 9% SGST 14% CGST 14% SGST

GST liability 17820 17820 22680 22680

Working note:

Particulars Tamil Movie (Rs) Hindi Movie (Rs)

Rate per ticket 90 90
Add: Entertainment tax 9 18
Value of taxable supply 99 108
Applicable GST rate 18% 28%

Q2. Mr. Ram sold goods to Mr. Lakshman for Rs. 250000. As per the contract of sale, Mr. Ram is
required to deliver the goods in the premises of Mr. Lakshman. Mr. Ram hires transporter for
transportation for delivery of goods. However, the freight paid by Mr. Lakshman to transporter.
Freight paid Rs. 2500. Find the transaction value of supply of goods.

Ans:

Particulars Value in Rs.

Value of supply of goods 250000
Add: Freight paid by recipient of supply 2500
(which the supplier is so liable to pay)
Taxable Value of Supply of Goods 252500
Q3. Bharat Gas sells cooking gas cylinders. Subsidy directly transferred to the account of the customer.
Selling price per cylinder is Rs. 800. Customer received subsidy directly from Government to his
bank account. Net outflow of the buyer is Rs. 600. Find the value of supply of goods (per cylinder)
in the hands of Bharat Gas.

Ans: Since, the amount of subsidy is directly credited to the account holder and not received by the
Bharat Gas making the supply. Therefore, such subsidy will not be considered as part of transaction
value as it is not received by the Bharat gas making the supply.

Hence, transaction value is Rs. 800 per cylinder.

Q4. The Government provides subsidy, for the benefit of farmers but it is given to the manufacturer of
fertilizers. Such subsidy will form part of value of supply?

Ans: The buyer of goods does not provide subsidy, but the Government as per the scheme provides
it.

Therefore, this will not form part of value of supply as it is specifically specified that such subsidy
provided by the Government will not form part of the value of supply.

Q5. M/s Ashok Enterprise sells mineral water bottles, with MRP Rs. 20 per bottle. However, customers
availing discount of Rs. 4 per bottle. In the month of Oct 2017, M/s Ashok Enterprise sold 2000
bottles. Applicable rate of GST 18%. Find the tax liability.

Ans:

Rs.
Transaction value 32000
Add: CGST 9% on Rs. 32000 2880
Add: SGST 9% on Rs. 32000 2880
Invoice value 37760

Working note Rs.

MRP value (Rs. 20 * 2000pcs) 40000
Less: Discount (Rs. 4* 2000 pcs) 8000
Transaction value 32000

Q6. Best Cars Ltd sells a car worth Rs. 500000 to Sundar Automobiles. Best Cars Ltd. incurred packing
charges of Rs. 6000 on the car. Best Cars Ltd provided a discount of 1% on the car price, as part of
Diwali scheme.
 Best Cars Ltd agreed to provide a further discount of 0.5% if Sundar Automobiles makes payment
by 31st of the month via net banking. Sundar Automobiles makes the payment by 31st of the month
using net banking. Find the Net GST liability in the hands of Best Cars Ltd. Applicable rate of GST
18%.

Ans:

Particulars Value in Rs.

value of the product 500000
Add: packing charges 6000
Sub-total 506000
Less: Discount 1% on Rs. 5 lakhs (5000)
Transaction value 501000
Add: CGST 9% 45090
Add: SGST 9% 45090
Invoice price 591180

Note: Since, the discount was known at the time of supply, and can be linked to this specified invoice,
the discount amount can be reduced from the transaction value.

For this, Best Cars Ltd will issue a credit note to Sundar Automobiles for Rs. 2500 (0.5% of Rs. 500000=
Rs. 2500+ GST @ 18% on Rs. 2500 =Rs. 450), and the same must be linked to the relevant tax invoice.

Discount given after supply but agreed upon before or at the time of supply and can be specifically
linked to relevant invoices, can be deducted from the transaction value.

Q7. However, due to a severe cash crunch. Best Cars Ltd requests Sundar Automobiles to make the
payment within 2 days, promising a discount of 2% on doing so. Sundar Automobiles makes the
payment within 2 days.
Ans: Since, the discount was not known at the time of supply, it couldn’t be claimed as a deduction
from the transaction value for GST calculation.

Q8. M/s Nambiar & Co., an Audit firm based in Cochin undertake an audit assignment of his client
based in Chennai. The Contract mentioned about the audit fees of Rs. 500000 and arrangement of
taxi by the Clint which may be worth Rs.15000.
Find the transaction value on which M/s Nambiar and Co., is liable to pay GST.

Ans: Transaction value in the hands of M/s Nambiar & Co, is Rs.515000.
Note: Not only audit fees but also the expenditure incurred in connection with the taxi Rs.15,000
constitutes the sole consideration.
. ,
Q9. M/s X Ltd is engaged in doing job work for M/s Y Ltd. M/s Y Ltd supplies raw material for Rs.200000
and packing material for Rs.22500 to M/s X Ltd. for completion of job work. M/s X Ltd has agreed
to supply job-work services for the purpose of performing the activities as specified by M/s Y Ltd.
Job worker labour charges Rs. 1,00,000, profit of Rs.70000 and material consumed for Rs.3500.
Find transaction value (i.e. sole consideration) to levy GST in the hands of M/s X Ltd.
Ans:

Particulars Value in Rs.

Service charges 100000
Add: Material consumed 3500
Add: Job worker profit 70000
Transaction value (i.e. taxable value of supply of service in the hands of 173500
M/s X Ltd.)
Note: “Although, it includes materials worth Rs.3500, still the entire supply including value
of material would be treated as services.

Q10. Asha Ltd. supplies raw material to a job worker Karena Ltd. After completing the job-work, the
finished product of 5000 packets are returned to Asha Ltd. putting the retail sale price as Rs.20 one
each packet. The product in the packet is covered under MRP provisions. Determine the
transaction value in the hands of Karena Ltd. under GST law from the following details:

Particulars Value in Rs.

Cost of raw material supplied 30000

Job worker’s charges including profit 10000
Transportation charges for sending the raw material to the job worker 3000
Transportation charges for returning the finished packets to Asha Ltd. 4500
Asha Ltd. paid certain technology transfer fees to 'Reena Ltd’, so 22500
that 'Karena Ltd’ can use the said technology in the given job-work
operation. This technology owned by Asha Ltd. for subsequent use
as well.

Note: Karena Ltd offered discount Rs.2000, provided full payment is made at the time of raising invoice
and the same is mentioned in the invoice. Asha Ltd. made full payment at the time of issue of invoice.
Ans:

Statement showing transaction value of Karena Ltd.

Particulars Value in Rs.
Cost of raw material supplied Exempted supply
Job worker’s charges including profit 10000
Transportation charges for sending the raw material to the job worker Exempted supply
Transportation charges for returning the finished packets to Asha Ltd. [Section 4500
15(2)(b) of the CGST Act, 2017]
Technology fee [Section 15(2)(b) of the CGST Act, 2017] 22500
Sub-total 37000
Less; Discount [Section 15(3) of CGST Act, 2017] (2000)
Transaction value (i.e. sole consideration) 35000

Note:
(1) It is very clear that principal to job worker and job worker to principal cannot be treated as
supply as per section 143 of the COST Act, 2017.
(2) Royalties and license fees related to the supply of services (i.e. job-work operations) that, the
recipient of supply must pay, either directly or indirectly, as a condition of the said supply is
also to be included in transaction value, to the extent that such royalties and fees are not
included in the price. '
(3) Therefore, if 'Asha Ltd.’ paid certain technology transfer fees to 'Reena Ltd’, so that 'Karena
Ltd’can use the said technology in the job-work operation that is performing for ' Asha Ltd’, the
value of such technology transfer fee may also be included in transaction value of job-work
services.

Q11. Mr. Bhanu makes supply of Rs.2,00,000 to Mr. Reno. The contract provides that Mr. Reno will
pay Rs.50,000 to Mr. Bhanu and Rs.1,50,000 to Mr. Venu to settle the debt of Mr. Bhanu. Find the
transaction value and GST liability in the hands of Mr. Bhanu. Applicable rate of CGST and SGST 9%
each.
Ans:
Ans: Statement showing transaction value and GST liability:
Particulars Value in Rs.
Payment from Reno to Bhanu 50000
Payment from Reno to Venue for settling the debt of Bhanu 150000
Transaction value (i.e. Sole consideration) 200000
CGST 9% 18000
SGST 9% 18000
Q12. Mr. A being a registered person sells TVs to all customers at Rs.45000. He supplied new TV for
Rs.42000 along with the exchange of an old TV. Find the open market value of TV,
Ans: Open market value is Rs.45000.

Q13. M/s X Ltd is a manufacturer of car and sells the car in the open market at a price of
Rs.1100000. M/s X Ltd provided the car to his company auditor is only for Rs.900000. In return
auditor provided auditing services to M/s X Ltd and charged Rs.5000 with the condition that
company will be provided the car at the price of Rs.900000. Find the value as per Rule 27(a),
Determination of value of supply.
Ans: Open market value of the car is Rs. 1100000 Therefore, M/s X Ltd transaction value should be Rs.
100000 on which GST will be levied.

Q14. M/s X Ltd. is supplier of security services provided such services to M/s Y Ltd. As per the
contract M/s Y Ltd is to pay monthly Rs.100000. In the month of November M/s Y Ltd. supplied
uniforms to all employees of M/s X Ltd. by spending Rs.20000. As a result, M/s X Ltd. raised the bill
for Rs.80000 in the month of November. In the given case M/s X Ltd. received consideration for
security service is partially in terms of money Rs.80000 and partially in kind (i.e. uniforms). Find the
taxable value of service on which GST will be levied.
Ans: GST will be levied on the value of Rs.100000 (Rs.80,000 + uniforms equal to monetary value of
Rs.20000) in the hands of M/s X Ltd.

Q15. Rami Academy normally charge Rs.10000 for teaching the commerce students. A merit student
approaches the management of Rami Academy and narrates his financial position. Rami Academy
management considering his financial position agrees to charge only Rs.5000 from such student.
Find the value of taxable supply of service.
Ans: Since, rami Academy has not received any consideration from the student in any other form,
Rs.5000 itself is the sole consideration. GST will be levied on Rs.5000.

Q16. Raj & Co. furnishes the following expenditure incurred by them to find the transaction value for
the purpose of paying GST.
(i) Direct material cost per unit inclusive of IGST at Rs. 944
18%
(ii) Direct wages Rs. 250
(iii) Other direct expenses Rs. 100
(iv) Indirect materials Rs. 75
(V) Factory overheads Rs. 200
(Vi) Administrative overhead Rs. 100
(25% relating to production capacity)
 (vii) Selling and distribution expense Rs. 150
(viii) Quality control Rs. 25
(ix) Sale of scrap realized Rs. 20
(X) Actual profit margin 15 %

Find the value for the purpose of payment of GST as per Rule 30 of the CGST Rules, 2017.
Ans:

Statement showing value of supply of goods as per Rule 30 of the CGST Rules, 2017:

Particulars Value in Rs.

Direct material cost (944 X 100/118) 800
Direct wages 250
Other direct expenses 100
Indirect materials 75
Factory overheads 200
Administrative overhead (25% of ^100) 25
Quality control 25
Sub-total 1475
Less: Sale of scrap (20)
Cost of production 1455
Add: 10% profit margin as per Rule 30 of the CGST Rules, 2017 145.50
Value of taxable supply of goods 1600.50

Cost Accounting Standard (CAS)-4 issued by the Institute of Cost Accountants of India enumerates
various costs to be included in determining the cost of production of goods. CAS-4 principles are also
applicable for determining the cost of supply of service.
Thus, cost of acquisition will include cost of transportation, any local taxes, insurance, other
expenditure like commission, fee and so on paid on procurement of goods.
However, GST element will not be considered for the purpose of determining the cost of acquisition.

Q17. Determine the cost of production of the under mentioned product for the purpose of valuation
in terms of Rule 30 of the Central Goods and Services Tax Rules, 2017. Direct Material Rs.11800,
Direct wages and Salaries Rs.8400, Works overheads Rs.6,200, Quality control costs Rs.35OO,
Research and Development Costs Rs.2400, Administration Overheads Rs.4,100, Selling and
Distribution Costs Rs.1600, Realizable value of scrap Rs.1200. Administrative overheads are in
relation to production activities. Material cost includes IGST Rs.1800. [CA Final May 2004 modified].
Ans: Calculation of Cost of Production and value:

Direct Material cost Rs. 11000

Less: IGST Rs. (1800)
Direct Wages Rs.8400
Works overheads Rs. 6200
Quality control costs Rs. 3500
Research and Development cost Rs. 2400
Administrative O.H. relating to production Rs.4100
Less: Realizable value of scrap Rs. (1200)
Cost of Production Rs.33400
Add: 10% profit margin Rs. 3340
Transaction Value (i.e. Assessable Value) Rs.36740

Q18. Compute the cost of production and valuation for the under mentioned product as per Rule 30
of the CGST Rules, 2017:

Rs.
1. Cost of material (Inclusive of COST & SGST at 12%) 112000
2. Direct wages 47000
3. Other direct materials 13500
4. Computer use for office purpose 41000
5. Quality control test incurred for production process 17000
6. Engineer charges paid for installation of machinery 12750
7. Another factory overhead 27000
8. Salary of staff appointed for office duty 84000
9.Sale of scrap realized 1800
10. Actual profit margin 15%
11. Administrative overhead 100000
(100% related to administrative Works)
12. Selling and distribution overhead 30000

Ans: Statement showing Transaction Value as per Rule 30 of the COST Rules, 2017:
Transaction cost Assessable value Rs. Remarks
Cost of material 100000 112000 * 100/112
Direct wages 47000
 Other direct material 13500
Computer office Nil Not addable
Quality control test 17000
Engineering charges for installation of Nil Not addable
machinery
Other factory overheads 27000
Salary Nil Not addable
Sale of scrap -1800
Cost of production 202700
Add: 10% profit margin 20270 202700 * 10%
Assessable value 222970

Q19. From the following particulars, compute the transaction value as per Rule 30 of the CGST Rules,
2017 for GST purpose. Out of 1,000 units manufactured, 800 units have been cleared to a sister
unit for further production of taxable goods on assesses behalf, the balance 200 units are lying in
the stock:
Particulars Rs.
Direct material consumed (inclusive of IGST @ 18%) 236000
Direct labour and direct expenses 160000
Works overheads 40000
Research and development costs 25000
Administration overheads (75% related to production) 80000
Input received free of cost from sister units 35000
Abnormal losses (not included above) 24000
Advertisement and selling costs 36000
VRS compensation to employee (not included above) 120000
Realizable value of scrap/wastage 20000

Ans: Statement showing Assessable Value for 800 units:

Transaction cost Assessable value Rs. Remarks
Material cost 200000 236000 x 100/118
Labour cost 160000
Overheads 40000
Research and Development 25000
Administrative overheads 60000 80000 X 75%
Input received from sister unit 35000
Abnormal loss Nil Not considered
VRS compensation Nil Not considered
Resale value of scrap -20000
 Cost of production for 1000 u 500000
Transaction value of 800 units 440000 (500000 x
800u/1000u) x
Q20. 110% and closing
Alpha Ltd., a manufacturer of taxable goods. Assuming that there is no opening
inventory, compute its value as per Rule 30 of the CGST Rules, 2017 for the purpose of GST from
the following information provided by Alpha Ltd:

Particulars Rs.

Cost of direct materials (inclusive of IGST 28%) * 25600

Cost of direct salaries (includes house rent allowance of Rs.12000) 30000
Consumable stores and repairs 8400
Depreciation of machinery 500
Quality control cost 4300
Research & development cost 2700
Administrative cost:
Production related 2000
Project management related 1800
Interest and financial charges 2400
Cost incurred due to break down of machinery 1300
Amortized cost of molds and tools received free of cost from the recipient of goods 600
Selling and distribution cost 4600
Scrap value realized 1500

*Note: ITC of the IGST so paid is available.

Ans: Statement showing assessable value for M/s Alpha Ltd.
Particulars Value Rs. Working note
Cost of direct materials 20000 25600 X 100/128
Cost of direct salary 30000
Consumables 8400
Depreciation of Machine 500
Quality control cost 4300
Research and development 2700
Administrative cost Production 2000
Add: amortization cost 600
Less: sale of scrap -1500
Cost of production 67000
 add: profit 6700 67000 X 10%
Transaction value 73700

As per Rule 31 of the CGST Rules, 2017 Residual method for determination of value of supply
of goods or services or both
It is provided that where the value of supply of goods or services or both cannot be determined under
rule 27 to rule 30 of the CGST Rules, 2017, value shall be determined by using reasonable means
consistent with the principles and the general provisions of section 15 and the provisions of this
Chapter IV of the CGST Rules, 2017.

Value of service can be on basis of rule 31 instead of on cost plus 10% basis:
In case of supply of services, the supplier may opt for rule 31 ignoring rule 30 (as per proviso to Rule 31
of CGST and SGST Rules, 2017).
It means to say that efforts should be made by proper officer to determine the by using his best
judgment assessment.

Q21. M/s X Ltd owned factory in Chennai (Tamil Nadu) and one depot in Cochin (Kerala). Depot in
Cochin is required to obtain separate registration as they are considered as distinct person under
Section 25(4) of the CGST Act, 2017. The goods manufactured in Chennai factory will be transferred
to Cochin Depot where it will be sold as it is.
Particulars No. of Price at Price at Rate of IGST
units Factory Depot Advalorem
1) Goods transferred from 1000 Per unit
Rs.200 Per unit
Rs.220 18%
factory to
2) Goods actually
depot on sold at depot 750
8th February Rs.220 Rs.250 12%
on
18th February
Find the value of taxable supply of goods and IGST liability in the hands of M/s X Ltd. of
Chennai.
Note: Depot in Cochin is not availing input tax credit.

Ans: Value of taxable supply of goods = Rs. 198000

(Rs.220 X 1000 units) X 90%
IGST = Rs.35640 (i.e. Rs.198000 x 18/100)

Note: It means at the time of transfer of goods from Chennai Factory to Cochin Depot, M/s X Ltd. will
have to determine the price at which depot will sell the goods to his customers.
As per 1st proviso to Rule 28 of Chapter IV of the CGST Rules, 2017 provides that such price should be
the price for sale of goods to unrelated person.

M/s X Ltd. has option to pay GST on 90% of such value (i.e. 90% of the price at which the goods are
being sold from Cochin Depot).

Q22. M/s Y Ltd owned factory in Hyderabad (Telangana) and one depot in Vijayawada (Andhra
Pradesh). Depot in Vijayawada is required to obtain separate registration as they are considered as
distinct person under Section 25(4) of the CGST Act, 2017. The goods manufactured in Hyderabad
factory will be transferred to Vijayawada Depot where it will be sold as it is. Depot in Vijayawada is
availing Input Tax Credit.

Particulars No. of Price at Price at Rate of IGST

units Factory Per Depot Per Advalorem
unit unit
1) Goods transferred from 1000 Rs.200 Rs.220 18%
factory to
depot on
2) Goods 8th February
actually sold at depot 750 Rs.220 Rs.250 12%
th
on 18
February
Find the value of taxable supply of goods and IGST liability in the hands of M/s Y Ltd. of
Hyderabad.

Ans:
Value of taxable supply of services = Rs. 200000/- (i.e. Deemed to be open market value)
(1000 units * Rs. 200)
IGST = Rs. 36000 (Rs. 200000 * 18/100)

Note-.
(i) As per 2nd proviso to Rule 28 of Chapter IV of the COST Rules, 2017 provides that where the
recipient is eligible for input tax credit, value declared in the invoice shall be deemed to be
open market value of goods or services.
(ii) Integrated Tax Department has right to reject the valuation if the value is not full fill the open
market value. It should meet the requirement of sole consideration.

Q23. Kamal & Co. manufactures customized products at its unit situated in Rajasthan. Cost of
production for Kamal & Co for 1000 products is Rs.2000000. These products require further
processing before sale, and for this purpose products are transferred from its Rajasthan unit to its
another unit in Punjab.
 The Punjab unit, apart from processing its own products, engages in processing of similar
products of other persons who supply the products of the same kind and quality and thereafter
sells these processed products to wholesalers. There are no other factories in the neighboring area
which are engaged in the same business as that of its Punjab unit.
Products of the same kind and quality are supplied in lots of 1000 each time by another
manufacturer located in Punjab. The price of such goods is Rs.1900000. Determine the value of
1000 products supplied by Kamal & Co. to its Punjab unit as per the provisions of CGST Act, 2017.

Ans: Value of supply for Kamal & Co., Rajasthan:

The value of the supply of goods or services or both between distinct persons as specified in section
25(4) and section 25(5) of the COST Act, 2017 or where the supplier and recipient are related, other
than where the supply is made through an agent, shall—
(a) be Open market value of such supply
(b) if the open market value is not available, be the value of supply of goods or services of like kind
and quality.
(c) If value is not determinable under clause (a) or (b), be the value as determined by application
of rule 30 or rule 31, in that order.

Provided that where the goods are intended for further supply as such by the recipient, the value shall,
at the option of the supplier, be an amount equivalent to 90% of the supply of goods of like kind and
quantity by the recipient to his customer not being a related person:

Provided further that where the recipient is eligible for full input tax credit, the value declared in the
invoice shall be deemed to be the open market value of goods or services.

In the given case, open market value of the 1000 products being supplied to Punjab unit is not
available since the supplier manufactures customized products. Therefore, value of 1000 products
supplied by Rajasthan unit of Kamal & Co. to Punjab unit will be the value of the goods of like kind and
quality supplied to Punjab unit by other customers which is Rs. 1900000.

Since goods are not supplied as such by the Punjab unit, goods cannot be valued @ 90% of the price
charged for the supply of like goods by the Punjab unit to its unrelated customers in terms of first
proviso to rule 28 of CGST Rules, 2017.

Further, if Punjab unit is entitled for full ITC, the value declared in the invoice of Rajasthan unit will be
deemed to be the open market value of the goods vide second proviso to rule 28 of CGST Rules, 2017.
Q24. A principal supplies groundnut to his agent and the agent is supplying groundnuts of like kind
and quality in subsequent supplies at a price of Rs.5000 per quintal on the day of the supply.
Another independent supplier is supplying groundnuts of like kind and quality to the said agent at
the price of Rs.4550 per quintal.
Find the value of taxable supply in the hands of principal as per Rule 29(a) of the CGST Rules, 2017.
Ans: The value of taxable supply made by the principal shall be Rs.4550 or where he exercises the
option, the value shall be Rs.4500 (i.e. 90% of Rs.5000) per quintal.

Q25. M/s P Ltd being a principal supplies laptop to his agent and the agent is supplying laptops of like
kind and quality in subsequent supplies. M/s P Ltd incorporated in Chennai (Tamil Nadu). Agent is
located in Nagercoil (Tamil Nadu). Goods supplied on 15th November by the Principal to his Agent.
Particulars No. of units Price at which Price at Rate of
principal which GST
supplies to agent Advalorem
agent supplies to
his
customer
not being a 18%
1) Selling price on 15th November 1000 Rs. Nil Rs.22000
related
2)Goods procured by agent from other independent supplier supplying laptops of like kind and
person
quality at
Rs.20000 per unit on 15th November.

Find the value of taxable supply of goods and GST liability in the hands of M/s P Ltd. of Chennai.

Ans: Value of taxable supply made by principal shall be Rs.20000 per laptop or where the principal
exercise the option the value shall be Rs. 19,800 per laptop (i.e. 90% of the Rs.22000). It is economical
to opt the 90% of the price charged for the supply of goods of like kind and quality by the recipient to
his customer not being related person on the day of supply.
Total taxable value of supply = Rs.19800000
(i.e. 19800 X 1000 units).
GST liability in the hands of M/s P Ltd. of Chennai:
CGST 9% on Rs.198 lakh = Rs.1782000
SGST 9% on Rs.198 lakh = Rs. 1782000

Q26. Ram & Co., being a car dealer dealing in second hand cars. Ram & Co., purchases used car from
Mr. Raja and sell the very same car to Miss. Rani after water wash and painting. The purchase price
is Rs.200000 whereas the sale price is Rs.250000. Find the GST liability as per rule 32(5) of the CGST
Rules, 2017 by following margin scheme in the hands of Ram & Co. Assume applicable rate of GST
 28%. Ram & Co., is not availing input tax credit on purchase of second hand cars.
Whether your Ans: is different if the sale of second hand car for Rs. 180000.

Note: Ram & Co., and Miss. Rani are located within the State of Tamil Nadu.
Ans: GST net liability is as follows:
Particulars Value Rs. 14% 14% Remarks
CGST Rs. SGST Rs.
Output supply 2,50,000
Less: purchase price 2,00,000
Difference known as 50,000 7,000 7,000 Charge GST on the margin or profit
margin earned on the goods (Rs. 50000* 28%)

Yes. Our Ans: different in case of sale price is Rs.180000:

Sale price =Rs. 180000
Less: purchase price = Rs. (200000)
Margin = Rs. (20000)
GST liability = Rs. Nil

Note: For a dealer who has opted for the margin scheme, there can be a scenario where the second-
hand goods are sold at zero margins or for a lesser price than the purchase price. In this case, no GST
will be applicable on the supply.

Q27. Mr. D being a dealer in goods sells new brand ears at Rs.1100000. He advertises that customers
can sell their old car if they buy new car from him. One customer exchanged his old car for
Rs.200000. Mr. D sold new car to that customer for Rs.900000. The Central Tax Department
demanded to pay GST on Rs.1100000 whereas Mr. D argues that he is eligible to pay GST on the
difference namely margin of Rs.900000 as per Rule 32(5) of the CGST Rules, 2017. Discuss and
decide the correct approach.
Ans: Rule 32(5) of the CGST Rules, 2017 is applicable only when person is dealing in buying and selling
of second hand goods.

In the given case Mr. D is not eligible for margin scheme as referred in rule 32(5). Since, dealer sold
new car and therefore, provisions of rule 32(5) will not apply.
Therefore, from the above it is evident that the Central Tax Department view is correct.

Q28. M/s X Ltd, a registered person under GST, being a dealer dealing with second-hand goods M/s X
Ltd. supplies a used camera to a consumer in Chennai for selling price of Rs. 15000. The used
 camera (i.e. second hand) was purchased for Rs.10000 from a registered dealer in Mumbai, on
which CGST + SGST of Rs.1400 each was charged (i.e. GST rate applicable to cameras is 28%).
M/s X Ltd. charged IGST 28% on inter State supply.
Find the net GST liability in the following independent cases;
1) If input tax credit availed.
2) If input tax credit not availed.
(i) Net GST liability in case of input tax credit availed:
Particulars Value Rs. 28% IGST Rs.
Output supply 15000 4200
Particulars Value Rs. 28% IGST Rs.
Less: ITC 10,000
CGST 14% (1400)
SGST 14% (1400)
Net GST liability 1400

(ii) Net GST liability in case of input tax credit not availed:
Value 28%
Particulars Remarks
Rs. IGST Rs.
Output supply 15000
Less: purchase price 12800 ITC will form part of cost.
Charge GST on the margin or profit
Difference known as margin 2200 616 earned on the goods (Rs. 2200 *
28%)

Repossession of goods in case of default by the unregistered borrower:

Q29. Mr. C has taken a loan from the bank on 15th July 2017 worth Rs.2 crore and purchased a
machine. Subsequently Mr. C defaulted in paying the loan amount along with interest.
Subsequently bank repossessed the machine from Mr. C on 1st Jan 2018. The banker sells the said
goods on 26th April 2018.

Find the value of taxable supply of goods in the hands of banker in the following two independent
cases:

Case 1: machine sold for Rs.19000000.

Case 2: machine sold for Rs.17000000.
Note: - Applicable rate of IGST 18%.

Ans: Determination of purchase value:

Particulars Value in Rs. Working note
Purchase value of the banker Purchase value for the lending company will be the
20000000
purchase price of the defaulter.
Less: 5% per quarter for 2 quarters (2000000) From 1st Jan 2018 to 26th April 2018 = 2 quarters
Purchase value at the time of
18000000
disposal by the bank

Value of taxable supply in the hands of banking company;

Particulars Case 1 Case 2 Remarks
Sale price 19000000 17000000
Less: purchase (18000000) (18000000) In case the sale price is below
price Rs.18000000 banker will not be liable
to pay GST as value is nil.
Taxable value or 1000000 Nil
Margin
IGST 18% 180000 Nil Rs. 10 lacs * 18%

Q30. X Ltd. being a cloth merchant sold gift voucher to customer for Rs.2000 on 10th November to
purchase specific cloth from its showroom. Goods actually purchased by customer on 15th
November for Rs.2400. Find the time of supply and value of supply with regard to gift voucher in
the hands of X Ltd.
Ans: Time of supply is at the time issue of voucher i.e. 10th November.
Value of supply = Rs.2000 for gift voucher.

Q31. Ram. & Co., being dealer in electronics and electrical items, issued gift voucher to its customer
for Rs.2000 on 15th November. Customer can use gift voucher to purchase anything which is
available. Customer purchased goods worth Rs.1400 on 20th Nov 2017.Applicable CGST and SGST
9% each.
Find the following
(a) time of supply
(b) value of supply
(c) GST liability in the hands of Ram & Co.
Ans:
(a) Time of supply is 20th November 2017.
 (b) Value of supply is Rs.1500.
(c) GST liability:
- CGST is Rs.126
- SGST is Rs.126
Working Note: Rs.1400 x 9% = Rs.126

Q32. Mr. & Ms. Kapoor purchase 10 gift vouchers for Rs.500 each from Crossword, and 5 vouchers
from a reputed Spa costing Rs.1000 each. The vouchers from a reputed Spa had a special offer for
couples, where in services for both persons at the price chargeable to one. Find the value of supply
in the hands of Crossword and reputed Spa.
Ans: 31: Statement showing value of taxable supply:
Particulars Crossword value Reputed Spa value Remarks
in Rs. in Rs.
Value of taxable 5000 10000 10 gits * 500 = Rs.
supply 5000
(5 vouchers * Rs.
1000)* 2 = Rs. 10000

Q33. Mr. X is a Customs Broker issues an invoice for reimbursement of a few expenses and for
consideration towards agency service rendered to an importer. The amounts charged by the
Customs Broker are as below:

S.No. Component charges in invoice Amount in Rs.

1 Agency income 10000
2 Travelling expenses 5500
3 Hotel expenses 9500
4 Customs duty 55000
5 Dock dues 2500

Find the value of taxable supply of service in the hands of Customs Broker.
Ans: statement showing taxable value of supply of service:
S.No. Particulars Amount in. Rs. Remarks
1 Agency income 10000 Addable into the value
2 Travelling expenses 5500 -do-
3 Hotel expenses 9500 -do-
4 Customs duty Not addable Pure agent reimbursement
5 Dock dues Not addable Pure agent reimbursement
Total 25000
Q34. Determine the value of supply and the GST liability, to be collected and paid by the owner, with
the following particulars:

Rs.

Rent on the commercial building 1800000

Maintenance charges collected by local society from the owner and 250000
reimbursed by the tenant
Owner intends to charge GST on refundable advance, as GST is 600000
applicable on advance.
Municipal taxes paid by the owner 300000

GST rates applicable on renting of business premises is as follows:

CGST 9% and SGST 9%
Provide suitable explanations where required.
4 Marks (CA Final (Old) May 2018)
Ans: Statement showing taxable supply and GST liability:
Rs.
Rent on the commercial building 1800000
Maintenance charges collected by local society from the owner and
reimbursed by the tenant 250000
Owner intends to charge GST on refundable advance, as GST is applicable Nil
on advance (GST
not applicable on refundable advance)
Municipal taxes paid by the owner (assumed the same recovered from the
tenant) 300000
Taxable supply 2350000
GST liability
CGST 9% on Rs.2350000 211500
SGST9% on Rs.2350000 211500

Q35. Compute the duty payable under the Customs Act, 1962 for imported equipment based on the
following information:
(i) Assessable value of the imported equipment US $ 10,100.
(ii) Date of Bill of Entry 25.10.2017 exchange rate notified by the Central Board of Excise and
Customs US $ 1 = Rs. 65.
(iii) Date of Entry inwards 01.11.2017 exchange rate notified by the Central Board of Excise and
Customs US $ 1 = Rs. 60.
 Find the taxable value of imported goods.
Ans: Statement showing taxable value of imported goods:
Particulars Value in Remarks
Assessable value 656500
Rs. 10100 USD * Rs. 65
of imported goods Exchange rate as on the date of submission of bill of
entry is relevant as per section 14 of the Customs Act,
1961.
Q36.
An assessee was under impression that his product is exempt from GST and hence sold the goods
@ Rs.100 per piece without charging GST. Later, it was found that actually, the product was
chargeable with IGST 18%. Department claimed that since goods were removed without GST,
transaction value should be Rs. 100 and GST is payable accordingly. Assessee contended that price
of Rs.100 should be taken as inclusive of GST and actual GST payable should be calculated by back
calculations. Determine the correct GST payable per piece. (ICWAI Final Dec. 2003 model)

Ans: As per rule 35 of the CGST Rules, 2017 transaction value and GST liability are as follows;
The Transaction value should be taken, as cum-tax-price and tax payable should be calculated by
making back calculations. Hence, the transaction value is as follows:
The transaction value = Rs.100 x 100/ 118 = Rs. 84.75
IGST =Rs.100x 18/ 118 = Rs. 15.25
Total invoice price = Rs. 100.00

Q37. Mr. A agrees to undertake a works contract for M/s B Ltd. for maintenance and repair or
reconstruction of machine for Rs.5000000. The breakup of the gross value charged by Mr. A to B
Ltd., is as under
a) Value of material Rs. 3000000
b) Labour charges Rs. 1500000
c) Cost of consumable Rs. 200000
d) Profit margin on labour and service Rs. 300000
Find the value of supply and GST liability?
Ans:
Particulars Value in Rs.
Value of material 3000000
Labour 1500000
Cost of consumables 200000
Profit margin 300000
Composite supply of works contract 5000000
GST @18% on Rs.5000000 900000
Q38. ME Ltd. has entered into a contract for construction of a building with SC Ltd. As per the
agreement, the amount payable (excluding all taxes and land value) by ME to SCL is Rs. 10000000
inclusive of the steel and cement to be supplied by ME for which it charged Rs.500000 from SCL.
Fair market value of the steel and cement (excluding taxes) is Rs. 1000000. Compute the 'total
amount charged’ pertaining to the said works contract for execution of ‘original works’. Also find
the GST liability?

Ans:
Particulars Value in Rs.
Composite supply of works contract 10000000
Add: Fair market value of material supplier by recipient of supply 1000000
Less: value of steel and cement charged by supplier at nominal value 500000
Value of taxable supply of service 10500000
GST 18% 1890000

Q39. M/s Beta Construction Co. Ltd. expects a gross turnover of Rs. 2500 crores during the coming
year 2018-19 from various commercial/industrial constructions (inclusive of land value Rs. 1000
crores). It furnishes following additional information: -
The company is in a dilemma whether to opt for works contract supply or construction supply. Advise.
Ans:

Particulars Works contract service Construction

(land value excluded) contract service
GST Rate 18% 12%
(land value
Value of supply Rs. 1500 crores Rs.2500
included)crores
GST liability Rs. 270 crores Rs. 300 crores
Advice: works contract service is economical.

Q40. JE Engineers, a partnership firm, registered under GST for supplying Works Contract services. JE
Engineers agreed to supply works contract services. Accordingly, company quoted an amount of
Rs.100 lakhs for a construction work. It is agreed that if B Ltd. supplied the steel and cement, the
contract amount will be reduced on the agreed basis. B Ltd. supplied steel and cement of Rs.10
lakh for use in the construction activities as a result the contract amount reduced to Rs.90 lakhs.
Further JE Engineers had billed and supplied goods to B Ltd. worth Rs.2 lakhs under a separate
agreement which was also used while providing above works contract service.
B Ltd. provided canteen facilities, electricity and water to JE Engineers free, without charge while
providing the works contract service. Cost of such services was Rs.150000.
Find out the taxable supply and GST liability?
Note: contract value excludes land value.
Ans:
Particulars Value in Rs. Remarks
Works contract supply in lakhs
Add: Material supplied free of 10.00
90.00 As per Sec. 15(2)(b) of the CGST Act, 2017.
cost by recipient of service
Add: consumables 2.00 Composite works contract service includes cost of
consumables
Add: Electricity and water 1.50 Monitory values of non-monitory value should be
included as per Rule 27(b) of the COST Rules, 2017.
Value of supply 103.50

GST 18% 18.63

Q41. ABC Constructions Ltd. has provided the following details with respect to individual residential
units constructed by it at various cities as part of residential apartments:
Flat Capet Amount charged (?)
type area
A 1980
(sq. 11000000 Part of consideration received before issuance of
Ft.) completion certificate by the competent authority.

B 2000 10000000 -do-

C 2500 10500000 -do-
D 2400 9950000 Entire consideration received before issuance of completion
certificate by the competent authority

E 2100 10000000 -do-

F 1600 8000000 -do-
G 1940 9000000 Entire consideration received after issuance of completion
certificate by the competent authority

LIG 60 sq. 20000000 34 Flats constructed under Housing for All (Urban)
Mtrs. Mission/Pradhan Mantri Awas Yojana (Urban).
Construction value includes land value.
EWS 400 12500000 Pure labour service contracts of construction to the
sqfts beneficiary-led individual house construction under Housing
for All (Urban) Mission/ Pradhan Mantri Awas Yojana
(Urban).
Following details are also available:

Type of building Amount

charged Rs.
Multi-level parking for local authority 31000000 Part of consideration received before
issuance of completion certificate by
the competent authority
122000000 Entire consideration received before
Office Complex issuance of completion certificate
by the competent authority
Shopping Mall 300000000 Entire consideration received after
issuance of completion certificate by
the competent authority
Find the GST liability if any?

Ans: Statement showing GST liability:

Flat type Amount charged Construction service GST Rate GST
(Rs.) Rs.

A 11000000 Fully taxable supply 12% 1320000

B 10000000 -do- 12% 1200000
C 10500000 -do- 12% 1260000
D 9950000 -do- 12% 1194000
E 10000000 -do- 12% 1200000
F 8000000 -do- 12% 960000
G 90,00,000 Not a supply -NA- -NA-
LIG 2,00,00,000 Taxable supply. 8% 16,00,000
EWS 1,25,00,000 wholly exempted Nil Nil
Multi-level 3,10,00,000 supply.
Fully taxable supply 12% 37,20,000
parking for local
Office Complex 12,20,00,000 Fully taxable supply 12% 1,46,40,000
authority
Shopping Mall 30,00,00,000 Not a supply -NA- -NA-

Q42. ABC Consultancy, registered in Mumbai, supplies technical consultancy services to its clients. It
has been providing technical services to XY Ltd., Mumbai since past two years. Consideration is
settled by XY Ltd. assignment wise. XY Ltd. paid ?45 lakh to ABC Consultancy on 10th January, 20XX
on ABC consultancy agreeing to not provide similar technical services to any other business entity
in India or abroad for a period of 8 years. ABC Consultancy is of the view that Rs.45 lakh is not
 chargeable to GST. You are required to examine whether the view taken by ABC Consultancy is
valid in law. Calculate GST liability of ABC Consultancy, if any. The technical services provided by
ABC consultancy is otherwise chargeable to GST at the rate of 18%. It may be noted that XY Ltd. is
not ready to pay any further amount to ABC Consultancy in addition to the amount already agreed.

Ans:
As per paragraph 5(e) of Schedule II of the CGST Act, 2017 provides that agreeing to the obligation
to refrain from an act or to tolerate an act or a situation or to do an act is treated as supply of
service.
Since, GST is not separately collected, it will be assumed that it is included in Rs.45 lakh. As per
Rule 35 of the CGST Rules, 2017, where the value of supply is inclusive of GST, the tax amount is
determined in the following manner.
Particulars Rs.
Taxable value of supply 3813560
Rs.45 lakh x 100/118
Add: CGST @9% on 38,13,560 343220
SGST @9% on 38,13,560 343220
Total 4500000

Q43. Black and Which Pvt. Ltd. has provided the following particulars relating to goods sold by it to
Colorful Pvt. Ltd. 342

Particulars Amount in Rs.

List price of the goods (exclusive of taxes and discounts) 50000
Tax levied by Municipal Authority on the sale of such goods 5000
CGST and SGST chargeable on the goods 10440
Packing charges (not included in price above) 1000

Block and White Pvt. Ltd. received Rs.2000 as a subsidy from an NGO on sale of such goods. The
price of Rs.50000 of the goods is after considering such subsidy. Block and White Pvt. Ltd. offers
2% discount on the list price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Block and White Pvt. Ltd.
Ans: Statement showing value of taxable supply
Particulars Amount in Rs.
List of the goods (exclusive of taxes and discount) 50000
 Add: Tax levied by Municipal Authority on the sale of such goods 5000
CGST and SGST chargeable on the goods Not addable
Add: packing charge 1000
Add; Subsidy from an NGO 2000
Less: Discount 2% on Rs.50000 (1000)
Value of taxable supply 57000

Q44. S Advertisers conceptualized and designed the advertising campaign for a new product
launched by Moon Pvt. Ltd. for a consideration of Rs.1500000. S Advertisers owed Rs.120000 to
one of its vendors in relation to the advertising service provided by it to Moon Pvt. Ltd. Such
liability of S Advertisers was discharged by Moon Pvt. Ltd. Moon Pvt. Ltd. delayed the payment of
consideration on thus, paid Rs.15000 as interest. Assume the rate of GST to be 18%.
Determine the value of taxable supply made by S Advertisers.
Ans: Statement showing value of taxable supply
Particulars Amount in Rs.
Service charges 500000
Add: payment made by Moon Pvt. Ltd to vendor of S Advertisers 20000
Add: Interest (i.e. Rs. 15000* 100/ 118) 12712
Value of taxable supply 532712
Note: The interest for delay in payment of consideration will be includible in the value of
supply but the time of supply of such interest will be the date when such interest is received in
terms of section 13(6) of the CGST Act, 2017. Such interest will be taken to be inclusive of GST
and the value will be computed by making back calculations [Interest/100 + tax rate) x 100].

Q45. Raman Ltd., a registered supplier in Mumbai (Maharashtra), has supplied goods to Sahil Traders
and Jaggy Motors Ltd. located in Ahmedabad (Gujarat) and Pune (Maharashtra) respectively.
Raman Ltd. has furnished the following details for the current month:

S. Particulars Sahil Traders Jaggi Motors Ltd.

No. (Rs.) (Rs.)

(i) Price of the goods (excluding GST) 20000 15000

(ii) Packing charges 600
(iii) Commission 400
(iv) Weighment charges 1000
(v) Discount for prompt payment (recorded in the 500
invoice)
 Items given in points (ii) to (v) have not been considered while arriving at price of the goods
given in point (i) above.
Compute the GST liability [CGST & SGST or IGST, as the case may be] of Raman Ltd. for the given
month. Assume the rates of taxes to be as under:
Particulars Rate of tax
Central tax (CGST) 9%
State Tax (SGST) 9%
Integrated tax (IGST) 18%

Make suitable assumptions, wherever necessary.

Note: The supply made to Sahil Traders is an inter-State supply.
Ans: statement showing taxable supply and GST liability:

S. No. Particulars Sahil Traders Jaggi Motors

(Rs.) Ltd. (Rs.)
(i) Price of the goods (excluding GST) 20000 15000
(ii) Add: Packing charges 600
(iii) Add: Commission 400
(iv) Add: Weighment charges 1000
(v) Less: Discount for prompt payment (500)
(recorded in the invoice)
Value of Taxable supply 21000 15500
CGST Nil 1,395
SGST Nil 1,395
IGST 3,780 Nil

Q46. Power Engineering Pvt. Ltd., a registered supplier, is engaged in providing expert maintenance
and repair services for large power plants that are in the nature of immovable property, situated all
over India. The company has its Head Office at Bangalore, Karnataka and branch offices in other
States. The work is done in the following manner.
• The company has self-contained mobile workshops, which are container trucks fitted out for
carrying out the repairs. The trucks are equipped with items like repair equipment’s,
consumables, tools, parts etc. to handle a wide variety of repair work.
• The truck is sent to the client location for carrying out the repair work. Depending upon the
repairs to be done, the equipment, consumables, tools, parts etc. are used from the stock of
such items carried in the truck.
• In some cases, a stand-alone machine is also sent to the client’s premises in such truck for
carrying out the repair work.
 • The customer is billed after the completion of the repair work depending upon the nature of
the work and the actual quantity of consumables, parts etc. used in the repair work.
• Sometimes the truck is sent to the company’s own location in other State(s) from where it is
further sent to client locations for repairs.
Work out the GST liability [COST & SGST or IGST, as the case may be] of Power Engineering Pvt. Ltd.,
Bangalore on the basis of the facts as described, read with the following data for the month of
November 20XX.
S.No. Particulars
A Truck sent to own location in Tamil Nadu
(i) Value of items contained in the truck – Rs.300000
(ii) Value of truck – Rs.2500000
B Truck sent to a client location in Tamil Nadu for carrying out repairs. Stand- alone
machine is also sent in the truck to client location for repairs
(i) Value of items contained in the truck – Rs.285000
(ii) Value of stand-alone machine – Rs.400000
(iii) Value of truck – Rs.2000000
(Billing for repairs to be done afterwards depending upon the actual items used)
C Truck sent to a client location in Karnataka for carrying out repairs
(i) Value of items contained in the truck-Rs.106000
(ii) Value of truck – Rs.2000000
(Billing for repairs to be done afterwards depending upon the actual items used)
D Invoices raised for repair work carried out in Tamil Nadu [including the invoice 7000000
for repair work done in 'B’] -
E Invoices raised for repair work carried out in Karnataka [including the invoice for 1200000
repair work done in ‘C’]

Also, specify the document(s), if any, which need to be issued by Power Engineering Pvt. Ltd.,
Bangalore for the above transactions.
All the given amounts are exclusive of GST, wherever applicable. Assume the rates of taxes to be as
under:

Items used for repairs

COST - 6% SGST - 6% IGST-12%
Container truck. Stand-alone machines
COST-2.5% SGST-2.5% IGST-5%
 Works contract for repairs and maintenance of immovable property
COST-9% SGST - 9% IGST-18%
You are required to make suitable assumptions, wherever necessary.
(C.A. Final May 2018 RTP)
Ans:
S.No. Particulars Rs.
A. Items sent in container truck to own location in Tamil Nadu - 36000
IGST @ 12% *Rs.300000 =
Container truck sent to own location in Tamil Nadu -
Since the activity is not a supply, tax invoice is not
required to be issued by Power Engineering Pvt. Ltd.
However, a delivery challan is to be issued by the
company in terms of rule 55(1) (c) of CGST Rules,
2017 for sending the truck to its own location in
Tamil Nadu.
B. Stand-alone machine sent in container truck to client location -
in Tamil Nadu, for carrying out repairs
a delivery challan is to be issued in terms of rule 55(1)(c) of
CGST Rules, 2017 for sending the stand-alone machines and
container truck to client location.
Container truck sent to client location in Tamil Nadu a
delivery challan is to be issued in terms of rule 55(1) (c) of
CGST Rules, 2017 for sending the stand-alone machines and
container truck to client location.
Items sent in container truck to client location in Tamil Nadu, -
for carrying out repairs
It is form part of works contract service and taxable only
when supply of service takes place.
C. Container truck sent to client location in Karnataka
Items sent in container truck to client location in Karnataka, -
for carrying out repairs
D. Invoices raised for repair work carried out in Tamil Nadu: 1260000
IGST @ 18% on Rs.7000000
E. Invoices raised for repair work carried out in Karnataka: CGST 216000
9% + SGST 9% on Rs.1200000
Total
GST 1512000
liability
Q47. ABC Ltd., Noida (Uttar Pradesh) is a supplier of machinery used for making bottle caps. The
supply of machinery is affected as under:
- The wholesale price of the machinery (excluding all taxes and other expenses) at which it is
supplied in the ordinary course of the business to various customers is Rs.4200000. However, the
actual price at which the machinery is supplied to an individual customer varies within a range of ±
10% depending upon the terms of contract of supply with the particular customer.
Apart from the price of the machinery, ABC Ltd. charges from the customer the following incidental
expenses:
• associated handling and loading charges of Rs.10000
• installation and commissioning charges of Rs.100000

The machinery can be dismantled and erected at another site, if required. The above charges are
compulsorily levied in every case of supply of machinery.
Transportation of machinery to the customer’s premises is arranged by ABC Ltd. through a third-party
service provider [Goods Transport Agency (GTA)]. The customer enters into a separate service contract
with the GTA and pays the freight directly to it.
The company provides one-year free warranty for the machinery. However, the company also provides
an extended two-year warranty on payment of additional charge of Rs.300000.
A cash discount of 2% on the price of the machinery is offered at the time of supply, if the customer
agrees to make the payment within 15 days of the receipt of the machinery at his premises. In the
event of failure to make the payment within the stipulated time, the company-
• recovers the discount given; and
• Charges interest @1% per month or part of the month on the total amount due from the
customer (towards the machinery supplied) from the date of making the supply till the date of
payment. However, no interest is charged on the tax dues.
For every machinery supplied, ABC Ltd. receives a grant of ?2,00,000 from its holding company DEF Ltd.
ABC Ltd. has supplied a machinery to D Pvt. Ltd. on August 1, 20XX at a price of ?40,00,000 (excluding
all taxes). D Pvt. Ltd has its corporate office in New Delhi. However, the machinery has been installed
at its manufacturing unit located in Gurugram (Haryana). D Pvt. Ltd. has paid the freight directly to the
GTA and opted for two-year warranty. Discount @ 2% was given to D Pvt. Ltd. as it agreed to make the
payment within 15 days. However, D Pvt. Ltd. paid the consideration on 30st October, 20XX.
Assume the rates of taxes to be as under:

Bottle cap making machine

SGST-6% SGST-6% SGST-6%
Service of transportation of goods
SGST - 2.5% SGST - 2.5% SGST - 2.5%
 Other services involved in the above supply
SGST-9% SGST-9% SGST-9%
Calculate the GST payable [CGST & SGST or IGST, as the case may be] on the machinery and support
your conclusions with legal provisions in the form of explanatory notes.
Make suitable assumptions, wherever needed.
(CA final RTP May 2018)
Ans: Computation GST liability of ABC Ltd.

(Rs.)
Price of machine 4000000
Handling and loading charges 10000
Installation and commissioning charges 100000
Transportation cost (not the responsibility of ABC Ltd) Nil
Additional warranty cost 300000
Grant from DEF Ltd. 200000

Total price of the machine 4610000

Less'. 2% cash discount on price of machinery = Rs.4000000 x 2% 80000
Taxable value of supply 4530000
Tax liability for the month of August 20XX
IGST @ 12% on Rs.4530000 543600
Tax liability for the month of October 20XX

Interest collected @3% on RS-44,10,000 132300

Chas discounted recovered 80000
Cum-tax value of interest and cash discount 212300
IGST={2,12,300/112} *12% 22746
Total IGST payable on the machinery {5,43,600{+22,746} 566346

Q48. Singhal brothers ,registered in Uttarakhand has supplied 30 tons of a chemical @ Rs-50,000 per
ton {excluding taxes } to P of Uttarakhand on 8th September ,20XX .The invoice for the supply has
also been issued on the same date .father ,following additional amounts were also charged from P
PARTICULARS RS.
FREIGHT 180000
PACKING CHARGES 110000
WEIGHING CHARGES 20000
 COST OF INSTRUMENT SPECIALLY PURCHASED BY 310000
SINGHAL’S BROTHERS TO MANUFACTURE THE CHEMICAL

As per the terms of the contract of supply, Singhal Brothers is required to get the chemical inspected
by an independent testing agency before the delivery of the same to P. P has paid such inspection
charges amounting to Rs. 12000 directly to the testing agency. Singhal Brothers has also received
Rs.5000000 as a subsidy from State Government for setting up chemical manufacturing plant in
Uttarakhand. P is required to make payment within 15 days of supply in terms of the contract.
However, P delayed the payment of consideration and made payment in November, 20XX thus paid
715,000 as interest. You are required to calculate the GST liability in this case and due date of deposit.
Assume the rate of GST to be 18%.
Note: Singhal Brothers and P are not related and price is the sole consideration for the supply.
Ans:
Computation of GST liability of Singhal Brothers
Particulars Rs.
Price of chemicals (Rs.50000 x 30 tons) 1500000
Freight 180000
Packing charges 110000
Weighing charges 20000
Cost of Special instrument 310000
Inspection charges 12000
Government subsidy Nil
Value of taxable supply - September 20XX 2132000
Tax liability for the month of September 20XX
CGST@9% 191880
SGST @ 9% 191880
Value of taxable supply (i.e. Interest for late payment) (Rs.15000 x 100/118) 12712
CGST payable @ 9% 1144
SGST payable @ 9% 1144
Due dates of payment of GST:
Particulars Time of Supply Value in Rs.
GST liability of Rs. 383760 for the taxable supply made by September 8,
October 20, 20XX
Singhal Brothers 20XX
December 20,
Interest amounting to Rs. 2288 November, 20XX
20XX

Q49. A manufacturer of machinery supplied a special machine to LM Furnishers. Following details are
 provided in relation to amounts charged; Charges mentioned in (ii) to (v) are not included in (i)
below. Other information furnished is—
(a) Cash discount @ 2% on price of machinery has been allowed to the customer at the time of
supply and also recorded in invoice.
(b) GST rate- 18%.
Calculate value of supply of the special machine.
S.No. Particulars Value in Rs.
1) Price of machinery excluding taxes (before cash discount) 600000
2) Transit insurance 11000
3) Packing charges 9000
4) Extra charges for designing the machine 20000
5) Freight 12000

Ans:
S.No. Particulars Value in Rs.
1) Price of machinery excluding taxes (before cash discount) 600000
2) Add: Transit insurance 11000
3) Add: Packing charges 9000
4) Add: Extra charges for designing the machine 20000
5) Add: Freight 12000
Sub-total 652000
Less: 2% cash discount on price of machinery -12000
(600000*2%)
Value of taxable supply 640000

Q50.
Laxmi Ltd. of Bhopal (Madhya Pradesh) is a supplier of machinery. Laxmi Ltd. has supplied
machinery to PQR Enterprises in Indore (Madhya Pradesh) on 1st October, 2017. The invoice for
supply has been issued on 1st October, 2017. Thus, the time of supply of machinery is 1st October,
2017. Laxmi Ltd. and PQR Enterprises are not related. Following information is provided.
Basic price of machinery excluding all taxes but including design and engineering charges of Rs.
10000 and loading charges Rs. 20000 – Rs. 2000000.

Laxmi Ltd. provides 2 years free warranty for the machinery. Laxmi Ltd. also provides an extended
one- year warranty on payment of additional charges of Rs. 100000. PQR Enterprises opted for one-
year warranty.
Laxmi Ltd. has collected consultancy charges in relation to pre-installation planning of Rs. 10000
and freight and insurance charges from place of removal to buyer’s premises of Rs.20000.
 Laxmi Ltd. received subsidy of 50000 from Central Government for supplying the machinery to
backward region since receiver was located in a backward region. Laxmi Ltd. also received Rs.
50000 from the joint venture partner of PQR Enterprises for making timely of machinery to the
recipient.
A cash discount of 1% on the basic price of the machinery is offered at the time of supply, if PQR
Enterprises agrees to make the payment within 30 days of the receipt of the machinery at his
premises. Discount @ 1% was given to PQR Enterprises as it agreed to make the payment within 30
days.
The machinery attracts CGST and SGST or IGST payable, as the case may be on the machinery.
10 Marks (CA Final May 2018 New)
Ans: Statement showing CGST and SGST payable by Laxmi Ltd.

PARTICULARS VALUE IN RS. WORKING NOTE

BASIC PRICE OF THE 1970000 Rs. 2000000- 10000- 20000 =
MACHINE 1970000/-
ADD: DESIGN AND 10000 Addable in transaction value
ENGINEERING
ADD: LOADING CHARGES 20000 -do-
ADD: EXTENDED 100000 -do
WARRANTY
ADD: CONSULTANCY 10000 -do-
CHARGES
ADD: FREIGHT AND 20000 -do-
INSURANCE CHARGES FROM
PLACE OF REMOVAL TO
BUYER’S PREMISES
ADD: SUBSIDY FROM Nil Not addable in transaction
GOVERNMENT value
SUBSIDY FROM JOINT 50000 Addable in transaction value
VENTURE
SUB- TOTAL 2180000
(19700) 1970000 * 1%
LESS: CASH DISCOUNT
TRANSACTION VALUE 2160300
CGST SGST
INTRA-STATE SUPPLY 194427 194427 9% * 2160300
Q51.
Mr. Nagarjuna, a registered supplier of Chennai has received the following amounts in respect of
the activities undertaken by him during the month ended on 30th September, 2017:
S.No. Particulars Amount (Rs.)
1) Amount charged for service provided to recognized sports body as selector 50000
of national team
2) Commission received as an insurance agent from insurance company 65000
3) Amount charged as business correspondent for the services provided to 15000
the urban of a nationalized bank with respect to savings bank accounts
4) Service to foreign diplomatic mission located in India 28000
5) Funeral services 30000

He received the services from unregistered goods transport agency for his business activities
relating to serial numbers 1) and 3) above and paid freight of Rs. 45000 (his aggregate turnover
of the previous year was Rs. 990000).
Note: All the transactions stated above are intra state transactions and also are exclusive of
GST.
You are required to calculate gross value of taxable supply on which GST is to be paid by Mr.
Nagarjuna for the month of September, 2017.
Working notes should form part of your Ans
7 Marks (CA Final (New) May 2018)
Ans: Statement showing gross value of taxable supply of Mr. Nagarjuna
S.No. Particulars Amount Remarks
(Rs.)
1) Amount charged for service provided to recognized sports 50000 Taxable
body as selector of national team
2) Commission received as an insurance agent from insurance Nil Taxable under
company RCM
3) Amount charged as business correspondent for the services 15000 Taxable
provided to the urban of a nationalized bank with respect
to savings bank accounts
4) Service to foreign diplomatic mission located in India 28000 Excluded from the
scope of supply
5) Funeral services Nil
Total taxable supply (forward charge) 93000
Total taxable supply (RCM) 45000 Freight paid to
GTA
Q52. Vayu Ltd. provides you the following particulars relating to goods supplied by it to Agni Ltd:
 Particulars Rs.
List price of the goods (Exclusive of Taxes 76000
and discounts)
Special packing at the request of customer 5000
to be charged to the customer
Duty levied by local authority on the sale of 4000
such goods
CGST and SGST charges in invoice 14400
Subsidy received from an NGO (The price of 5000
Rs. 76000 given above is after considering
the subsidy)
Vayu Ltd. offers 3% discount of the list price of the goods which is recorded in the invoice for the
goods. Determine the value of taxable supplies made by Vayu Ltd.
5 Marks (CA Final (old) May 2018)
Ans: 51: Statement showing value of taxable supply made by Vayu Ltd.

Particulars Rs.
List price of the goods (Exclusive of Taxes and discounts) 76000
Special packing at the request of customer to be charged to the customer 5000
Duty levied by local authority on the sale of such goods 4000
CGST and SGST charges in invoice Not addable
Subsidy received from an NGO (The price of Rs. 76000 given above is after
5000
considering the subsidy)
Sub- total 90000
Less: Discount @ 3% on Rs. 76000 (2280)
Taxable supply 87720

Q53: XYZ Ltd., New Delhi, manufactures biscuits under the brand name ‘Tasty picks. Biscuits are
supplied to wholesalers and distributors located across India on FOR basis from the warehouse of the
company located at New Delhi. The company uses multiple modes of transport for supplying the
biscuits to its customers spread across the country. The transportation cost is shown as a line item in
the invoice and is billed to the customers with a mark-up of 2% on total amount of freight paid
(inclusive of taxes).

Flour used for the production process is procured from vendors located in Madhya Pradesh on ex-
factory basis. The company has provided the following data relating to transportation of biscuits and
flour in the month of April 20XX.
For sales within the NCR region (Rs. 2000000), the company arranged a local mini-van belonging to an
individual and paid him Rs. 54000.

For sales to locations in neighboring States (Rs. 5500000) the company booked the goods by road
carriers (GTAs) and paid road freight of Rs. 373000. Out of the total sales to neighboring States, goods
worth Rs. 1000000 were booked through a GTA which paid tax @ 12%. Freight of Rs. 73000 was paid to
such GTA.

For purchase of flour from Madhya Pradesh (Rs. 1500000), the company booked the goods by a GTA in
a single carriage and paid road freight of Rs. 1500.
For local purchase of baking powder, the company booked the goods by a GTA in a single carriage and
paid road freight of RS 1,500.

For transferring the biscuits {open market value –Rs. 4,00000} to one of its sister concerns in Rajasthan,
the company booked the goods by a GTA and paid road freight of RS 40,000.

Based on the particulars given above, compute the GST payable on the amount paid for transportation
by XYZ Ltd. when it avails the services of different transporters.

Compute the GST charged on transportation cost billed by the company to its customers.

Note: Assume the rate of GST on transportation of goods and biscuits to be 5%and 12%respectively
{except]where any other rate is specified in the question}
ANS:
Computation of GST payable on amounts on amounts paid for transportations by XYZ Ltd, when it
avails the services of different transporter:
Freight
Particulars GST payable Remarks
(Rs.)
Supply of goods in mini van 54000 Nil Exempted supply
By rails (Biscuits) 317000 15850 Forward charge
By GTA (5%) 300000 15000 RCM
By GTA (12%) 73000 8760 Forward charge
By GTA (flour) 55000 Nil Exempted supply
By GTA (butter) 35000 1750 RCM
By GTA (backing powder) 1500 Nil Exempted supply
By GTA (Biscuits to sister concern) 40000 2000 RCM
Total tax payable by XYZ on availing
43360
services of different transporters
2) Computation of GST charged on transportation cost billed by XYZ Ltd. to its customers:

Freight billed
GST paid on
Freight paid (with mark-up GST charged @
Particulars freight (Rs.)
(Rs.) (A) @ 2% on (A)+ 12% (Rs.)
(B)
(B)) (Rs.)
Transportation of
biscuits in a local -
54000 55080 6610
minivan belonging
to an individual
Transportation of
biscuits by Indian 317000 15850 339507 40741
Railways
Transpiration
300000 15000 321300 38556
biscuits by GTA
Transpiration
biscuits by GTA @ 73000 8760 83395 10007
12%
Total tax
charged by XYZ
Ltd. on
95914
transportation
cost billed to the
customers

Note:

1) Since XYZ Ltd. is supplying biscuits on FOR basis, the service of transportation of biscuits gets
bundled with the supply of biscuits. Thus, the supply of biscuits and transportation service is a
composite supply, chargeable to tax at the rate applicable to the principal supply (biscuits) i.e.,
12% (Section 8(a) of the CGST Act, 2017 read with the definition of ‘composite supply’ under
section 2(30) of the CGST Act, 2017 and ‘principal supply’ under section 2(90) of the CGST Ac,
2017).
2) It has been assumed that there is no mark-up on transportation cost billed to sister concern
(non – customer)

Q54 Explain the principle of valuation as per section 15 of CGST Act

Ans:

As per Section IS (1) of CGST Act

The value of a supply of goods or services or both shall be the transaction value, which is

➢ The price actually paid or

➢ Payable
for the said supply of goods or services or both where the supplier and the recipient of the
supply are
➢ Not related and
➢ The price is the sole consideration for the supply.

Section 15(2) includes certain elements like: -

➢ Taxes other than GST

➢ Third party payment by recipient
➢ Incidental expenses charged by Supplier
➢ Interest, late fee &
➢ Subsidies directly linked to the price

Also, sec 15(3) allows, deduction of discount from transaction value.

Q55: When will the recipient and supplier be treated as related?

Ans:

The relationship will be examined based on the explanation appended to Section 15 which defines the
term "related persons". Accordingly, the following persons would be treated as "related persons" for
the purpose of GST:

➢ Such persons are officers or directors of one another's businesses;

➢ Such persons are legally recognized partners in business;
➢ Such persons are employer and employee;
➢ any person directly or indirectly owns, controls or holds twenty-five percent, or more of the
outstanding voting stock or shares of both of them;
➢ one of them directly or indirectly controls the other or both of them are directly or indirectly
controlled by a third person;
➢ together they directly or indirectly control a third person; or
➢ they are members of the same family;
➢ persons who are associated in the business of one another where one is the sole agent/ sole
distributor/ sole concessionaire of the other.
Q56: Whether discounts given to a customer be allowed as a deduction from transaction value?

Ans:
Yes, the following two types of discounts would be excluded from transaction value;
Discount at the time of Sale - Allowed as a deduction provided if the discount is recorded in the
invoice. Post-supply Discount - If such discount is based on the arrangement entered into before or at
the time of supply, AND where the same can be linked to relevant invoices, then the same is allowed as
a discount on the condition that the recipient reverses the tax credit related to such discount availed
earlier.

Q57: Can any addition be made to the contracted price when 'Transaction Value' is acceptable?

Ans:

Yes. Section 15 of CGST Act, provides for inclusions to the transaction value (on which GST will be
payable). The below are broadly, the inclusions prescribed:

(a) any taxes, duties, cases, fees and charges levied under any law other than the GST law, if
charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but which has been
incurred by the recipient, but not included in the price;
(c) incidental expenses, including commission and packing, charged by the supplier to the
recipient, and any amount charged for anything done by the supplier in respect of the supply
until delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
(e) Subsidies directly linked to the price excluding subsidies provided by the Government.

Q58: CASE STUDY Black and White Pvt. Ltd, has provided the following particulars relating to goods
sold by it to Colorful Pvt. Ltd. [ICAI Material]

Particulars (Rs.)
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
CGST and SGST chargeable on the goods 10,440
1,000
Packing charges (not included in price above)

Black and White Pvt. Ltd. received 2000 as a subsidy from an NGO on sale of such goods. The
price of? 50,000 of the goods is after considering such subsidy.
 Black and White Ltd. offers 2% discount on the list price of the goods which is recorded in the
invoice for the goods.
Determine the value of taxable supply made by Black and White Pvt. Ltd.
Ans:

Particulars (Rs.)
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods [Includible
5,000
in the value as per section 15(2)(a)]
CGST and SGST chargeable on the goods [Not includible in the value as
per section 15(2)(a)) Packing charges [Includible in the value as per 1,000
section 15(2)(c)]
Subsidy received from a non-Government body [Since subsidy is
received from a non-Government body, the same is included in the 2,000
value in terms of section 15(2)(e)]
Total 58,000
Less: Discount @ 2% on Rs.50,000 [Since discount is known at the time
1,000
of supply, it is deductible from the value in terms of section 15(3) (a)]
Value of taxable supply 57,000

Q59: Sam Riddhi Advertisers conceptualized and designed the advertising campaign for a new product
launched by New Moon Pvt. Ltd. for a consideration of Rs.5, 00,000. Sam Riddhi Advertisers owed
20,000 to one of its vendors in relation to the advertising service provided by it to New Moon Pvt. Ltd.
Such liability of Sam Riddhi Advertisers was discharged by New Moon Pvt. Ltd. New Moon Pvt. Ltd.
delayed the payment of consideration and thus, paid Rs.15,000 as interest. [ICAI Material] Determine
the value of taxable supply made by Sam Riddhi Advertisers

Ans:

Particulars (Rs.)

Service charges 5,00,000

Payment made by New Moon Pvt. Ltd to vendor of Sam Riddhi 20,000
Advertisers [Liability of the supplier being discharged by the recipient, is
includible in the value in terms of section 15(2)(b)]

Interest for delay in payment of consideration [Includible in the value in 12712

terms of section 15(2)(d) i.e., 1500 × 100 /118] [note 1]
 Value of taxable supply 532712

Note 1: the interest for delay in payment of consideration. will be includible in the value of supply but
the time. of supply will be the date when such interest amount is received in term of sec 13(6). Such
interest is inclusive of GST and the value shall be computed by backward calculation i.e.
(Int/100+tax*100).

Q60: AKJ Foods Pvt. Ltd. gets an order for supply of processed food from a customer. The customer
wants the consignment tested for gluten or specified chemical residues. AKI Foods Pvt. Ltd. does the
testing and charges a testing fee for the same from the customer. AKJ Foods Pvt. Ltd. argues that such
testing fees should not form part of the consideration for the sale as it is a separate activity.
Is his agreement correct in light of section 15?

Ans:
Facts of the case: AKJ foods Pvt. Ltd. has done some specified chemical test on the request of customer
for which extra testing fees collected from the customer.
Issue for the discussion: Whether testing fees collected from the customer would form a part of
consideration for supply of processed food?
Legal provision: As per section 15(2)(c) of CGST Act, mandates the addition of certain elements to
transaction value to arrive at taxable value, the section specifies that amount charged for anything
done by the supplier in respect of the supply at the time of or before delivery of goods or supply of
services shall be included in taxable value.
Conclusion: Thus, in the given case even though the testing is carried out on request of customer it
should be added in transaction value.

Q61: Vayu Ltd. provides you the following particulars relating to goods supplied by it to Agni Ltd.:

Particulars (Rs.)
List price of the goods (exclusive of Taxes and discounts). 76,000
Special packing at the request of customer to be charged to the customer. 5,000
Duty levied by local authority on the sale of such goods. 4,000
CGST and SGST charged in invoice. 14,400
 Subsidy received from an NGO (The price of Rs.76,000 given above is after 5,000
considering the subsidy)
Vayu Ltd. offers 3% discount of the list price of the goods which is recorded in the invoice for the
goods. Determine the value of taxable supplies made by Vayu Ltd.

Ans:

Computation of value of taxable supplies by Vayu Ltd.

Particulars (Rs.)
List price of the goods 76,000
Add: Special packing [Note 1] 5,000
Duty levied by local authority on sale of goods [Note 2] 4,000
CGST and SGST charged [Note 2] -
Subsidy received from an NGO [Note 3] 5,000
Less: Discount offered =3% of List price =Rs.76,000 x 3% [Note-4] 2,280
Value of taxable supplies 87,720

Notes:

1. Being incidental expenses charged by the supplier to the recipient of supply, packing charges
are includible in the value as per section 15(2)(c) of the CGST Act, 2017.
2. Taxes, duties, etc. levied under any law for the time being in force other than CGST,
SGST/UTGST, IGST are includible in the value as per section 15(2) (a) of CGST Act, 2017. Duty
levied by local authority on sale of goods has been assumed to be recovered from Agni Ltd. and
not included in the list price of the goods.
3. Subsidy directly linked to the price received from a non-Government body is includible in the
value in terms of section IS(2)(e) of CGST Act, 2017.
4. Since discount is known at the time of supply, it is deductible from the value in terms of section
15(3) (a) of CGST Act, 2017

Q62: A philanthropic association makes a substantial donation each year to a reputed private
management institution to subsidize the education of low-income group students who have gained
admission there. The fee for these individuals is reduced thereby, coming to? 3 lakh a year compared
to S lakh a year for other students.
What would be the taxable value of the service of coaching and instruction provided by the institution?

Ans:
As per section 15(2)(e) of CGST Act, the value of a supply includes subsidies directly linked to the price,
excluding the subsidies given by the State Government and Central Government in this case as subsidy
is not given by Government but from a philanthropic association. Thus, subsidy is to be added back to
the price to arrive at the taxable value, which comes to Rs.5lakh a year.

Q63: Mazda Banners, an advertising firm, gives an interest - free credit period of 30 days for payment
by the customer. Its customer ABC paid for the supply 32 days after the supply of service. Mazda
Banners waived the interest payable for delay of two days.
The Department wants to add interest for two days as per contract. Should notional interest be added
to the taxable value?

Ans:
As per sec 15(2)(d) of CGST Act, transaction value includes interest, late fee, penalty for delay of
payment of consideration for any supply. Normally, interest should be added to the transaction value
when it is actually received from the customer & not on notional basis. Also, as per sec 12(6) or 13(6)
of CGST Act, the time of supply for interest, late fee, penalty for delayed payment of consideration
shall be the date on which supplier receives such additional amount.

Q64: Crunch Bakery Products Ltd sells biscuits and cakes through its dealers, to whom it charges the
list price minus standard discount and pays GST accordingly. When goods remain unsold with the
dealers, it offers additional discounts on the stock as an incentive to push the sales.
Can this additional discount be reduced from the price at which the goods were sold and concomitant
tax adjustments made?

Ans:
Facts of the case: In the given case Crunch bakery products sold the biscuits after discount to the
dealer. Later on, supplier has given additional discount as an incentive to push sale of unsold stock of
dealer. Issue: Whether additional discount given by supplier as an incentive after supply of goods is
deductible from transaction value?
Legal provision: As per sec 15(3) any discount is deductible after supply if following conditions are
satisfied:
(i) Such discount is established in terms of agreement entered into at or before the time of
supply.
(ii) Such discount is linked to the relevant invoices
(iii) ITC proportionate to such discount is reversed by the recipient.
Conclusion: In the given case Crunch bakery products Ltd. has given additional discount after supply of
goods which was not agreed at the time of supply.
Hence, deduction of such additional discount is not available.

Q65: M/s. Reno Consultants are a labour contractor of manpower to Ms. Sanu Creations. They charge
to the principal employer for the wages of their labour which amounts to Rs.1,20,000 plus their service
charge of Rs.12,000 for arranging the labour. The issue is whether GST is payable on the total amount
charged by them or only their charges for labour. Examine the case and advise suitably.

Ans:

Legal Provision: The above case falls within the purview of Section 15 (1) of CGST Act

Discussion: As per the above Section

The value of a supply of goods or services or both shall be the transaction value, which is

➢ the price actually paid or

➢ payable for the said supply of goods or services or both where the supplier and the recipient of
the supply are
➢ not related and
➢ the price is the sole consideration for the supply.

Conclusion: Hence, the GST shall be payable on the total amount of Rs.1,20,000 + Rs.12,000 i.e.
Rs.1,32,000 as this is the price actually payable to the supplier of service wherein both the parties are
not related and price is the sole consideration for sale.

Q66: Mr. Vasudevan has conducted a market survey for Mr. Subramanian. However, Mr. Vasudevan
has not charged any fee for such services as Mr. Subramanian happens to be his best friend. Is GST
payable on such free service? Explain.

Ans:
As per Section 7 (1) (a) of CGST Act, when any supply of goods or services are made or agreed to be
made for consideration in the course of business then it is liable to GST.
Thus, free supply of goods or services not liable to GST unless it is covered in Schedule I. In the given
case Mr. Vasudevan & Mr. Subramanian both are best friends & not related party hence not covered in
Schedule I.
Hence, no GST is payable on free supply of service by Mr. Vasudevan, Value of supply will be
determining as per rule.

Q67: An Indian company is required to pay Rs.1,00,000 to a German company for technical knowhow.
It deduced Rs.10,000 as income tax at source and paid Rs.90,000 to the German company. On what
amount the Indian company will be liable to pay GST under reverse charge?

Ans:
Legal Provision: The above case falls within the purview of Section 15 (2) (a) of CGST Act
Discussion: As per the above section any taxes, duties, cases, fees and charges levied under any law for
the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory
Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged
separately by the supplier, shall be included in value of supply.
Conclusion: Hence, for GST purposes the value of taxable supplies shall be Rs.100,000 including the
TDS pertaining to Income Tax as this pertains to tax which is in force other than GST Act and so the
same shall be included in assessing value of taxable supplies.

Q68: XYZ Ltd. sells plant & machinery installed at its factory on 'as is whereas basis at Rs.2, 00,000, In
order to remove machinery from factory, the buyer incurs dismantling charges of Rs.3000, which are
paid to third party. Determine the value of supply as per GST Act.

Ans:
As per section 15(2) (b) of CGST Act, 2017, any amount that supplier is liable to pay in relation to such
supply but which has been paid by the recipient of the supply and not included in the price actually
paid or payable for the goods shall be included in the value of supply.
In the given case, XYZ it sells the plant & machinery as is whereas basis without having any liability of
dismantling. Thus, it cannot be included in the transaction value of XYZ Ltd. = Rs.2,00,000 as
dismantling charges is directly incurred by buyer & also it not the liability of supplier hence this value of
dismantling Rs.3,000 shall be separately treated in the invoice of third party
Q69: M/s XY2 & co purchased goods worth Rs.1,27,000 + GST @ 12% from M/s Ash Pvt. Ltd for supply
of electronic products as per the contract. M/s Ash Pvt. Ltd is required to deliver the goods to the
premises of MIs XY2 & co. M/s Ash Pvt. Ltd. hires transporter for delivery of goods to its premises.
However, the lorry receipt of 22,000 indicates that the freight is payable by M/s XYZ & co. Determine
the transaction value?

Ans:
As per section 15(2) (b) of CGST Act, Expenses of supplier if borne by recipient & not included in price
shall be included while computing the transaction value. In the given case as the cost of freight for
delivery of goods was the liability of M/s Ash Pvt. Ltd. but has been incurred by M/s XYZ & co this will
be included in the transaction value i.e.
Purchase value of Electronic products = Rs.1,27, 000 %3D
+ Freight charges = Rs.22,000
Transaction Value = Rs.1,49,000
GST Payable @ 12% = Rs.17880

Q70: Determine whether the following taxes and their value for levy of GST shall be included in the
following cases as per section 15 of CGST Act.

(i) Mr. R recovers rent for premises of Rs.15,000 and a house tax of Rs.1000 per month.
(ii) Ticket price for entry in film theatre is 300 and an entertainment tax was levied by local
bodies at 40%.
(iii) Contract price of supply of goods is 14,000 inclusive of all taxes and GST is 18%.

Ans:

As per section IS (2)(0) of CGST Act, 2017, value of supply shall not include any taxes under CGST Act,
SGST Act, UTGST Act, and the GST Act, if charged separately by the supplier. Thus, in accordance with
this section we shall determine the treatment and valuation for the given cases;

(i) Value of supply shall be including the house tax i.e. Rs.15,000 + House tax Rs.1000 = 16,000
per month, here the value for GST will be Rs.16,000/-
(ii) Ticket price for entry in film theatre is 300 before taxes; entertainment tax levied by local
bodies @ 40% shall be included. Thus, the value for GST will be = 300 + 40% = Rs.420.
(iii) Contract Value is 14,000 including GST @18% but GST charged shall iii) be worked out as
per Rule 35 of CGST rules i.e. 14,000 18/118 = 2136, thus the value for GST will be 11864.
Q71: Determine the value of taxable supply from the following information as in accordance with the
provisions of section 15 of the CGST Act 2017,

➢ Contract Value of goods inclusive of GST @ 12% Rs.9,50,000

➢ The above value of goods includes the following charges
➢ Packing & Handling charges Rs.15,000
➢ Assembling & Pattern making charges Rs.22,000
➢ Testing charges Rs.11,000
➢ Transport charges paid by recipient on behalf of supplier Rs.7,500
Has not been included in the contract value

Ans:

Particulars Rs. Rs.

Total Contract price of goods 9,50,000
Less: -GST @12% [ 9,50,000 *12/112] (Note 3) 1,01,786
Taxable value exclusive of GST 8,48,214
Add: -Transport charges 7,500
Value of taxable supply 8,55,714

Working Notes:

1. As per section 15(2)(c) of CGST Act, 2017, incidental expenses or charges for anything done by
supplier for supply of goods or services are includible in transaction value.
Hence following charges are not deducted from total. contract price: -
a) Packing & handling charges
b) Assembling & pattern making charges
c) Testing charges
2. As per section 15(2)(b) of CGST Act, 2017, any amount made by recipient to 3rd party for which
Supplier is liable to pay then it should be added in transaction value. Hence, transport charges
are to be separately added to the value of supply.
3. As per section 15(2) (a) of CGST Act, 2017, value of supply shall not include any taxes under
CGST Act, SGST Act, UTGST Act, and the GST Act, if charged separately by the supplier.

Q72: Asha Traders dealing in supply of garments received the following subsidies:
 a) Value of Taxable Supply of garments is Rs.45,000
b) Subsidy directly linked to the supply and received from a Trust engaged in promotion of such
garment is Rs.12,000
c) Subsidy from Central Government for promoting such units is 9,000, Determine the Transaction
Value of supply as per section IS of CGST Act.

Ans:

Computation of Value of Supply as per section IS of CGST Act:

Particulars Rs.
Value of taxable supply of garments 45,000
Subsidy received from Trust 12,000
Subsidy received from Government of India (As per section 15(2)(e) of CGST
Act, 2017, such subsidy amount shall not be included)
Transaction Value as per GST 57,000

Q73: Mr. Yash located in Mumbai purchases 9000 Parker ink pens worth Rs.5,50,000 from SK
enterprises wholesalers located in Pune. Mr. Yash's wife is an employee in SK Enterprises. The price of
each Parker pen in the open market is Rs.75. The supplier additionally charges Rs.4000 for delivery of
the goods to the business premises of recipient. Determine the value of supply as GST Act.

Ans:
As per sec 15(1), Value of supply is transaction value i.e. price actually paid or payable for supply where
➢ Buyer & Seller are not related &
➢ Price is sole consideration
In given case, Mr. Yash's wife is employee in SK enterprises, they are not treated as related person
henceforth the value of supply is actual price i.e., Rs.5,50,000 & delivery charges of 4,000 to be
included i.e. Rs.5,54,000.
Note: Delivery charges incidental expenses as per sec 15(2)(c) to be added to transaction value.

Q74: Quantum Plats Private Limited, Delhi supplies plastic granulation machine to Capcom Ltd., Delhi.
It furnishes the following details in respect of such supply:

Particulars Rs.
List Price of the machine (exclusive of taxes and discounts) 1,00,000
 Corrugated Boxes used for packing the machine (not included in price 1,000
above)
Subsidy received from Delhi Government on sale of such machine 5,000
(considered in Price above)
Discount @ 2% is offered on list price of the machine (recorded in the -
machine)

Determine the value of taxable supply made by Quantum Plats Private Limited.

Ans:

Computation of value of taxable supply

Particulars Rs.
List Price of the goods (exclusive of taxes and discounts) 1,00,000
Add: Corrugated received Boxes used for packing the machine [includible 1,000
in the value as per section 15(2)(c)]
Add: Subsidy received from Delhi Government on sale of such machine
[Subsidy received from State Government is not included the value in
terms of section 15(2) (e)]
Total 1,01,000
Less: Discount @ 2% on Rs.1,00,000 2,000
[Since discount is known at the time of supply, it is deductible from the
value in terms of section 15(3)(a)]
Value of taxable supply 99,000

Q75: There are separate valuation provisions for CGST, SGST and IGST and for Goods and Services.
Examine the correctness of the statement.

Ans:

No, they said statement is not correct. Section 15 of CGST Act determines the value of supply of goods
or services or both. Further, section 15 is applicable for determining value of taxable supply under IGST
as well vide section 20 of IGST Act. Section 20 of IGST Act inter alia provides that the provisions of CGST
Act relating to time and value of supply shall mutatis mutandis apply in relation to integrated tax as
they apply in relation to central tax. Thus, section 15 is common for all three taxes and also common
for goods and services.
Q76: Whether post-supply discounts or incentives are allowed as admissible deduction under section
I5 of the CGST Act? If yes, what are the necessary conditions to be complied with for availing such
deduction?

Ans:
Yes, post-supply discounts or incentives are allowed as admissible deduction under section 15of the
CGST Act. Where the post-supply discount is established as per the agreement which is known at or
before the time of supply and where such discount specifically linked to the relevant invoice and the
recipient has reversed input tax credit attributable to such discount, the discount is allowed as
admissible deduction under Section 15(3)(b) of the CGST Act.

Q77: Kamal Book Depot, a wholesaler of stationery items, registered in Mumbai, has received order
for supply of stationery items worth Rs.2,00,000/- on 12th November, 20XX from another local
registered dealer, Mr. Mehta, Mumbai. Kamal Book Depot charged the following additional expenses
from Mr. Mehta: -

Sr. No. Particulars Amount (Rs.)

i) Packing charges 5,000

ii) Freight & cartage 2,000

iii) Transit insurance 1,500

iv) Extra designing charges 6,000

v) Taxes by Municipal Authority 500

The goods were delivered to Mr. Mehta on 14th November, 20XX. Since Mr. Mehta was satisfied with
the quality of the goods, he made the payment of goods the same day and simultaneously placed
another order on Kamal Book Depot of stationery items amounting to 10,00,000 to be delivered in the
month of December, 20XX**. On receipt of second order, Kamal Book Depot allowed a discount of
20,000 on the first order placed by Mr. Mehta. Compute the GST liability of Kamal Book Depot for the
month of November, 20XX assuming the rates of GST on the goods supplied as under:

CGST 9% SGST 9%

Would your Ans: be different if expenses (i) to (v) given in above table are already included in the price
of Rs.2,00,000?
Note: -

i) All the amounts given above are exclusive of GST

ii) Kamal Book Depot and Mr. Mehta are not related persons and price is the sole
consideration of the supply.

"Payment and invoice for the second order will also be made in the month of December, 20XX only.
(CAL RTP May 19 New)

Ans:
Computation of value of taxable supply and tax liability
Particulars Amount (Rs.)
Price of the goods [Note-1] 2,00,000
i) Packing charges [Note-2] 5,000
ii) Freight & Cartage [Note-3] 2,000
iii) Transit Insurance [Note-3] 1,500
iv) Extra Designing charges [Note-4] 6,000
v) Taxes by Municipal Authority [Note-5] 500
Value of taxable supply 2,15,000
CGST @ 9% 19,350
SGST @ 9% 19,350
Notes: -

1. As per section 15(1) of the CGST Act, 2017, the value of a supply is the transaction value i.e. the
price actually paid or payable for the said supply.
2. All incidental expenses including packing charged by the supplier to the recipient are includible
in the value of supply in terms of section 15(2) of the CGST Act, 2017.
3. The given supply is a composite supply involving supply of goods (stationery items) and services
(transit insurance and freight) where the principal supply is the supply of goods.
As per section 8(a) of the CGST Act, 2017, a composite supply is treated as a supply of the
principal supply involved therein and charged to tax accordingly.
4. Any amount charged for anything done by the supplier in respect of the supply of goods or
services or both at the time of, or before delivery of goods or supply of services; is includible in
the value of supply vide section 15(2) of the CGST Act, 2017. Thus, extra designing charges are
to be included in the value of supply.
5. The taxes by Municipal Authorities are includible in the value of supply in terms of section 15(2)
of the CGST Act, 2017.
 6. In the given case, Mr. Mehta is allowed a discount of 20,000 on the goods supplied to him in
the month of November, 20XX. Since the said goods have already been delivered by Kamal
Book Depot, this discount will be a post-supply discount.
Further, value of supply shall not include any discount which is given after the supply has been
affected, if-
(i) such discount is established in terms of an agreement entered into at or before the time
of such supply and specifically linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of document issued by the
supplier has been reversed by the recipient of the supply [Section 15(3) of the CGST Act,
2017].

However, in the given case, post-supply discount given to Mr. Mehta will not be allowed as a
deduction from the value of supply since the discount policy was not known before the time of
such supply although the discount can be specifically linked to relevant invoice (invoice
pertaining to stationery items supplied to Mr. Mehta in November, 20XX).

In case the expenses (i) to (v) given in above table are already included in the price of 2,00,000:
Since these expenses are includible in the value of supply by virtue of the reasons mentioned in
explanatory notes above, no further addition will be required. Resultantly, the value of taxable
supply will be Rs.2,00,000 and CGST and SGST will be Rs.18,000 and Rs.18,000 respectively.

Questions from RTP, MTP of CMA

Q78: M/s Nambiar & Co., an Audit firm based in Cochin undertakes an audit assignment of his client
based in Chennai. The Contract mentioned about the audit fees of Rs.5,00,000 and arrangement of taxi
by the Client which may be worth Rs.15,000. Find the transaction value on which M/s Nambiar and Co.
is liable to pay GST.

Ans:
Transaction value in the hands of M/s Nambiar & Co., is Rs.15,000.
Note: Not only audit fees but also the expenditure incurred in connection with the taxi 15,000
constitute the sole consideration.

Question 26:

(a) Admission to True Theater is Rs.90 per ticket for a Tamil Movie as well as for a Hindi Movie plus
entertainment tax Rs.10% on Tamil Movie and 20% on other languages. In the month of
 November, True Theater sold 2000 tickets of Tamil Movie and I500 tickets of Hindi Movie. Find
the value of taxable supply of service. Applicable rate of GST is 18% (for Tamil movie tickets) &
28% (for Hindi movie tickets). Find the GST liability if any.
(b) The Government provides subsidy, for the benefit of farmers but it is given to the manufacturer
of fertilizers. Will such subsidy form part of value of supply? Give reason.

Ans:

Statement showing value of taxable supply of service and GST liability:

Value of taxable services:

Tamil Movie Rs.1,98,000 (Rs99 x 2000 tickets)
Hindi Movie Rs.1,62, 000 (Rs.108 x 1500 tickets)
Particulars 9% CGST 9% SGST 14% CGST 14% SGST
GST Liability (Rs.) 17,820 17,820 22,680 22,680

Working Notes:

Particulars Tamil Movie (Rs.) Hindi Movie (Rs.)

Rate per Tickets 90 90
Add: Entertainment Tax 9 18
Value of Taxable Supply 99 108
Applicable GST Rate 18% 28%

Note: - The given rates are assumed for actual rates refer CBIC portal

(b)The buyer of goods does not provide subsidy, but the Government as per the scheme provides it.
Therefore, this will not form part of value of supply as it is specifically specified that such subsidy
provided by the Government will not form part of the value of supply.

Q79: Candy Blue Ltd., Mumbai, a registered supplier, is manufacturing Chocolates and Biscuits. It
provides the following details of taxable inter-state supply made by it for the month of October 2017

Particulars Amount in (Rs.)

(i), List price of goods supplied inter-state 12,40,000
Item already adjusted in the price given in (i)above:
 (1) Subsidy from Central Government for supply of Biscuits 1,20,000
to Government School.
(2) Subsidy from Trade Association for supply of quality 30,000
Biscuits.
Items not adjusted in the price given in (i) above: 24,000
(3) Tax levied by Municipal Authority
(4) Packing Charge 12,000
(5) Late fee paid by the recipient of supply for delayed
Payment of invoice 5,000

Calculate the Value of taxable supply made by MIs Candy Blue Ltd. for the month of October 2017.

Ans:

Computation of value of taxable supply made by Candy Blue Ltd. for the month of October, 2017.

Particulars (Rs.)
List Price of the goods 12,40,000
Add: Subsidy amounting to Rs.1,20,000 received from Central Nil
Government [Since subsidy is received from Government, the same is not
includible in the value in terms of section IS of the CGST Act, 2017.]
Subsidy received from Trade Association [Since subsidy is received from a 30,000
non-Government body, the same is includible in the value in terms of
section 15 of the CGST Act, 2017.]
Tax levied by the Municipal Authority [Includible in the value as per 24,000
section 15 of the CGST Act, 2017]
Packing charges [Being incidental expenses, the same are includible in 12,000
the value as per section 15 of the CGST Act, 2017]
Late fees paid by recipient of supply for delayed payment [Includible in 5,000
the value as per section 15 of the CGST Act, 2017]
Value of taxable supply 13,11,000

Note: In the above solution, list price of the goods and late fee for delayed payment of invoice have
been assumed to be exclusive of taxes.
Q80: Shri Krishna Pvt. Ltd., a registered dealer, furnishes the following information relating to goods
sold by it to Shri Balram Pvt. Ltd. in the course of Intra State.

Particulars Amount (Rs.)

Price of the goods 1,00,000
Municipal Tax 2,000
Inspection charges 15,000
Subsidies received from Shri Ram Trust (As the products is going to be used 50,000
by blind association)
Late fees for delayed payment. (Though Shri Balram Pvt. Ltd. made late 1,000
payment but these charges are waived by Shri Krishna Pvt. Ltd.)
Shri Balram Pvt. Ltd. paid to Radha Pvt. Ltd. (on behalf of Shri Krishna Pvt. 2,000
Ltd.) weighment charges.

According to GST Law, determine the value of taxable supply made by Shri Krishna Pvt. Ltd. Items given
in Point (ii) to (vi) are not considered while arriving at the price of the goods given in point no. (i).

Ans:

Computation of value of taxable supply made by Shri. Krishna Pvt. Ltd.

Particulars Rs.
Price of the goods 1,00,000
Municipal Tax 2,000
[Includible in the value as per section 15 of the CGST Act, 2017]
Inspection charges 15,000
[Being incidental expenses, the same are includible in the value as per
section 15 of the CGST Act, 2017]
Subsidy received from Shri. Ram Trust [Since subsidy is received from a non- 50,000
Government body, the same is includible in the value in terms of section 15
of the CGST Act, 20172]
Late fees for delayed payment [Not includible since waived off] Nil
Weighment charges paid to Radha Pvt. Ltd. by Shri Balram Pvt. Ltd. On behalf 2,000
of Shri Krishna Pvt. Ltd.
[Liability of the supplier being discharged by the recipient, is includible in the
value in terms of section 15 of the CGST Act, 2017]
Value of taxable supply 1,69,000
Q81: Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the
following details of taxable inter-State supply made by it for the month of March, 20XX.

Particulars Amount in (Rs.)

List price of goods supplied inter-state (exclusive of taxes) 15,00,000
Subsidy received from Central Government for supply of taxable goods to 2,10,000
Government School.
Subsidy received from an NGO for supply of taxable goods to an old age 50,000
home
Tax levied by Municipal Authority 20,000
Packing charges 15,000
Late fee paid by the recipient of supply for delayed payment of invoice 6,000

The list price of the goods takes into account the two subsidies received. However, the other
charges/taxes/fee are charged to the customers over and above the list price. Calculate the value of
taxable supply made by M/s Red Pepper Ltd. for the month of March, 20Xx. Rate of IGST is 18%.

Ans:

Computation of value of taxable supply made by Red Pepper Ltd. for the month of March, 20XX

Particulars Amount
List price of the goods 15,00,000
Add: Subsidy amounting to Rs.2,10,000 received from Central Government Nil
[Since subsidy is received from Government, the same is not includible in the
value in terms of section IS of the CGST Act, 2017]
Subsidy received from NGO [Since subsidy is received from a non- 50,000
Government body, the same is includible in the value in terms of section 15
of the CGST Act, 2017]
Tax levied by the Municipal Authority [Includible in the value as per section 20,000
15 of the CGST Act, 2017]
Packing charges [Being incidental expenses, the same are includible in the 15,000
value as per section IS of the CGST Act, 2017]
Late fees paid by recipient of supply for delayed payment [Includible in the 5,085
value as per section IS of the CGST Act, 2017] (assumed to be inclusive of
taxes) [ 6,000 x 100/118] rounded off
Value of taxable supply 15,90,085
Q82: Ms. Achanta, a registered supplier in Kochi (Kerala State) has provided the following details in
respect of her supplies made Intra-State for the month of March 2018:

S. No. Particulars Amount (Rs.)

i) List price of goods supplied intra-state (exclusive of items given 3,30,000
below from ii to v)
ii) Swachh Bharat cess levied on sale of the goods 12,500
iii) Packing expenses charged separately in the invoice 10,800
iv) Discount of 1% on list price of goods was provided (recorded in the
invoice of goods)
v) Subsidy received from State Govt. for encouraging women 5,000
entrepreneurs

Compute the value of taxable supply and the gross GST liability of Ms. Achanta for the month of March
2018 assuming rate of CGST to be 9% and SGST to be 9%. All the amounts given above are exclusive of
GST

Ans:

Computation of value of taxable supply and gross GST liability of Ms. Achanta for the month of March,
2018

Particulars Amount (Rs.)

List price of the goods 3,30,000
Add: Swachh Bharat Cess (SBC) levied on sale of goods [Note-1] 12,500
Add: Packing expenses [Note-2] 10,800
Less: Subsidy received from State Government [Note-3] (5,000)
Less: Discount @ 1% on list price [Note-4] (3,300)
Value of taxable supply 3,45,000
CGST @ 9% 31,050
SGST @ 9% 31,050
Gross GST liability 62,100

Notes: -As per section 15 of CGST Act, 2017,

 1. Any taxes, duties and cess levied under any law other than CGST, SGST is includible in the value.
2. Packing expenses being incidental expenses are includible in the value.
3. Since subsidy is received from State Government, the same is not includible in the value, it has
been assumed that such subsidies are directly linked to the price of the goods. Further, since
the same has not been adjusted in the list price, the same is to be excluded from the list price.
4. Since discount is known at the time of supply, it is deductible from the value.

Note:

(i) In the above Ans: the term "exclusive" mentioned in the question has been taken to be as
"not adjusted in the list price", i.e. the list price given in the question is before adjusting the
amount of discount and subsidy. However, it is also possible to take a view that the list price
"excludes" amount of discount and subsidy. Therefore, the same need not be deducted
again from the list price to arrive at the taxable value.
(ii) Read SBC as other taxes.

Q83: Kola Ltd. supplies machinery to Gisa Ltd. (Dealer in same State), provides following particulars
regarding the same. Determine the value of taxable supply of machinery. (CA Final Exam May 19 Old)

No. Particulars Amount

(i) Price of Machinery (exclusive of taxes and discounts) 5,50,000
(ii) One part is directly fitted in machinery at place of Gisa Ltd. 20,000
(Amount paid by Gisa Ltd. directly to supplier, as per
contract this amount should be paid by Kola Ltd. and not
included in price)
(iii) Installation and testing charges for machinery, not included 25,000
in price
(iv) (Discount 2% on machinery price (recorded in the invoice)

(v) Kola Ltd. provides additional 1% discount at year end, based

on additional purchase of other machinery

Ans:

Computation of taxable value of supply of machinery

S. No. Particulars Amount (Rs.)

Price of machinery (exclusive of taxes and discounts) 5,50,000
 Add: Amount paid by Gisa Ltd. directly to the supplier for a 20,000
part fitted in the machinery [Note-I]
Add: Installation and testing charges [Note-2] 25,000
Less: Discount 2% on machinery price [ Rs.5,50,000 x 2%] (11,0000)
[Note-3]
Less: Additional 1% discount at year end [Note-4] Nil
Value of taxable supply 5,84,000

Notes: As per section IS of CGST Act, 2017

1. Any amount that the supplier is liable to pay in relation to a supply but which has been incurred
by the recipient of the supply and not included in the price actually paid or payable for the
goods shall be included in the value of supply.
2. Any amount charged for anything done by the supplier in respect of the supply of goods at the
time of, or before delivery of goods shall be included in the value of supply.
3. Since discount is given at the time of supply of machinery and recorded in the invoice, the value
of the supply shall not include such discount.

Though the additional discount is established before or at the time of supply, it shall not be excluded
from the value of supply on the assumption that the same is not linked to the relevant invoice and
proportionate ITC has not been reversed by Gisa Ltd.
 Definitions Place of Supply of Goods

Question 1: What do you mean by import of service as per IGST Act?

Answer: As per sec 2(10) Import of service means the supply of any service, where:
i) The supplier of service is located outside India
ii) The recipient of service is located in India; and
iii) The place of supply of service is in India
Question 2: Explain the term Export of Service in reference to IGST Act.
Answer- As per sec 2(6) Export of Services means the supply of any service when–
The supplier of service is located in India
i) The recipient of service is located outside India; and
ii) The place of supply of service is outside India
iii) The payment for such services has been received by the supplier of service
in convertible foreign exchange or in Indian Rupees wherever permitted
by Reserve Bank of India
iv) The supplier of service and the recipient of service are not merely
establishments of a distinct person in accordance with Explanation I in sec 8
of IGST Act.

Sec 10(1) (a)- Movement of Goods

Question 3: What is the place of supply where goods involved movement?
Answer- As per section 10 (1)(a) of the IGST Act,2017, where the supply involves
movement of goods, whether by the supplier or the recipient or by any other
person the place of supply of goods is the location of the goods at the time at
which the movement of goods terminates for delivery to the recipient.
Question 4: X Ltd of Mumbai receives an order from A Ltd. of Surat for the supply of
certain goods. The price quoted by X Ltd being inclusive of freight. X Ltd arranges
for the transportation of the goods to Surat. The delivery of the goods is taken by
A Ltd at Surat. Determine the place of supply of goods and nature of transaction.
Would your answer be different if A Ltd has arranged the transport of goods which
are delivered to it by transporter in Surat.
Answer –
Legal Provision- The above case falls within the purview of Section 10 (1) (a) of IGST
Act
Discussion- Location of Supplier is Mumbai. As per the above Section the place of
supply of goods where the supply involves movement of goods, whether by the
supplier or the recipient or by any other person, the place of supply of such goods
shall be the location of the goods at the time at which the movement of goods
terminates for delivery to the recipient. In the above case the Place of Supply is
Surat.
Conclusion- In the above case it does not matter who has arranged for the transport
of goods i.e. either the supplier or recipient. The location of delivery of goods is
required in order to decide the place of supply. Since the supplier is located in
Mumbai and Place of Supply is Surat, IGST will be triggered as it comes under the
category of Inter-State supply

Question 5: (ICAI-BGM)
Supplier's factory fromTermination of
Particulars where goods are movement
removed for delivery
Movement of goods by the supplier Orissa Assam
(goods dispatched by supplier) [Section 10(1)
(a) read with 2(96)(a) of CGST Act]
Orissa Orissa
Movement of goods by the recipient Kerala Goa
(goods collected by recipient) [Section 10(1) (a) Kerala Kerala
read with 2(96)(b) of CGST Act]

Answer

Particulars Supplier's Termination of Place of Tax Payable

factory from movement Supply
where for delivery
goods are
removed
Movement of goods by the Orissa Assam Assam IGST payable at
supplier (goods Orissa
 dispatched by supplier) Orissa Orissa Orissa CGST/SGST
[Section 10(1)(a) read payable at
with 2(96)(a) of CGST Act] Orissa
Movement of goods by the Kerala Goa Goa IGST payable at
recipient (goods collected Kerala
by recipient) [Section Kerala Kerala Kerala CGST/SGST
10(1)(a) read with payable at
2(96)(b) of CGST Act] Kerala

Sec 10(1) (a) - MOVEMENT OF GOODS TO MORE THAN ONE LOCATION

Question 6:
P Ltd of Mumbai receives an order from R Ltd of Bangalore for the supply of certain
goods. The price charged is inclusive of freight. P Ltd arranges for the
transportation of the goods to Bangalore as well as Pune where R Ltd has a
branch. The delivery of the goods is taken by R Ltd at Bangalore and Pune
respectively. Determine the place of supply for the same & nature of transaction

Answer
Legal Provision
The above case falls within the purview of Section 10 (1) (a) of IGST Act
Discussion
Location of supplier of goods is Mumbai. As per the above Section Place of Supply of
goods where the supply involves movement of goods, whether by the supplier or
the recipient or by any other person, the place of supply of such goods shall be
the location of the goods at the time at which the movement of goods terminates
for delivery to the recipient. The Place of Supply will be the place where goods
are delivered.
Conclusion
In the above case it does not matter who has arranged for the transport of goods i.e.
either the supplier or recipient. The location of delivery of goods is required in
order to decide the place of supply. When Place of Supply is Bangalore IGST will
be triggered (Inter-State) and when Place of Supply is Pune CGST+SGST will be
triggered (Intra-State)
Sec 10(1) (b) - DIRECTION OF THIRD PERSON
Question 7: (ICAI-Material)
What will be the place of supply if the goods are delivered by the supplier to a
person on the direction of a third person?

Answer - As per Section 10 (1) (b) of IGST Act where the goods are delivered by the
supplier to a recipient or any other person on the direction of a third person,
whether acting as an agent or otherwise, before or during movement of goods
the place of supply shall be deemed to be the principal place of business of such
person on whose directions goods are delivered goods are delivered & it shall be
deemed that the said person has received the goods.

Question 8: Determine the place of supply of goods for the following

Supplier and his Location of the buyerRecipient and his Place of delivery of
location (third person) location goods
A Ltd, Bangalore B Ltd, Bangalore M Ltd, Mumbai Mumbai
A Ltd, Bangalore M Ltd, Mumbai B Ltd, Bangalore Bangalore
A Ltd, Bangalore S Ltd, Surat M Ltd, Mumbai Mumbai
A Ltd, Bangalore M Ltd, Mumbai P Ltd, Mumbai Mumbai

Answer - As per Section 10 (1) (b) of IGST Act where the goods are delivered by the
supplier to a recipient or any other person on the direction of a third person,
whether acting as an agent or otherwise, before or during movement of goods, it
shall be deemed that the said third person has received the goods and the place
of supply of such goods shall be the principal place of business of such person.

Discussion and Conclusion

Supplier and his Location of the Recipient and his Place of Place of CGST+SG
location buyer (third location delivery Supply ST/
person) of goods IGST
A Ltd, Bangalore B Ltd, Bangalore M Ltd, Mumbai Mumbai Bangalore CGST+SG
ST
A Ltd, Bangalore M Ltd, Mumbai B Ltd, Bangalore Bangalore Mumbai IGST
A Ltd, Bangalore S Ltd, Surat M Ltd, Mumbai Mumbai Surat IGST
A Ltd, Bangalore M Ltd, Mumbai P Ltd, Mumbai Mumbai Mumbai IGST

Question 9: (ICAI Material)

Parth of Pune, Maharashtra enters into an agreement to sell goods to Bakul of
Bareilly, Uttar Pradesh. While the goods were being packed in Pune godown of
Parth, Bakul got an order from Shreyas of Shimoga, Karnataka for the said goods.
Bakul agreed to supply the said goods to Shreyas and asked Parth to deliver the
goods to Shreyas at Shimoga. [CA final Rtp Nov 18]
You are required to determine the place of supply(ies) in the above situation.

Answer - As per section 10(1)(b) of IGST Act, 2017, where the goods are delivered by
the supplier to a recipient or any other person on the direction of a third person,
whether acting as an agent or otherwise, before or during movement of goods,
either by way of transfer of documents of title to the goods or otherwise, it shall
be deemed that the said third person has received the goods and the place of
supply of such goods shall be the principal place of business of such person.

Thus, in the given case, it is deemed that the Bakul has received the goods and the
place of supply of such goods is the principal place of business of Bakul.

Accordingly, the place of supply between Parth (Pune) and Bakul (Bareilly) will be
Bareilly, Uttar Pradesh.
This situation involves another supply between Bakul (Bareilly) and Shreyas
(Shimoga).

Section 10(1)(a) of IGST Act, 2017 stipulates that where the supply involves
movement of goods, whether by the supplier or the recipient or by any other
person, the place of supply of such goods shall be the location of the goods at the
time at which the movement of goods terminates for delivery to the recipient.

Thus, the place of supply in second case is the location of the goods at the time when
the movement of goods terminates for delivery to the recipient (Shreyas) i.e.,
Shimoga, Karnataka.

Question 10: Raman Row, a registered supplier under GST in Mumbai, is directed by
Nero Enterprises, Kolkata to deliver goods valued at Rs.12, 00,000 to Fabricana of
Aurangabad in Maharashtra. Raman Row makes out an invoice at 9% tax rate
under CGST and SGST respectively (scheduled rate) and delivers it locally in
Maharashtra.
Discuss and comment on the above levy of tax and determine the tax liability of
goods in the above circumstances. [CA Final May 18 Old]

Answer:- The supply between Raman Row (Mumbai) and Nero Enterprises (Kolkata)
is a bill to ship to supply where the goods are delivered by the supplier [Raman
Row] to a recipient [Fabricana (Aurangabad)] or any other person on the direction
of a third person [Nero Enterprises], In such a case, it is deemed that the said
third person has received the goods and the place of supply of such goods is the
principal place of business of such person vide section 10(1) (b) of IGST Act, 2017.
Accordingly, the place of supply between Raman Row (Mumbai) and Nero
Enterprises (Kolkata) will be Kolkata and thus, it will be an inter -State supply
liable to IGST. Hence, Raman Row should charge 18% IGST on Rs.12, 00,000,
which comes out to Rs.2, 16,000.
This situation involves another supply between Nero Enterprises (Kolkata) and
Fabricana (Aurangabad). The place of supply in this case will be the location of the
goods at the time when the movement of goods terminates for delivery to the
recipient i.e., Aurangabad in terms of section 10(1) (a) of IGST Act, 2017. Thus,
being an inter-State supply, the same will also be chargeable to IGST.

Supply of Goods does not involve movement - sec 10(1)(c)

Question 11:
Determine place of supply if supply does not involved movement of goods?

Answer - As per Section 10 (1) (c) of IGST Act, 2017, Place of Supply of goods where
the supply does not involve movement of goods, whether by the supplier or the
recipient, the place of supply shall be the location of such goods at the time of
the delivery to the recipient.

Question 12:
AB Academy of Mumbai sells the class furniture to CD Academy; the branch is
located in Mumbai and the registered office in Bangalore. The furniture stays in
the same classroom. Determine Place of supply and nature of transaction.

Answer
Legal Provision- The above case falls within the purview of Section 10 (1) (c) of IGST
Act, 2017
Discussion - As per the above Section Place of Supply of goods where the supply
does not involve movement of goods, whether by the supplier or the recipient,
the place of supply shall be the location of such goods at the time of the delivery
to the recipient. In the above case Place of Supply is Mumbai.
Conclusion-
Location of Supplier of Goods is Mumbai and Place of Supply is Mumbai. Hence, it is
intra state transaction CGST+SGST will be payable.

Question 13: (ICAI-Material)

Mr. A (New Delhi) has leased his machine (cost Rs.8, 00,000) to Mr. B (Noida, Uttar
Pradesh) for production of goods on a monthly rent of Rs.40, 000. After 14
months Mr. B requested Mr. A to sell the machine to him for Rs.4, 00,000, which
is agreed to by Mr. A. Determine place of supply

Answer
Legal Provision- The above case falls within the purview of Section 10 (1) (c) of IGST
Act, 2017

Discussion - As per the above Section Place of Supply of goods where the supply
does not involve movement of goods, whether by the supplier .or the recipient,
the place of supply shall be the location of such goods at the time of the delivery
to the recipient.

Conclusion- In this case, there will be no movement of goods and the same will be
sold on as is where is basis. Thus, the location of the machine at the time of such
sale will be the place of supply i.e., Noida. IGST shall be levied on such supply.

Question 14: (ICAI-Material)

Particulars Location of Location of Location of
Supplier Recipient Goods
Sale of pre-installed DG Set Delhi Bhopal Bhopal
Manufacture of moulds by job-
worker (supplier), sold to the Tamil Nadu Kerala Tamil Nadu
Principal, but retained in job
worker's premises
Answer
Legal Provision- The above case falls within the purview of Section 10 (1) (c) of IGST
Act, 2017
Discussion- As per the above Section Place of Supply of goods where the supply does
not involve movement of goods, whether by the supplier or the recipient, the
place of supply shall be the location of such goods at the time of the delivery to
the recipient.
Particulars Location of Location of Location of Place of Tax Payable
Supplier Recipient Goods Supply
Sale of pre-installed DG Set Delhi Bhopal Bhopal Bhopal IGST
payable
at Delhi
Manufacture of moulds by job- CGST+TN
worker (supplier), sold to the Tamil Nadu Kerala Tamil Nadu Tamil GST
Principal, but retained in job Nadu Payable
worker's premises at Tamil
Nadu

Sec 10(1) (d) - GOODS ARE ASSEMBLED OR INSTALLED AT SITE

Question 15: Determine place of supply if goods are assembled or install at site?

Answer - As per Section 10 (1) (d) of IGST Act, 2017, where the goods are assembled
or installed at site, the place of supply shall be the place of such installation or
assembly.

Question 16: Mr. A located in Chennai places an order on Mr. B of Chennai for
installation of machinery at his factory in Mumbai. Mr. B procures the various
parts of the machinery from different States and arranges for installation of the
same in A's factory at Mumbai. Determine the place of supply and nature of
transaction of the machine.

Answer
Legal Provision- The above case falls within the purview of Section 10 (1) (d) of IGST
Act
Discussion- As per the above Section Place of Supply of goods where the goods are
assembled or installed at site, the place of supply shall be the place of such
installation or assembly.
Hence, Place of Supply is Mumbai
Conclusion- Location of Supplier of Goods is Chennai and Place of Supply is Mumbai.
In the above case IGST will be triggered as it's an interstate supply

Question 17: (ICAI-Material)

Pure Refineries (Mumbai, Maharashtra) gives a contract to PQ Ltd. (Ranchi,
Jharkhand) to assemble a power plant in its Kutch, Gujarat refinery. Determine
POS and nature of supply.

Answer
Legal Provision- The above case falls within the purview of Section 10 (1) (d) of IGST
Act
Discussion- As per the above Section Place of Supply of goods where the goods are
assembled or installed at site, the place of supply shall be the place of such
installation or assembly.
Conclusion:- The place of supply is the site of assembly of power plant i.e., Kutch
even though Pure refineries is located in Maharashtra.

Question 18: (ICAI-BGM)

Particulars Location of Registered Office ofInstallation/
Supplier Recipient Assembly Site
Installation of weigh bridge Delhi Bhopal Bhopal
Servers supplied and Karnataka Goa Karnataka
installed at the office of
a marketing firm
Supply of workstations Gujarat Gujarat Kerala

Answer-
Legal Provision- The above case falls within the purview of Section 10 (1) (d) of IGST
Act
Discussion- As per the above Section Place of Supply of goods where the goods are
assembled or installed at site, the place of supply shall be the place of such
installation or assembly Hence, Place of Supply is Mumbai
 Particulars Location of Registered Installation/Place of Tax Payable
Supplier Office of Assembly Supply
Recipient Site
Installation of weigh bridge Delhi Bhopal Bhopal Bhopal IGST payable
at Delhi

Servers supplied and installed Karnataka Goa Karnataka Karnataka CGST+Kar

at the office of a marketing GST
firm Payable at
Karnataka
Supply of workstations Gujarat Gujarat Kerala Kerala IGST payable
at Gujarat

GOODS SUPPLIED ON BOARDA CONVEYANCE - sec 10(1)(e)

Question 19:
What is place of supply of Goods if it is supplied on board a conveyance?

Answer - As per Section 10 (1) (e) of IGST Act, 2017 Place of Supply of goods where
the goods are supplied on board a conveyance, including a vessel, an aircraft, a
train or a motor vehicle, the place of supply shall be the location at which such
goods are taken on board.

Question 20: (ICAI-Material)

Ms. P (New Delhi) boards a New Delhi-Kolkata flight to attend a business meeting at
Kolkata. She buys lunch in the flight. The food items were loaded into the aircraft
at New Delhi. The Airlines is registered in New Delhi and Kolkata. Determine POS

Answer
Legal Provision- The above case falls within the purview of Section 10 (1) (e) of IGST
Act
Discussion - As per the above Section Place of Supply of goods where the goods are
supplied on board a conveyance, including a vessel, an aircraft, a train or a motor
vehicle, the place of supply shall be the location at which such goods are taken on
board.
Conclusion - The place of supply of food items by the airlines to Ms. P is the location
at which the goods are taken on board i.e., New Delhi. It is irrelevant whether
the buyer is registered or unregistered.

Question 21: (ICAI-Material)

Ms. S, an unregistered person, (New Delhi) is travelling from New Delhi to Kanpur,
Uttar Pradesh in a train. The train starts at New Delhi and stops at three stations
before reaching Kanpur. The food items were loaded into the train at Aligarh
(Uttar Pradesh)- 2nd station. Ms. S buys dinner on board the train. Determine POS

Answer-
Legal Provision- The above case falls within the purview of Section 10 (1) (e) of IGST
Act

Discussion - As per the above Section Place of Supply of goods where the goods are
supplied on board a conveyance, including a vessel, an aircraft, a train or a motor
vehicle, the place of supply shall be the location at which such goods are taken on
board.

Conclusion - The place of supply is the location at which the goods are taken on
board i.e., Aligarh. The location at which Ms. S boards the train is irrelevant.

GOODS IMPORTED INTO INDIA - Sec 11 (a)

Question 22:
Determine the place of supply of goods.
i) XY2 Ltd of Jaipur imported certain goods from PQR of Canada. The
goods were imported through vessel and delivery of goods was taken at
Mumbai Port.
ii) Ms. M imports electric kettles from China for her Kitchen Store in Noida,
Uttar Pradesh. Ms. M is registered in Uttar Pradesh.

Answer - As per Section 11 (a) of IGST Act 2017, Place of Supply of goods imported
into India shall be the location of the importer.

Conclusion
(i) Location of Supplier of Goods is Canada and Place of Supply is Jaipur.
Hence, IGST will be triggered
 (ii) Location of Supplier of Goods is China and Place of Supply is Noida (U.P.)
Hence, IGST will be triggered

GOODS EXPORTED FROM INDIA - sec 11 (b)

Question 23: Determine the place of supply of goods.
(i) M Ltd located in Mumbai is exporting its goods on the basis of its order
received from N Ltd located in Singapore.
(ii) Ms. Reshmi (New Delhi) exports spices from New Delhi to London, UK.

Answer –
Discussion- As per Section 11 (b) of IGST Act 2017 Place of Supply of goods exported
from India shall be the location outside India.

Conclusion
(i) Location of Supplier of Goods is Mumbai and Place of Supply is
Singapore. Hence IGST will be triggered as per Sec 7(5)(a) of IGST Act.
(ii) Location of Supplier of Goods is Delhi and Place of Supply is London.
Hence IGST will be triggered as per Sec 7(5)(a) of IGST Act.
In above two cases as per section 16 of IGST Act. Supply can be made without
payment of IGST under a Bond or Letter of Undertaking or can pay IGST and a
refund for the same can be claimed
Question 24:
A Ltd of Mumbai received an order from B Ltd. Price is inclusive of freight. A Ltd is to
deliver goods to B Ltd which is located in a SEZ in Mumbai. Determine place of
supply of the same.

Answer
Legal Provision - The above case falls within the purview of Section 10 (1) (a) and
Section 8 (1) of IGST Act

Discussion- Location of Supplier of Goods is Mumbai. As per Section 10 (1) (a) of

IGST Act Place of Supply of Goods where the supply involves movement of goods,
whether by the supplier or the recipient or by any other person, the place of
supply of such goods shall be the location of the goods at the time at which the
movement of goods terminates for delivery to the recipient. In the above case
Place of Supply is Mumbai.
As per Section 8 (1) of IGST Act

Provided that the following supply of goods shall not be treated as intra-State
supply, namely:--
(i) supply of goods to or by a Special Economic Zone developer or a Special
Economic Zone unit
Hence, even though it is an Intra-State supply it will be treated as an Inter-State
supply as B Ltd is located in a SEZ.

Conclusion- In the above case IGST will be triggered

Place of supply of services where Location of

supplier & Recipient in India

GENERAL PROVISION - sec 12 (2)

Question 25:
Mr. A, a Cost and Management Accountant located in Maharashtra providing Cost
Auditing Service. Determine Place of Supply if he provides service to
(a) A registered person located in Maharashtra
(b) A registered person located in Karnataka
(c) A non-registered person located in MP
(d) A non-registered person whose address does not exist on record

Answer
The given cases fall under the provisions of section 12 of IGST Act, wherein both the
supplier of service and recipient of service are located in India.
(a) Legal Provision - As per Section 12 (2) (a) of IGST Act
Discussion - The above section states that where supply of service made to a
registered person the place of supply shall be the location of such person.
In the above case the recipient is located in Maharashtra; hence the place
of supply shall be Maharashtra.
 Conclusion- Since both the service provider and place of supply are in
Maharashtra (intra- state) CGST+SGST will be triggered.

(b) Legal Provision- As per Section 12 (2) (a) of IGST Act

Discussion- The above section states that where supply of service made to a
registered person the place of supply shall be the location of such person.
In the above case the recipient is located in Karnataka; hence the place of
supply shall be Karnataka.
Conclusion - Since the service provider and place of supply are pertaining to
different states (inter-state) IGST will be triggered.

(c) Legal Provision- As per Section 12 (2) (b) (1) of IGST Act
Discussion- Where supply of service is made to any person other than a
registered person the place of supply shall be the location of the recipient
where the address on record exists. In the above case the place of supply
shall be MP as this address is available.
Conclusion- In the above case the service provider is located in Maharashtra
and recipient is located in MP, hence IGST will be triggered.

(d) Legal Provision - As per Section 12 (2) (b) (ii) of IGST Act Discussion- Where
supply is made to any person other than a registered person place of supply
shall be location of supplier of services in all other cases. In the above case
the address of recipient does not exist on record hence the place of supply
shall be location of supplier of service which is Maharashtra.
Conclusion- As the location of supplier and place of supply are both in
Maharashtra CGST+SGST will be triggered.

Question 26:
Determine the Place of supply for the following cases:-
i) Mr. A (a Chartered Accountant registered in New Delhi) makes a supply
of service to his client Mr. B of Noida, Uttar Pradesh (registered in Uttar
Pradesh).
ii) Mr. A, a CA in Gurugram, Haryana, (registered in Haryana) provides
Consultancy services to his client Mr. C who is a resident of New Delhi
but is not registered under GST. [ICAI Material]

Answer
The given cases fall under the provisions of section 12 of IGST Act, wherein the
location of supplier of service and recipient of service both are located in India.
i) As per sec 12(2)(a) In this case, since the supply is made to a registered
person, the place of supply is the location of the registered recipient
i.e., Noida. IGST shall be charged
ii) As per sec 12(2)(a), As the given case, the address of Mr. C is available
on records of Mr. A the location of Mr. C i.e. New Delhi will be the place
of supply, else the location of Mr. A which is Gurugram, will be place of
supply.

SERVICES RELATING TO IMMOVABLE PROPERTY - sec 12(3)

Question 27:
Mr. P of Mumbai, an interior decorator has provided service of beautification of a
flat in Mumbai. The flat belongs to a person who is resident of Kashmir. What is
the place of supply? Whether CGST+SGST or IGST be payable? Explain with
reference to Place of Supply of Services section under IGST Act.

Answer
Legal Provision
Section 12 (3) (a) of IGST Act is applicable as the service is directly in relation to
immovable property.

Discussion
According to the above stated section service provided by interior decorator will
trigger GST wherein the place of supply will be the location at which the
immovable property is located. Hence, in the above case the place of supply is
Mumbai.

Conclusion
As location of supplier is in Mumbai & also place of supply in Mumbai, CGST and
SGST will be triggered, as the nature of supply is Intra-state.

Question 28: Mr. Raman, a Delhi based Interior Architect provides his professional
services in respect of property which is intended to be located in Chandigarh
(service recipient also located in Chandigarh)
Answer
Legal Provision
Section 12 (3) (a) of IGST Act is applicable as the service is directly in relation to
immovable property.

Discussion
According to the above stated section service provided by architect will trigger GST
wherein the place of supply will be the location at which the immovable property
is intended to be located. Hence, in the above case the place of supply is
Chandigarh.

Conclusion
As location of supply in Delhi and place of supply in Chandigarh, Thus, we can
conclude that. IGST (inter-sate) will be triggered.

Question 29: Determine the place of supply of service for the following cases:-
a) KTS Builders (Mumbai) is constructing a factory building for PLM Pvt. Ltd.
(Kolkata), in New Delhi.
b) Shah and Shah, an architectural firm at Kolkata, has been hired by MKF
Builders of Mumbai to draw up a plan for a high rise building to be
constructed by them in Ahmedabad, Gujarat.
c) Mr. Ramesh, a Chartered Accountant, (New Delhi) travels to Mumbai for
business and stays in a hotel there.
d) Mr. X, a consulting engineer based in Mumbai, Maharashtra renders
professional services in respect of an immovable property of Mr. Y
(Bangalore) located in Australia.

Answer
The given cases fall under the provisions of section 12 of IGST Act, wherein the
location of supplier of service and recipient of service both are located in India.
a) As per sec 12(3) of IGST Act, The place of supply is the location of the
immovable property i.e., New Delhi.
b) As per sec 12(3) of IGST Act, The place of supply is the place where the
immovable property is intended to be located i.e., Ahmedabad.
c) As per sec 12(3) of IGST Act, The place of supply of accommodation service
is the place where the hotel is located i.e., Mumbai.
 d) As per sec 12(3) of IGST Act, since the immovable property is located
outside India, the place of supply of service is the location of recipient i.e.,
Bangalore and not the place where the immovable property is located
(Australia).

Rule 4 in relation to sec 12(3) of IGST Act

Question 30
i) Sahara India Ltd. provides the services of 2 days accommodation in a
houseboat, which is situated in Orissa, Kerala and Karnataka. In the boat
most of the guests boards the house boat in Orissa and stay there for 12
hours but it also moves further into Kerala & Karnataka for 24 hours and
12 hours respectively (as declared by the service provider) for a total
value of Rs.1,50,000. Identify the Place of Supply and Value of Supply of
accommodation service provided by Sahara India Ltd.
ii) Would your answer change in case services provided by way of
accommodation in any immovable property such as hotel, inn, etc. for
organizing any marriage where such immovable property i.e. hotel is
situated in two or more contiguous States/UT's or both?

Answer:-
In case of service by way of lodging accommodation by a house boat or any other
vessel and services ancillary to such services, the supply of services shall be
treated as made in each of the respective States/UT:-
→ In proportion to the time spent by the boat or vessel in each such State/UT
→ Which shall be determined on the basis of a declaration made to the effect
by the service provider.

i) Thus,
Place of Supply The place of supply of this service is in the States of
Orissa, Kerala & Karnataka.
Value of Supply The service shall be deemed to have been provided in the
ratio of 12:24:12 or 1:2:1 or 0.5:1:0.5 (simplified) in
the States of Orissa, Kerala & Karnataka, respectively.

Value of Supply:- Orissa = Rs.37, 500

Kerala =Rs.75, 000
 Karnataka = Rs.37, 500

If services provided by way of accommodation in any immovable property for

organizing any marriage where such hotel is situated in two or more contiguous
States/UT's or both, the service shall be deemed to have been provided in each
such State/UT in proportion to the area of immovable property lying in each State
or UT.

Restaurant/catering, Personal Grooming, Fitness, Beauty Treatment - Sec 12(4)

Question 31:
Determine the place of supply of service for the following cases:-
i) Mr. A, a business man from Pune dines in a restaurant at Mumbai while
on a business trip. Determine the place of supply
ii) Mr. Timmy Ferreira, a makeup artist at Kolkata, goes to Jaipur, Rajasthan
for doing the makeup of Ms. Simran Kapoor, a Bollywood actress based
in Mumbai. Determine the place of supply (ICAI-Final) [Sec 12 (4)]

Answer
i) As per sec 12(4) of IGST Act, The place of supply of restaurant service is
the location where such service is performed i.e., Mumbai.
ii) As per sec 12(4) of IGST Act, The place of supply is the location where
such service is performed i.e., Jaipur.

TRAINING AND PERFORMANCE APPRAISAL - Sec 12(5)

Question 32:
Determine the place of supply of services for the following cases:-[ICAI Material]
i) DEO Consultants (Kolkata) impart GST training to accounts and finance
personnel of Sun Cements Ltd. (Guwahati, Assam registered person) at
the company's Kolkata office.
ii) Mr. Suresh (unregistered person based in Noida) signs up with Excellent
Linguistics (New Delhi) for training on English speaking at their New
Delhi Centre

Answer
Legal Provision: Sec 12(5) is applicable to determine, the Place of supply of services
in relation to training & performance appraisal
i) As per sec 12(5) of IGST Act, if the recipient is registered, the place of
supply is the location of such registered person i.e., Guwahati.
ii) As per sec 12(5) of IGST Act, if the recipient is unregistered, the place of
supply is the location where services were performed i.e., New Delhi.

Admission To Cultural, Artistic, Sporting, Scientific, Educational,

Entertainment Event Or Amusement Park - Sec 12(6)
Question 33:
Determine the place of supply of service for the following cases:- [ICAI Material]
i) Mr. A, a resident of Ghaziabad, Uttar Pradesh, buys a ticket for a circus
organized at Gurugram, Haryana by a circus company based in New
Delhi. Determine the place of supply
ii) Mr. B of New Delhi buys a ticket for an amusement park located in
Noida, Uttar Pradesh. Determine the place of supply

Answer
Legal provision:-As per sec 12(6) of IGST Act, The place of supply of services
provided by way of admission to a cultural, artistic, sporting, scientific,
educational, entertainment event or amusement park or any other place and
services ancillary thereto, shall be the place where the event is actually held or
where the park or such other place is located.
i) As per sec 12(6) of IGST Act, The place of supply is the location where
the circus is held i.e., Gurugram.
ii) As per sec 12(6) of IGST Act, The place of the supply is the location
where the park is located i.e., Noida.

Question 34:
Mr. A of Pune, booked online for the Tiger Safari at the Ranthambor National Park
(Rajasthan) and hired a jeep to be taken around for the safari. Determine the
place of supply for the services.

Answer:-
Here, there are two kinds of supply of services- first admission to the park and
second hiring of the jeep. As per the provisions of Section 12(6) of the IGST Act,
 the place of supply of services by way of admission to an amusement park or any
other place shall be the location of the park, here Ranthambor (Rajasthan). The
service of hiring of the jeep is ancillary to the service of admission to the park as
the same is provided to make the visit more convenient. Hence, the provisions of
Section 12(6) shall apply thereon and the place of supply shall be the place of
location of the park being Ranthambor (Rajasthan).

Organisation Of A Cultural, Artistic, Sporting, Entertainment Event, Fair,

Exhibition, Celebration Events - Sec 12(7)
Question 35:
Determine the place of supply of services for the following cases:-
a) Mega Events, an event management company at New Delhi, organizes an
award function for Shah Diamond Merchants of Ahmedabad (registered in
Gujarat), at Mumbai.
b) Mega Events, an event management company at New Delhi, organizes an
award function for Shah Diamond Merchants of Ahmedabad (registered in
Gujarat), at Mauritius.
c) Grand Wedding Planners (Chennai) is hired by Mr. Ramesh (unregistered
person based in Hyderabad) to plan and organise his wedding at New Delhi.
d) Grand Wedding Planners (Chennai) is hired by Mr. Ramesh (unregistered
person based in Hyderabad) to plan and organise his wedding at Seychelles

Answer
Legal provision:- As per section 12(7) of IGST Act, The place of supply of services
provided by way of,-
(a) organisation of a cultural, artistic, sporting, scientific, educational or
entertainment event including supply of services in relation to a
conference, fair, exhibition, celebration or similar events; or
(b) services ancillary to organisation of any of the events or services referred to
in clause
(a), or assigning of sponsorship to such events,--
(i) to a registered person, shall be the location of such person;
(ii) to a person other than a registered person, shall be the place where the
event is actually held and if the event is held outside India, the place of
supply shall be the location of the recipient
Thus the place of supply for the given cases as per the above stated provision shall
be as follows:-
a) In the given case since the recipient is a registered person, the place of
supply is the location of the recipient, i.e., Ahmedabad.
b) In the given case since the recipient is a registered person, the place of
supply is the location of the recipient, i.e., Ahmedabad
c) In the given case since the recipient being an unregistered person, the
place of supply is the location where the event is held i.e., New Delhi.
d) In the given case since the recipient being an unregistered person and the
event held outside India, the place of supply is the location of the recipient
i.e., Hyderabad and not the location where the event is held i.e., Seychelles.
Question 36:
The Sultan Group being an event organizer located at New Delhi organized Miss India
2017 beauty pageant in India in the following Cities for M/s Femina Miss India an
unregistered person located in Mumbai:
City No. of days Fees in Rs.
New Delhi 12 12 Crores
Chennai 18 18 Crores
Mumbai 30 30 Crores
Total 60 60 Crores
Find the place of supply of service if contract specifies clear details. Find the place of
supply of service if contract specifies lump sum amount of Rs.48 crores.
Answer:- The place of supply of service if contract specifies clear details:
No. of DaysRs. in crores Location of POS of service =
City supplier of where the GST
Service respective
event is held

New Delhi 12 12 New Delhi New Delhi CGST & SGST

Chennai 18 18 New Delhi Chennai IGST
Mumbai 30 30 New Delhi Mumbai IGST
Total 60 60
The place of supply of service if contract specifies lump sum amount as per Rule S
will be the proportion arrived at by the application of Generally Acceptance
Accounting Principle :-
 No. of DaysRs. in crores Location of POS of service =
City supplier of where the GST
Service respective
event is held

New Delhi 12 9.6 New Delhi New Delhi CGST & SGST
Chennai 18 14.4 New Delhi Chennai IGST
Mumbai 30 24 New Delhi Mumbai IGST
Total 60 48
Question 37:
Damani Industries has recruited Super Events Pvt. Ltd., an event management
company of Gujarat, for organising the grand party for the launch of its new
product at Bangalore. Damani Industries is registered in Mumbai. Determine the
place of supply of the services provided by Super Events Pvt. Ltd. to Damani
Industries. Will your answer be different if the product launch party is organised
at Dubai? [CA Final May 2018 New& old]

Answer:-
Section 12(7) (a)(i) of IGST Act, 2017 stipulates that when service by way of
organization of an event is provided to a registered person, place of supply is the
location of recipient.
Since, in the given case, the product launch party at Bangalore is organized for
Damani Industries (registered in Mumbai), place of supply is the location of
Damani Industries i.e., Mumbai.
In case the product launch party is organised at Dubai, the answer will remain the
same, i.e. the place of supply is the location of Damani Industries - Mumbai.

Question 38:
Mr. Murthy, an unregistered person and a resident of Pune, hires the services of M/s
Sun Ltd. an event management company registered in Delhi, for organising of the
new product launch in Bengaluru.
(i) Determine the place of supply of services provided by M/s Sun Ltd.
(ii) What would be your answer in case the product launch takes place in
Bangkok?
(iii) What would be your answer in case Mr. Murthy is a registered
person and product launches take place in Bengaluru and Bangkok? [CA
Final May 2018 New]
Answer:-
(i) As per section 12(7)(a)(ii) of IGST Act, 2017, when service by way of
organization of an event is provided to an unregistered person, the
place of supply is the location where the event is actually held and if the
event is held outside India, the place of supply is the location of
recipient.
Since, in the given case, the service recipient [Mr. Murthy] is unregistered
and event is held in India, place of supply is the location where the event
is actually held i.e., Bengaluru. The location of the supplier and the
location of the recipient is irrelevant in this case.
(ii) However, if product launch takes place outside India [Bangkok], the
place of supply will be the location of recipient i.e., Pune.
(iii) When service by way of organization of an event is provided to a
registered person, place of supply is the location of recipient vide
section 12(7)(a)(i) of IGST Act, 2017. Therefore, if Mr. Murthy is a
registered person, then in both the cases i.e., either when product
launch takes place in Bengaluru or Bangkok, the place of supply will be
the location of recipient i.e., Pune.

Question 39:
Determine the place of supply for the following independent cases under the IGST
Act, 2017:
(i) Grand Gala Events, an event management company at Kolkata,
organises two award functions for Kalyan Jewellers of Chennai
(Registered in Chennai) at New Delhi and at Singapore.
(ii) Perfect Planners (Bengaluru) is hired by Dr. Kelvin (unregistered person
based in Kochi) to plan and organise his son's wedding at Mumbai. [CA
Final May 2018 Old]
Will your answer be different if the wedding is to take place at Malaysia?

Answer:-
(i) When service by way of organization of an event is provided to a
registered person, place of supply is the location of recipient in terms of
section 12(7) (a)(i) of IGST Act, 2017. Since, in the given case, the award
functions at New Delhi and Singapore are organized for Kalyan Jewellers
 (registered in Chennai), place of supply in both the cases is the location
of Kalyan Jewellers i.e., Chennai.
(ii) As per section 12(7)(a) (ii) of IGST Act, 2017, when service by way of
organization of an event is provided to an unregistered person, the
place of supply is the location where the event is actually held and if the
event is held outside India, the place of supply is the location of
recipient.
Since, in the given case, the service recipient [Dr. Kelvin] is unregistered
and event is held in India, place of supply is the location where the event
is actually held i.e., Mumbai. However, if the wedding is to take place
outside India [Malaysia], the place of supply is the location of recipient,
i.e. Kochi.

Question 40: [Rule 5]

Event Dynamics an event management company has to organize a cultural event in
States of Assam, Sikkim, Manipur and Meghalaya for a recipient Mr. Parekh
(unregistered under GST). No contract was entered into by both the parties for
any such event to be held in each of the above States and a consolidated amount
of Rs.20 lakhs have been charged by Event Dynamics to Mr. Parekh. Both Event
Dynamics and Mr. Parekh are located in Mumbai. Determine the place of supply
as well as value of supply for organization of event by Event Dynamics.
Would your answer differ if both the parties entered into contract in regard to an
event to be held in each of the above mentioned States and the value to be
apportioned in the ratio of 1:2:1:1 in each state respectively?

Answer:-
As per Section 12(7) read with rule 5 of IGST Act, where the event is held in more
than one State/UT and a consolidated amount is charged for supply of such
services relating to such event:-
Place of Supply - shall be taken as being in each of the respective States/UT
Value of Supply - shall be in proportion to the value for services separately collected
or determined in terms of contract entered into in this regard or in the absence of
any such contract or agreement on the basis of "Generally Accepted Accounting
Principles" Therefore in case of supply of service by Event Dynamics:
Place of Supply In all four States such as Assam, Sikkim, Manipur and
Meghalaya
Value of Supply The service shall be deemed to have been provided in the
 equal ratio in each States on the basis of the application of
generally accepted accounting principles. The value of
services provided will thus be apportioned as 5 lakhs in
each States of Assam, Sikkim, Manipur and Meghalaya
In case contract entered into in this regard then place of supply will remains same as
above and value of supply of such service will be determined as per the terms of
contract i.e. in the ratio of 1:2:1:1. Hence Value shall be apportioned as Rs.4 lakhs
in Assam, Rs.8 lakhs in Sikkim, Rs.4 lakhs in Manipur & Rs.4 lakhs in Meghalaya.

PASSENGER TRANSPORTATION - Sec 12(9)

Question 41:
Determine the place of supply for the following services:-
i) Mr. Amar (registered person in New Delhi) travels from Mumbai to
Bangalore in Airjet flight. Mr. Amar has bought the tickets for the
journey from Airjet's office registered in New Delhi.
ii) Mr. C (unregistered person in Chennai) has come to Delhi on a vacation.
He buys pre-paid Delhi Metro Card from Delhi Metro (New Delhi) for
hassle free commute in the National Capital Region. [ICAI Material]

Answer
Legal Provision:
The place of supply of passenger transport service to:
a) A registered person shall be location of such person
b) Person other than registered person shall be place where the passenger
embarks on conveyance for a continuous Journey.
i) As per sec 12(9)(a) of IGST Act, The place of supply is the location of
recipient i.e., New Delhi.
ii) Pre-Paid metro card is given for future use &the point of
embarkation is not known at the time of issue of right to passage, i.e.
POS will be Chennai, address of Mr. C as per Sec 12(2). If address of is
not available, place of supply will be Location of Supply i.e. New
Delhi.

Question 42:
What will be the place of supply of passenger transportation service, if a person
travels from Mumbai to Delhi and back to Mumbai? [ICAI Material]
Answer:
If the person is registered, the place of supply will be the location of recipient. If the
person is not registered, the place of supply for the forward journey from
Mumbai to Delhi will be Mumbai, the place where he embarks [Section 12(9) of
IGST Act].
However, for the return journey, the place of supply will be Delhi as the return
journey has to be treated as separate journey [Explanation to section 12(9) of the
IGST Act].

Question 43:
Mr. Shyam, an unregistered person, based in Gurugram, Haryana books a two-way
air journey ticket from New Delhi to Mumbai on 5th December. He leaves New
Delhi on 10th December in a late-night flight and lands in Mumbai the next day.
He leaves Mumbai on 14th December in a morning flight and lands in New Delhi
the same day.
The return journey is treated as a separate journey, even if the tickets for onward
and return journey are issued at the same time, [ICAI Material]

Answer
In the given case Mr. Shyam, being an unregistered person, the place of supply for
the outward and return journeys are the locations where the unregistered
person embarks on the conveyance for the continuous journey i.e., New Delhi
and Mumbai respectively.
On Board services - Sec 12(10)
Question 44:
Mr. X is travelling from Delhi to Mumbai in an Airjet flight. He desires to watch an
English movie during the journey by making the necessary payment. [ICAI
Material]

Answer
As per sec 12(10) of IGST Act, The place of supply of such service of showing 'movie
on demand is the first scheduled point of departure of the conveyance for the
journey i.e., Delhi.

TELECOMMUNICATION SERVICES - SEC 12(11)

Question 45:
What is the place of supply for mobile connection? Can it be the location of supplier?
[ICAI Material]

Answer
The location of supplier of mobile services cannot be the place of supply as the
mobile companies are providing services in multiple states and many of these
services are inter- state. The consumption principle will be broken if the location
of supplier is taken as place of supply and all the revenue may go to a few states
where the suppliers are located.
The place of supply for mobile connection would depend on whether the connection
is on postpaid or prepaid basis.
In case of postpaid connections- the place of supply is the location of billing address
of the recipient of service.
In case of pre-paid connections- the place of supply is the place where payment for
such connection is received or such pre-paid vouchers are sold.
If the recharge is done through internet/e-payment - the location of recipient of
service provider as on record will be the taken as the place of service

Question 46:
Determine the place of supply for the following telecommunication services:- [ICAL
Material]
a) Mr. X (Kolkata) gets a landline phone installed at his home from Skybel Ltd.
b) Mr. Y (Mumbai) gets a DTH installed at his home from RT Ltd
c) Mr. D (Mumbai) takes a post-paid mobile connection in Mumbai from
Skybel Ltd.
d) Mr. E (New Delhi) gets his post-paid bill paid online from Goa
e) Mr. C (Pune) purchases a pre-paid card from a selling agent in Mumbai.

Answer
As per sec 12(11) of IGST Act, the place of supply of telecommunication services for
the given cases shall be determined and following manner
a) The place of supply in case of fixed telecommunication line is the location
where the telecommunication line is installed i.e., Kolkata.
b) The place of supply is the location where the DTH is installed i.e., Mumbai.
 c) The place of supply in case of mobile connection is the location of billing
address of the recipient i.e., Mumbai.
d) The payment being made through electronic mode, the place of supply is
the location of the recipient in the records of the supplier i.e., New. Delhi.
e) The place of supply is the address of the selling agent or re-seller i.e.,
Mumbai.

Question 47: [Rule 6]

Telecom India installs an internet leased circuit between Nagpur and Jabalpur office
of Reliance Ltd. for the consolidated amount of Rs.10 lakhs as per the contract
made by both the parties in the FY 2018-19. The starting point of this circuit is in
Nagpur and the end point of the circuit is in Jabalpur. Determine the Place of
supply as well as value of supply of service made by Telecom India in the FY 2018-
19.
Would your answer differ if the leased circuit installs in the cities of Nagpur, Mumbai
and Jabalpur office of Reliance Ltd., where the starting point and the end point
remains same as Nagpur & Jabalpur?

Answer
Legal Provision:- As per Section 12(11)(a) read with rule 6 of the IGST Act
determines the place of supply of services in relation to telecommunication
services provided using fixed telecommunication line, leased circuits, internet
leased circuits, cable or dish antenna. The place of supply of such services is the
location where the telecommunication line or leased circuits is installed for
receipt of services.
If the leased circuit is installed in more Place and Value of Supply is deemed to be
than one State/UT and a consolidated
amount is charged for supply of
services
In case of contract or agreement in each of the respective States/UT in
proportion to the value of services
determined in terms of the contract or
agreement
In the absence of any such contract or the value is determined in accordance with
agreement rule 6 of IGST Act in proportion to the
number of points lying in the State/UT
 i) Place of Supply:- is in the State of Maharashtra and Madhya Pradesh
Value of Supply :- in the ratio of 1:1 i.e. Rs.5 lakhs in Maharashtra and Rs.5 lakhs
in Madhya Pradesh.
ii) Place of Supply:- is in the State of Maharashtra and Madhya Pradesh
Value of Supply :- in the ratio of 2:1 i.e. Rs.6,66,667 in Maharashtra and
Rs.3,33,333 in Madhya Pradesh.

FINANCIAL AND STOCK BROKING - Sec 12(12)

Question 48:
Determine the place of supply of service for the following:- [ICAI Material]
i) Mr. A (Chennai) buys shares from a broker in BSE (Mumbai).
ii) Mr. B (New Delhi) withdraws money from Best Bank's ATM in Amritsar.
Mr. B has crossed his limit of free ATM withdrawals
iii) Mr. C, an unregistered person from Varanasi, Uttar Pradesh, visits a
bank registered in New Delhi for getting a demand draft made.
Answer
Legal provision:- As per section 12(12) of IGST Act, The place of supply of banking
and other financial services, including stock broking services to any person shall
be the location of the recipient of services on the records of the supplier of
services: Provided that if the location of recipient of services is not on the records
of the supplier, the place of supply shall be the location of the supplier of services.
Thus as per the above provision the place of supply of services shall be determined:-
i) The place of supply is the location of the recipient of services on the
records of the supplier i.e., Chennai.
ii) The place of supply is the location of the recipient of services in the
records of the supplier i.e., New Delhi.
iii) Since the location of recipient is not available in the records of the
supplier, the place of supply is the location of the supplier of services
i.e., New Delhi.

Question 49:
A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank
in Manali. What is the place of supply? [ICAI Material]

Answer
If the service is not linked to the account of person, place of supply will be Kullu i.e.,
the location of the supplier of services. However, if the service is linked to the
 account of the person, the place of supply will be Mumbai, the location of
recipient on the records of the supplier.

INSURANCE - Sec 12(13)

Question 50:
Mr. A, CEO of XY Ltd., Mumbai (a company registered in Maharashtra) buys
insurance cover for the inventory stored in company's factory located at Mumbai,
from Excellent Insurers, Chennai (registered in Tamil Nadu). [ICAI Material]

Answer
Legal Provision: As per sec 12 (13) of IGST Act, The place of supply of insurance
service shall: be the location of such person if such service provide to registered
person.
Therefore the place of supply is the location of the registered recipient i.e., Mumbai.

Question 51:
Ms. B (unregistered resident of Kolkata) goes to her native place Patna, Bihar and
buys a medical insurance policy for her parents there from Safe Insurers, Patna
(registered in Bihar). [ICAI Material]

Answer
When insurance service is provided to an unregistered person, the location of the
recipient of services on the records of the supplier of insurance services is the
place of supply. The place of supply is the location of recipient of services i.e.
Patna.

ADVERTISEMENT SERVICE TO GOVERNMENT- Sec 12(14)

A new rule 3 has been inserted in IGST rules to provide a mechanism to compute
the proportionate value of advertisement services attributable to different
States or union territories in the absence of any contract between the supplier
of service and recipient of services.
Question 52: [Rule 3(1)]
ABC (a government agency) issue a release order to a newspaper for an
advertisement on 'Beti Bachao beti padhao', to be published in the newspaper
DEF (whose head office is in Delhi) for the editions of Delhi, Pune, Mumbai,
 Lucknow and Jaipur for Rs.1 lakh, 2.5 Lakh, 3 lakh, 3.5 lakh & Rs.5 lakh
respectively. A consolidated sum of 12 lakh was paid, determine value.

Answer
As per sec 12(14), place of supply shall be the respective State/UT with following
value under rule 3
➢ Delhi for advertisement published in Delhi (1 lakh x 12 lakh /15 lakh)
=80,000
➢ Maharashtra : Pune & Mumbai (5.5 lakh x 12 lakh / 15 lakh total) = 4,40,000
➢ Uttar Pradesh: Lucknow (3.5 lakh x 12 lakh/ 15 lakh) = 2,80,000
➢ Rajasthan : Jaipur (5 lakh x 12 lakh / 15 lakh total) = 4,00,000

Question 53: [Rule 3(2)]

As a part of the campaign 'Swachh Bharat' , ABC (a government agency) has engaged
a company GH for printing of Rs.1, 00,000 pamphlets (at a total cost of
Rs.2,50,000) to be distributed in the states of Haryana (Rs.20,000 Pamphlets),
Uttar pradesh (50,000 Pamphlets) and Rajasthan (30,000 Pamphlets). Determine
value and place of supply.

Answer
As per sec 12(14), place of supply shall be respective State/UT with following value
under rule 3-
➢ the ratio of breakup i.e. 2: 5:3 will form basis of value attributable to
dissemination in each of the three States. Separate invoices will have to be
issued State wise by GH to ABC indicating the value pertaining to that state.
➢ Haryana (50,000), Uttar Pradesh (1,25,000) and Rajasthan (75,000)

Question 54: [Rule 3(3)]

ABC (a government agency) as part of campaign "Saakshar Bharat" has engaged a
firm 1J for putting up hoarding near Airport in four metros i.e. Delhi, Mumbai,
Chennai and kolkata. Determine place of supply and manner of determination of
value

Answer:-
The place of supply of this service is in Delhi, Maharashtra, Tamil Nadu and West
Bengal. In such a case, amount actually paid to 1J for hoardings in each of four
 metros will constitute value attributable to dissemination in Delhi, Maharashtra,
Tamil Nadu and West Bengal respectively. Separate invoices will have to be issued
State wise and Union territory wise by 1J to ABC indicating value pertaining to
that State or Union territory.

Question 55: [Rule 3 (4)]

ABC (a government agency) places an order on KL for advertisement of 348 lakh to
be placed on a train with regard to "Janani Suraksha Yojana". Name of trian is
Hazrat Nizamuddin Vasco Da Gama Goa Express, which runs through Delhi,
Haryana, Uttar Pradesh, Madhya Pradesh, Maharashtra, Karnataka and Goa
The length of track for this train in said States/UT is 1:1:4:4:6:6:2. Determine value
and POS.

Answer:-
As per Sec 12(14), POS shall be respective State/UT Delhi, Haryana, Uttar Pradesh
Madhya Pradesh, Maharashtra, Karnataka, Goa with Rs.48 lakh divided in ratio of
1:1:4:4:6 6:2 viz. 2 lakh: 2 lakh : 8 lakh : 8 lakh: 12 lakh: 12 lakh: 4 lakh. Separate
invoices will have to be issued state wise and UT wise by KL to ABC indicating the
value pertaining to that State of UT.

Question 56: [Rule 3(6)]

ABC (a government agency) issued a release order of 9,640 to MN for display of
advertisements relating to "Ujjwala" scheme on railway tickets sold from all
Stations in Madhya Pradesh (713 railway stations) & Chhattisgarh (251 stations),
Determine place of supply.

Answer:-
The place of supply of this service is in Madhya Pradesh and Chhattisgarh and value
will be divided in ratio of number of railway stations in each State. Hence,
Madhya Pradesh (Rs.7, 130) and Chhattisgarh (Rs.2,510).

Question 57: [Rule 3(7)]

ABC (a government agency) issued a release order for an advertisement on 'Pradhan
Mantri Ujjwala Yojana', to be broadcast on FM radio station RedFM, at Kolkata,
Bhubaneswar, Patna, Ranchi and Delhi. Determine place of supply and value.
Answer:-
The release order issued by ABC will show the breakup of the amount which to be is
paid to each of these radio stations. The place of supply of this service is in West
Bengal, Orissa, Bihar, Jharkhand and Delhi. The place of supply of Delhi is in Delhi
even though the studio may be physically located in another state. Separate
invoices will have to be issued State wise and Union territory wise by MN (sic: OP)
to ABC based on the value pertaining to each State or Union territory.

Question 58: [Rule 3(8)]

ABC (a government agency) issued a release order with QR channel for telecasting an
advertisement in Nov. 2017 relating to "Pradhan Mantri Kaushal Vikas Yojana" for
telecast in Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. The other
details are
✓ Viewership figures of QR channel in last week of Sept. 2017= 1 lakh for
Delhi + 2 lakhs for region comprising of Uttar Pradesh and Uttarakhand +1
lakh for the region comprising of Bihar and Jharkhand;
✓ Ratio of the populations of Uttar Pradesh and Uttarakhand works out to
9:1.
✓ Ratio of populations for Bihar and Jharkhand is 4:1.
Determine the place of supply and value, if total cost of advertisement Rs.20, 00,000.

Answer:-
As per section 12(14) read with rule 3 of IGST Rules, 2017-
"Viewership for UP & Uttarakhand = 2 lakhs for region; divided in 9:1 = UP (1,
80,000) & Uttarakhand (20,000).
* Viewership for Bihar and Jharkhand = 1 lakh; divided in 4:1 = Bihar (80,000) &
Jharkhand = (20,000).
"Now, Viewership ratio for Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand =
1, 00,000: 1, 80,000: 20, 000: 80, 000 : 20,000 = 5 :9:1:4:1 (simplification).

If this ratio is applied to total amount, then, value of service in each state 5 lakh
(Delhi), 9 lakh (Uttar Pradesh), 1 lakh (Uttarakhand), 4 lakh (Bihar) and I lakh
(Jharkhand). Separate invoices will have to be issued State wise and Union
territory wise by QR to ABC indicating the value pertaining to that State or Union
territory.
Question 59:
RST Inc., a corn chips manufacturing company based in USA, intends to launch its
products in India. However, the company wishes to know the taste and
sensibilities of Indians before launching its products in India. For this purpose, RST
Inc., has approached ABC Consultants, Mumbai, (Maharashtra) to carry out a
survey in India to enable it to make changes, if any, in its products to suit Indian
taste.
The survey is to be solely based on the oral replies of the surveyees; they will not be
provided any sample by RST Inc. to taste. ABC Consultants will be paid in
convertible foreign exchange for the assignment.
With reference to the provisions of GST law, determine the place of supply of the
service. Also, explain whether the said supply will amount to export of service?
[CA Final RTP May 2018]

Answer:-
As per section 13(2) of the IGST Act, 2017, in case where the location of the supplier
of services or the location of the recipient of services is outside India, the place of
supply of services except the services specified in sub -sections (3) to (13) shall be
the location of the recipient of services. Sub-sections (3) to (13) provide the
mechanism to determine the place of supply in certain specific situations.
The given case does not fall under any of such specific situations and thus, the place
of supply in this case will be determined as per sec 13(2) of IGST act. Thus, the
place of supply of services in this case is the location of recipient of services i.e.,
USA.
As per section 2(6) of the IGST Act, 2017, export of services means the supply of any
service when,-
(a) the supplier of service is located in India;
(b) the recipient of service is located outside India;
(c) the place of supply of service is outside India;
(d) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
(e) the supplier of service and the recipient of service are not merely
establishments of a distinct person in accordance with Explanation I in
section 8.
Since all the above five conditions are fulfilled in the given case, the same will be
considered as an export of service.
 Sec 13(1):- Place of supply of services where location of
supplier or location of recipient is outside India

PERFORMANCE BASED SERVICE - Sec 13(3)

Question 60:
Mr. X (New Delhi) imports a machine from Germany for being installed in his factory
at New Delhi. To install such machine, Mr. X takes the service of an engineer who
comes to India from Germany for this specific installation.

Answer:
As per Sec 13(3) Service Supplied in respect of goods which are required to be made
physically available by the recipient the place of supply is the place where service
is performed.
The place of supply of installation service, which requires the physical presence of
machinery, is the location where the service is actually performed i.e., New Delhi

Question 61:
A software company located in United States of America (USA) takes services of a
software company located in Bangalore to service its software in USA. The Indian
software company provides its services through electronic means from its office
in India.

Answer:
As per Sec 13(3) Service Supplied in respect of goods which are required to be made
physically available by the recipient the place of supply is the place where service
is performed.
But, where service is provided from a remote location by way of electronics means
then POS is based on location of goods at the time when service is supplied.
As per Sec 13(3) of IGST Act, 2017, The place of supply is the location where goods
are situated at the time of supply of service i.e., USA.

Question 62:
ABC Ltd., Hyderabad has exported a machine to a company in Indonesia. The
machine stops functioning and is thus, imported by ABC Ltd. for free repairs in
 terms of the sale contract. The machine is exported after repairs. Determine the
POS for for repair service? (ICAI)

Answer:
As per exception to Sec 13(3), where goods are temporarily imported into India for
repairs and are exported after repairs then place of supply will be determined as
per Sec 13(2) The place of supply of repair service is the location of the recipient
i.e., Indonesia.

Question 63:
PQR Consultants, New Delhi, bags a contract for doing a market research for a
vehicle manufacturing company based in South Korea, in respect of its upcoming
model of a car. The research is to be carried out in five countries including New
Delhi.

Answer:
As per sec 13 (3), Since the services are supplied at more than one location including
a location in the taxable territory, the place of supply is the location in the taxable
territory i.e. New Delhi.

Question 64:
Shaan company of Mumbai has temporarily imported x-ray machine from its
customer located in Japan for repairs. Determine POS in following cases
i) The said goods have been re-exported to Japan after carrying out the
necessary repairs without being put to any use in Mumbai.
ii) The said goods have been re-exported after repair but used for other
purpose

Answer
(i) Legal Provision - The above case falls within the purview of Section 13
(3) (a) of IGST Act
Discussion - Location of Service Provider is Mumbai. As per the proviso to
the above stated section nothing contained in this clause shall apply in
the case of services supplied in respect of goods which are temporarily
imported into India for repairs and are exported after repairs without
being put to any other use in India, than that which is required for such
repairs. Hence, here the general section of Section 13 (2) of IGST Act
 shall be applicable wherein the place of supply shall be the location of
the recipient of services which in the instant case is Japan.
Conclusion- A location of supplier is Mumbai & Place of Supply is Japan.
Hence IGST will be triggered. As the above case falls within the purview
of export as per section 16 of IGST Act.
Supply can be made without payment of IGST under a Bond or Letter of
Undertaking or IGST can be paid and a refund for the same can be
claimed

(ii) Legal Provision- The above case falls within the purview of Section 13
(3) (a) of IGST Act
Discussion - Location of Service Provider is Mumbai. As per the above
section place of supply is the location where the services are actually
performed for services supplied in respect of goods which are required
to be made physically available by the recipient of services to the
supplier of services, or to a person acting on behalf of the supplier of
services in order to provide the services. In the above case Place of
Supply is Mumbai.

Related to Immovable Property - Sec 13(4)

Question 65:
Determine the place of supply of services for the following case:-
a) An interior designer based at Mumbai, renders his services in July 2017, to
an MNC based at USA, for construction of a shopping mall at Dubai.
Determine the Place of Supply in the above situation and discuss if the
service is taxable in India
b) Mr. C, an architect (New Delhi), provides professional services to Mr. 2 of
New York in relation to his immovable property located in Pune.
c) Mr. C, an architect (New Delhi), enters into a contract with Mr. 2 of New
York to provide professional services in respect of immovable properties of
Mr. 2 located in Pune and New York.

Answer
Legal Provision:- For the given case above ,section 13 (4) of IGST Act is applicable as
the service is directly pertaining to immovable property.
Thus, the place of supply of services for the following cases shall be:-
 a) In the above case the location of service provider is India (Mumbai) and the
place of supply is the place where the immovable property is located, in the
instant case it is Dubai.
IGST will be triggered as the above case falls within the purview of export as
per section 16 of IGST Act. Supply can be made without payment of IGST
under a Bond or Letter of Undertaking or IGST can be paid and a refund for
the same can be claimed.
b) The place of supply is the location of immovable property i.e., Pune.
c) As per Sec 13(6) Since the immovable properties are located in more than
one location including a location in the taxable territory, the place of supply
is the location in the taxable territory i.e., Pune.

Question 66:
Mr. Mahendra Goyal, an interior decorator provides professional services to Mr.
Harish Jain in relation to two of his immovable properties.
Determine the place of supply in the transactions below as per provisions of GST law
in the following independent situations:
Explain the relevant provisions of law to support your conclusions
Case Location of Mr. Location of Mr. Properties situated
Mahendra Goyal Harish Jain at
1 Delhi Mumbai New York (USA)
2 Delhi New York Paris (France)

Answer:-
Case 1: As per section 12(3) of the IGST Act, 2017, where both the service provider
and the service recipient are located in India, the place of supply of services
directly in relation to an immovable property, including services provided by
interior decorators is the location of the immovable property. However, if the
immovable property is located outside India, the place of supply is the location of
the recipient.
Since in the given case, both the service provider (Mr. Mahendra Goyal) and the
service recipient (Mr. Harish Jain) are located in India and the immovable
property is located outside India (New York), the place of supply will be the
location of recipient i.e., Mumbai.
Case 2- As per section 13(4) of the IGST Act, 2017 where either the service provider
or the service recipient is located outside India, the place of supply of services
 directly in relation to an immovable property including services of interior
decorators is the location of the immovable property.
Since in the given case, service recipient (Mr. Harish Jain) is located outside India
(New York), the place of supply will be the location of immovable property i.e.,
Paris (France).

EVENT BASED PROVISIONS - Sec 13(5)

Question 67:
Arijit who is a well-known playback singer from Delhi organizes an event in America
for which he hires and uses the services of a German based event organization.
Discuss the place of supply and GST if applicable.

Answer
Legal Provision - Section 13 (5) of IGST Act is applicable as the service is of artistic
nature.
Discussion - As per the above stated section the place of supply for services supplied
which is artistic in nature shall be the place where the event is actually held. In
the above case the event is held in America. Hence, place of supply is America.
Location of Service Provider is Germany as this is where the event organizer is
located.
Conclusion - No GST will be triggered as the above locations pertain to non-taxable
territories.

Question 68:
An Indian company provided services to a Dubai firm, in relation to organization of
IPL in Dubai. Advice whether the service is subject to GST. Give reasons for your
view

Answer
Legal Provision - Section 13 (5) of IGST Act is applicable as the service is of
organizing a sporting event.
Discussion - As per the above stated section the place of supply for services supplied
which is organizing a sporting event shall be the place where the event is actually
held. In the above case the event is held in Dubai. Hence, place of supply is Dubai.
Conclusion - Location of Service Provider is India & Place of Supply is Dubai, hence
IGST will be triggered. As the above case falls within the purview of export as per
 section 16 of IGST Act. Supply can be made without payment of IGST under a
Bond or Letter of Undertaking or IGST can be paid and a refund for the same can
be claimed.

Specified Services - Sec 13(8)

Question 69:
Mr. Sumit has a permanent residence at Ahmedabad. He has a savings bank account
with Ahmedabad Branch of Safe and Sound Bank. On April I, 2018, Mr. Sumit
opened a safe deposit locker with the Ahmedabad Branch of Safe and Sound
Bank. Mr. Sumit went to USA for official work in December, 2018 and has been
residing there since then. Mr. Sumit contends that since he is a non-resident
during the year 2019-2020 in terms of the Income-tax Act, GST cannot be levied
on the locker fee charged by Safe and Sound Bank for the year 2019-2020.
Examine the correctness of the contention of Mr. Sumit.

Answer
Legal Provision - The above case falls within the purview of Section 13 (8) of IGST
Act.
Discussion - As per the above stated section the place of supply shall be the location
of the supplier of services, for services supplied by a banking company to account
holders. In the above case Mr. Sumit is an account holder with Ahmedabad
Branch of Safe and Sound Bank and is receiving services pertaining to safe deposit
locker. The location of supplier is Ahmedabad and place of supply is Ahmedabad.
Conclusion - Since both the location of supplier and place of supply is Ahmedabad
CGST+SGST will be triggered.
It is important to note that GST and Income Tax Act are two separate Acts and have
no dependency and interrelation with each other. If by the Income Tax Act, Mr.
Sumit is a non- resident, then it's not necessary that the same status will be
created on him, through GST as well. Any service provided in a taxable territory
and not falling under negative list is chargeable to GST. The above case does not
fall within the purview of Section 7 Schedule II of CGST Act.

Question 70:
Determine the place of supply for the following services:-
i) A travel agent registered in New Delhi books a tour of famous Indian
cities for a Dubai resident
 ii) Mr. D, an unregistered person based in New Delhi, leaves for a European
holiday. He hires a car from London, UK for 20 days

Answer
Legal provision;- As per sec 13(8) of IGST Act the place of supply for specified
category of services shall be location of supplier of services
Thus as per the above provision the place of supply of services shall be:-
i) The place of supply is the location of the supplier of services i.e., New
Delhi. As it falls under the ambit of intermediate services
ii) The place of supply is the location of the supplier of services i.e.,
London. As it falls under the ambit of hiring of means of transport upto
period of 1 month.

Question 71:
PQ Trade Links of Hyderabad are appointed as commission agent by a foreign
company for sale of its goods to Indian customers. In lieu of their services, PQ
Trade Links receive a fixed percentage of commission from the concerned foreign
company.

Answer
Legal Provision - The above case falls within the ambit of Section 13 (8) (b) of IGST
Act
Discussion - As per above Section the place of supply of intermediary services shall
be the location of the supplier of services. In the above case the place of supply is
Hyderabad. Definition of Intermediary as per Section 2 (13) of IGST Act: means a
broker, an agent or any other person, by whatever name called, who arranges or
facilitates the supply of goods or services or both, or securities, between two or
more persons, but does not include a person who supplies such goods or services
or both or securities on his own account
Conclusion - Location of service provider is Hyderabad & Place of supply is
Hyderabad hence; CGST+SGST will be triggered in the above case

Question 72:
ABC Pvt. Ltd., New Delhi, provides support services to foreign customers in relation
to procuring goods from India. The company identifies the prospective vendor,
 reviews product quality and pricing and then shares the vendor details with the
foreign customer.
The foreign customer then directly places purchase order on the Indian vendor for
purchase of the specified goods. ABC Pvt. Ltd. charges its foreign customer cost
plus 10% mark up for services provided by it.
For the month of December, 20XX, the company has charged US $ 1, 00,000
(exclusive of GST) to its foreign customer. With reference to the provisions of GST
law, examine whether the company is liable to pay IGST or CGST and SGST.
Note: GST @ 18% is applicable on supply of the support services provided by ABC
Pvt. Ltd. Rate of exchange is Rs.65 per US $. [CA Final RTP May 18]
Answer:-
Legal provision:- As per Section 2(13) of the IGST Act, 2017 defines "intermediary"
mean a broker, an agent or only other person, by whatever name called, who
arranges or facilitates the supply of goods or services or both, or securities,
between two or more persons, but does not include a person who supplies such
goods or services or both or securities on his own account. As per section
13(8)(b), the place of supply in case of intermediary services is the location of the
supplier.
If the location of the supplier of services or the location of the recipient of service is
outside India, the place of supply is determined in terms of section 13 of the IGST
Act,
Discussion:-In this case, since ABC Pvt. Ltd. is engaged in arranging or facilitating
supply of goods between the foreign customer and the Indian vendor, the said
services can be classified as intermediary services.
Also in the given case, the recipient of supply is located outside India, the provisions
of supply of intermediary services will be determined in terms of section 13 of the
IGST Act, 2017.
As per the above stated provision, the place of supply in case of intermediary
services is the location of the supplier i.e., the location of ABC Pvt. Ltd. which is
New Delhi.
Further, as per section 8(2) of the IGST Act, 2017, supply of services where the
location of the supplier and the place of supply of services are in the same State is
treated as intra- State supply.
Conclusion:-Therefore, since in the given case, both the location of ABC Pvt. Ltd. and
the place of supply of the service provided by it are in New Delhi, the supply of
service will be an intra-State supply liavable to CGST & SGST.
Assuming that the given rate of exchange is prevailing on the date of time of supply
of services, the CGST and SGST liability will be worked out as under:
CGST =Rs.5, 85,000 (1, 00,000 x 65 x 9%)
SGST = Rs.5, 85,000 (1, 00,000 x 65 x 9%)

Transport of goods - Sec 13(9)

Question 73:
A shipping line, Mumbai, Maharashtra transports a shipment of flowers from
Mumbai to Paris, for an event management company based in Paris.

Answer
Legal Provision: As per sec 13(9) of IGST Act, the Place of supply of transport of
goods other than by way of mail or couriers shall be place of destination of such
goods. The place of supply is the location of destination of goods transported i.e.,
Paris.

Passenger Transport services -- Sec 13(10)

Question 74:
Mr. A, a foreign tourist, has booked a ticket for New Delhi-Sri Lanka flight from an
airline registered in New Delhi for a continuous journey without any stopover.

Answer:
Legal Provision: the POS in respect of passenger transport of services shall be place
where passenger embarks on conveyance for continuous journey.
As per Sec 13(10) The place of supply is the place where the passenger embarks on
the conveyance for a continuous journey i.e., New Delhi.

Question 75:
Mr. A travelled on a Bagdogra-Dibrugarh-Singapore-Dibrugarh-Bagdogra flight where
a single ticket with no stopover has been issued by Parkinson Airlines.

Answer
Legal Provision - This case falls within the ambit of Section 13 (10) of IGST Act
Discussion - The location of service provider is assumed to be in Singapore. As per
the aforesaid section the place of supply in respect of passenger transportation
services shall be the place where the passenger embarks on the conveyance for a
continuous journey.
Conclusion - Hence, in the instant case place of supply is Bagdogra i.e. India

On board services - Sec 13(11)

Question 76:
A movie-on-demand is provided as on-board entertainment during the Bangalore-
Delhi leg of a Singapore-Bangalore-Delhi flight against a charge of Rs.500 per
passenger in addition to the fare of Rs.25, 000 per passenger. What will be the
place of provision of service in this case? Will your answer change, if the above
service is provided on a Delhi- Bangalore-Singapore-Malaysia flight during the
Singapore- Malaysia leg?

Answer
Legal Provision - The above case falls within the purview of Section 13 (11) of IGST
Act.
Discussion - As per the above stated Section the place of supply of services provided
on board a conveyance during the course of a passenger transport operation,
including services intended to be wholly or substantially consumed while on
board, shall be the first scheduled point of departure of that conveyance for the
journey. Hence in the above case place of supply is Singapore.
Conclusion - Singapore is outside the purview of taxable territory hence GST will not
be triggered.
If the service is provided on a Delhi-Bangalore-Singapore-Malaysia flight the place of
supply would be Delhi as per the above stated section.

Question 77:
Determine the place of provision of service in each of the following independent
cases:
(i) A video game or a movie-on-demand is provided as on-board
entertainment during the Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi
flight.
(ii) A video game or a movie-on-demand is provided on a Delhi-Kolkata-
Bangkok- Jakarta flight during the Bangkok-Jakarta leg.
Answer
(i) Legal Provision- The above case falls within the purview of Section 13
(11) of IGST Act
Discussion - Location of Service Provider is assumed to be Bangkok. As per
the above stated Section the place of supply of services provided on
board a conveyance during the course of a passenger transport
operation, including services intended to be wholly or substantially
consumed while on board, shall be the first scheduled point of
departure of that conveyance for the journey. Hence, place of supply is
Bangkok
Conclusion - GST is not triggered as Bangkok falls within the purview of
non-taxable territory

(ii) Legal Provision - The above case falls within the purview of Section 13
(11) of IGST Act
Discussion - Location of Service Provider is assumed to be Delhi. As per the
above stated Section the place of supply of services provided on board a
conveyance during the course of a passenger transport operation,
including services intended to be wholly or substantially consumed
while on board, shall be the first scheduled point of departure of that
conveyance for the journey. Hence, place of supply is Delhi
Conclusion - CGST+SGST will be triggered

Mixed Category
Question 78: (ICAI)
AM Ltd, of Mumbai (having diversified businesses) has provided the following
services, whose values are listed below. Compute its GST liability @ 12%
1. Services provided to a company located in Dubai in relation to organization
of a festival celebration event in Dubai Rs.4 lakh
2. Services provided to a unregistered company located in Jammu being an
unregistered person in relation to fashion show in Jammu Rs.3 lakh
3. Services provided to an unregistered company located in Delhi in relation
to fashion show in Jammu Rs.3 lakh
4. Services of allowing downloading of digital content from various websites
Rs.4 lakh, the recipient of which is located in Singapore
Answer:
No. Particulars Legal Discussion Conclusion GST
Provision
Services Section 13 Place of Supply shall be IGST is triggered. =Rs.400,
provided in (5) of the place where the As per section 000*12%
relation to IGST Act event is actually held. 16 of IGST Act = Rs.48,
organization In the above case this is export of 000
1 of a festival event is held in Dubai. service and can
celebration Hence, place of supply be dealt with
event outside is Dubai. Location of in two ways:
service provider is 1) Export without
Mumbai (India) the payment of
IGST under a
Bond or Letter
of Undertaking
2) Pay IGST and
claim a refund
Services Section Place of Supply shall be IGST will be =Rs.300,
provided in 12(7) the place where the triggered 000 *
relation to event is actually held. (inter-state) 12% =
fashion show In the above case the Rs.36,
in Jammu event is held in 000
2 Jammu. Hence, place
of supply is Jammu.
Location of service
provider is Mumbai,
Maharashtra
Services Section Place of Supply shall be IGST will be =Rs.300,
provided to a 12(7) the place where the triggered 000 *
company in event is actually held. (inter-state) 12%
Delhi in In the above case the =RS.36,
relation to event is held in 000
fashion show Jammu. Location of
3 in Jammu service provider is
Mumbai, Maharashtra.
Here it does not
matter whether the
 services are provided
to a company in Delhi
Services of Section Place of Supply is the IGST triggered As =Rs.400,
allowing 13(12) location of the per section 16 000 *
downloading recipient of service. of IGST Act this 12%
of digital Here the recipient is is export of =Rs.48,
content from located in Singapore. service and can 000
its website Hence, place of supply be dealt with
is Singapore. Location in two ways:
4 of service provider is 1) Export without
Mumbai, Maharashtra the payment of
IGST under a
Bond or Letter
of undertaking
2) pay IGST and
claim and
refund

SEZ
Question 79:
AB Ltd located in Chennai is providing taxable services to MN Ltd who is registered in
Chennai and is located in a SEZ. Determine POPS

Answer
Legal Provision - The above case falls within the purview of Section 12 (2) (a) and
Section 8 (1) of IGST Act
Discussion- Location of Service Provider is Chennai. As per the above Section place of
supply of services to a registered person shall be the location of such person. In
the above case the Place of Supply is Chennai.
As per Section 8 (1) of IGST Act
Provided that the following supply of goods or service or both shall not be treated as
intra- state supply, namely:--
 (i) supply of goods to or by a Special Economic Zone developer or a Special
Economic zone unit
Hence, even though it is an Intra-State supply it will be treated as an Inter-State
supply as MN Ltd is located in a SEZ.

Question from MTP, RTP of ICAI

Question 80:
Explain the significance of the place of supply of goods and services under GST.

Answer:
The basic principle of GST is that it should effectively tax the consumption of such
supplies at the destination thereof or as the case may at the point of
consumption. So, place of supply provision determines the place i.e. taxable
jurisdiction where the tax should reach. The place of supply determines whether
transactions is intra-state or inter- state. In other words, the place of Supply of
goods or services is required to determine whether a supply is subject to SGST
plus CGST in a given State or Union territory or else would attract IGST if it is on
inter-state supply.

Question 81:
Why does GST law provide separate rules for place of supply in respect of B2B
(supplies to registered persons) and B2C (supplies to unregistered persons)
transactions?

Answer:
In respect of B2B transactions, the taxes paid are taken as credit by the recipient so
such transactions are just passing through. GST collected on B2B supplies
effectively create a liability for the government and an asset for the recipient of
such supplies in as much as the recipient is entitled to use the input tax credit for
payment of future taxes. For B2B transactions, the location of recipient takes care
in almost all situations as further credit is to be taken by recipient.
The recipient usually further supplies to another customer. The supply is consumed
only when a B2B transaction is further converted into B2C transaction. In respect
of B2C transactions, the supply is finally consumed and the taxes paid actually
come to the government.
Question 82:
M/s Kingsize Airlines has issued a ticket/pass to Mr. Saxena, the winner of annual
lucky draw, for travelling to anywhere in India. Determine the place of supply in
this case.

Answer:
As per section 12(9) of the IGST Act, 2017, the place of supply of passenger
transportation service to a person other than a registered person, shall be the
place where the passenger embarks on the conveyance for a continuous journey.

In the above case, the place of embarkation will not be available at the time of issue
of invoice as the right to passage is for future use. Accordingly, place of supply
cannot be the place of embarkation.
The proviso to section 12(9) provides that where the right to passage is given for
future us and the point of embarkation is not known at the time of issue of right
to passage, the place of supply of such service shall be determined in accordance
with the provisions of 12(2).
Thus, in such cases, the default rule shall apply i.e., the place of supply of services
made to any person other than a registered person shall be the location of the
recipient where the address on record exists and the location of the supplier of
services in other cases.

Question 83:
Answer the following questions in the light of the place of supply provisions
contained in the IGST Act, 2017:
(1) Quickdeal Enterprises (Ahmednagar, Gujarat) opens a new branch office at
Hissar, Haryana. It purchases a building for office from Ruhani Builders
(Hissar) alon) with pre-installed office furniture and fixtures. Determine
place of supply of the pre-installed office furniture and fixtures.
(2) Supra Events, an event management company at New Delhi, organizes an
award function for Chirag Diamond Merchants of Varanasi (registered in
U.P.), at Mumbai. Determine place of supply of the service supplied by
Supra Events. Will your answer be different, if the award function is
organised at Mauritius instead of Mumbai?

Answer:
 (1) Section 10(1(C) of the IGST Act stipulates that if the supply does not
involve movement of goods, the place of supply is the location of goods at
the time of delivery to the recipient. Since there is no movement of office
furniture and fixtures in the given case, the place of supply of such goods is
their location at the time of delivery to the recipient (Quickdeal Enterprises)
i.e., Hissar, Haryana.
(2) Section 12(7) of the IGST Act stipulates that the place of supply of services
provided by way of organisation of a cultural, artistic, sporting, scientific,
educational or entertainment event including supply of services in relation
to a conference, fair, exhibition, celebration or similar events is the location
of recipient in a case where such service is provided to a registered person.
In the given case, since the recipient (Chirag Diamond Merchants) is a
registered person, the place of supply is the location of the recipient, i.e.,
Varanasi, U.P.
Further, the place of supply will not change even if the award function is
organised at Mauritius instead of Mumbai as the location of recipient
remains unchanged. Thus, in that case also, the place of supply is the
location of the recipient, i.e., Varanasi, U.P.

Question from MTP, RTP of CMA

Question 84:
(a) X Ltd., located in Mumbai, Maharashtra receives order from M/s Y Ltd.
located in Ahmedabad, Gujarat for supply of one machine. Find the place of
supply and applicable GST?
(b) M/s Karina Ltd. incorporated in Mumbai and own a godown in Chennai. Mr.
M of Mumbai approached M/s Karina Ltd. of Mumbai for purchase of goods
lying in godown at Chennai. Mr. M further informs that he does not want
delivery of goods in Mumbai. M/s Karina Ltd. issues invoice for sale of
goods in Mumbai. Find the place of supply of goods and levy of tax?

Answer:
(a) 1. Location of Supplier: Mumbai (Maharashtra).
2. Place Of Supply: Ahmedabad (Gujarat)
Since, the movement of goods terminates at Ahmedabad. Applicable GST = IGST. As
the nature of supply is inter- state supply, Location of supplier = Mumbai
(b) Place of supply goods = Chennai.
 IGST will be levied.
(Location of such goods at the time of the delivery to the recipient where
supply does not involve movement of goods.) This place of supply is
irrespective of the location of the buyer and seller.
Question 85:
(a) Mr. X located in Chennai engaged the services of Mr. Y an Architect in
Chennai. Mr. X requests him to make design of residential complex to be
constructed in Cochin, Kerala. Mr. Y provided drawing and design services
in relation to immovable property located at Cochin. Find the place of
supply of service and levy of tax.
(b) Mr. A located at Kolkata provides training at Kolkata to employees of M/s
Infosys Ltd, which is registered at Mumbai. Find the place of supply of
service and GST liability in the following two cases: Case I: Infosys Ltd. is
registered person under GST. Case 2: Infosys Ltd. is not registered person
under GST.

Answer:
(a) As per sec 12(3) of CGST Act, Place of supply of service = location of
immovable property (i.e. Cochin) IGST is liable to pay by Mr. Y.
(b) Case 1: As per sec 12(5) of CGST Act, as the location of supplier is Chennai If
Infosys Ltd. is a registered person – Place of Supply will be Mumbai. Mr. A.
is liable to pay IGST. Case 2: If Infosys Ltd. is not a registered person - Then
Place of Supply will be Kolkata. Mr. A. is liable to pay CGST and SGST.

Question 86:
(a) Jet Air registered under GST and located in Mumbai operates flight from
Delhi- Dubai-London-Dubai-Delhi. Mr. Roy who is unregistered person,
purchase air ticket for Delhi-London. Two tickets are issued to him showing
Delhi-Dubai with a halt at Dubai for 5 hours and Dubai-London. Find the
Place of supply of service and GST liability.
(b) M/s Air Call registered under GST and located in Chennai. M/s Air Call has
appointed Mr. C of Chennai as a selling agent for supplying pre-payment
voucher to the subscriber. Find the Place of supply of service and GST
liability.

Answer:
 (a) Place of Supply = Delhi (i.e. place of embark). As per sec 12 (9) of CGST Act,
GST = Jet Air is liable to pay IGST for the entire value of air fare.
Note: since, it is continuous journey, place of embarking of passenger who is
unregistered person is relevant.
(b) Place of Supply = Chennai (i.e. Address of the selling agent on the record of
M/s Air Call). As per Sec 12 (11) of CGST Act,
GST = CGST & SGST is liable to be paid by M/s Air Call.

Question 87:
Musicera Pvt. Ltd., owned by Nitish Daani - a famous classical singer - wishes to
organise a 'Nitish Daani Music Concert' in Gurugram (Haryana). Musicera Pvt. Ltd.
(registered in Ludhiana, Punjab) enters into a contract with an evet management
company, Supriya (P) Ltd. (registered in Delhi) for organising the said music
concert at an agreed consideration of Rs.10, 00,000. Supriya (P) Ltd. books the
lawns of Hotel Dumdum, Gurugram (registered in Haryana) for holding the music
concert, for a lump sum consideration of Rs.4, 00,000. Musicera Pvt. Ltd. fixes the
entry fee to the music concert at Rs.5, 000. 400 tickets for 'Nitish Daani Music
Concert' are sold. You are required to determine the CGST and SGST or IGST
liability, as the case may be, in respect of the supplie(s) involved in the given
scenario. Will your answer be different if the price per ticket is fixed at Rs.450?
Note: Rate of CGST and SGST is 9% each and IGST is 18%. All the amounts given
above are exclusive of taxes, wherever applicable. [CA final RTP May 19]

Answer:
The CGST and SGST or IGST liability in respect of above given supplies is determined
as under:
(i) As per the provisions of section 12(6) of the IGST Act, 2017, the place of
supply of services provided by way of admission to, inter alia, a cultural
event shall be the place where the event is actually held.
Therefore, the place of supply of services supplied by Musicera Pvt. Ltd. to
audiences by way of admission to the music concert is the location of
the Hotel Dumdum, i.e. Gurugram, Haryana.
Since the location of the supplier (Ludhiana, Punjab) and the place of
supply (Gurugram, Haryana) are in different States, IGST will be leviable.
Therefore, IGST leviable will be computed as follows:
Consideration for supply (400 tickets @ Rs.5, 000 per ticket) = Rs.20, 00,000
IGST @18% on value of supply = Rs.20, 00,000 x 18% = Rs.3, 60,000.
 (ii) Section 12(7)(a)(i) of IGST Act, 2017 stipulates that the place of supply of
services provided by way of organization of, inter alia, a cultural event to
a registered person is the location of such person.
Therefore, the place of supply of services supplied by Supriya (P) Ltd. to
Musicera Pvt. Ltd. (Ludhiana, Punjab) by way of organising the music
concert is the location of the recipient, i.e. Ludhiana (Punjab).
Since the location of the supplier (Delhi) and the place of supply (Ludhiana,
Punjab) are in different States, IGST will be leviable. Therefore, IGST
leviable will be computed as follows: Consideration for supply = Rs.10,
00,000
IGST @ 18% on value of supply = Rs.10, 00,000 x 18% = Rs.1, 80,000
(iii) As per the provisions of section 12(3)(c) of the 1IGST Act, 2017, the
place of supply of services, by way of accommodation in any immovable
property for organizing, inter alia, any cultural function shall be the
location at which the immovable property is located.
Therefore, the place of supply of services supplied by Hotel Dumdum
(Gurugram, Haryana) to Supriya (P) Ltd. by way of accommodation in
Hotel lawns for organising the music concert shall be the location of the
Hotel Dumdum, i.e. Gurugram, Haryana. Since the location of the
supplier (Gurugram, Haryana) and the place of supply (Gurugram,
Haryana) are in the same State, CGST and SGST will be leviable.
Therefore, CGST and SGST leviable will be computed as follows:
Consideration for supply = Rs.4, 00,000
CGST@9% on value of supply = Rs.4, 00,000 x 9% = Rs.36, 000
SGST @9% on value of supply = Rs.4, 00,000 x 9% = Rs.36, 000
If the price for the entry ticket is fixed at Rs.450, answer will change in
respect of supply of service provided by way of admission to music
concert, as mentioned in point (i) above.
There will be no IGST liability if the consideration for the ticket is Rs.450 as
the inter-State services by way of right to admission to, inter alia,
musical performance are exempt from IGST vide Notification No. 9/2017
IT (R) dated 28.06.2017, if the consideration for right to admission to the
event is not more than Rs.500 per person. However, there will be no
change in the answer in respect of supplies mentioned in point (ii) and
(iii) above.

Question 88:
Zed Ltd. is engaged in fertilizer manufacturing in Karnataka. It has GST registration
from Karnataka (Zed Ltd. does not have registration in any other State/ Union
Territory). Tapas is head of finance department of the company. On January 10,
2018, Tapas goes to Mumbai to attend a 3 day conference on international
finance organised by Harvard Business School at Nariman Point. For this purpose,
he incurs the following expenditure-
1. Bengaluru-Mumbai air ticket (paid to Air Shakti, Karnataka): Rs.26, 000 +
GST.
2. 3 day conference participation fee (paid to Harvard Business School, at the
time of registration in Mumbai): Rs.1, 50,000 + GST.
3. Hotel expenditure (paid to Senerio Hotels, Mumbai): Rs.60, 000 + GST.
4. Mumbai-Bengaluru air ticket (paid to Pawan Airways, Mumbai): Rs.32, 000
+ GST.
These expenses are paid by cheque by 2Zed Ltd. Recipient of supply is Zed Ltd.
(GSTIN of Zed Ltd. is given on tax invoices).
What is the place of supply in these cases? [CMA Final RTP Dec 18]

Answer:
Place of supply will be determined as follows –
1. Bengaluru-Mumbai air ticket - This service is pertaining to transportation of
passengers. It is covered by section 12(9) of IGST Act. If the recipient is a
registered person, place of supply of service is the location of recipient of
service. Zed Ltd. is registered in Karnataka. Place of supply of service is in
Karnataka. Location of supplier is in Karnataka. Consequently, it is intra-
state supply.
2. Conference participation - Training services are covered by section 12(5) of
IGST Act. If the recipient is a registered person, place of supply of service is
the location of recipient of service. Zed Ltd. is registered in Karnataka. Place
of supply of service is in Karnataka. Location of supplier is in Mumbai (it is
assumed that Harvard Business School has taken registration in Mumbai as
a casual taxable person for this conference). Consequently, it is inter-state
supply.
3. Lodging accommodation by Scenario Hotels - It is covered by section
12(3)(b) of IGST Act. Place of supply of service is the location of hotel
building (i.e., Mumbai). Location of supplier is in Mumbai. It is, therefore,
intra-state supply.
 4. Mumbai-Bengaluru air ticket - As discussed above, place of supply of
service is in Karnataka. Location of supplier is in Mumbai. Consequently, it
is inter-state supply.

Question 89:
Priyank of Pune, Maharashtra enters into an agreement to sell goods to Bisht of
Bareilly, Uttar Pradesh. While the goods were being packed in Pune godown of
Priyank, Bisht got an order from Sahil of Shimoga, Karnataka for the said goods.
Bisht agreed to supply the said goods to Sahil and asked Priyank to deliver the
goods to Sahil at Shimoga.
You are required to determine the place of supply(ies) in the above situation. [CA
Final RTP Nov 19

Answer:
The supply between Priyank (Pune) and Bisht (Bareilly) is a bill to ship to supply
where the goods are delivered by the supplier [Priyank] to a recipient [Sahil
(Shimoga)] or any other person on the direction of a third person [Bisht]. The
place of supply in case of domestic bill to ship to supply of goods is determined in
terms of section 10(1)(b) of IGST Act, 2017.
As per section 10(1)(b) of IGST Act, 2017, where the goods are delivered by the
supplier to a recipient or any other person on the direction of a third person,
whether acting as an agent or otherwise, before or during movement of goods,
either by way of transfer of documents of title to the goods or otherwise, it shall
be deemed that the said third person has received the goods and the place of
supply of such goods shall be the principal place of business of such person.

Thus, in the given case, it is deemed that the Bisht has received the goods and the
place of supply of such goods is the principal place of business of Bisht.
Accordingly, the place of supply between Priyank (Pune) and Bisht (Bareilly) will
be Bareilly, Uttar Pradesh.

This situation involves another supply between Bisht (Bareilly) and Sahil (Shimoga).
The place of supply in this case will be determined in terms of section 10(1)(a) of
IGST Act, 2017.

Section 10(1) (a) of IGST Act, 2017 stipulates that where the supply involves
movement of goods, whether by the supplier or the recipient or by any other
 person, the place of supply of such goods shall be the location of the goods at the
time at which the movement of goods terminates for delivery to the recipient.

Thus, the place of supply in second case is the location of the goods at the time when
the movement of goods terminates for delivery to the recipient (Sahil), i.e.
Shimoga, Karnataka.

Question 90:
Asha Enterprises, supplier of sewing machines, is located in Kota (Rajasthan) and
registered for purpose of GST in the said State. It receives an order from Deep
Traders, located in Jalandhar (Punjab) and registered for the purpose of GST in
the said State, The order is for the supply of 100 sewing machines with an
instruction to ship the sewing machines to Jyoti Sons, located in Patiala (Punjab)
and registered in the said State for purpose of GST. Jyoti Sons is a customer of
Deep Traders. Sewing machines are being shipped in a lorry by Asha Enterprises.
Briefly explain the following:
(a) the place of supply under IGST Act, 2017;
(b) the nature of supply:- whether inter-State or intra-State and
(c) whether CGSTISGST or IGST as would be applicable in this case.
[CA Final May 19 Old]

Answer:
The supply between Asha Enterprises (Kota, Rajasthan) and Deep Traders (Jalandhar,
Punjab) is a bill to ship to supply where the goods are delivered by the supplier
[Asha Enterprises] to a recipient [Jyoti Sons (Patiala, Punjab)] on the direction of a
third person [Deep Traders].

In case of such supply, it is deemed that the said third person has received the goods
and the place of supply of such goods is the principal place of business of such
person [Section 10(1) (b) of the IGST Act, 2017]. Thus, the place of supply
between Asha Enterprises (Rajasthan) and Deep Traders (Punjab) will be
Jalandhar, Punjab.

Since the location of supplier and the place of supply are in two different States, the
supply is an inter-State supply in terms of section 7 of the IGST Act, 2017, liable to
IGST.
This situation involves another supply between Deep Traders (Jalandhar, Punjab) and
Jyoti Sons (Patiala, Punjab). In this case, since the supply involves movement of
goods, place of supply will be the location of the goods at the time at which the
movement of goods terminates for delivery to the recipient, i.e. Patiala, Punjab
[Section 10(1)(a) of the IGST Act, 2017].

Since the location of supplier and the place of supply are in the same State, the
supply is an intra-State supply in terms of section 8 of the IGST Act, 2017, liable to
CGST
NewlyandInserted
SGST.

Question 91:
Mr. Vijay received an order from Mr. Dev Patel, England, for cutting and polishing
diamonds, and for such contract Mr. Dev Patel has sent diamonds from England
.After Mr. Vijay has finished the work on diamond he exported back those
diamonds to England and at the same time received $5000 as a consideration for
such contract. Determine Place of Supply.

Answer:
Legal Provision:-
Place of Supply in case of performance based services is to be determined as per the
provisions contained in Section 13(3) (a) of the IGST Act and generally the Place of
Supply is where the services are actually performed.
But there is exception in case of services supplied in respect of goods which are
temporarily imported into India for repairs or for any other treatment or process
and are exported after such repairs or treatment or process without being put to
any use in India, other than that which is required for such repairs or treatment or
process. So, in this cases place of supply would be as per section 13(2).

Conclusion:- Therefore, in the given case of cutting and polishing activity on

unpolished diamonds which are temporarily imported into India are not put to
any use in India, the Place of Supply will be place of recipient i.e. England

Question 92:
Post authorities of INPT Port provides various services such as in respect of arrival of
wagons at port, haulage of wagons inside port area up-to place of unloading,
siding of wagons inside the port, unloading of wagons, movement of unloaded
 cargo to plot and staking hereof, movement of unloaded cargo to berth, shipment
loading on vessel etc. Determine the Place of Supply.
a) Determine Place of Supply if such services is provided to Mr. A, registered
in Pune and if Mr. A is registered in outside India?

Answer:
Legal Provision: -
Services provided by Port authorities are ancillary to or related to cargo handling
services and are not related to immovable property.
Accordingly, the place of supply of such services will be determined as per the
provisions contained in Section 12(2) or
Section 13(2) of the IGST Act, as the case may be, depending upon the terms of the
contract between the supplier and recipient of such services.

Conclusion: -
Applying the above provision if Mr. A, registered in Pune the place of supply of such
services will be determined as per the provisions contained in Section 12(2) i.e.
Maharashtra (Pune). And if Mr. A is registered in outside India the place of supply
of such services will be outside India determined as per the provisions contained
in Section 13(2) of the IGST Act.

Question 93: R Limited of Rajasthan sells 100 cell phones to Shah Traders in Tamil
Nadu. R Limited delivers the product to Shah Traders in its warehouse in Chennai.

Find the place of supply and levy of GST?

Ans:

Place of supply = Chennai (i.e. Tamil Nadu)

IGST will be levied.

Question 94: Maruti Traders, a dealer in furniture, located in Maharashtra, receives an

order from Bhagavan Traders, also located in Maharashtra. The order is for the
supply of 250 Tables, with an instruction to ship the Tables to Bhakta Hard ware’s,
located in Tamil Nadu. Bhakta Hardware’s is a customer of Bhagavan Traders. Find
 the place of supply and levy of GST in the hands of Maruti Traders as well as
Bhagavan Traders?

Ans: There are two parts to this transaction:

• First part of the transaction – between Maruti Traders (Maharashtra) and

Bhagavan Traders (Maharashtra):
Maruti traders is the supplier of Tables, and Bhagavan Traders is the buyer.
Accordingly, Maruti traders bills the transaction to Bhavan Traders, and as
per the instruction, ships the goods to Bhakta Hardware’ sin Tamil Nadu.
• The second part of the transaction – between Bhagavan Traders and Bhakta
Hardware’s; Bhagavan Traders is the supplier, and Bhakta Hardware’s is the
buyer. Bhavan Traders bills the transaction to Bhakta Hardware’s, and
endorse the lorry receipt (goods shipped in a lorry by Maruti Traders) in
favor of Bhakta Hardware’s. This lorry receipt (LR) will enable Bhakta
Hardware’s to take the delivery of the goods.
Over here, on the instruction from Bhagavan Traders, Maruti Traders ships the
tables to Bhakta Hardware’s located in Tamil Nadu.
Here, Bhagavan Traders is deemed as the third person. Therefore, the place of
supply will be the principal place of business of the third person, i.e.,
Maharashtra. Accordingly, Maruti Traders charges CGST and SGST on billing
to Bhagavan Traders. The second part of the transaction between Bhavan
Traders and Bhakta Hardware’s will be interstate, and IGST will be charged.

Question 95: Whether E-commerce operator (ECO) like FILPKART, AMAZON,

SNAPDEAL is to be considered as agent of the manufacture/ trader & provisions
of section 10(1)(b) of IGST Act, 2017 as applicable to Bill to – Ship to transaction
shall apply?

Ans: Se. 2(45) of CGST Act, defines the term “electronic commerce operator” as any
person who owns, operates or manages digital or electronic facility or platform
for electronic commerce

Sec. 2(44) of CGST Act, defines the term “Electronic commerce” as means the supply
of goods or services or both, including digital products over digital or electronic
network.

The ECO cannot be considered to acting as agent or otherwise as required by Section

10(1)(b) of IGST Act, 2017.
ECO is an independent service provider and earning commission for the services
rendered by it and its primary responsibility is collect TCS @ 1% under section
52(1) of CGST Act, 2017 on the net value of taxable supplies made through it by
other suppliers where the consideration with respect to such supplies is to be
collected by the operator.

From the above it is evident that the ECO is not working in the capacity of agent or
otherwise. It is only providing the online market place services and earning
subscription fees or commission on the sale value from the listed sellers.

So, the provisions of section 10 (1)(b) of IGST Act, i.e. bill to-ship to provisions are not
applicable to ECO.

Question 96: Mr. A of Chennai, Tamil Nadu orders a headphone from Amazon to be
delivered to his father in kanigiri (AP) as a gift. M/s Cloudtail India Pvt. Ltd.,
(online seller registered in Hyderabad) processes the order and sends the
headphone accordingly and Mr. A is billed by Amazon.

Find the place of supply and levy of GST? Who is liable to pay GST?

Ans: Place of supply = Chennai (i.e. location of buyers) as per Section 10 (1) (b) of the
IGST Act, 2017.

IGST is liable to pay by M/s Cloudtail India Pvt. Ltd. (Hyderabad).

Question 97: M/s H Ltd., holding company incorporated in Hyderabad, Telangana for
facilitating the sale of finished product of another Company M/s S Ltd. subsidiary
of H Ltd. M/s S Ltd. incorporated in Chennai.

Sale Agreement provides that H Ltd. will be responsible for evacuation of 100%
products and by- products of S Ltd., for a marketing commission @ 5% on net
sales value. S Ltd., will pack the material in standard bags as per the industry
norms and will also get the bags printed as “Marketed by H Ltd.” along with H Ltd
logo & with other printing such as “Manufactured by S Ltd.” along with S Ltd.,
logo.

M/s S Ltd is directly supplying the goods to the ultimate customers who are located
in the State of Tamil Nadu on behalf of M/s H Ltd.
Whether the aforesaid agreement will attract taxability & modality of invoicing will
attract the scope of section 10(1)(b) of IGST Act, 2017 (i.e. bill to and ship model
as goods are moving to customer as per directions for H Ltd.)?

Ans: The provisions under section 10(1)(b) of the IGST Act, 2017 has been made to
avoid two times movement of goods, first from S Ltd., to H Ltd., and then second
time from H Ltd., to the ultimate customer.

The given scenario is covered under bill to ship model.

M/s S Ltd., and M/s H Ltd., are registered in different States, the IGST will be payable
by M/s S Ltd., while directly supplying the goods to ultimate customer who may
be located within the same State as that of M/s S Ltd.

M/s S Ltd., will issue bill in the name of M/s H Ltd., and goods ship to customers.

M/s H Ltd., will issue bill in the name of individual customers, then IGST will be
payable by M/s H Ltd.

Question 98: Chandana Traders in Karnataka receives an order from M/s A Inc. in USA
to deliver 100 cell phones at Odiar Dealers in Karnataka. On application of section
10(1)(b) place of supply will be USA. The Question arises will this transaction be
taxed even if the place of supply is USA?

Ans: There will be two parts to this transaction as well:

a) Between Chandana Traders of Karnataka and M/s A Inc. of USA.

b) Between M/s A Inc. of USA and Odiar Dealers in Karnataka.
a) Between Chandana Traders of Karnataka and M/s A Inc. of USA.

Transaction between Chandana Traders of Karnataka and M/s A Inc. of USA will
be considered as Export?

As per section 16 of the IGST Act,2017, export of goods is a “Zero Rated Supply”
and tax need not be levied on the same.

As per section 2(5) of the IGST Act, 2017, export of goods “means taking goods
out of India to a place outside India. In our case, as goods are not moving out
of India hence it cannot be termed as exports.
Section 7(5)(a) of the IGST Act, 2017 states that supply of goods or services or
both when the supplier is located in India and the place of supply is outside
India shall be treated to be a supply of goods or services or both in the course
of inter-state trade or commerce.

Above section applies to the present case, supplier (Chandana Traders) is located
in India and place of supply (USA) is outside India as per Sec. 10(1)(b) of the
IGST Act, 2017. Hence, the transaction between Chandana Traders of
Karnataka and M/s A Inc. of USA will be considered as an inter-state supply,
and IGST shall be levied on it.

b) Between M/s A Inc. USA and Odiar Dealers in Karnataka:

The transaction between M/s A Inc. of USA and Odiar Dealers in Karnataka cannot
be considered as the import of goods. Accordingly, to Section 2(10) of the IGST
Act, 2017 “import of goods” means bringing goods into India from a place
outside India.

This transaction will be covered under section 7(5) (c) which states that supply of
goods or services or both in the taxable territory, not being an intra-state
supply and not covered elsewhere in section 7 shall be treated to be a supply
of goods or services or both in the course of inter-state trade or commerce.

In the present case, the supply of goods is in the taxable territory (Karnataka), it is
not an intra-state supply as a supplier (M/s A Inc. of USA) is located outside the
taxable territory and such a situation is not covered elsewhere in section 7.
Hence, transaction between M/s A Inc. of USA and Odiar Dealers in Karnataka
is also an inter-state transaction and IGST will have to be paid by Odiar Dealers
under reverse charge mechanism (Section 5(4) of the IGST Act, 2017).

Note: Sec. 5(4) of the IGST Act, 2017 suspended till 30th June 2018.

Question 99: A and B both located in Kerala. B comes to shops of A. A delivered

goods to B. what are the place of supply of goods. Which levy will attract?

Ans: Place of supply goods= Kerala.

CGST & SGST will be levied

Location of such goods at the time of the delivery to the recipient.

 This is irrespective of the location of the buyer and seller.

Question 100: M/s Karina Ltd. incorporated in Mumbai and own a godown in
Chennai. Mr. M of Mumbai approached M/s Karina Ltd. of Mumbai for
purchase of goods lying in godown at Chennai. Mr. M further informs that he
does not want delivery of goods in Mumbai. M/s Karina Ltd. issues invoice for
sale of goods in Mumbai.

find the place of supply of goods and levy of tax?

Ans:

Mr. M direct to M/s. karina to

deliver the goods at Chennai
Mr. M
Mumbai

M/s M/s Karina

Mr. M
Karina godown Chennai
chennai
Mumbai

Place of supply goods = Chennai

IGST will be levied

Location of such goods at the time of the delivery to the

recipient where supply does not involve movement of goods.

This place of supply is irrespective of the location of the buyer

and seller.

Question 101: M/s X Ltd has place of business in Chennai, being an NBFC given an
asset under financial lease to M/s ABC Ltd. of Chennai. The said asset so far used
by M/s ABC Ltd in their factory located at Hyderabad. At the end of lease period
 the said asset acquired by M/s ABC Ltd. at a nominal amount. Find the place of
supply of goods and levy of GST.

Ans: Place of supply of goods = Hyderabad.

IGST will be levied.

Since, there is no movement of goods from one place to another, provisions of

section 10(1) © of IGST applicable.

Question 102: M/s Feather Light Furniture Pvt. Ltd. being a manufacturer in Mumbai
send its personnel to Kolkata for setting up a new office for a client whose
registered office is in Delhi. The furniture is brought in dismantled form (i.e. Fully
knocked down condition) to the office at Kolkata and assembled at the client’s
place. Here, the place of supply will be Kolkata as it is the place of assembly/
installation.

Ans: Place of supply of goods = Kolkata

M/s Feather Light Furnitures Pvt. Ltd. is liable to pay IGST.

Question 103: M/s X Ltd. Tirupati, Andhra Pradesh agrees to supply machinery to Y
Ltd. of Mumbai, which would be installed at site in Mumbai. Find the place of
supply and GST liability?

Ans: Place of supply of goods = Mumbai

M/s X Ltd. is liable to pay IGST.

Question 104: Chennai express train going form Chennai to cochin, M/s Spice Jet
Airlines of Chennai flying between Delhi- Mumbai. The goods are loaded in the
aircraft in Delhi. Find the place of supply of goods and levy of tax?

Ans: Place of supply of goods= Delhi

m/s X Ltd. is liable to pay IGST.

Question 105: Mr. C of Chennai supplied goods to M/s Spice Jet Airlines of Chennai
flying between Delhi-Mumbai. The goods are loaded in the aircraft in Delhi. Find
the place of supply of goods and levy of tax?

Ans: Place of supply of goods = Delhi

Mr. C of Chennai is liable to pay IGST.

Question 106: Mr. M of Mumbai imports goods from Mr. G of Germany.

Find the place of supply and levy of GST?

Ans: Place of supply = Mumbai (i.e. location of importer)

Question 107: Mr. C of Chennai exports goods to Mr. A Inc. of USA.

Ans: Place of supply = USA

Question 108: M/s Rajini & Sons is registered in the State of Kerala and is a supplier of
repair and maintenance services to M/s Sha Ltd., which is a SEZ unit in Kerala. The
aforesaid supply shall be an inter-State shall be an inter- State supply and shall be
subject to IGST even though both the units are located in the State of Kerala.

Ans: Supply of services by a SEZ unit to the recipient of service shall be treated to be
a supply of service in the course of inter-State trade or commerce even if both are
located in the same State.

It is important to note Section 16 of the IGST Act, supplies to SEZ unit is treated as
zero rated supply.

Question 109: M/s X Ltd. has entered into agreement with M/s Y Ltd to maintain air
conditioners. M/s X Ltd has air conditioners located in Telangana, Andhra Pradesh
and Tamil Nadu. M/s Y Ltd. has appointed sub- contractors for the purpose of
providing the services of maintenance of air conditioners installed in Telangana,
Andhra Pradesh and Tamil Nadu. The maintenance and repair work undertaken
by the sub-contractor. Who is a supplier of service in the given case?

Ans: Supplier of service is M/s Y Ltd., even though the services are actually provided
by the sub-contractors on behalf of M/s Y Ltd.

Question 110: Mr. X located in Chennai engaged the services of Mr. Y an Architect in
Chennai. Mr. X reQts him to make design of residential complex to be constructed
in Cochin, Kerala. Mr. Y provided drawing and design of residential complex to be
constructed in Cochin, Kerala. Mr. Y provided drawing and design services in
relation to immovable property located at Cochin.

Find the place of supply of service and levy of tax?

Ans: Place of supply of service = location or intended to be locate the property (i.e.
Cochin)

IGST is liable to pay by Mr. Y

Question 111: Mr. Rohit registered person in Jaipur. He went to Kolkata and stays in a
Taj hotel at Kolkata. He also availed Beauty treatment services at hotel.

Find the place of supply of services and tax liability in the hands of Taj hotel.

Ans: Place of supply of service = Kolkata place of supply of service is same for
accommodation service by hotel as well as Beauty treatment as it is an ancillary
service to the accommodation.

Question 112: Mr. Navab a person staying at Dubai, trained for the purpose of
grooming of horse in Chennai. Find the place of supply of service?

Ans: Place of supply of service = Chennai

As the horses are groomed in Chennai.

Question 113: M/s Cut Ltd., provider of hair cutting saloon service, located in
Mumbai. Mr. M.S. Dhoni came from Jharkhand to Mumbai after appointment for
haircut. The services are provided in Mumbai. Find the place of supply of service
and tax liability in the hands of M/s Cut Ltd.

Ans: Place of supply of service = Mumbai

M/s Cut Ltd is liable to pay CGST and SGST.

Question 114: Mr. A located at Kolkata provides training at Kolkata to employees of

M/s Infosys Ltd, which is registered at Mumbai.

Find the place of supply of service and GST liability in the following two cases?

Case 1: If Infosys is registered person under GST

Case 2: Infosys is not registered person under GST

Ans:

Case 1: If Infosys Ltd is a registered person

POS will be Mumbai.

Mr. A is liable to pay IGST.

Case 2: If Infosys Ltd is not a registered than POS will be Kolkata.

Mr. A liable to pay CGST and SGST.

Question 115: PS Academy registered person provides commercial training and

coaching services to budding Accountants at Chennai. Many students (who are
unregistered persons) from Telangana, Andhra Pradesh, Tamil Nadu, Karnataka
and Kerala came and stay in Chennai for the purpose of undergoing training in the
PS Academy. Find the Place of supply of service?

Ans:

Place of supply of service = Chennai

As the training is performed in Chennai.

PS Academy is liable to pay CGST and SGST.

Question 116: X Ltd. being a registered person located in Hyderabad hires Mr. Y who
is located in Chennai for appraisal performance of senior employees of their
company. Mr. Y visits Hyderabad to evaluate the performance of the senior
employees of their company.

a) Find the Place of supply of service?

b) What would be the place of supply of service if some of the selected
employees and relevant papers are sent to Chennai for evaluation where X
Ltd. is un- registered person.

Ans:

a) POS = Hyderabad (i.e. Location of recipient of Service, since, provided to a

registered person)
Mr. Y is liable to pay IGST.
b) POS = Chennai (i.e. Location where the services are actually performed,
since, provided to unregistered person)
Mr. Y is liable to pay CGST and SGST.
Question 117: Mr. Remo (located in Mumbai) a Choreographer, being a judge
appraises the performance of dance show competition of various participants. He
went to Bengaluru to appraise the performance of dance show competition of
various participants

Find the place of supply of service.

Ans:

POS = Benguluru

(i.e. where the appraisal of performance has been made, since, recipients are
unregistered persons)

Question 118: Board of control for Cricket in India located at Mumbai, sold tickets
online for IPL match, is going to conduct at chepauk Stadium, Chennai. However,
finally match conduct at Mumbai. Find the place of supply of service of admission
to sporting event?

Ans: POS = Mumbai

BCCI is liable to pay CGST and SGST.

Question 119: Mr. X an event organizer, located in Chennai received an order from
M/s Taxman publications, Mumbai to conduct a book fair at Chennai. Find the
place of supply of service and GST in the following two cases:

Case 1: Taxman publications is a registered person.

Case 2: Taxman publications is a un-registered person.

Ans: Case 1: Mumbai (i.e. location of recipient of service)

Mr. X of Chennai is liable to pay IGST.

Case 2: Chennai (i.e. location where the event is actually held)

Mr. X of Chennai is liable to pay CGST & SGST.

Question 120: Mr. Kapil Sharma, a Jalandhar based comedian, hosted a comedy show
at Singapore on birthday occasion of Mumbai based actor Mr. Shah Rukh Khan’s
son Abram.
Ans: POS = Mumbai (i.e. location of service recipient).

GST= IGST is liable to pay by Mr. Kapil Sharma

Question 121: Mr. D of Delhi being an event organizer hosted an exhibition at Mumbai
to exihibit the products of exhibitor namely, Chennai Silks, Chennai, is a registered
person.

Ans: POS = Chennai (i.e. location of service recipient)

GST=IGST is liable to pay by Mr. D.

Question 122: Mr. C of Chennai being an event organizer hosted an exhibition at

Dhaka to exhibit the products of exhibitor (namely Chennai Silks) located Chennai.

Ans:

POS = Chennai (i.e. location of service recipient)

GST = CGST and SGST is not liable to pay by Mr. C

Note: Services by an organizer to any person in respect of a business exhibition held

outside India is exempted from GST (Entry No. 52).

Question 123:

M/s Kalyan Pvt. Ltd. is an event management company is located in Chennai. Mr. Raj
located in Jaipur hires the services of M/s Kalyan Pvt. Ltd., for organizing marriage
function of his son in Taj Coromandel, Chennai. Mr. Raj is not a registered person.
Find the place of supply of service and GST liability?

Ans:

POS = Chennai

(i.e. where the event is actually held).

M/s Kalyan Pvt. Ltd. of Chennai is liable to pay CGST & SGST.

Question 124: The Times Group being an event organizer located at New Delhi
organized Miss India 2017 beauty pageant in India in the following Cities for M/s
Femina Miss India an unregistered person located in Mumbai:
 City No. of Days Fee in Rs.

New Delhi 12 12 crores

Chennai 18 18 crores

Mumbai 20 20 crores

Total 50 50 crores

Find the place of supply of service if contract specifies clear details.

Find the place of supply of service if contract specifies lump sum amount of Rs. 48
crores.

Ans:

The place of supply of service if contract specifies clear details :

City No. of DaysRs. In croreLocation of Place of supply of GST

supplier service= where
of service the respective
event is held.

New Delhi 12 12 New Delhi New Delhi CGST & SGST

Chennai 18 18 New Delhi Chennai IGST

Mumbai 20 20 New Delhi Mumbai IGST

Total 50 50

The place of supply of service if contract specifies lump sum amount:

City No. of Days Rs. In crore Location of Place of GST

supplier of supply of
service service =
where the
respective
 event is
held.

New Delhi 12 11.52 New Delhi New Delhi CGST & SGST

Chennai 18 17.82 New Delhi Chennai IGST

Mumbai 20 19.2 New Delhi Mumbai IGST

Total 50 48

Question 124: M/s Navatha a transporter registered under GST, located in

Vijayawada. M/s C Ltd. of Chennai registered under GST, received under GST,
received services from M/s Navatha for transport of goods from its warehouse in
Vijayawada to Guntur. M/s Navatha delivered goods at Guntur.

Find the place of supply of service and GST?

Whether your Ans is different , if M/s C Ltd. of Chennai is not a registered person
under GST?

Note: ITC availed by M/s Navatha.

Ans: If the recipient is registered person:

POS = Chennai (i.e. location of recipient).

M/s Navatha of Vijayawada is liable to pay IGST.

If the recipient is not a registered person:

POS = Vijayawada (i.e. Location at which such goods are handed over for their
transportation).

M/s Navatha of Vijayawada is liable to pay CGST & SGST.

Question 125: M/s DHL courier registered under GST and located in Mumbai, provided
transportation of documents like CheQ, promissory notes, pay orders (which
cannot be considered as goods) belonging to Mr. C of Chennai, from Mumbai to
Chennai.

Find the place of supply of services in the following independent case

 a) Mr. C of Chennai is a registered person under GST.
b) Mr. C of Chennai is an un-registered person under GST, however his
address is available in the books of M/s DHL.
c) Mr. C of Chennai is an un-registered person under GST, however his
address is not available in the books of M/s DHL.

Ans: Place of supply of services is as per section 12 (2) but not under section 12(8) of
IGST.

a) POS = Chennai (i.e. location of recipient of service)

b) POS = Chennai (i.e. location of recipient of service)
c) POS = Mumbai (i.e. location of recipient of service)

Question 126: Mr. Ram working in Infosys Company having office in Bengaluru is
registered under GST. Mr. Ram purchased the ticket from Hyderabad for
transportation passenger by Air from Hyderabad to Chennai. Mr. Ram discloses
the name of the organization and its registration number and the place where the
organization is registered. Supplier of service is located at Hyderabad.

Find the following

a) Place of supply of service and GST liability?

b) Whether your Ans is different if Mr. Ram is not disclosed the name of the
organization and its registration number?

Ans: a) POS = Bengaluru (i.e. location of recipient of service)

GST = IGST is liable to pay by Air Travel Operator

b ) POS = Hyderabad (i.e. Place where the passenger embarks on the continuous
journey)

GST = CGST & SGST is liable to pay by Air Travel Operator

Question 127: Jet Air registered under GST and located in Mumbai operates flight
from Delhi-Dubai-London-Dubai-Delhi. Mr. R who is unregistered person,
purchase air ticket for Delhi-London. Two tickets are issued to him showing delhi-
dubai with a halt at Dubai for 5 hours and Dubai-London.

Find the place of supply of service and GST liability?

Ans: POS = Delhi (i.e. place of embark)

GST = Jet Air is liable to pay IGST for the entire value of air fare.

Note : Since, it is continuous journey, place of embarking of passenger who is

unregistered person is relevant.

Question 128: Jet Air registered under GST and located in Mumbai operates flight
from Mumbai-Delhi-Mumbai. Mr. R who is unregistered person, purchase air
ticket for Mumbai-Delhi-Mumbai. Only one ticket is issued to him showing both
the route.

Find the place of supply of service and GST liability?

Ans: POS = Mumbai (i.e. Mumbai-Delhi, place of embark is relevant)

GST = Jet Airways is liable to pay CGST & SGST.

POS= Delhi (i.e. Delhi-Mumbai, Place of embark is relevant)

GST = Jet Airways is liable to pay IGST.

Note:

1) As per explanation, Mumbai-Delhi and Delhi-Mumbai journey will be

considered two separate journeys.
2) If there is stopover during the journey, the journey will not be considered
as continuous journey.

Question 129: A movie on demand is provided as onboard entertainment during the

Delhi-Chennai leg of a Dubai-Delhi-Chennai flight.

Find the place of supply of service?

Ans: Dubai (outside the taxable territory, hence not liable to GST).

Question 130: M/s Air Call registered under GST and located in Chennai. M/s Air Call
has appointed Mr. C as a selling agent for supplying pre-payment voucher to the
subscriber. Find the Place of supply of service and GST liability?

Ans: POS = Chennai (i.e. Address of the selling agent on the record of M/s Air Call).
GST= CGST & SGST is liable to pay by M/s Air Call.

Question 131: Mr. Harsha being a registered stock broker at BSE, located in Mumbai.
He has clients in Chennai, Kolkata, Bengaluru. He purchases and sells shares of
clients located in Chennai, Kolkata, Bengaluru. Find the place of supply of service
and GST liability?

Ans: POS = Chennai, Kolkata & Bengaluru.

GST = IGST is liable to pay by Mr. Harsha.

Question 132: M/s X Ltd. has factory in Coachin, Chennai, Vijaywada and Hyderabad
and office in Bengaluru. M/s X Ltd obtains insurance for the assets located in
Cochin, Chennai, Vijayawada, Hyderabad and Bengaluru from insurance company
located at Delhi. Premium receipt issued by the insurance company to the
Bengaluru office.

Find the place of supply of service and GST liability?

Ans: POS =Bengaluru

GST = IGST is liable to pay by the insurance company.

Question 133: The Government has hired 200 hoardings in Lakshadweep and 175
hoardings in Chennai for providing advertisement of gas subsidy and contract
contains the consideration for these hoardings separately. Hoarding services
supplied by M/s X Ltd. located in Hyderabad.

Find the place of supply of service and GST

Ans:

POS = Lakshadweep & Chennai

GST = IGST is liable to pay by M/s X Ltd.

A new rule 3 has been inserted in IGST Rules to provide a mechanism to compute the
proportionate value of advertisement services attributable to different States or
Union territories in the absence of any contract between the supplier of service
and recipient of services.
Question 134: Govt. Agency issues a release order with QR channel (located in Delhi)
for telecasting an advertisement relating to the ‘Pradhan Mantri Kaushal Vikas
Yojana’ in the month of November, 2017. In the first phase, this will be telecast in
the Union territory of Delhi, States of Uttar Pradesh, Uttarakhand, Bihar and
Jharkhand.

Viewership figures for their channel in the last week of September 2017 from the
broadcast Audience Research Council is as follows:

Number of viewers 100000 for Delhi and 200000 for the region comprising of Uttar
Pradesh and Uttarakhand and 100000 for the region comprising of Bihar and
Jharkhand.

The ratio of the populations of Uttar Pradesh and Uttarakhand is 9:1 & for Bihar and
Jharkhand is 4:1.

Total amount payable to QR by Govt. Agency is Rs. 2000000.

Applicable rate of GST 18%

Find the value of supply and place of supply for each State along with CGST & SGST
or IGST payable by QR for the month of November 2017.

Ans:

State/UT Value of supply Place of supply CGST & SGST IGST

Delhi 500000 Delhi 90000 Nil

Uttar Pradesh 900000 Uttar Pradesh Nil 162000

Bihar 400000 Bihar Nil 72000

Jharkhand 100000 Jharkhand Nil 18000

Uttarakhand 100000 Uttarakhand Nil 18000

Question 135: Mrs. Neelam Goel, an Interior Designer based in Delhi provides her
service to an Indian Hotel Chain (which has business establishment in Mumbai)
for its newly acquired property in London. Find the place of supply of service and
the person liable to pay GST if any?

Ans: As per Section 12 (3) (a) of IGST Act 2017, Location of service recipient is the
place of supply of service.

POS = Mumbai. Taxable territory. Hence attract IGST in the hands of Mrs. Neelam
Goel.

Question 136: Mr. D of Dhaka being an event organizer hosted an exhibition in

Mumbai to exhibit the products of exhibitor (namely M/s S Silks Ltd. of Shimla).

Ans: PPS = Mumbai

GST = CGST & SGST is liable to pay by Mr. D of Dhaka (non-resident taxable person).

Question 137: Mr. Harsha, an event organizer located in Malaysia, undertakes to

organize comedy shows of Mr. Bhrami of Hyderabad and Mr. Vadivelu of Chennai
in India. The comedy shows are hosted in Telangana, Andhra Pradesh, Tamil Nadu
and Pondicherry.

Gross value of contract is Rs.60 crores.

Place of supply of service No. of Days Recipient of service

Telangana 20 Mr. Bhrami

Andhra Pradesh 15 Mr. Bhrami

Tamil Nadu 14 Mr. Vadivelu

Pondicherry 01 Mr. Vadivelu

Total 50

Find the place of supply of services, value of service and person liable to pay tax.

Ans:
Place of Supply Value Rs. In croresWho is liable to pay GST GST
of service

Telangana 24 Mr. Harsha being a non- IGST

resident taxable person.

Andhra Pradesh18 Mr. Harsha being a non- IGST

resident taxable person.

Tamil Nadu 16.80 Mr. Harsha being a non- IGST

resident taxable person.

Pondicherry 1.2 Mr. Harsha being a non- IGST

resident taxable person.

Total 60

Question 138: Mr. S has a permanent residence at Chennai. He has a savings bank
account with Chennai Mound Road Branch of State Bank of India. On Aug 1, 2015,
Mr. S opened a safe deposit locker with the Chennai Mound Road Branch of State
Bank of India. Mr. S went to Singapore for official work in Sep, 2015 and has been
residing there since then. Mr. S contents that since he is a non-resident during the
year 2017-18 in terms of the Income-tax Act, GST cannot be levied on the locker
fee charged by State Bank of India for the year 2017-18.

Examine the correctness of the contention of Mr. S.

Ans: POS = Chennai

GST = CGST and SGST is liable to pay by State Bank of India Chennai Mount Road
Branch.

Question 139: Write a brief note on the applicability of GST in the following cases.

1) Whether the representation service provided by State Bank of India

Chennai to a foreign MTSO (Money Transfer Service operator) in relation to
money transfer to a beneficiary in India falls in the category of intermediary
service.
 2) Whether GST is leviable on the services provided as mentioned in 1) above
by an intermediary/ agent located in India (in taxable territory) to MTSO’s
located outside in India.

Ans: 1)Yes, the given service falls under intermediary service under section 13(8)(b)
of the IGST Act, 2017.

2 ) Place of supply of service is location of the supplier of service (i.e. taxable

territory namely Chennai) and hence, GST is liable to pay by intermediary/agent.

Question 140: M/s Bharath International of Imphal, Manipur is an Indenting Agent.

M/s MRS Inc. of Singapore, supply yarns as per the instruction of M/s Bharath
International, an Indenting Agent, to the buyers located in India and Bangladesh
also. M/s MRSS Inc. of Singapore give commission to M/s Bharath International of
Imphal at Pre-decided rate in percentage of sales value. M/s MRS Inc. of
Singapore is foreign resident, and not having any permanent establishment of
business in India. M/s Bharath International of Imphal receive the commission in
the hands of M/s Bharath International is not liable to any other tax.

Answer the following:

1) Whether M/s Bharath International of Imphal is liable to pay IGST on the

amount of Commission?
2) If yes, then how the amount of IGST will be calculated say USD 100000
received in the month of April 2018? Exchange rate as per generally
accepted accounting principles is Rs. 68.25. RBI exchange rate is Rs. 68.
Applicable rate of IGST @ 18%.
3) Whether IGST paid on the Commission amount is eligible for the credit as
RCM?

Ans:

Place of supply = Location of supplier i.e. Imphal, Manipur (i.e. Taxable Territory) as
per Section 13 (8)(b) of the IGST Act, 2017.

Location of supplier = M/s Bharath International of Imphal, Manipur

It is not export of service. Since, section 2(6) of the IGST Act, 2017 one of the
condition (i.e. Place of supply should be outside India) is not satisfied.
In view of the above provisions Anss to specific queries are provided as follows:

A) M/s Bharath International of Imphal, Manipur is liable to pay IGST on the

commission amount received by it. (Sec 7(5)(c) of the IGST Act, 2017)
B) IGST is Rs. 1228500(i.e. (Rs. 68.25 * USD 100000) * 18%).
C) Since, M/s Bharath International, Imphal is liable to pay IGST on the
commission amount received from M/s MRS Inc. of Singapore, and M/s
Bharath International, Imphal it is not paying GST on reverse charge, it is
not eligible to take credit of GST paid by it.

Question 141: A vessel Bhishma, sailing from U.S.A to Australia via, India carries
various types of capital goods namely ‘A, B, C & D’. ‘A & B’ are destined to
Mumbai port. On account of submission of bill of transshipment product ‘A’
transshipped to Chennai port as ultimate destination in India and product ‘B’
transshipped to Sri lanka.

Find the place of supply of service and person liable to pay GST.

Ans: Place of supply of services is destination of goods and person liable to pay GST
is the importer.

In the given case

Place of supply = Chennai (i.e. product ‘A’ ultimate destination in India)

Person liable to pay GST is importer on the ocean freight.

Question 142: Determine the place of supply of service as well as their taxability in
each of the following cases with brief reasons:

a) XY Ltd. of Delhi, agrees to provide ‘technical inspection and certification

service’ in respect of a newly developed product of an overseas firm (for a
newly launched motorbike which has to meet emission standards in
different states or countries). The overseas firm has
b) provided its newly developed product to XY Ltd. for the purpose of testing.
The testing is carried out in Delhi (15%), Assam(35%) and Sweden (50%).
c) A movie on demand is provided as on board entertainment during the
Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi Flight.
Ans: as per Section 13(6) of IGST Act, 2017, Place of supply of service will be the
place in the taxable territory (i.e. Delhi and Assam).

X Ltd is liable to pay IGST for the part of Delhi

X Ltd is liable to pay IGST for the part of Assam.

X Ltd is also liable to pay IGST for the services rendered in Sweden.

It means tax will be payable on the entire value.

B) as per section 13 (11) of the IGST Act 2017, POS is Bangkok which is nontaxable
territory, not subject to GST.
Question 144: Swamy Ltd. of Chennai acquires the business of SA Ltd. at
Johannesburg, South Africa. Swamy Ltd. entered into a contract with M/s Krish &
Krish Architects, Chennai to do the interiors of the building of new business at
South Africa. The Central Tax department issued a notice demanding GST based
on the Place of supply of service provisions. Discuss briefly the applicability of the
Place of supply of service to M/s Krish & Krish as the work to be done is outside
the taxable territory.
Ans: Place of supply of services supplied directly in relation to an IMMOVABLE
PROPERTY as per Section 13(4) of IGST is where immovable property is located or
located or intented to be located.
However, location of supplier and location of supplier and location of recipient is in
India we should refer section 12 (3) (a) of IGST Act, 2017, accordingly place of
supply of service is where immovable property located or intended to be located
in India. If location of immovable property is outside India then place of supply is
location of the recipient.
In the given case location of supplier and location of recipient is in India and hence,
place of supply of service is Chennai section 12 (3)(a) of IGST. Location of supplier
of service is in Chennai. CGST and SGST will be levied (sec. 8(2) of IGST subject to
sec. 12).
From the above it is evident that the claim of the Central Tax Department is correct.
Question 145: With reference to the GST provisions briefly explain:

1) Time of supply under reverse charge with respect to payment date.

 2) Place of supply of service of hiring of all means of transport (expect vessel
and air craft) upto a period of one month, where location of supplier or
location of recipient is from outside India.
Ans: 1) The phrase “the date on which payment received by the Supplier” or “the
date of payment “ means-
• The date on which payment is entered in his books of accounts
Or
• The date on which the payment is debited to his bank account,
Whichever is earlier.
2) SPECIFIED SERVICES (section 13(8)(c) of the IGST Act, 2017)
PLACE OF SUPPLY OF SERVICES = LOCATION OF THE SERVICE PROVIDER
Question 146: With reference to the position of goods and service Tax law as
applicable on or after 01-07-2017, what would be the place of supply of service in
the following independent cases?
1) MN Trade Links of New Delhi are appointed as commission agent by a
foreign company for sale of its goods to Indian customers. In lieu of their
services, MN Trade Links receive a fixed percentage of commission from the
concerned foreign company.
2) OP Fabricators of Mumbai has temporarily imported certain goods from its
customer located in Hongkong for repairs. The said goods have been re-
exported to hongkong after carrying out the necessary repairs without
being put to any use in Mumbai.
3) UV Airlines, an airlines located in New Delhi, has hired aircrafts from a
foreign Airlines for a period of 15 days.
Ans:
1) Place of supply of service = New Delhi (i.e. location of supplier of service
section 13(8)(b) of the IGST Act, 2017). IGST will be levied.
2) Place of supply of service = HongKong (i.e. location of recipient of service as
per section 13(2) of the IGST Act, 2017). No GST will be levied.
3) Place of supply of service = New Delhi (i.e. location of recipient of service
as per section 13(2) of the IGST Act, 2017). IGST will be levied.
Question 147: Determine the place of supply of service in each of the following
independent cases and state whether GST is payable in each of these cases:
a) Mr. A travelled on a Bagdogra-dibrugarh-singapore-dibrugarh-bagdogra
flight where a single ticket with no stopover has been issued by Parkinson
Airlines located in Dubai.
b) Mr. B, a well- known comedian from Delhi, organises a stage-show in
Japan.for organising the stage-show, he takes the services from a Mumbai
based event organiser.
Ans: a) Place of supply of services = Bagdogra of West Bengal (As per Section
13(10) of the IGST). However, it is specifically exempted from GST.
b ) Place of supply of service = Delhi (i.e. location of recipient of service). IGST is
payable by supplier of service (Section 12(7) of the IGST).
Question 148: M/s. X of Chennai, engaged in various businesses has provided the
following services, whose values are listed below. Compute its GST liability:
1) Service of interior decoration in respect of immovable property located in
Jammu: Rs. 5 lakh;
2) Service of renting of commercial building in Delhi: 15 lakh;
3) Architectural services to an Indian Hotel Chain which has business
establishment in Mumbai for its newly acquired property in Sydney: 25
lakhs;
4) Services provided as an Indian agent undertaking marketing in India of
goods of a goods of a foreign seller: Rs. 51 lakhs;
5) Services provided as travel agent undertaking marketing in India of services
of a foreign seller: Rs. 1 lakhs.
Applicable rate of GST 18%.
Ans:
Particulars Value Rs. (in lakhs)Working note
Interior decoration services 5 POS = J& K (Section 12(3)(a) of
IGST)
Taxable territory. IGST will be
levied
Renting of commercial 15 POS = Delhi (Section 12(3)(a) of
buildings IGST)
 Taxable territory IGST will be
levied
Architectural services 25 POS = Mumbai (Section 12(3)(a)
of IGST)
Taxable territory IGST will be
levied
Marketing of goods 51 POS = Chennai (Section 12(3)(a)
of IGST)
Taxable territory IGST will be
levied
Travel agent 1 POS = Chennai (Section 12(3)(a)
of IGST)
Taxable territory IGST will be
levied
Taxable supply of services 97
IGST liability 17.46
POS = Place of supply
Question 149:

1) Mr. Z, a supplier registered in Hyderabad (Telangana), procures goods from

China and directly supplies the same to a customer in US. With reference to
the provisions of GST law, examine whether the supply of goods by Mr. Z to
customer in US is an inter-State supply?
2) RST Inc., a corn chips manufacturing company based in USA, intends to
launch its products in India. However, the company wishes to know the
taste and sensibilities of Indians before launching its products in India. For
this purpose, RST Inc. has approached ABC Consultants, Mumbai,
(Maharashtra) to carry out a survey in India to enable it to make changes, if
any, in its products to suit Indian taste.
The survey is to be solely based on the oral replies of the surveyees; they will not be
provided any sample by RST Inc. to taste. ABC Consultants will be paid in
convertible foreign exchange for the assignment.
With reference to the provisions of GST law, determine the place of the service. Also,
explain whether the said supply will amount to export of service?
Ans:
 1) The transaction undertaken by Mr. Z is neither import nor export of goods
in terms of Customs Act, 1962. However, it is an inter-state supply in terms
of provisions of section 7(5)(a) of the IGST Act, 2017 which provides that
when the supplier is located in India and the place of supply is outside
India, supply of goods or services or both in the course of inter- State trade
commerce.
2) As per section 13(2) of the IGST Act, 2017 place of supply= USA.
Since, all conditions specified under section 2(6) of the IGST Act, 2017 are
fulfilled in the given case, the same will be considered as an ‘export of
service’.
Question 150: ABC Pvt. Ltd., New Delhi, provides support services to foreign
customers in relation to procuring goods from India. The company identifies the
prospective vendor, reviews product quality and pricing and then shares the
vendor details with the foreign customer. The foreign customer then directly
places purchase order on the Indian vendor for purchase of the specified goods.
ABC Pvt. Ltd. charges its foreign customer cost plus 10% mark up for services
provided by it. For the month of December, 20XX, the company has charged US $
100000 (exclusively of GST) to its foreign customer. With reference to the
provisions of GST law, examine whether the company is liable to pay IGST or CGST
and SGST.
Note : GST @ 18% is applicable on supply of the support services provided by ABC
Pvt. Ltd. Rate of exchange is Rs. 65 per US $.
Ans: As per Section 13(8)(b) of the IGST Act, 2017 the place of supply in case of
intermediary services is the location of the supplier (i.e. ABC Pvt, Ltd, New Delhi).
As per section 8(2) of the IGST Act, 2017 Subject to the provisions of section 12
supply of services where the location of the supplier and the place of supply of
services are in the same State is treated as intra-State supply. In the given case it
is not so.
Therefore, ABC Pvt. Ltd. New Delhi is liable to pay IGST (As per Sec. 7(5)(c) of IGST
Act, 2017).
IGST 9% = Rs. 1170000 (i.e. Rs. 65 * 100000 * 18%)
Question 151: M/s jiju Ltd. an Indian Company, is a subsidiary of M/s Didi Ltd. of UK.
The aforesaid holding company M/s Didi Ltd. places an order for supply of certain
 goods on M/s jiju Ltd. M/s Jiju Ltd. in turn, places an order on a company located
in China. M/s Jiju Ltd specifically asks the Chinese Company to supply the
specified goods directly to M/s Didi Ltd. on its behalf. M/s Jiju Ltd. shall receive
the agreed price from M/s Didi Ltd. in convertible foreign exchange.
In the light of above information whether supply of goods by M/s Jiju Ltd. to M/s Didi
Ltd. shall qualify as ‘Exports of Goods’?
Ans: As per section 2(5) of the IGST Act, 2017, “export of goods” means taking goods
out of India to a place outside India. In our case, as goods are not moving out of
India hence it cannot be termed as exports.
Place of supply of goods = U.K.
Location of supplier = India
However, M/s Jiju Ltd. is liable to pay IGST.
Note: Supply of Goods from China to Uk (i.e. from non-Taxable territory to non-
Taxable territory).
As per the Finance Act, 2018 to be notified:
Schedule 3 Point No. 7, supply excludes: Supply of goods from a place in the non-
taxable territory to another place in the non-taxable territory without such goods
entering into India.
Clarification on supply of satellite launch services by ANTRIX Corporation Ltd
Question 152: Mr. Murthy, an unregistered person and a resident of Pune, hires the
services of M/s Sun Ltd. an event management company registered in Delhi, for
organizing of the new product launch in Bengaluru.
1) Determine the place of supply of services provided by M/s Sun Ltd.
2) What would your Ans be in case the product launchtakes place in Bangkok?
3) What would your Ans be in case Mr. Murthy is a registered person and
product launches takes place in Bengaluru and Bangkok?
ANS: Place of supply= Bengaluru (i.e. location where the event is actually held
,where recipient is unregistered person ).
(II) place of supply =pune (i.e.if the event is held outside india ,the place of supply
shall be the location of the recipient .
(III) place of supply =pune (I.e.as per sec. 12(7) of igst location of
i.Recipient is the place of supply for the following independent cases under the igst
act.2017:
Question 153: Determine the place of supply for the following independent cases
under the IGST act, 2017 :
(i)Grand gala events ,an events managements company at Kolkata ,organizes two
award functions for kalyan jewellers of Chennai (registered in Chennai )at new
Delhi and Singapore .
(ii)prefect planners (bengaluru )in hired by dr ,Kelvin (unregistered person based in
kochi )to plan and organize his son’s wedding at Mumbai.
Will your Ans be different if the wending is to take place at Malaysia?
2.5*2=5 marks (CA final (old)may 2018 )
ANS:
(I) PLACE OF SUPPLY =CHENNAI (Refer section 12(2) of IGST)
(II) Place of supply = Mumbai (Refer Section 12(2) of IGST)
(III) Place of supply = Kochi (Refer Section 12(2) of IGST)
Question 154: Raman Row, a registered supplier under GST in Mumbai, is directed by
Nero Enterprises, Kolkata to deliver goods valued at Rs. 1200000 to fabricana of
Aurangabad in Maharashtra. Raman Row makes out an invoice at 9% tax rate
under CGST and SGST respectively (scheduled rate) and delivers it locally in
Maharastra.
Discuss and comment on the above levy of tax and determine the tax liability of
goods in the above circumstances.
Discuss and comment on the above levy of tax and determine the tax liability of
goods in the above circumstances.
Ans:
Place of supply = koltaka (Sec. 10(1)(b) of IGST Act, 2017)
Location of supplier of goods = Mumbai
Raman Row is liable to pay IGST.
IGST = Rs. 216000 (i.e. Rs. 1200000* 18%)
Question 155: Mr. Mahendra Goyal, an interior decorator provides professional
services to Mr. Harish Jain in relation to two of his immovable properties.
Determine the place of supply in the transactions below as per provisions of GST law
in the following independent situations:
Case Location of Mr. Mahendra Location of Mr. HarishProperties situated
Goyal Jain at
1 Delhi Mumbai New York(USA)
2 Delhi New Delhi Paris (France)
Explain the relevant provisions of law to support your conclusions.
Ans:
Case Location of Mr. Location of Mr. Properties Place of supply
Mahendra Goyal Harish Jain situated at
1 Delhi Mumbai New York(USA) Mumbai (As
per section
12(3)(a) of
IGST Act,
2017
2 Delhi New Delhi Paris (France) Paris (France)
As per Section
13(4) of
IGST Act,
2017.
 Question Bank: TIME OF SUPPLY

Time of Supply of Goods

General Concept of Time of Supply and Invoice

Question 1: What will be the time of supply of goods, generally?

Answer:
As separate provisions pertaining to time of supply of goods and services exist Generally, in terms of
Section 12 of the CGST Act, 2017, the time of supply of goods shall be the earliest of the following:
(a) Date of issue of invoice; or
(b) Last date of issue of invoice; or
(c) Date on which payment is entered in books of accounts of the supplier; or
(d) Date on which payment is credited to the bank account.

Question 2: What would be the 'due date of issuance of invoice' with reference to the provisions
relating to time of supply of goods?

Answer:
Section 31 of the CGST Act, 2017 prescribes the time at which the tax invoice should be issued by a
registered taxable person supplying goods. Accordingly, the due date for issuance of invoice would be as
follows:
(a) Supply involves movement of goods- It is provided that the tax invoice should be issued before
or at the time of removal of goods for supply to the recipient.
(b) Any other case - before at the time of delivery of goods or making goods available to the
recipient.
Proviso to Section 31 of the CGST Act, 2017 also empowers the Government by way of
notification, to specify the categories of goods or supplies in respect of which a tax invoice shall
be issued, within such time and in such manner as may be prescribed.

Question 3: What will be the date of payment to ascertain the time of supply of goods?

Answer:
In terms of the Explanation 2 to Section 12, the date of payment shall be the earliest of the following
dates:
(a) Date on which payment is entered in books of accounts of the supplier; or
(b) Date on which payment is credited to the bank account.
Question 4: What will be the time of supply where multiple invoices are issued for a single
consignment involving supply of goods?

Answer:
The time of supply of goods shall be the
➢ date of issuance of invoice; or
➢ due date for issuance of invoice or
➢ receipt of payment by the supplier,
Whichever is earliest, in relation to the respective invoice.
Note: As per N/N 66/2017 - CT Dated IS/11/2017, time of supply of goods shall be as per section 12(2)(a)
i.e., invoice or last date of invoice, Thus in case of supply goods TOS is not on advances received & this is
applicable to all registered persons.

Time of Supply of Goods - Movement of goods involved

Question 5: Determine Time of Supply of Goods

S. No. Concept illustration Invoice Date Invoice due Payment entry Credit in bank
Section 12(2) Date [Date of in suppliers account
removal] book
1. Invoice raised before 10-Oct-17 20-Oct-17 26-Oct-17 30-Oct-17
removal

2. Advance received 30-Oct-17 20-Oct-17 10-Oct-17 12-Oct-17

Answer:

As per Section 12 of the CGST Act, 2017, the time of supply of goods shall be the earliest of the
following:

(a) Date of issue of invoice; or

(b) Last date of issue of invoice; or
(c) Date on which payment is entered in books of accounts of the supplier; or
(d) Date on which payment is credited to the bank account.

S. No. Concept Invoice Date Invoice due Payment Credit bank Time of
illustration date [Date entry in account Supply
Section of removal] suppliers
12(2) book
1. Invoice 10-Oct-17 20-Oct-17 26-Oct-17 30-Oct-17 10-Oct-17
raised
before
removal
2. Advanced 30-Oct-17 20-Oct-17 10-Oct-17 12-Oct-17 20-Oct-17
 received

Note: As per N/N 66/2017 - CT Dated 15/11/2017, time of supply of goods shall be as per section
12(2)(a) i.e., invoice or last date of invoice. Thus case of supply goods TOS is not on advances received &
this is applicable to all registered persons.

Time of Supply of Goods - Non- Movement of Goods

Question 6: An order is placed on Ram & Co. on 18th August supply of a consignment of customised
shoes. Ram & Co. gets the consignment ready and informs the customer and issues the invoice on 2
December. The customer collects the consignment from the premises Ram & Co. on 7th December and
electronically transfers the payment the same date, which is entered in the accounts on the next day, 8
December.
What is the time of supply of the shoes? (ICAI Material)

Answer:
As per Section 12 of the CGST Act, 2017, the time of supply of goods shall be the earliest of the
following:
(a) Date of issue of invoice; or
(b) Last date of issue of invoice; or
Note: As per Sec 31(1) in case of movement of goods not involved invoice shall be issued before
or at the time of delivery of goods making the goods available to the recipient
(c) Date on which payment is entered in books of accounts of the suppliers; or
(d) Date on which payment is credited to the bank account.
In this case,
Date of invoice: 2nd December
Date of actual receipt of payment: 7th December
Date of recording payment in books of account: 8th December.
As per N/N 66/2017 - CT Dated I5/11/2017, time of supply of goods shall be as per section 12(2)(a) i.e.,
invoice or last date of invoice. In this case, the invoice issued before the removal of goods and is thus
within the time limit prescribed under sec. 31 (1). Therefore time of supply goods is date of issue of
invoice i.e., 2nd December

Question 7: A machine has to be supplied at site. It is done by sourcing various components from
vendors and assembling the machine at site. The details of the various events are:

17th September Purchase order with advance of Rs.50,000 is received for goods worth Rs.12 lakh
and entry duly made in the seller’s books of accounts.
20th October The machine is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
4th November Balance payment of Rs.11,50,000 received.

Determine the time of supply (ies) in the above scenario.

Answer:
As per Section 12 of the CGST Act, 2017, the time of supply of goods shall be the earliest of the
following:
(a) Date of issue of invoice; or
(b) Last date of issue of invoice; or
Note: As per Sec 31(1) in case of movement of goods not involved the invoice shall be issued before or
at the time of delivery of goods or making the goods available to the recipient
(c) Date on which payment is entered in books of accounts of the supplier; or (d) Date on which
payment is credited to the bank account.
In this case,
As per N/N 66/2017 - CT Dated I5/11/2017 , time of supply of goods shall be as per section 12(2)(a) i.e.,
invoice or last date of invoice. Thus in case of supply of goods TOS is not on advance received & the
above provision is applicable to all registered persons.
In this case, The time of supply of goods to the extent of Rs.50,000 is 20th October, i.e., the last date of
issue of invoice , even though the date of payment is earlier this will not be considered as per above
notification. [Section 12(2)(a)].
The time of supply of goods to the extent of the balance amount of Rs.11,50,000 is 20th October which
is the date on which the goods were made available to the recipient as per section 31(1) (b), and the
invoice should have been issued on this date [Section 12(2)(a)].

Excess Amount received up to Rs.1000

Question 8: What is time of supply with respect to amount received in excess of the invoice amount
(e.g.: Invoice is issued for Rs.5,000 on August 22, 2017 by the supplier. Subsequently, the recipient pays-
scenario 1: Rs.5,500/- and scenario 2: Rs.8,000/-) ? For scenario 2:- Date on which payment entered in
books of accounts of the supplier is Aug 30, 2017 & date on which payment is credited to bank account
is Aug 28, 2017.

Answer:
In term of the proviso to sec 12(2)(b) read with N/N -66/2017. The time of supply with respect to the
amount received in excess of the amount indicated in tax invoice shall be the date of issue of invoice. In
respect of such excess amount.
However, in given case, receipt of advance does create time of supply in the hand of supplier. Thus, this
advance will not give rise to time of supply irrespective amount of such advance.
Time of supply shall be date of issue of invoice or last date of issue of invoice, Therefore TOS in both the
scenario will be 22 Sep 2017 i.e., date of issue of invoice
Note:- The ICAI has taken different view i.e. TOS as per sec 12(5), if TOS cannot be determined, but
author view is as above.

Date on which payment is August 30, 2017 Time of supply shall be August
entered in books of accounts of 28,2017
the supplier
Date on which payment is August 28, 2017
credited to the bank account

Continues Supply of Goods

Question 9: Gas is supplied by a pipeline. Monthly payments are made by the recipient as per contract.
Every quarter, invoice is issued by the supplier supported by a statement of the goods dispatched and
payments made, and the recipient has to pay the differential amount, if any. The details of the various
events are [ICAL Material]

August 5, September 5, October Payments of Rs.2 lakh made in each month

6
October 3 Statement of accounts issued by supplier, with invoice for the
quarter July - September
October 17 Differential payment of Rs.56,000 received by supplier for the
quarter July - September as per statement of accounts

Answer:
Time of Supply for the above case,
S. No. Date of Payment Date of issue of Date of invoice Time of supply
SOA successive (N/N 66/2017)
payment [sec
31(4)]
1 August 5 October 3 August 5 August 5
2 October 3 September 5 September 5
September 5
3 October 6 October 3 October 6 October 6
4 October 17 October 3 October 3 October 3

As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in section
12(2)(a), i.e. date of issue of invoice or the last date on which invoice ought to have been issued in terms
of section 31.
As per section 31(4), in case of continuous supply of goods, where successive statements of accounts or
successive payments are involved, the invoice is issued before or at the time of each such statement is
issued or, as the case may be, each such payment is received. Therefore, invoice should be issued on
August 5, September 5 and October 6 when monthly payments of 2 lakh are received.
Thus, the time of supply for the purpose of payment of tax will be August 5, September 5 and October 6
respectively for goods valued at 2 lakh each. For goods valued at Rs.56,000, the time of supply for the
purpose of payment of tax will be October 3, the date of issuance of invoice. 2.

Reverse Charge Basis

Question 10: What will be the time of supply where tax is liable to be paid on goods under reverse
charge mechanism?

Answer:
In case of tax liable to be paid on goods under reverse charge mechanism, the time of supply shall be
the earliest of the following:
(a) Date of receipt of goods by the recipient; or
(b) Date on which the payment is entered in the books of accounts of the recipient; or
(c) Date on which payment is debited in the bank account of the recipient; or
(d) Date immediately following 30 days from the date of issue of invoice or any other document, by
whatever name called, in lieu thereof by the supplier. Where the time of supply cannot be
ascertained from above, the date of entry in the books of accounts of the recipient shall be the
time of supply of goods.

Question 11: Determine the time of supply from the given information

May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days
from the date of issuance of invoice elapse on June3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment

Answer:

Here, May 12 will be the time of supply, being the earliest of the three stipulated dates namely [Section
12(3)],

➢ Receipt of goods, date of payment and

➢ date immediately following 30 days of issuance of invoice by supplier. (Here, date of invoice is
relevant only for calculating thirty days from that date.)

Question 12: Determine the time of supply from the given information
May 4 Supplier invoices goods taxable on reverse charge basis to Pillar & Co.(30 days from
the date of issuance of invoice elapse on June3)

June 12 Pillar & Co receives the goods, which were held up in transit
July 03 Payment made for the goods

Answer:

Here, June 4, 31st day from the date of supplier's invoice, will be the time of supply, being the earliest of
the three stipulated dates namely, [Section 12(3)]

➢ receipt of goods,
➢ date of payment and
➢ date immediately following 30 days of issuance of invoice by supplier.

Question 13: Determine the time of supply in the following cases assuming that GST is payable under
reverse charge: ICAI Material]

Date of receipt Date of payment by recipient of goods Date of issue of invoice by

supplier of goods

(1) (2) (3)

i. July 1 August 20 June 29

ii. July 1 June 25 June 29

iii. July 1 Part payment made on June 30 and June 29
balance amount paid on July 20
iv. July 5 Payment is entered in the books of June 1
account on June 28 and debited in
recipient’s bank account on June 30
v. July 1 Payment is entered in the books of June 29
account on June 30 and debited in
recipient’s bank account on June 26
vi August 1 August 10 June 29

Answer:

As per Sec 12(3) tax liable to be paid on goods under reverse charge mechanism, the time of supply shall
be the earliest of the following:
 (a) Date of receipt of goods by the recipient; or
(b) Date on which the payment is entered in the books of accounts of the recipient; or
(c) Date on which payment is debited in the bank account of the recipient; or
(d) Date immediately following 30 days from the date of issue of invoice or any other document, by
whatever name called, in lieu thereof by the supplier.

Date of receipt of Date of payment Date of issue of Date immediately Time of supply of
goods by recipient of invoice by following 30 days Goods [Earlier of
goods supplier of goods from date of (1), (2) & (4)]
invoice
(1) (2) (3) (4) (5)
i. July 1 August 10 June 29 July 30 July 1
ii. July 1 June 25 June 29 July 30 June 25
iii. July 1 Part of payment June 29 July 30 June 30 for part
made on June 30 payment made
and balance and July 1 for
amount paid on balancing amount
July 20
iv. July 5 Payment is June 1 July 2nd June 28 (i.e.,
entered in the when payment is
books of account entered in the
on June 28 and books of account
debited in of the recipient )
recipient’s bank
account on June
30
v. July 1 Payment is June 29 July 30 June 26 (i.e.,
entered in the when payment is
books of account debited in the
on June 30 and recipient’s bank
debited in account)
recipient’s bank
account on June
26
vi. August 1 August 10 June 29 July 30 July 30 (i.e., 31st
day from issuance
of invoice)

Vouchers
Question 14: What will be the time of supply in case of supply of vouchers?

Answer: In terms of Section 12(4) of the CGST Act, 2017, time of supply of vouchers shall be the earliest
of the following:

(a) date of issue of voucher, if the supply is identifiable at that point; or

(b) date of redemption of voucher, in all other cases.

Question 15: Mr. A buys vouchers from Lifestyle of worth Rs.1,000/- for a shirt dated August 01, 2017.
Mr. A gifts such vouchers to Mr. B who redeems such vouchers with Amazon India on August 31, 2018.

Answer:

Time of supply is the date of issue of vouchers viz, August 01, 2017, as the supply is identifiable at that
point.

Question 16: XY2 Ltd has purchased for its employees 100 vouchers dated 14/12/2017 worth Rs.2,000
each for specific footwear from ABC Ltd, a footwear manufacturing company. The vouchers were issued
by ABC Ltd on IS/12/2017. The vouchers can be encashed at retail outlets of ABC Ltd, The employees of
XY2 Ltd encashed the same on 01/01/2018. Determine the time of supply for the same

Answer:

Legal Provision - In terms of Section 12(4) of the CGST Act, 2017, time of supply of vouchers shall be the
earliest of the following:

(a) date of issue of voucher, if the supply is identifiable at that point; or

(b) date of redemption of voucher, in all other cases,

Discussion- As per the above stated Section time of supply shall be the date of issue of voucher if the
supply is identifiable at that point. In the above case supply is identifiable as it specifically pertains to
footwear.

Conclusion - Hence, time of supply is 15/12/2017

Question 17: Ms. Reema purchased a gift voucher from Shoppers Stop (a departmental store) worth
Rs.2,500 on 3010/2017 and gifted it to her friend on occasion of her birthday on 0412/2017. Her friend
encashed the same on O1/01/2018 for purchase of a handbag. Determine the time of supply

Answer:
Legal Provision - In terms of Section 12(4) of the CGST Act, 2017, time of supply of vouchers shall be the
earliest of the following:
(a) date of issue of voucher, if the supply is identifiable at that point; or
(b) date of redemption of voucher, in all other cases.
Discussion - As per the above stated Section time of supply shall be the date of redemption of the
voucher in case the supply is not identifiable at that point. The voucher given is that of a departmental
store offering a variety of products and the voucher can be used to purchase any product.
Conclusion - Hence, time of supply is 1/1/2018

Question 18: Acmesales Limited sells food coupons to a company, which gives these to its employees as
part of the agreed perquisites. The coupons can be redeemed for purchase of any item of food
/provisions in the outlets that are part of the program. What will be the time of supply? (ICAI Study
Material)

Answer:
As the supply against which the coupon will be redeemed is not known on the date of the sale of the
coupon, the time of supply of the coupon will be the date on which the employee redeems it against
food / provision items of his choice.

Special Charges

Question 19: What will be the Time of supply in case of addition in value by way of interest, late fee or
penalty?

Answer:
In terms of Section 12(6) of the CGST Act, 2017, the date on which the supplier receives interest, penalty
or late fee which forms part of value will be the time of supply.

Question 20: Mr. X a registered supplier supplied certain goods to Mr.Y on 6 months credit with a
penalty clause in the agreement levying a penalty of 12% p.a. of the invoice value in case of delayed
payment. The invoice was dated 01/12/2017 and Invoice value was Rs.20,000 Mr. Y could not make the
payment on the due date due to unavoidable reasons. He however made the payment of the invoice
value on 01/06/2018. Mr. X raised a debit note for the penalty amount. There being dispute on this, the
matter was in arbitration which was finally resolved with Mr. Y agreeing to pay half of the penalty
amount. The amount was paid by Mr. Y on 12/12/2018. Determine the time of supply.

Answer:
Legal Provision - The above case falls within the purview of Section 12 (6) of CGST Act
Discussion - As per the above stated Section time of supply to the extent it relates to an addition in the
value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be
the date on which the supplier receives such addition in value
Conclusion - for the amount received as penalty the time of supply shall be 12/12/2018
 Goods sent on return basis

Question 21: From the following Information determine time of supply, if goods are supplied on
approval basis

S. No. Sale as App. Basis Removal of Issue of Invoice Accepted by Receipt of

Goods Recipient Payments
1. Acceptance 01/11/17 25/11/17 15/11/17 25/11/17
Communicated
Within 6 Month of
Removal
2. Amt. paid to Supplier 01/11/17 25/11/17 15/11/17 12/11/17
before informing
acceptance
3. Acceptance Not 01/11/17 15/05/18 15/05/18 02/05/18
Communicated
Within 6 month of
Removal

Answer:

Where Goods are being sent for approval on Sale/Return are removed before Supply taken place,
Invoice shall be issued.

(a) Before or at the time of Supply or

(b) 6 months from the date of Removal
Whichever is earlier

Determination of TOS:- TOS in above case shall be determined as per Sec. 12 (2) read with N/No.
66/2017, i.e.

➢ Date of Invoice or
➢ Last date of Invoice

Whichever is earlier.

So, in given case, Last date of Invoice.

(1) In case goods are sent for sale on Approval / Return Basis, last day of invoice is date of
acceptance by recipient OR Completion of 6 month if acceptance not given within 6 month. So,
Invoice issued after last date i.e. 15/11/17. Hence, TOS is on 15/11/17.
 S. No. Sale as App. Removal of Issue of Accepted Recipient Time of Supply
Basis Goods Invoice by of
Recipient Payments
1. Acceptance 01/11/17 25/11/17 15/11/17 25/11/17 15/11/17
Communicated
within 6
month of
Removal
2. Amt. paid to 01/11/17 25/11/17 15/11/17 12/11/17 (a), U/s 12(2) –
Supplier 12/11/17 (b)
before N/No.6612017-
informing 15/11/17
acceptance
3. Acceptance 01/11/17 15/05/18 15/05/18 02/05/18 01/04/18 (i.e.
Not 6 month from
Communicated Removal)
within 6
month of
Removal

Question 22: Food meal coupons are sold to a company on 9th August for being distributed to the
employees of the said company. The coupons are valid for six months and can be used against purchase
of food items. The employees use them in various stores for purchases of various edible items on
different dates throughout the six months. What is the date of supply of the coupons? [CA IPC MTP Aug
2018]

Answer:
Section 12(4) of CGST Act, 2017 provides that in case of supply of vouchers by a supplier, the time of
supply shall be the date of issue of invoice, if the supply is identifiable at that point; or the date of
redemption of vouchers, in all other cases.
As the coupons can be used for a variety of food items, which are taxed at different rates, the supply
cannot be identified at the time of purchase of the coupons. Therefore, the time of supply of the
coupons is the date of their redemption in terms of section 12(4) of CGST Act.

Question 23: Gupta & Sons, a registered supplier, paying tax under normal scheme is a wholesale
supplier of ready-made garments located in Bandra, Mumbai. On 5th September, 20XX, Mohini, owner
of Charming Boutique located in Dadar, Mumbai, approached Gupta & Sons for supply of a consignment
of customised dresses for ladies and kids. Gupta & Sons gets the consignment ready by 2nd December,
20XX and informs Mohini about the same. The invoice for the consignment was issued the next day, 3rd
December, 20XX.
Due to some reasons, Mohini could not collect the consignment immediately. So, she collects the
consignment from the premises of Gupta & Sons on 18th December, 20XX and hands over the cheque
for payment on the same date. The said payment is entered in the accounts on 20th December, 2OXX
and amount is credited in the bank account on 21st December, 20XX.
You are required to determine the time of supply of the readymade garments supplied by Gupta & Sons
to Mohini elaborating the relevant provisions under the GST law. [CA IPC MTP Aug 2018]

Answer:
As per Notification No. 66/2017 CT dated 1S.JI.2017, a registered person (excluding composition
supplier) has to pay GST on the outward supply of goods at the time of supply as specified in section
12(2)(a) of CGST Act, 2017 i.e., date of issue of invoice or the last date on which invoice ought to have
been issued in terms of section 31. Therefore, the time of supply of goods is 3rd December which is the
date on which the invoice for the consignment was issued.

Time of Supply of Service

Question 24: How to ascertain the time of supply of services?

Answer:

The time of supply of services shall be determined in terms of Section 13 of the CGST Act, 2017

Case : Time of supply

a) If the invoice is issued within the period The date of issue of invoice by the supplier, or The
prescribed under sec 31 date of receipt of payment, Whichever is earlier
b) if the invoice is not issued within the period The date of provision of service, or The date of
prescribed under sec 31 receipt of payment, Whichever is earlier
c) In a case where the provisions of clause (a) or The date on which the recipient shows the receipt
(b) do not apply of services in his books of account

Explanation: The date of receipt of payment - Shall be the date on which the payment is entered in the
books of account of the supplier or the date on which the payment is credited to his bank account,
whichever is earlier.

Question 25:

Case 1 Case 2
Date of invoice August 31, 2017 August 31, 2017
Date of supply of service August 7, 2017 July 7, 2017
Payment received by way of August 10, 2017 August 10, 2017
cheque and the entry for receipt
of payment is recorded in books
of accounts
Amount credited to bank August 12, 2017 August 12, 2017
account of

Answer:

Case I:

Legal provision:- As per section 13(2)(a) of CGST Act, The date of issue of invoice by the supplier, if
invoice is issued within prescribed period or date of receipt of payment, whichever is earlier.

Case 1
Date of invoice August 31, 2017
Date of supply of service August 7, 2017
Payment received by way of August 10, 2017 Time of supply of services shall
cheque and the entry for receipt be August 10, 2017
of payment is recorded in books
of accounts
Amount credited to bank August 12, 2017
account of supplier

Case 2 :
Legal provision:- As per section 13(2)(b) of CGST Act, The date of provision of service, if invoice is not
issued within prescribed period or date of receipt of payment, whichever is earlier.
Case 2
Date of invoice August 31, 2017
Date of supply of service July 7, 2017
Payment received by way of August 10, 2017 Time of supply of services shall
cheque and the August 10, 2017 be July 7, 2017
August 10, 2017 entry for receipt
of payment is recorded in books
of accounts
Amount credited to bank August 12, 2017
account of supplier

Question 26: Raju Pvt. Ltd. receives the order and advance payment on 5th January for carrying out an
architectural design job. It delivers the designs on 23rd April. By oversight, no invoice is issued at that
time, and it is issued much later, after the expiry of prescribed period for issue of invoice. When is the
time of supply of service?

Answer: Since the invoice has not been issued within the prescribed time period, time of supply of
service will be the earlier of the following two dates in terms of section 13(2)(b):
 ➢ Date of provision of service
➢ Date of receipt of payment

The payment was received on 5th January and the service was provided on 2 3rd April. Therefore, the
date of payment, i.e., 5th January is the time of supply of the service in this case.

Question 27: Determine the time of supply from the following particulars: (ICAI Study Material)

6th May Booking of convention hall, sum agreed Rs.15000, advance of Rs.3000 received
15th September Function held in convention hall
27th October Invoice issued for R 15000, indicating balance of 12000 payable
3rd November Balance payment of Rs.12000 received

Answer:
As per section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply
of service. In the given case, the invoice is not issued within the prescribed time limit. As per section
13(2)(b), in a case where the invoice is not issued within the prescribed time, the time of supply of
service is the date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of Rs.3,000 is 6th May as the date of payment of
Rs.3000 is earlier than the date of provision of service. The time of supply of service to the extent of the
balance 12,000 is 15th September which is the date of provision of service.

Question 28: Modern Security Co. provides service of testing of electronic devices. In one case, it tested
a batch of devices on 4th and 5th September but could not raise invoice till 19th November because of
some dispute about the condition of the devices on return.
The payment was made in December, What is the method to fix the time of supply of the service?

Answer:

The time of supply of services, if the invoice is not issued in time, is the date of payment or the date of
provision of service, whichever is earlier [Section 13(2)(b)]. In this case, the service is provided on 5th
September but not invoiced within the prescribed time limit. Therefore, the date of provision of service,
i.e., 5th September, will be the time of supply.

Question 29: Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in
an apartment complex, for which the Apartment Owners' Association showed a payment in cash on 4th
April to them against work of this description. The dates of the work are not clear from the records of
ABC & Co. ABC & Co have not issued invoice or entered the payment in their books of account. (ICAI
Material)
Answer:

The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13(2) as
neither the invoice has been issued nor the date of provision of service is available as also the date of
receipt of payment in the books of the supplier is also not available. Therefore, the time of supply will be
determined vide clause (c) of section 13(2) i.e., the date on which the recipient of service shows receipt
of the service in his books of account. Thus, time of supply will be 4th April, the date on which the
Apartment Owners' Association records the receipt of service in its books of account.

Question 30: Sunidhi Ltd. provided business support services to Bansi on 10th August, 20XX for
Rs.50,000. The invoice for the same was issued on 20th August, 20XX. Sunidhi Ltd. received the payment
against the said invoice on 15th August, 20XX vide cheque dated 12th August, 20XX. The entry for the
receipt of payment was made in the books of accounts on 15th August, 20XX itself. However, the
amount was credited in the bank A/c on 25th August, 20XX. Determine the point of taxation in the given
case

Answer:

Legal Provision:- As per Section 13 (2) (a) of CGST Act, if in case the invoice has been issued within 30
days of provision of service. As per the above section time of supply is date of issue of invoice or the
date of receipt of payment whichever is earlier.

Discussion: Thus as per the above provision, in the given case

Date of entry in books of A/c 15.08.20XX

Date of credit to bank account 25.08.20XX
Date of receipt of payment 15.08.20XX
Date of issue of invoice 20.08.20XX
The time of supply is 15th August, 20XX i.e. the date of receipt of payment, which is the earliest of the
above aforesaid dates.

Question 31: Determine the point of taxation and due date of e- payment of goods & service tax in each
of following independent cases:

S. No. Date of completion Date of Invoice Date on which payment is received

1 10.04.2018 05.05.2018 20.05.2018
2 10.04.2018 05.05.2018 20.04.2018
3 10.04.2018 05.05.2018 25.04.2018(Part)and 20.05.2018 (remaining)
4 10.04.2018 05.05.2018 06.04.2018(Part)and 09.04.2018 (remaining)
5 10.04.2018 16.05.2018 05.04.2018(Part)and 14.05.2018 (remaining)
Answer:

S. No. Date of Date of Date on which Section Applicability Time of

completion Invoice payment is Supply
received
1. 10.04.2018 05.05.2018 20.05.2018 Section 13 (2) (a) is 05.05.2018
applicable. Date of Invoice
or Date of receipt of
payment whichever is
earlier

2. 10.04.2018 05.05.2018 25.04.2018 Section 13 (2) (a) is 25.04.2018

applicable. Date of Invoice
or Date of receipt of
payment whichever is
earlier
3. 10.04.2018 05.05.2018 25.04.2018(Part) Section 13(2)(a) is 25.04.2018
and 20.05.2018 applicable. Date of Invoice (Part) and
(remaining) or Date of receipt of 05.05.2018
payment whichever is (remaining)
earlier
4. 10.04.2018 05.05.2018 06.04.2018(Part) Section 13(2)(a) is 06.04.2018
and 09.04.2018 applicable. Date of Invoice (Part) and
(remaining) or Date of receipt of 09.04.2018
payment whichever is (remaining)
earlier
5. 10.04.2018 16.05.2018 05.04.2018(Part) Section 13(2)(a) is 05.04.2018
and 14.04.2018 applicable. Date of (Part) and
(remaining) Provision of service or date 10.04.2018
of receipt of payment (remaining)
whichever is earlier

Continuous Supply of Service

Question 32: Determine whether the following services amount to continuous supply of service in the
following case: XY2 & Co., a firm of interior decorators, enters in to a contract with Mr. Mehta on
O1.08.2018 for doing up the interiors of his newly constructed home for a total consideration of 60 lakh.
As per the terms of the contract, XY2 & Co. will complete the work by 31.01.2019 and consideration will
be paid in six equal installments on the first day of each month covered during the period of contract.

Answer:
Legal Provision: As per sec 2(33) of CGST Act, "Continuous supply of services" means a supply of
services which is provided, or agreed to be provided, continuously or on recurrent basis, under a
contract, for a period exceeding three months with periodic payment obligations and includes supply of
such services as the Government may, subject to such conditions, as it may, by notification, specify.
Conclusion- Since in the given case, service is provided for a period of six months with the obligation of
periodic payment, the same will amount to continuous supply of service.

Question 33: Determine the Time of Supply for the following case: (ICAI Material)

Continuous supply of services Section Invoice date Date as per Receipt Of

13(2) r/w Section 31(5) contract payment
1. Section 31(5) (a) Contract provides for 02-Nov-17 10-Nov-17 15-Nov-17
payments monthly on the 10th of 17-Dec-17 10-Dec-17 15-Dec-17
succeeding month 10-Jan-18 10-Jan-18 06-Jan-18

2. Section 31(5)(c) Contract provides for 12-Nov-17 10-Nov-17 25-Nov-17

payments on completion of event. 24-Apr-18 24-Apr-18 20-Apr-18
Recipient to pay within 1 month from
date of completion

Answer:

Continuous supply of services Invoice date Date as per Receipt Of Time of

Section 13(2) r/w Section 31(5) contract payment Supply

1. Section 31(5) (a) Contract provides for 02-Nov-17 10-Nov-17 15-Nov-17 02-Nov-17
payments monthly on the 10th of 17-Dec-17 10-Dec-17 15-Dec-17 10-Dec-17
succeeding month 10-Jan-18 10-Jan-18 06-Jan-18 06-Jan-18

2. Section 31(5)(c) Contract provides for 12-Nov-17 10-Nov-17 25-Nov-17 10-Nov-17

payments on completion of event. 24-Apr-18 24-Apr-18 20-Apr-18 20-Apr-18
Recipient to pay within 1 month from
date of completion

Note:- As per ICAI background material date of completion of service is the due date in terms of contract
or date of completion of event
 REVERSE CHARGE

Question 34: What would be the time of supply of services taxable under reverse charge mechanism?

Answer:
In terms of Section 13(3) of the CGST Act, 2017, the time of supply of services for remittance of tax
under reverse charge mechanism shall be the earliest of the following:
(a) Date of payment recorded in the books of accounts of the recipient;
(b) Date of debit in bank account of the recipient;
(c) 60 days from the date of issue of invoice or any other document in lieu thereof by the supplier;
or
If it is not possible to determine the time of supply under the aforesaid clauses, the time of supply
shall be the date of entry in the books of account of the recipient of supply.
In case of associated enterprises, where the supplier of service is located outside India, the time of
supply shall be the date of entry in the books of account of the recipient of supply or the date of
payment, whichever is earlier.

Question 35: Determine the time of supply in the following cases assuming that GST is payable
under reverse charge: (ICAI Material)

S. No. Date of payment by recipient for supply of Date of issue of invoice by supplier
services of services
(1) (2)

(i) August 10 June 29

(ii) August 10 June 1
(iii) Part payment made on June 30 and balance June 29
amount paid on September 1
(iv) Payment is entered in the books of account on June 1
June 28 and debited in recipient's bank account on
June 30
(v) Payment is entered in the books of account on June 29
June 30 and debited in recipient's bank account on
June 26

Answer:
 S. No. Date of payment by recipient Date of Date Time of Supply of
for supply of services issue of immediately goods (earlier of (1)
invoice by following 60 days & (3)
supplier of from invoice
services
(1) (2) (3) (4)

(i) August 10 June 29 August 29 August 10

(ii) August 10 June 1 August 1 August 1

(iii) Part payment made on June 30 June 29 August 29 June 30 for Part
and balance amount paid on payment and
September 1 August 29 for
balance amount
(iv) Payment is entered in the June 1 August 1 June 28 (i.e., when
books of account on June 28 payment is entered
and debited in recipient's bank in the books of
account on June 30 account of the
recipient)
(v) Payment is entered in the June 29 August 29 June 26 (i.e., when
books of account on June 30 payment is debited
and debited in recipient's bank in the recipient’s
account on June 26 bank account)

Question 36: Kabira Industries Ltd engaged the services of a transporter for road transport of a
consignment on 17th June and made advance payment for the transport on the same date, i.e., 17th
June. However, the consignment could not be sent immediately on account of a strike in the factory,
and instead was sent on 20th July. Invoice was received from the transporter on 22nd July. (ICAI
Material)
What is the time of supply of the transporter's service?
Note: Transporter's service is taxed on reverse charge basis.

Answer:

Time of supply of service taxable under reverse charge is the earlier of the following two dates in terms
of section 13(3): -

➢ Date of payment
➢ 61st day from the date of issue of invoice

In this case, the date of payment precedes 61st day from the date of issue of invoice by the supplier of
service. Hence, the date of payment, that is 17th. June, will be treated as the time of supply of service
[Section 13(3)(a)].
Question 37: A firm of lawyers issues invoice for services to ABC Ltd. on 17th Feb. The payment is
contested by ABC Ltd. on the ground that on account of negligence of the firm, the company's case was
dismissed by the Court for non-appearance, which necessitated further appearance for which the firm is
billing the company. The dispute drags on and finally payment is made on 3rd November. (ICAI Material)
Identify the time of supply of the legal services.
Note: Legal services are taxable on reverse charge basis.

Answer:

Time of supply of services that are taxable under reverse charge is earliest of the following two dates in
terms of section 13(3): -
➢ Date of payment [3rd November]
➢ 61st day from the date of issue of invoice [19th April]
The date of payment comes subsequent to the 6lst day from the issue of invoice by the supplier of
service. Therefore, the 6lst day from supplier's invoice has to be taken as the time of supply. This fixes
19th April as the time of supply.

Question 38: Determine the Time of supply for the following cases: (ICAI) Material)

Reverse charge Section Date of invoice Date of Payment by Entry of

13(3) issued by completion of recipient receipt
supplier service
1. General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17
2. Advance paid 31-Oct-17 31-Oct-17 05-Oct-17 31-Oct-17
3. Delay in payment 31-Oct-17 31-Oct-17 10-Jan-18 31-0ct-17
(Max. 60 days from
date of invoice)
4. Service received from 31-Oct-17 30-Nov-17 05-Apr-18 31-Mar-18
associated enterprise
located outside India
(No time extension
allowed)
5. Service by un- - 30-Nov-17 - 05-Dec-17
registered person, no
payment made

Answer:
 Reverse charge Date of invoice Date of Payment Entry of Time of
Section 13(3) issued by completion by receipt Supply
supplier of service recipient
1. General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17
2. Advance paid 31-Oct-17 31-Oct-17 05-Oct-17 31-Oct-17 05-Oct-17
3. Delay in payment 31-Oct-17 31-Oct-17 10-Jan-18 31-0ct-17 31-Dec-17
(Max. 60 days from
date of invoice)
4. Service received 31-Oct-17 30-Nov-17 05-Apr-18 31-Mar-18 31-Mar-17
from associated
enterprise located
outside India (No
time extension
allowed)
5. Service by un- - 30-Nov-17 - 05-Dec-17 05-Dec-17
registered person,
no payment made

Vouchers

Question 39: State whether the following can be categorized as a voucher? (ICAL Material)

i) Shopping gift card purchased for Rs.5,000/-

ii) Coupons or token given to customer by pizza outlet on making purchase of Rs.1,000/- which
allows 10% discount on next purchase
iii) Money deposited into digital wallet
iv) Points credited into digital wallet
v) Transfer of liability towards accumulated loyalty points credited to customers
vi) Pre-paid instruments:
➢ Telephone calling card /recharge card
➢ Multi-currency traveller's card
➢ DTH recharge card

Answer:
 Activities Voucher or not? Nature of Instrument
Shopping gift card purchased for Not Voucher It's money, by way of 'stored value' though
Rs.5,000/- encashable
Coupons or token given to Not Voucher It is future discount by way of ‘Value to use’
customer by pizza outlet on not encashable
making purchase of Rs.1000/-
which allows 10% discount on
next purchase
Money deposit into digital wallet Not Voucher It’s money by way of started value through
encahable
Points credit into digital wallet Not Voucher It is future discount by way of ‘value-to-use’
not encashable
Transfer of liability towards Voucher Now it’s become on ‘instrument with
accumulated loyalty points obligation’
credited to customer
Pre-paid instruments:- Not Voucher It’s money received in advance to be settled by
➢ Telephone calling card / making supplies in future
recharge and
➢ Multi-currency travelers
card
➢ DTH recharge card

Question 40: From the following information determine the time of supply of services where supply is
by issue of voucher valid for one year and are issued after supply of first service
Date of First Service: 01.01.2019
Date of Issue of Voucher: 01.01.2019
Date of Redemption of Voucher: 31.8.2019
Last date for acceptance of voucher: 31.12.2019 (ICAI Material)

Answer:

Legal Provision- As per Section 13 (4) of CGST Act, In case of supply of vouchers by a supplier, the time
of supply shall be

(a) If the supply is identifiable at that point - the date of issue of voucher,
(b) In all other cases- the date of redemption of voucher.

Discussion- As per the above mentioned Section the time of supply is the date of issue of voucher, if the
supply is identifiable at that point.

Conclusion- Hence, the time of supply is the issue of voucher i.e. 01.01.2019
 In case of small advances up to Rs.1,000

Question 41: Mr. X took telecommunication service from BSNL. For the month of January, 2018 the bill
amount was Rs.5,000. He made a payment of Rs.5,500 with an instruction to adjust the excess payment
against next month's bill, and hence the same was adjusted by BSNL in case of his next month bill
payable on 5/3/2018 (invoice issued on same date). Determine the time of supply with regard to such
excess payment in light of the GST law

Answer:
As per the Section 13(2) where the supplier of taxable service receives an amount up to one thousand
rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such
excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such
excess amount. Excess amount in the above case is Rs.500
Conclusion- Hence, time of supply is 5/3/2018

General

Question 42: An income-tax and money laundering case against Mr. XYZ, working in a multi- national
company, reveals a large volume of undisclosed assets, which he claims as service income. On this basis,
the GST authorities investigate the GST liability. Dates of provision of service, whether in the first half or
the second half of the financial year being scrutinised by income-tax authorities, are not known. Mr. XY2
voluntarily pays GST during the investigation. What is the time of supply of the services? (ICAI Study
Material)

Answer:
Where it is not possible to determine the time of supply in terms of date of invoice or date of provision
of service or date of receipt of payment or date of receipt of services in the books of account of the
recipient, and where periodical return is not to be filed (Mr. XYZ, being an employee in a multi- national
company, is not a registered person), the date of payment of tax is taken as the time of supply [Section
13(5)(b)].
Therefore, the date when Mr. XY2 pays the GST will be the time of supply.
 TOS in case of Joint Development Agreements:

Question 43: Mr. X enters into a joint development agreement with SM Constructions Ltd. on 12th
January whereby the development right over the plot of land owned by Mr. X is transferred to SM
Constructions to build a residential complex. SM Constructions agrees to transfer 5 flats out of 20 flats
to be built in the residential complex to Mr. X as a consideration for transfer of development rights. The
other details are: Land development rights are transferred on 31st January Construction begins on 1st
April and value of land is 2cr.
Construction of 5 flats gets completed on 30th June
Construction of entire complex gets completed on 30th November
Completion certificate for flats issued to Mr. X on 25th December
Date of first occupation of the project is 21st December till that SM builder sale 10 flats to the customers
and remaining are still unsold.
1. Determined the time of supply of service for transfer of development rights ?
2. Who is liable to pay tax ?
3. Calculate the GST payable ? (assume GST rate is 18%)

Answer:

Legal provision:- supply of services by a landowner to a developer by way of-

(i) transfer of transferable development rights (TDR) or floor space index (FSI);
(ii) granting of long term lease,
for construction of residential apartments have been exempted subject to the condition
that the constructed flats are sold before issuance of completion certificate or first
occupation of the project, whichever is earlier, and tax is paid on them.
Such exemption for TDR, FSI, long term lease (premium) shall not be available in case of
flats which remain un-booked on the date of issuance of completion certificate or first
occupation of the project, whichever is earlier.

The supply of construction service by him against consideration in the form of development rights or FSI
(including additional FSI), shall arise on the date of issuance of completion certificate or first occupation
of the project, whichever is earlier

The promoter (developer) shall be liable to pay tax at the applicable rate, on reverse charge basis, on
such proportion of

(i) Value of development rights and/or FSI, or

(ii) Upfront amount paid for long term lease, as is attributable to such un- booked residential
apartments.

Conclusion:-
 1. In given case time of supply of services is DAT OF Completion certificate for flats issued to Mr. X
on 25th December OR Date of first occupation of the project is 21st December whichever is
earlier Therefore time of supply is 21 December
2. In given case SM builder is liable to pay GST under Reverse charge
3. Calculation of amount of GST payable under RCM-
Total sale of flat before first occupation is 15 (i.e.10+5) flats sale of flat After first occupation is 5
flats total consideration for land right is payable is 2cr.
Amount on which tax is payable - 2cr*5/20= 0.5cr
GST payable is 0.5*18%=0.09

Questions from RTP, MTP of ICAI

Question 44: The time of liability to pay GST is independent of the time of supply of goods/ services.
Discuss the correctness of the statement?

Answer:
The said statement is not correct. Liability to pay arises at the time of supply of goods as explained in
Section 12 and at the time of supply of services as explained in Section 13 of CGST Act.
The time is generally the earliest of one of the three events, namely receiving payment, issuance of
invoice or completion of supply. Different situations envisaged and different tax points have been
explained in the aforesaid sections.

Question 45: Mr. Lakhan provides Continuous Supply of Services (CSs) to M/s. TNB Limited. He
furnishes the following further information:
(i) Date of commencement of providing CS - 01-10-2017
(ii) Date of completion of providing CSS - 31-01-2018
(iii) Date of receipt of payment by Mr. Lakhan - 30-03-2018
Determine the time of issue of invoice as per provisions of CGST Act, 2017, in the following
circumstances:
(i) If no due date for payment is agreed upon by both under the contract of CSS.
(ii) If payment is linked to the completion of service.
(iii) If M/s. TNB Limited has to make payment on 25-03-2018 as per the contract between them
(CA_Inter New_Nov. 18 Suggested)

Answer:

(i) Where the due date of payment is not ascertainable from the contract, the invoice shall be
issued before or at the time when the supplier of service receives the payment.
 Thus, in the given case, the invoice should be issued on or before 30.03.2018 (date of
receipt of payment by Mr. Lakhan).
(ii) If payment is linked to the completion of an event, the invoice should be issued on or before
the date of completion of that event.
Since in the given case where payment is linked to the completion of service, invoice should
be issued on or before 31.01.2018 (date of completion of service).
(iii) Where the due date of payment is ascertainable from the contract, the invoice should be
issued on or before the due date of payment.
If M/s. TNB Limited has to make payment on 25.03.2018 as per the contract between them,
the invoice should be issued on or before 25.03.2018.

Question 46: Mr. XY2 & Co., a firm of Chartered Accountants, issued invoice for services rendered to

Mr. A on 7th September, 2017. Determine the time of supply in the following independent cases:

(1) The provision of service was completed on 1st August, 2017.

(2) The provision of service was completed on 14th August, 2017.
(3) Mr. A made the payment on 3rd August, 2017 where provision of service was remaining to be
completed.
(4) Mr. A made the payment on 15th September, 2017 where provision of service was remaining to
be completed. (CA_Inter Old Nov. 18 Suggested)

Answer:
Time of supply will be:
(A) if the invoice is issued within 30 days of supply of service, date of invoice
OR
date of receipt of payment,
whichever is earlier
(B) if the invoice is not issued within 30 days of supply of service,
date of provision of service
OR
date of receipt of payment,
whichever is earlier
In accordance with aforesaid provisions, time of supply is:
1. 01.08.2017 since the invoice is not issued within 30 days of supply of service.
2. 07.09.2017 since the invoice is issued within 30 days of supply of service.
3. 03.08.2017 viz. earlier of 07.09.2017 or 03.08.2017
4. 07.09.2017 viz. earlier of 07.09.2017 or 15.09.2017
Question 47: Mr. Mayank provides Continuous Supply of Services (CSS) to M/s. Omega Limited. He
furnishes the following further information:

(i) Date of commencement of Providing CSS 01-10-20XX

(ii) Date of completion of Providing CSS 31-01-20XY
(iii) Date of receipt of payment by Mr. Mayank 30-03-20XY

Determine the time of issue of invoice as per provisions of CGST Act, 2017, in the following
circumstances:

(i) If no due date for payment is agreed upon by both under the contract of CSS.
(ii) If payment is linked to the completion of service.
(iii) If M/s. Omega Limited has to make payment on 25-03-20XY as per the contract between
them. (CA Inter MTP Mar 19)

Answer:

(i) Where the due date of payment is not ascertainable from the contract, the invoice shall be
issued before or at the time when the supplier of service receives the payment.
Thus, in the given case, the invoice should be issued on or before 30.03.20XY (date of
receipt of payment by Mr. Mayank).
(ii) If payment is linked to the completion of an event, the invoice should be issued on or before
the date of completion of that event.
Since in the given case payment is linked to the completion of service, invoice should be
issued on or before 31.01,20XY (date of completion of service).
(iii) Where the due date of payment is ascertainable from the contract, the invoice should be
issued on or before the due date of payment. If M/s. Omega Limited has to make payment
on 25.03.20XY as per the contract between them, the invoice should be issued on or before
25.03.20XY.

Question 48:

(a) M/s. Indian Oil Corporation entered into a contract with Mr. B for supply of oil throughout the
year. M/s Indian Oil Corporation issues monthly statement for the oil supplied to Mr. B.
Determine the time of supply of goods in following independent cases:
(i) Mr. B made payment for the month of July on 31# July2017 and M/s Indian Oil
Corporation issued statement for the month of July on 8th August 2017.
(ii) M/s Indian Oil Corporation issued statement for the month of August on 5th
September2017, the payment of which not received till 30th September2017.
 (b) State the time of supply for goods sent for approval.

Answer:

(a)
i) 31st July 2017 will be the time of supply

Earliest of the following:

• Date of Invoice: 8th August 2017

• Last date on which invoice has to be issued:

Date of payment (31.07.2017) or statement (08.08.2017), whichever is earlier i.e. 31st July 2017.

ii) 5th September 2017 will be the time of supply. Earliest of the following:
• Date of Invoice: 5th September 2017.
• Last date on which invoice has to be issued:

Date of payment (not known) or statement (05.09.2017), whichever is earlier i.e. 5th September 2017.
(b) Time of supply for goods sent for approval =

• Time when it becomes known that supply is taken place.

OR
• Six month from the date of removal.
Whichever is earlier.

Question 49: Shopper's Stop store a large retailer who sells various types of products like readymade
garment, jewellery, cosmetics, fabrics, shoes etc., issued the voucher on 10-07-2017 to their prospective
customer for enabling them to buy any product from their shop. Customer purchased readymade
garments on 20th Aug 2017. Find the time of supply of goods?

Answer:
Time of supply of goods = 20-08-2017
Note: time of supply will be the date of encashment of voucher (i.e. Redemption of voucher). Since, the
voucher is not identifiable with any specific product.

Question 50: M/s Mansh & Vansh Trading Company, a registered supplier, is liable to pay GST under
forward charge. Determine the time of supply from the following information furnished by it:

(i) Goods were supplied on 03-10-2017

 (ii) Invoice was issued on 05-10-2017
(iii) Payment received on 09-10-2017

Answer:
As per section 12 of CGST Act, 2017, the time of supply of goods, tax on which is payable under forward
charge, is the earlier of the following two dates:
(i) Date of issue of invoice/last date on which the invoice is required to be issued
(ii) Date of receipt of payment i.e., the date on which the payment is recorded in the books of
account of the supplier or date on which the payment is credited to the supplier's bank
account, whichever is earlier
Further, a registered person is required to issue a tax invoice before or at the time of
removal of goods for supply to the recipient. Thus, in the given case, the invoice for supply
of goods should have been issued on or before the removal of goods i.e., on 03-10-2017.
However, since the invoice has not been issued within the prescribed time, the time of
supply will be the last date on which the invoice is required to be issued (03-10-2017)or date
of receipt of payment (09-10-2017), whichever is earlier,
Thus, the time of supply of the goods will be 03-10-2017.

Question 51: On 4th September, 2017, V.R. Mehman a famous music composer, received 3crore of
consideration from Zilmil Music Co. Ltd. for sale of copyright of his original music album. He finished his
work & made available the CD to the music company on 20th July, 2017 & raised the invoice on 24th
July, 2017. What will be the time of supply as per CGST Act, 2017?
Note: Above service is taxable under reverse charge basis.

Answer:
As per section 13 of CGST Act, 2017, the time of supply of service on which GST is payable on reverse
charge basis is earlier of the following:
• Date of payment (04.09.2017), or
• Date immediately following 60 days since issue of invoice by the supplier (23.09.2017)
Thus, time of supply of services is 04.09.2017
Note: As in the above case reverse charge provisions as per section 9(3) are attracted.
 Questions From RTP, MTP of CMA

Question 52: Mr. Ram sold goods to Mr. Ravi worth Rs.5,00,000. The invoice was issued on 15th
November. The payment was received on 30th November. The goods were supplied on 20th November.
Find the time of supply of goods? P.Y. turnover of Mr. Ram Rs.172 lakhs.

Answer:
(The time of supply of goods where supply involves movement of goods will be:
➢ Invoice issued before or at the time of removal of goods for supply to the recipient.
Or,
➢ Date on which supplier received the payment.
Whichever is earlier.
Particulars Whichever is earlier
Date of issue of invoice 15th November

Last date on which invoice should have been issued 20th November
Date of receipt of payment 30th November
Therefore, time of supply of goods = 15 November Date of invoice or
payment whichever is earlier.

Question 53: Examine the following independent cases of supply of goods and services and determine
the time of issue of invoice under each of the cases as per the provisions of CGST Act, 2017:

(i) Sakthi Enterprises, Kolkata entered into a contract with Suraj Enterprises, Surat for supply of
goods on 31t October, 2018. The goods were removed from the factory at Kolkata on 1th
October, 2018. As per the agreement, the goods were to be delivered by 31t October, 2018.
Suraj Enterprises has received the goods on 14th October, 2018.
(ii) Trust and Fun Ltd, an event management company, has provided its services for an event at
Kapoor Film Agencies, Mumbai on 5th June, 2018. Payment for the event was made on 19th
June, 2018. (CA Inter Exam May 19 New)

Answer:
 (i) A registered person supplying taxable goods shall issue a tax invoice, before or at the time
of removal of goods for supply to the recipient, where the supply involves movement of
goods.
Therefore, in the given case, invoice has to be issued on or before, 11th October 2018 (the
time of removal of goods).
(ii) A registered person [other than an insurer/banking company/financial institution, including
an NBFC] supplying taxable services shall issue a tax invoice before or after the provision of
service, but within a period of 30 days from the date of supply of service.
Thus, in the given case, invoice has to be issued within 30 days of 5th June 2018 (date of
supply of service), i.e. on or before, 5th July 2018

Question 54: Mr. Ram sold goods to Mr. Ravi worth Rs. 500000. The invoice was issued on 15th
November. The payment was received on 30th November. The goods were supplied on 20th November.

Find the time of supply of goods?

P.Y. turnover of Mr. Ram 172 lakhs.

Ans:

PARTICULARS Whichever is earlier

Dt of issue of invoice 15 November
Last dt. On which invoice should have been 20 November
issued
Dt. of receipt of payment 30 November
th
Therefore, time of supply of goods= 15 November.
Dt. of inv. Or payment whichever is earlier.

Question 55: X & Co., being a trader receives an advance of Rs. 2500/- on 29/11/17 for goods worth Rs.
10000/- to be supplied in the month of January 2018.

Find the following:

a) Time of supply
b) Due date of tax liability
c) CGST and SGST liability.

Note: P.Y. turnover Rs. 0.80 crore. X & co., opted to pay GST under Composition scheme.

a) Time of supply the date of invoice (i.e. turnover basis) = January 2018
b) Due date of tax liability 18th April 2018 (i.e. quarterly)
c) CGST = Rs. 50/- (i.e. Rs. 10000 * 0.5 %) and SGST = Rs. 50/- (i.e. Rs. 10000* 0.5%)
 Question 56: X & Co., receives an advance of Rs. 2500/- on 29-07-17 for goods worth Rs. 10000/- to
be supplied in the month of September 2017.

Find the following:

a) Value of supply of goods in the month of July 2017.

b) Due date of tax liability for the month of July 2017.
Note: P.Y. turnover Rs. 1.8 crore.

Ans:

a) Advance Rs. 2500/- is treated as deemed supply.

b) Therefore, X & Co., has made a supply of Rs. 2500/- on 29-07-17.

Question 57: If a supplier of goods has received an amount of Rs. 1500/- against an invoice of
1100/- on 25-7-2017 and the date of invoice of next supply to the said recipient is 14-8-2017.

find the following in respect of excess amount over and above invoice value:

a) Time of supply of goods

b) Due date of payment of tax.

Ans:

a) Since, excess amount received over and above invoice value not exceeds Rs. 1000, supplier has
an option to treat the time of supply w.r.t. Rs. 400/- either as 25-07-17 or 14-8-2017.
b) Due date of payment of tax
• If time of Supply =25-7-2017, then due date is 20-8-2017
• If time of Supply =14-8-2017, then due date is 20-9-2017

Question 58: M/s X Ltd., being a manufacture, sold goods to M/s Y Ltd., wholesaler, and issued invoice
for the sale on 1-8-2017.

Find the time of supply of goods in each of the following independent cases:

1) M/s X Ltd., removes the goods for delivery to M/s Y Ltd., on 16th August, 2017.
2) M/s Y Ltd., collects the goods from premises of M/s X Ltd., on 10th August, 2017.
3) M/s Y Ltd. made full payment on 26th July, 2017.
4) M/s Y Ltd., credited the payment in bank account of M/s X Ltd., on 28th July, 2017 for 3/4th of
goods. recorded the same as receipts in his books on 3rd August, 2017. The goods were
dispatched on 5th August 2017 from the warehouse.

Ans:

1) 1st August 2017 is the of time of supply of goods.

i.e. Earlier of the following:
 • Date of invoice -1st August 2017
Or
• Date on which invoice is required to be issued – 16th August 2017.
2) 1st August 2017 is the time of supply of goods.
i.e. Earlier of the following: -
• Date of invoice -1st August 2017
Or
• Date on which goods is delivered – 10th August 2017.
3) 26th July 2017 is the time of supply of goods
i.e. Earlier of the following: -
• Date of invoice -1st August 2017
Or
• Date of payment- 26th July 2017.

Note: Irrespective of turnover the above time of supply is whole good, because Rs. 1.5 crore turnover
criteria effective from October, 2017.

4) The time of supply of goods for 3/4th of the goods will be 28th July 2017 as the payment has
been made prior to the date of invoice and the time of supply of goods will be 1st August 2017
for remaining 1/4th goods.

Note: Irrespective of turnover the above time of supply is whole good, because Rs. 1.5 crore
turnover criteria effective from 13th Oct 2017.

Question 59: Part Advance payment is made or invoice issued is for part payment, whether the
time of supply will cover the full supply?

Ans: The supply of services shall be deemed to have been made to the extent it is covered by the
invoice or the part payment. It means part advance payment is the time of supply.

However, for goods payment of tax will need to be made upon date of issue of invoice, irrespective
of the fact whether or not advance or part payment is received.

Question 60: M/s X Ltd, being a manufacturer, sold goods to M/s Y Ltd., wholesaler, and issued
invoice for the sale on 1-08-2018.

Find the time of supply of goods in each of the following independent cases:

1) M/s X Ltd., removes the goods for delivery to M/s Y Ltd., on 16th August 2018.
2) M/s Y Ltd., collects the goods from premises of M/s X Ltd., on 10th August 2018.
3) M/s Y Ltd. Made full payment on 26th July 2018.
4) M/s Y Ltd., credited the payment in bank account of M/s X Ltd., on 28th July 2018 for 3/4th of
goods, M/s X Ltd., recorded the same as receipts in his books on 3rd August 2018. The goods
were dispatched on 31st July 2018 from the warehouse.
 Ans : Time of supply on or after 15th November 2017 is as follows:

1) Time of supply = Date of Invoice – 1st August 2018.

2) Time of supply = Date of Invoice – 1st August 2018.
3) Time of supply = Date of Invoice – 1st August 2018.
4) Time of supply = Date of dispatch of goods (i.e. last date on which invoice might have been
issued) -31st July 2018.

Question 61: M/s Indian Oil Corporation entered into a contract with Mr. B to supply of oil
throughout the year. M/s Indian Oil Corporation issues monthly statement for the oil supplied to
Mr. B.

Determine the time of supply of goods in following independent cases:

(1) Mr. B made payment for the month of July on 31st July 2017 and M/s Indian Oil Corporation
issued statement for the month of July on 8th August 2017.
(2) M/s Indian Oil Corporation issued statement for the month of August on 5th September
2017, the payment of which not received till 30th September 2017.
Ans:
1) 31st July 2017 will be the time of supply.
Earliest of the following:
• Date of Invoice: 8th August 2017.
• Last date on which invoice has to be issued.
Date of payment (31-07-2017) or
Statement (08-08-2017), whichever is earlier i.e. 31st July 2017.
2) 5th September 2017 will be the time of supply.
Earliest of the following:
• Date of Invoice: 5th September 2017.
• Last date on which invoice has to be issued.
Date of payment (31-07-2017) or
Statement (05-09-2017), whichever is earlier i.e. 5th September 2017.

Question 62: BSNL regularly issues invoices to the customers on 10th of the following month from the
end of relevant month. An invoice has been issued for Rs. 100000 (exclusively of GST) on 10th October
2018 for the taxable services provided to a customer from 1st September 2018 to 30th September 2018.
However, payment received from the same customer for Rs. 100950 on 31Oct 2018.

Find the time of supply and due date of payment of GST only for the excess payment which is received
over and above invoice value.

Any invoice is required to issue for excess payment of Rs. 950 by BSNL?

Ans9: Time of supply for Rs. 950 = 10 November 2018

Due date of payment is 20 December 2018

Note: No need to issue any separate invoice in respect of such excess payment. Since, it is adjusted
against next invoice.

Question 63: On the basis of following information, determine the ‘Time of supply’ from the following: -

1 Commencement of providing of service on 05-06-2018

2 Completion of service on 10-10-2018
3 Invoice issued on 20-10-2018
4 Payment received by cheque and entered in 15-10-2018
the books on
5 Amount credited in Bank A/c on 25-10-2018
6 Service became taxable for the first time on 01-07-2018

Ans: Time of supply = 15-10-2018

Date of payment = book entry or bank entry whichever is earlier (i.e. 15-10-2018)

Date of invoice = 20-10-2018 (i.e. invoice issued within 30 days from the of completion of service)

Hence, date payment or date of invoice whichever is earlier is the time of supply.

Question 64: ABC & Co., a Chartered Accountants firm issued invoice for services rendered to Mr. Ram
on 5th August 2017. Determine the time of supply in following independent cases:

1) The provisions of services were completed on 1st July 2017.

2) The provisions of services were completed on 15th July 2017.
3) Mr. Ram made the payment on 3rd July 2017, where provisions of services were remaining to be
completed.
4) Mr. Ram made the payment on 15th August 2017, where provisions of services were remaining
to be completed.

Ans:

1) 1st July will be the time of supply of services as invoice is not is not issued within the time frame
of 30 days.
2) 5th August 2017 will be the time of supply of services as invoice is issued within the time frame.
3) 3rd July 2017 will be the time of supply of services as payment received before invoice date.
4) 5th August 2017 will be the time of supply of services as invoice is issued before the completion
of provisions of services.

Question 65: GK developers Limited (i.e. Developer) enters into an agreement with land owner Mr.
Nagarajan where Transfer Development Right (TDRs) of the land transferred but ownership in land
continues with the landowner (i.e. license to occupy land) on 31 st January, 2018. After entering to TDRs/
Joint Development Agreements, the flats meant for landowner and builder are identified and a
Supplementary Agreement (i.e. conveyance deed) is entered into for this purpose on 15th February,
2018. In pursuit of this agreement a total of 1000 residential units will be constructed by GK Developers
Limited on the land provided by Mr. Nagarajan, whereas 40% of the units shall be given to Mr.
Nagarajan.

Ans the following:

a) Transfer of TDRs is taxable supply? If so, who is liable to pay GST?

Find the time of supply for transfer of TDRs?
b) Whether GST is payable on the owner’s share of the flats/ house/portion of the building
constructed by the builder or developer given to the land owner as per development
agreement? If so, find the Time of Supply?
c) Find the time of supply for the consideration received by the builder from other buyers for
continuous supply of service?
d) Re-work, where TDRs of the land transferred permanently and irrevocably transferred by the
landowner to the developer (i.e. sale/transfer of land). If so, transfer of TDRs is taxable supply in
the hands of landowner?
Note: landowner both Developer and of them are registered persons under GST.

Ans:

a) As per Clause 2(a) of Schedule-2 of the CGST Act, 2017 read with Section 7 of the said Act merits
consideration. Under the said clause, any lease, tenancy, easement, license to occupy land being
a supply of service. Accordingly, GST is applicable on license to occupy land being a supply of
service.

In the given case it is supply of service. GST is liable to pay by the landowner (i.e. Mr. Nagarajan).

Time of supply= 15th February, 2018.

b) The builder/developer is liable to pay GST even on the share of the land owner and given in lieu
of the land received for the development, besides GST on the builder/ developer’s share of the
complex/building.
In the given transaction, the builder/developer receives consideration for the construction
service provided by him, from two categories of service receivers:
I. From land owner: in the form of land/ development rights; and
II. From other buyers: normally in cash.
c) Time of supply for continuous supply of service =
Where the payment is linked to the completion of an event: The time of completion of that
event;
d) As per Clause 5 of Schedule-3 of the CGST Act, 2017 read with section 7 of the said Act, under
the said clause, sale of land and, subject to clause (b) of paragraph 5 of schedule-2, sale of
building shall be treated neither as a supply of goods nor a supply of services.
 Accordingly, in the given GST is not applicable on the sale of land.

Question 66: Mr. A, a registered person received goods (i.e. Bidi leaves) from Mr. B, an unregistered
dealer. Mr. B issues invoice on 1st July 2017.

Find the time of supply of goods in following independent cases:

1) Mr. A received goods on 15th July 2017, payment of which is not made yet.
2) Mr. A received goods on 3rd August 2017 & made payment for the same on 4th August 2017.
3) Mr. A made payment on 8th July and received goods on the same date.
4) Mr. A received goods on 10th July 2017 & made payment for the same on 9th July 2017.

Ans:

1) Time of supply of goods =15-07-2017

Earliest of the following:
Receipt of Goods
Date of payment
Dt. immediately following 30
Days from the date of invoice = 01-08-2017
2) Time of supply of goods =01-08-2017
Earliest of the following:
Receipts of goods = 03-08-2017
Date of payment = 04-08-2017
Dt. immediately following 30
Days from the date of invoice= 01-08-2017
3) Time of supply of goods =08-07-2017
Earliest of the following:
Receipts of goods = 08-07-2017
Date of payment = 08-07-2017
Dt. immediately following 30
Days from the date of invoice= 01-08-2017
4) Time of supply of goods =09-07-2017
Earliest of the following:
Receipts of goods = 10-07-2017
Date of payment = 09-07-2017
Dt. immediately following 30
Days from the date of invoice= 01-08-2017

Question 67: C Ltd., a registered firm received services from a Raman & Co., an Advocate firm., an
unregistered person. The firm issued invoice to C Ltd. On 1st July 2017. Determine the time of supply of
services in the following independent cases:
 1) C Ltd. Made the payments to the firm on 15th August 2017.
2) C Ltd., made the payments to the firm on 11th September 2017.

Note: C Ltd turnover in the preceding financial year was Rs. 2 crores

Ans:

1) Time of supply of service= 15-08-2017

Note: as payment made earlier than the date immediately following 60 days from date of issue of
invoice.

2) Time of supply of service= 31-08-2017

Note: as payment made after the date immediately following 60 days from date of issue of invoice.

Question 68: X Ltd. (India) & Y Ltd. (London) is associated enterprises. X Ltd., a registered firm received
the services of Y Ltd., an unregistered firm. Determine the time of supply in following cases:

1) X Ltd., recorded the liability in the books on 15th July 2017 and payment will be made in the next
month.
2) X Ltd. Made advance payment to Y Ltd. on 10th July and recorded liability in the books on 15th
Aug 2017.

Ans:

1) Time of supply =15-07-2017

Note: as the date of entry in the books is prior to the date of payment.
2) Time of supply = 10-07-2017

Note: as the payment is made earlier to the date of entry in the books.

Question 69: Mr. A sent goods to Mr. B on approval basis on 20th January 2018.

Find the time of supply in the following independent cases:

a) If Mr. B accept the goods on 10th February 2018.

b) If Mr. B accepts the goods on 1st September 2018.
c) If Mr. B returns the goods on 10th February 2018.
d) If Mr. B return the goods on 1st September 2018.

Ans:

S. Particulars Time of supply Remarks

No.
1 If Mr. B accept the 10th February 2018 • Time when it becomes known
goods on 10th that supply is taken place (i.e.
 February 2018. 10th Feb 2018)
Or
Six months from the date of
removal (i.e. 20th July 2018)
Whichever is earlier
2 If Mr. B accepts 21st July 2018 1st day after expiry of 6 months from
the goods on 1st the date of removal.
September 2018.

3 If Mr. B returns Not applicable No tax will be payable. Since, goods

the goods on 10th returned within six months from the
September 2018. date of dispatch.
4 If Mr. B return the Mr. A Mr. B GST will be payable as the return is
goods on 1st st
21 July 2018 1 st after 6 months from date of dispatch.
September 2018. September Both Mr. A and Mr. B are liable to pay
2018 GST.
Question 70: Reliable Industries a readymade garment manufacturer issued the voucher on 10-07-2017
to their prospective customer for enabling them to buy readymade garments manufactured by them
from their shop.

Customer purchased readymade garments on 20th Aug 2017.

Find the time of supply of goods?

ANS: Time of supply of goods=10-07-2017

Note: time of supply will be issuance of the voucher. Since, the voucher is identifiable with the goods.

Question 71: Shopper’s stop stores a large retailer who sells various types of products like readymade
garment, jewellery, cosmetics, fabrics, shoes etc., issued the voucher on 10-07-2017 to their prospective
customer for enabling them to buy any product from their shop. Customer purchased readymade
garments on 20th august, 2017.

Find the time of supply of supply of goods?

Ans: Time of supply of goods = 20-08-2017

Note: Time of supply will be the date of encashment of voucher (i.e. Redemption of voucher). Since, the
voucher is not identifiable with any specific product.

Question 72: Reliable Industries a readymade garment manufacturer issued the voucher on 10-07-
2017 to their prospective customer for enabling them to buy readymade garments manufactured by
them from their shop. Customer purchased readymade garments on 20th Aug 2017.

Find the time of supply of goods?

Ans 19: Time of supply of goods= 10-07-2017

Note: Time of supply will be the date of encashment of voucher (i.e. Redemption of voucher). Since, the
voucher is not identifiable with any specific product.

Question 73: Mr. X being a supplier receives consideration in the month of September 2017, instead of
due date of July 2017, and for such delay he Is eligible to receive an interest amount of Rs. 1000/- and
the said amount is received on 15-12-2017.

Ans: The time of supply = 15-12-17

i.e. the date on which it is received by the supplier and

Due date of tax liability = 20-01-18.

Question 74: Mr. X is supplied goods to Mr. Y on 28thJanuary 2018. The GST rate on goods is changed
from 12% to 5% w.e.f. 1st January 2018. Mr. X issued invoice on 28th August 2017 and payment is
credited in his bank account on 30th December 2017.

1) What is the time of supply in this case?

2) Effective rate of GST?

Ans:

Time of supply = 28th August 2017

Effective rate of Tax= 12%

Question 75: Nature of transaction is supply of taxable goods:

Date of Invoice 20th November 2017

Date of supply of goods 25th November 2017
Date of receipt of payment 1st October 2017
GST rate prior to 15th November 2017 28%
GST rate on or after 15th November 2017 18%
Find the Time of Supply and effective rate of tax?

Ans:

Time of supply 20th November 2017

Effective rate of tax 18%
GST paid on advance @ 28%. However, the time of supply, according to section 14 of the CGST Act,
is the date of issue of invoice and effective rate of tax is 18%. Therefore, 10% additional tax paid can
either be adjusted against the balance payment of tax against that particular supply or claimed back
as refund.

Question 76: Nature of transaction is supply of taxable goods:

Date of invoice 25th November 2017

Date of supply of goods 20th November 2017
Date of receipt of payment 1st October 2017
GST rate prior to 15th November 2017 18%
GST rate on or after 15th November 2017 28%
Find the Time of supply and effective rate of tax?

Ans:

Time of supply 25th November 2017

Effective rate of tax 28%
GST paid on advance @ 18%. However, the time of supply, according to section 14 of the CGST Act,
is the date of issue of invoice and effective rate of tax is 28%. Therefore, 10% additional tax has to
pay either by utilizing electronic credit ledger or by electronic cash ledger.

Question 77: Nature of transaction is supply of taxable goods:

Date of invoice 20th October 2017

Date of supply of goods 15th October 2017
Date of receipt of payment 21st November 2017
GST rate prior to 15th November 2017 18%
GST rate on or after 15th November 2017 28%
Find the Time of supply and effective rate of tax?

Ans:

Time of supply 20th October 2017

Effective rate of tax 18%

Question 78: X Pvt. Ltd. engaged in providing taxable services by way of training and coaching activities
in relation of information Accounting and Auditing since, 1st July 2017 has the following details in respect
of that activity for the month of September, 2017:

Date of issuance invoice Date on which payment received Amount in Rs.

16-09-2017 03-10-2017 250000
20-10-2017 06-10-2017 25000
02-10-2017 30-09-2017 125000
The date of change in effective rate of tax in this case is 01-10-2017 from 12% to 18%. These services are
rendered in August 2017. Find the time of supply of service, effective rate of tax and due date of
payment of tax.

Ans:

Services Date of Date on Amount in Time of Effective Due date of

rendered issuance which Rs. supply of rate of tax payment
invoice payment service
 received
Aug 2017 16-09-2017 03-10-2017 250000 16-09-2017 12% 20-10-2017
Aug 2017 20-10-2017 06-10-2017 25000 06-10-2017 18% 20-11-2017
Aug 2017 02-10-2017 30-09-2017 125000 30-09-2017 12% 20-11-2017

Question 79: A machine has to be supplied at site. It is done by sourcing various components from
vendors and assembling the machine at site. The details of the various events are:

17th September Purchase order with advance of Rs. 50000 Is

received for goods worth Rs. 12 lakh and entry
duly made in the seller’s books of account.
20th October The machine is assembled, tested at site, and
accepted by the buyer
23rd October Invoice raised
th
4 November Balance payment of Rs. 1150000 received
Determine the time of supply(is) in the above scenario.

Note: Turnover for the year 2016-17 as per records of supplier is Rs. 218 lakhs.

Ans:

For Advance payment:

Time of supply = 17th September

For Balance payment:

Time of supply =20th October

Working note:

1) Sale taken place on 20th October

2) Invoice is issued on 23th October (however, last date to issue invoice is 20th October)
3) Balance amount paid on 4th November
Whichever is earlier.

Question 80: A machine has to be supplied at site. It is done by sourcing various components from
vendors and assembling the machine at site. The details of the various events are:

17th September Purchase order with advance of Rs. 25000 is received for goods worth
Rs. 10 lakh and entry duly made in the seller’s books of account.
th
20 October The machine is assembled, tested at site, and accepted by the buyer
23rd October Invoice raised
th
4 November Balance payment of Rs. 975000 received
Determine the time of supply(is) in the above scenario.

Note: Turnover for the year 2017-18 as per records of supplier is Rs. 218 lakhs.
Ans: Time of supply for the entire value of Rs. 10 lakhs = 20th October

Note: As per Section 31(1) (b) of the CGST Act, 2017 last date to issue invoice is 20th October.

Question 81: Gas is supplied by a pipeline. Monthly payments are made by the recipient as per
contract. Every quarter, invoice is issued by the supplier supported by a statement of the goods
dispatched and payments made, and the recipient has to pay the differential amount, if any. The details
of the various events are:

August 5, September 5, October 6 Payments of Rs. 2 lakhs made in each month

October 3 Statement of accounts issued by supplier, with
invoice for the quarter July- September
October 17 Differential payment of Rs. 56000 received by
supplier for the quarter July- September as per
statement of accounts
Determine the time of supply.

P.Y. turnover (2016-17) of the supplier is Rs. 200 lakhs.

Ans:

Time of supply for payments of Rs. 2 lakhs made in each month

• August 5,
• September 5,
• October 6

Time of supply for differential payment of Rs. 56000:

• October 3

Note:

1. Date of invoice for the quarter July to Sep = 3 October

2. Payment received in October 6, is belongs to Oct-Dec quarter, for which invoice is yet to issue.

Question 82: Determine the time of supply from the given information:

May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co.
May 12 Bridge & Co. receives the goods
May30 Bridge & Co. makes the payment
Ans: Time of supply= May 12

Working note:

1) Date of payment = May 30

2) 1st Day that occur after expiry of 30 days from date of invoice =June 4
 3) Date of receipt of goods = May 12
Whichever is earlier.

Question 83: Determine the time of supply from the given information:

May 4 Supplier invoices goods taxable on reverse

charge basis to pillar & Co.
June 12 Pillar & Co. receives the goods, which were held
up in transit
July 3 Pillar & Co. makes the payment
Ans: Time of supply = June 4

Working note:

1) Date of payment = July 3

2) 1st Day that occur after expiry of 30 days from date of invoice = June 4
3) Date of receipt of goods = June 12
Whichever is earlier.

Question 84: Determine the time of supply from the following particulars:

6 May Booking of convention hall, sum agreed Rs.

15000, advance of Rs. 3000 received

15th September Function held in convention hall

27th October Invoice issued for Rs. 15000, indicating balance

of 12000 payable

3rd November Balance payment of Rs. 12000 received

Ans: Time of supply for Rs. 3000= 6th may

Time of supply for the balance Rs. 12000= 15th September

Note: As per section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of
supply of service. In the given case, the invoice is not issued within the prescribed time limit. As per
section 13(2)(b), in a case where the invoice is not issued within the prescribed time, the time of supply
of service is the date of provision of service or receipt of payment, whichever is earlier.

Question 85: Determine the time of supply from the given information. (Assuming that service being
supplied is taxable under reverse charge)

May 4 The supplier of service issues invoice for service

provided. There is dispute about amount
 payable, and payment is delayed.

August 21 payment made to the supplier of service

Ans: Here, July 4 will be the time of supply, being the earliest of the two stipulated dates namely, date
of payment and date immediately following 60 days since issue of invoice.

Question 86: An income tax and money laundering case against Mr. X, working in a company, reveals a
large volume of undisclosed assets, which he claims as service income. On this basis, the GST authorities
investigate the GST liability. Dates of provision of service, whether in the first half or the second half of
the financial year being scrutinized by income tax authorities, are not known. Mr. X voluntarily pays GST
during the investigation.

What is the time of supply of the services?

Ans: Where it is not possible to determine the time of supply in terms of date of invoice or date of
provision of service or date of receipt of payment or date of receipt of services in the books of account
of the recipient, and where periodical return is not to be filed (Mr. X, being an employee in a company,
is not a registered person), the date of payment of tax is taken as the time of supply(section 13(5)(b)).

Therefore, the date when Mr. X pays the GST will be the time of supply.

Question 87: Royal Sweet Co., Delhi, a registered supplier, has furnished the details of the following few
transaction which took place in November, 20XX:

Assume the rates of taxes to be as under: -

S. NO. Date of payment Particulars Date of invoice Amount (Rs.)

1) 11-11-20XX Payment made to an 07-07-20XX 125000

advocate in Delhi

2) 20-11-20XX Paid sitting fee to Director 15-10-20XX 75000

from Haryana for meeting
held in Delhi on 15-10-
20XX (Inter-State supply)

Particulars Rate

CGST 9%

SGST 9%

IGST 18%

ANS:
Computation of GST payable for the month of November, 20XX

S.No. Particulars Time of CGST(Rs.) SGST(Rs.) IGST Interest

supply of (Rs.) (Rs.)
services

1) Services from an 6th Sep 20XX 11250 11250 NIL 677

advocate in Delhi

2) Director’s Sitting 20TH Nov NIL NIL 13500 Nil

fee 20XX

Interest = 22500 * 18% * 61/365 = Rs. 677/-

Due date of payment tax is 20th Oct 20XX.

No. of days delay

Oct 20XX 11 Days

Nov 20XX 30 Days

Dec 20XX 20 Days

Total No. of days delay 61 Days

Question 88: Sambhav Industries Ltd. (SIL) is an Indian Company. It has received taxable services from
a UK based company- George Ltd. on 1-1-2018. George Ltd. raised on SIL an invoice of £ 45000 on 27-1-
2018.SIL debited its books of accounts on 7/2/18 and made the payment on 25/3/2018

George Ltd. and SIL are associated enterprises.

Find the time of supply in the following independent cases:

a) George Ltd. and SIL are associated enterprises.

b) George Ltd. and SIL are non-associated enterprises.
c) George Ltd. and SIL are associated enterprises but both of them located in taxable territory

Ans:

a) Time of supply 07-02-2018

b) Time of supply 25-03-2018

c) Time of supply 27-01-2018

Question 89: Mr. M a registered person, provides the following information in respect of his regular
customer, Mr. S

Date Particulars Amount (Rs.)

01-10-2018 Supply of goods 35700

01-10-2018 Date of receipt 35700

18-10-2018 Receipt of payment 36000

Find the time supply for excess payment over and above invoice value.

Ans:

The time of supply in respect of the excess payment of Rs. 300 shall be at the option of Mr. M as follows:

Option 1: Time of supply = 01-11-2018 (i.e. Date of next invoice)

Option 2: Time of supply = 18-10-2018(i.e. Date of receipt of excess payment)

Question 90: Cell Two Ltd., a registered person, provides the following information in respect of its
regular customer, Mr. Piyush:

Date Particulars Amount (Rs.)

01-10-2018 Supply of service for the month 845

of September 2018

01-10-2018 Date of invoice 845

18-10-2018 Receipt of payment 1000

Find the time of supply for excess payment over and above invoice value.

Ans:

The time of supply at the option of the supplier:

Option 1: Time of supply in respect of the excess payment of Rs. 155 at the option of cell Two Ltd., shall
be 1-11-2018 (i.e. the date of the next monthly invoice) or

Option 2: Time of supply = 18-10-2018 (i.e. Date of receipt of excess payment).

Question 91: Determine the time of supply from the following particulars:
8th September Community hall booked for a marriage; sum agreed Rs. 120000, Advance
Rs. 20000 recorded in the books of account.

10th September Advance amount credit in bank account

2nd November Marriage held in community hall

18th December Invoice issued for Rs. 120000 indicating the balance of Rs. 100000
payables

22nd December Balance Rs. 100000 recorded in the books of account.

24th December Payment Rs. 100000 credit to the bank account

Ans:

Date of payment for advance = Bank entry or Book entry, whichever is earlier

Therefore, date of payment (for advance) in the given case= 8th September

Date of completion of service = 2nd November

(Invoice date not relevant. Since, it is issued after 30 days from the date of completion of service).

Date of payment for balance amount = Bank entry or Book entry, whichever is earlier

Therefore, date of payment (for balance) in the given case= 22nd December

Whichever is earlier

Time of supply for Advance of Rs. 20000 is 8th September

Time of supply for balance of Rs. 100000 is 2 nd November

 Input Tax Credit

Basic

Question 1: What is input tax?

Answer: Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union
territory tax (UTGST) charged on supply of goods or services or both made to a registered
person. It also includes tax paid on reverse charge basis and integrated goods and services tax
charged on import of goods. It does not include tax paid under composition levy. Sec 16:
Eligibility and Conditions for taking Input Tax Credit

Question 2: Whether capital goods can be considered as inputs? [ICAI]

Answer: No, 'Inputs' are defined under Section 2(59) of the CGST Act to mean any goods other
than capital goods used or intended to be used by a supplier in the course or furtherance of
business.
"Capital goods' are defined under Section 2(19) of the CGST Act to mean goods, the value of
which is capitalized in the books of account of the person claiming the input tax credit and
which are used or intended to be used in the course or furtherance of business.

Question 3: Whether Input tax credit on Inputs and Capital Goods is allowed in one
installment? [1CAI]

Answer:
Yes. Input tax credit will be available in full with respect to inputs and capital goods, subject to
fulfillment of the prescribed conditions under Section 16(2) of the CGST Act.
Even in the case of supply of goods in lots/ installments, the credit would be available in full on
the receipt of the last lot/ installment.

Question 4: What are the conditions necessary for obtaining ITC? [IPC MTP 2018]

Answer: Following four conditions are to be satisfied by the registered taxable person for
obtaining ITC:
(a) he is in possession of tax invoice or debit note or such other tax paying documents as
may be prescribed
 (b) he has received the goods or services or both
(c) the supplier has actually paid the tax charged in respect of the supply to the
Government; and
(d) he has furnished the return under section 39.

Question 5: One of the conditions to claim credit is that the receiver has received the goods. Is
there any provision for deemed receipt of goods in case of transfer of document of title before
or during the movement of goods? [ICAI]

Answer:
Yes. Explanation to Section 16(2)(b) of the CGST Act provides for deemed receipt of goods
where the goods are delivered by the supplier to the recipient or any other person on the
direction of the recipient, whether acting as agent or otherwise, before or during movement of
goods.

Question 6: In case the amount is paid partly to the supplier of service, whether full taxes can
be adjusted first? If no, then whether it has to be calculated proportionately? [ICAI]

Answer:
No, there is no provision under the GST law to allocate part payment of the invoice towards the
taxes first so that the input tax credit can be allowed. Second proviso to Section 16(2) of the
CGST Act clearly provides that the entire value of supply (with tax) is to be paid within 180 days
from the date of issue of invoice.
Therefore, as long as the entire payment is made within 180 days, the recipient would be
entitled to claim the credit in full, assuming that only part payment is made within 180 days,
availing of proportionate credit based on such part payment is not provided for under the CGST
Act.
However, Rule 37 of the CGST Rules provides for availability of the amount of input tax credit
availed of proportionate to such amount paid to the supplier.

Question 7: Can a person take ITC without payment of consideration for the supply along with
tax to the supplier?

Answer:
Yes, the recipient can take ITC. However, he is required to pay the consideration along with tax
within 180 days from the date of issue of invoice. This condition is not applicable where tax is
payable on reverse charge basis.
Question 8: What is the maximum time limit to claim the Input tax credit? [ICAI]

Answer: In terms of Section 16(4) of the CGST Act, a registered person is not entitled to claim
input tax credit in respect of any supply of goods or services after the earlier of following two
events:

(a) Due Date of filing of the return under Section 39 of the Act for the month of September
following the end of financial year to which such invoice or invoice relating to such debit
note pertains, i.e. 20th October;
(b) Furnishing of the annual return. In terms of Section 44, the due date of filing annual
return is 31st December following the end of the financial year.
However, in cases of credit in special circumstances like new registration, voluntary
registration, etc. the credit will not be available after the expiry of one year from the
date of issue of tax invoice.

Question 9: Whether the registered person can avail the benefits of input tax credit and
depreciation on the tax component of capital goods and plant and machinery?

Answer:
No,
Section 16(3) provides that input tax credit will not be allowed on the tax component of cost of
capital goods/ plant and machinery, if the depreciation on the said tax component is claimed
under the provision of Income Tax Act, 1961 by the taxable person. Therefore, the registered
person has an option to either claim depreciation (under the Income Tax Act, 1961) or claim
credit under the GST law, on the said tax component.
For example: Cost of Asset= Rs.1, 000/- Tax = Rs.100/- Total = Rs.1, 100/-
If depreciation charged on Rs.1, 000/- then credit will be available under the GST law and if
depreciation is charged on Rs.1, 100/- then credit will not be available.

Sec 16(2) (b)-Deemed receipt of goods/Bill to ship to model

Question 10: One of the conditions to claim credit is that the receiver has received the goods.
Is there any provision for deemed receipt of goods in case of transfer of document of title
before or during the movement of goods? would your answer will be different in case supply of
service?
Answer:

Explanation to Section 16(2) (b) of the CGST Act provides for deemed receipt of goods or
services as the case may be,

1) Where the goods are delivered by the supplier to the recipient or any other person on
the direction of the recipient, whether acting as agent or otherwise, before or during
movement of goods.
2) Where the services are provided by supplier on the direction of and on account of such
registered person.
No, answer will be the same as above stated

Question 11: Will a person get the input tax credit if he has not actually received the services
but has been received by some other person on the direction of that person?

Answer: As per Explanation (ii) in Section 16(2) (b) of the CGST Act 2017, it has been stated that
the registered person will be deemed to have received the services where these services have
been provided by the supplier to any person on the direction of and on account of such
registered person.

[Transfer before moment]

Question 12: A is a trader who places an order on B for a consignment of soda ash. A receives a
buying order from C for the same quantity of soda ash. A instructs B to deliver the goods to C,
and in turn he raises an invoice on C. Determine whether input tax credit will be available?
(ICAI)

Answer:
Legal Provision:- As per explanation to sec 16(2)(b) of the CGST Act provides for deemed
receipt of goods or as the case may be service i) where the goods are delivered by the supplier
to the recipient or any other person on the direction of the recipient, whether acting as agent
or otherwise, before or during movement of goods, ii) Where the service are provided by
supplier to any person on the direction of and an account of such registered person.
Conclusion:- As per the above stated provision, The person taking the ITC must have received
the goods and / or services. In the given case though the goods are not physically received at
the premises of Mr. A, the condition of section 16(2) (b) is satisfied, Thus Mr. A is entitled to ITC
on the consignment.

Question 13: A technical testing agency tests and certifies each batch of machine tools before
dispatch by BMT Ltd. Some of these tools are dispatched to a unit in a SEZ without payment of
GST as these supplies are not taxable. The finance personnel of BMT Ltd. want to know whether
they need to carry out reversal of ITC on the testing agency's services to the extent attributable
to the SEZ supplies. Give your comments

Answer:
Under section 16(2) of the 1GST Act, credit of input tax is allowed to be taken for inward
supplies used to make zero rated supplies. Under section 17 of the CGST Act also, ITC is
disallowed only to the extent it pertains to supplies used for non-business purposes or supplies
other than taxable and zero-rated supplies. Supplies to SEZ units are zero rated supplies in
terms of section 16(1) of IGST Act. Thus, full ITC is allowed on inward supplies of BMT Ltd. used
for effecting supplies to the unit in the SEZ.

Section 17 -Apportionment of credit and blocked credits

Question 14: If certain goods/ services are used partly for business and partly for non-business
purposes, will the credits be allowed in full or proportionately?

Answer:
The credit on goods/ services used partly for business and partly for non- business purposes will
be allowed proportionately to the extent it is attributable for business purposes. The manner of
calculation of such credit is provided in Rule 42(1) of the CGST Rules, 2017.

Question 15: Credit attributable to exempt supplies is not available to a registered person.
What are the supplies that are included in exempt supplies?

Answer:

As per sec 2(47) of CGST Act, "exempt supply" means supply of any goods or services or both
which attracts nil rate of tax or which may be wholly exempt from tax under section II, or under
section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply.
'Exempt Supplies' for this purposes means all supplies other than taxable and zero rated
supplies and specifically include the following:
 ✓ Supplies liable to tax under reverse charge mechanism;
✓ Transactions in securities;
✓ Sale of land;
✓ subject to clause (b) of paragraph 5 of Schedule II, sale of building.

Explanation : - For the purposes of this sec, the expression "value of exempt supply", shall not
include the value of activities or transactions specified in Schedule III, except those specified in
Para 5 of the said Schedule.

Important explanation:-For determining the value of an exempt supply as referred to in section

17(3) –
(a) the value of land and building shall be taken as the same as adopted for the purpose of
paying stamp duty; and
(b) the value of security shall be taken as one per cent. of the sale value of such security.

Question 16: A garment factory receives a Government order for making uniforms for a
commando unit. This supply is exempt from tax under a special notification. The fabric is
separately procured for the supply, but thread and lining material for the collars are the ones
which are used for other taxable products of the factory. The turnover of the other products of
the factory and exempted uniforms in July is Rs.4crore and Rs.1crore respectively, the ITC on
thread and lining material procured in July Rs.5, 000 and Rs.15, 000 respectively.
Calculate the eligible ITC on thread and lining material.

Answer:
Thread and lining material are inputs which are used for making taxable as well as exempt
supplies. Therefore, credit on such items will be apportioned and credit attributable to exempt
supplies will be added to the output tax liability in terms of rule 43 of the CGST Rules, 2017.
Credit attributable to exempt supplies = Common credit * (Exempt turnover / Total Turnover)
Common credit =Rs.15,000 + Rs.5,000 = Rs.20,000
Exempt turnover = Rs.1crore
Total turnover = Rs.5crore [Rs.1crore + Rs.4crore]
Credit attributable to exempt supplies = [Rs.1crore/ Rs.5crore]" Rs.20,000 = Rs.4,000
Ineligible credit of 4,000 will be added to the output tax liability for the month of July. Credit of
Rs.16, 000 will be eligible credit for the month of July.

Sec 17(5) - Blocked Credit

Question 17: Whether input tax paid on Motor vehicle and other conveyances which is used
for courier agency, outdoor catering, pandal and shamiana and tour operator is eligible?

Answer:
The restriction of input tax credit on motor vehicles provided under Section 17 (5) is on such
motor vehicles except when they are used for further supply of vehicles transportation of
passengers, imparting training or for transportation of goods, As refer in clause (a)& (aa) of sec
17(5).
Therefore, input tax credit will be available when it is used by courier agency, outdoor catering,
pandal and shamiana and tour operator as it covers use of vehicles for transportation of goods/
transportation of passengers.
Generally, motor vehicle is used for transportation of goods in case of courier agency, pandal,
shamiyana.

Question 18: SRS Cars Pvt. Ltd, a car manufacturer, purchased a tempo Traveler (Seating
capacity of I5 persons) for the transport of its employees within the factory premises. Can SRS
Cars Pvt. Ltd. avail ITC on such purchase?
Will your answer differ if seating capacity on tempo traveler is 10 persons.

Answer:

As per sec 17 (5)(a) of CGST Act, Motor vehicle for transportation of persons having approved
seating capacity of not more than 13 persons (including the driver), except when they are used
for making the following taxable supplies namely :

a) Transportation of passengers or
b) Further supply of such motor vehicles or
c) Imparting training on driving, such motor vehicles

Thus in a given case, SRS Car Pvt. Ltd. will be able to availed the ITC as tempo have sitting
capacity more than 13 Yes, if seating capacity of tempo travel is 10 person in this case SRS Car
Pvt. Ltd. is not able to availed ITC.

Question 19: Mr. Veer paid tax on repairs, maintenance and insurance of Motor Vehicles for
transportation of persons used for the purpose of business is eligible for ITC?

Answer:
As per section 17(5) (ab) the input tax credit is blocked on the repairs, maintenance and general
insurance of those motor vehicles on which input tax credit is blocked under Section 17(5) (a) of
the CGST Act 2017. So, input tax credit on repairing, maintenance and insurance of motor
vehicles for transportation of persons carrying not more than 13 persons will be blocked under
Section 17(5) provided it is not used for exceptional situations viz. transportation of passengers,
further supply and imparting training on driving. Therefore in given case Mr. Veer is not eligible
for ITC.

Question 20: Can Vsmart Ltd. claim ITC on a truck used for transportation of goods? Also
comment whether repairing, maintenance and insurance of such vehicles will be allowable as
credit?

Answer:
As per section 17(5) Input tax credit is not blocked on any motor vehicles for transportation for
goods. Also, any expenses in the form of repairs, maintenance and general insurance of motor
vehicles credit of which is not blocked under Section 17(5) (a) of the CGST Act 2017 will be
allowable as input tax credit under GST. So, it should be allowed as input tax credit to Vsmart
Ltd.

Question 21: Whether ITC is available in respect of dumpers, work- trucks, fork-lift trucks and
other special purpose motor vehicles?

Answer:
ITC non-availability in case of motor vehicles restricted to only those meant for transportation
of persons having approved capacity of not more than 13 persons (including the driver) except
when used for specified purposes. Further, the words 'other conveyances' have been removed
from the ambit of blocked credit. Hence, input tax credit would be available in respect of
dumpers, work-trucks, fork-lift trucks and other special purpose motor vehicles. (As per
amendment made in CGST Act, 2018)

Question 22: Mr. A has two branches one in Mumbai (MH) and another in Goa. Mr. A purchase
a vessel for transportation of goods between two branches as a cheapest sources for
transportation. Whether Mr. A eligible for Input Tax Credit paid on vessel?

Answer:
As per section 17(5)(aa) of 1GST Act, 2018 vessel & aircraft except when they are used i) for
making the following taxable supplies namely –
A) Further supply of such vessels or aircraft or
B) Transportation of passengers or
 C) Imparting training on navigation such vessel
D) Imparting training on flying such aircraft ii) for transportation of goods Therefore by
referring the above provision Mr. A will be eligible for ITC.

Question 23: A flying school imports an aircraft for use in its training activity, and takes ITC of
the IGST paid on the import. The departmental audit raises an objection that aircrafts fall within
the definition of "conveyance" in section 2(34) of the Act and that ITC is not allowed on
conveyances. Offer your comments.

Answer:
Under section 17(5)(aa) (i) of the CGST Act, ITC is allowed on aircraft if they are used to make
the taxable supply of imparting training on flying an aircraft. Therefore, the credit is correctly
taken.

Question 24: A taxable person is in the business of information technology. He buys a motor
vehicle for use of his Executive Directors. Can he avail the ITC in respect of GST paid on
purchase of such motor vehicle?

Answer:
No. As per section 17(5)(a), ITC on motor vehicles can be availed only if the taxable person is in
the business of transport of passengers or is providing the services of imparting training on
driving/flying/navigating motor vehicles or is in the business of supply of motor vehicles.
Note: Assumed that the seating capacity is not more than 13 persons.

Sec 17(5) (b)

Question 25: Whether benefit of input tax credit would be available if the company procures
health insurance services for benefit of its employees. Procurement of such services is
mandatory under Factories Act.

Answer:
Yes, Section 17(5) (b) of the CGST Act provides that tax paid w.r.t rent a cab services, life/
health insurance services will be eligible as input tax credit where the Government notifies that
such services are obligatory for an employer to provide to its employees under any law for the
time being in force.
Question 26: What are the conditions to avail the input tax credit on Rent a cab, life Insurance,
Health Insurance?

Answer:
Tax paid w.r.t rent a cab services, life/ health insurance services will be eligible as input tax
credit subject to the following condition that
• Such services are used by a registered person for making an outward taxable supply of
the same category of goods or services or both or as part of a taxable composite or
mixed supply.

Sec 17(5) (c)

Question 27: What do you mean by 'Plant and Machinery'?

Answer:
The expression "plant and machinery" has been defined in Explanation to Section 17 for the
purpose of Chapter V or VI of the CGST Act. It means apparatus, equipment, and machinery
fixed to earth by foundation or structural support that are used for making outward supply of
goods or services or both and includes such foundation and structural supports but excludes-
(i) land, building or any other civil structures;
(ii) Telecommunication towers; and
(iii) Pipelines laid outside the factory premises.

Sec 17(5) (g)

Question 28: Whether Input tax credit is available in respect of Input tax paid on use of mobile
phones/laptops as given to employees?

Answer:
Yes. The mobile phones/ laptops would be covered under the definition of 'inputs' as they are
used in the course/ furtherance of business and hence, the input tax paid on such goods will be
available as input tax credit. If not used for personal consumption

Sec 17(5) (h)

Question 29: Whether input tax credit will be available on taxable goods which are given by
way of gift or free samples under the sales promotion?

Answer:
No. Section 17(5) (h) specifically restricts input tax credit on goods disposed of by way of gift or
free samples.

Question 30: Determine the eligibility of Input tax credit for the following cases as per sec
17(5) of CGST Act:-

a) Aspire Ltd is a registered person engaged passenger transport services, It purchased two
motor vehicles for Rs.25, 00,000 plus GST @ 28% for its business as on 10.10.2017.
Determine whether Aspire Ltd can avail the benefit of Input tax credit of the GST paid by
it on motor vehicles.
b) MC Ltd. conducted its 25th Annual General Meeting at its head office in Bangalore and
availed services of Swadh Caterers for the occasion. Swadh caterers charged Rs.4,5
0,000 plus GST @ 18% for supply of outdoor catering services. Determine whether MC
Ltd. can avail Input Tax credit of GST paid on outdoor catering service.
c) Nirmitee Pvt. Ltd. is engaged in supply of works contract services. It gives a part of the
construction work to a sub-contractor. The sub-contractor charges GST in his invoice to
Nirmitee Pvt. Ltd. determine the eligibility of input tax credit benefit available to
Nirmitee Pvt. Ltd.
d) A taxable person is in business of information technology. He buys a motor vehicle for
use of his Executive Directors. Can he avail the ITC in respect of GST paid on purchase of
such motor vehicle?

Answer:

a) As per section 17(5)(a), Motor vehicle for transportation of persons having approved
seating capacity of not more than 13 persons (including the driver), except when they
are used for making the following taxable supplies namely:
a) Transportation of passengers or
b) Further supply of such motor vehicles or
c) Imparting training on driving, such motor vehicles

as in the given case Aspire Ltd is engaged in transportation of passengers it will be

entitled to take credit of GST amounting to Rs.7,00,000 i.e. {Rs.25,00,000 *28%}
 b) As per section 17(5)(b), input tax credit shall not be available in respect of supply of
outdoor catering service. Thus, MC Ltd is not entitled to avail Input tax credit of GST
paid on outdoor catering services availed from Swadh caterers.
c) As per section 17(5)(c), Input tax credit shall not be available in respect of works
contract services when supplied for construction of an immovable property (other than
plant and machinery) except where it is an input service for further supply of works
contract service. Thus the given case falls under the exception criteria as the services are
supplied by a sub-contractor can avail the benefit of ITC.
d) No. ITC on motor vehicles can be availed only if the taxable person is in the business of
transport of passengers or goods or is providing the services of imparting training on
motor vehicles.

Question 31: ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the
following items during the month of July. (ICAI)

S. No. Items GST paid

i. Electrical transformers to be used in the manufacturing process 5,20,000
Ii. Trucks used for the transport of raw material 1,00,000
iii. Raw material 2,00,000
iv. Confectionery items for consumption of employees working in the 25,000
factory

Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving
necessary explanations for treatment of various items.
Note:
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) ABC Co. Ltd. is not eligible for any threshold exemption.

Answer:
Computation of ITC available with ABC Co. Ltd, for the month of July
S. No. Items GST paid (rs.)
i. Electrical transformers [Being goods used in the course or 5, 20,000
furtherance of business, ITC thereon is available in terms of
section 16(1)]
ii. Trucks used for the transport of raw material [Though ITC on 1, 00,000
motor vehicles has been specifically disallowed under section
I17(5)(aa), ITC on motor vehicles used for transportation of
goods is allowed under section 17(5)(aa) (ii)]

iii. Raw material [Being goods used in the course or furtherance of 2,00,000
business, ITC thereon is available in terms of section 16(1)]
iv. Confectionery items for consumption of employees working in Nil
the factory [ITC on food or beverages is specifically disallowed
unless the same is used iv for making outward taxable supply of
the same category or as an element of the taxable composite or
mixed supply-Section 17(5) (b) (i)]
Total ITC 8, 20,000

Question 32: Mr. X, a supplier of goods, pays GST under regular scheme. Mr. X is not eligible
for any threshold exemption. He has made the following outward taxable supplies in a tax
period:

Particulars (rs.)
Intra-State supply of goods 8,00,000
Intra-State supply of goods 3,00,000 He has also furnished the following information in
respect of purchases made by him in that tax perio

Particulars (rs.)
Intra-State purchases of 3,00,000
goods
Intra-State purchases of 50,000
goods Mr. X has following ITCS with him at the beginning
of the tax period:

Particulars (rs.)
CGST 30,000
SGST 30,000
IGST 70,000
Note:
(i) Rate of CGST, SGST and 1GST to be 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. X during the tax period. Make suitable assumptions as
required.

Answer: Computation of total ITC

Particulars CGST @ 9% SGST @9% (rs.) IGST @ 18%

(rs.) (rs.)
Opening ITC 30,000 30,000 70,000
Add: ITC on Intra-State purchases of 27,000 27,000 Nil
taxable goods valuing Rs.5,00,000
ITC on Inter State purchases of goods Nil Nil 9, 000
valuing Rs.50,000
Total ITC 57,000 57,000 79,000

Computation of GST payable by Mr. X on outward supplies

Sr. Particulars Value of CGST 9% SGST 9% IGST

No. Supply 18%
1 Intra-State supply of goods 8, 00,000 72, 000 72, 000 -
2 Intra-State supply of goods 3, 00, 000 - - 54, 000
Total GST payable - 72, 000 72, 000 54, 000
3 Less : ITC (Note 1) (57, 000)- (25, 000) 2- (54, 000)
CGST IGST 1 -IGST
Net GST payable 15,000 Nil Nil

Note:- ITC of IIGST has been utilised completely against liability of IGST 1st and then balance
has been utilised against liability of SGST in any order as per rule 88A & circular clarification
regarding this.

Question 33: Shine Ltd. a registered manufacturer is engaged in taxable supply of goods. It
procured the following goods during the October, 2017. Determine the amount of Input Tax
credit available by giving necessary explanation for treatment of various supplies of goods.

Answer:
SI. No Description of goods Input tax paid (rs.)
1 Laptop for factory unit 40, 000
2 Tempo carriage for movement of inputs used in 1, 75, 000
manufacture
3 Inputs used in construction of unit building of factory 36, 000
4 Goods used for purpose other than business 27, 000
5 Capital goods used for making outward supplies to SEZ 52, 000
unit

Computation of Input Tax.credit available to Shine Itd:-

SI. No Description of goods Input tax paid (rs.)

1 Laptop for factory unit [WN-1] 40, 000
2 Tempo carriage for movement of inputs used in 1, 75, 000
manufacture [WN-2]
3 Inputs used in construction of unit building of factory Nil
[WN-3]
4 Goods used for purpose other than business [WN-4] Nil
5 Capital goods used for making outward supplies to SEZ 52, 000
unit [WN-5]
Total Input tax credit available 2, 67, 000

Notes:

1) As per sec 17(1), Input tax credit is available for goods used in course or furtherance of
business and in the given case as laptop is used for the purpose of business thus eligible
for credit.
2) As per section 17(5)(aa) clause (ii), Input tax credit is available of input tax paid on
Motor vehicles and other conveyances when they are used for transportation of goods.
Since, here, the truck is used for transportation of goods hence, input tax credit shall be
allowed on same.
3) As per section 17(5)(d), Input tax credit shall not be available in respect of goods or
services or both received by a taxable person for construction of an immovable property
on his own account including when such goods or services are used in course or
furtherance of business. However, credit to the extent of capitalization to the said
immovable property is disallowed.
 4) As per section 17(5)(g), No input tax credit shall be available if goods are used for
personal consumption.
5) Input tax credit of tax paid on capital goods used for making taxable supplies including
zero rated supply shall be admissible. Supplies made to SEZ developer or SEZ unit is
covered in Zero rated supplies. So, credit of such tax will be admissible.

Question 34: Smart Pvt. Ltd. in respect of various inputs purchased during the month of
August, 2017 pertaining to which following information is provided determines the amount of
input tax credit admissible to Smart Pvt. Ltd.

Particulars CGST & SGST (rs.)

Exide battery units purchased against a tax invoice issued by Exide 54,000
Ltd. Smart Pvt. Ltd. has made payment to Exide Ltd. for such
purchases in the month of Sept 2017.
Spare parts purchased invoice is missing 42,000
Auto parts purchased for personal consumption 75,000
Purchased spare parts from Aksa Ltd. (Invoice of Aksa Ltd. is received 57,000
in month of August 2017, but goods were received in month of Sept
2017).
Goods purchased from Asha Ltd payment against which is made by 86,500
Smart Pvt. Ltd. to Asha Ltd. but tax has not been deposited by Asha
Ltd.

Answer:

S. No. Particulars CGST & SGST

(rs.)
Exide battery units purchased against a tax invoice issued by 54,000
Exide Ltd. Smart Pvt. Ltd. has made payment to Exide Ltd. for
such purchases in the month of Sept 2017. [WN-1]
Spare parts purchased invoice is missing [WN-1] -
Auto parts purchased for personal consumption [WN-2] -
Purchased spare parts from Aksa Ltd. (Invoice of Aksa Ltd. is -
received in month of August 2017, but goods were received in
month of Sept 2017). [WN-3]
 Goods purchased from Asha Ltd payment against which is made -
by Smart Pvt. Ltd to Asha Ltd. but tax has not been deposited by
Asha Ltd. [WN-4]
Total admissible Input tax credit for the month of August 54,000

Note:-

1) As per section 16(2) (a) of CGST Act, A registered person shall be eligible to avail input
tax credit if he is in possession of a tax invoice or debit note issued by a supplier
registered under this Act, or such other tax paying documents as prescribed in Rule 36
of CGST Rules. Thus ITC is available only when there is a valid invoice.
2) As per section 17(5) (g) of CGST Act, goods or services or both used for personal
consumption i.e. other than business purpose than input tax credit benefit shall not be
available on such goods.
3) As per section 16 (2) (b) of CGST Act, A registered person shall be eligible to avail input
tax credit if he has received the goods or services or both.
4) As per section 16(2)(c) of CGST Act, The tax charged in respect of such supply has been
actually paid to the Government either in cash or through utilization of input tax credit.

Section 18- Switching of Credit

New Registration / Voluntary Registration

Question 35: Whether input tax credit can be availed on input services and capital goods (lying
in stock) when there is application for new registration or during voluntary registration under
section 18?

Answer:
No. In case of new registrations and voluntary registrations, input tax credit can be availed only
on the stock held (inputs, semi-finished goods or finished goods) preceding the day when he is
liable to pay tax or preceding to the date of grant of voluntary registration. Therefore, Input
service and capital goods lying in stock shall not be eligible for ITC.

Compulsory Registration

Question 36: What is the difference between the availment of credit in case of Compulsory
Registration and Voluntary Registration?
Answer:
In case of compulsory registration, the input tax credit can be availed on the stocks held
immediately preceding the date from which he becomes liable to pay tax (date of grant of
registration may be later) and in case of voluntary registration, the input tax credit can be
availed on the stocks held immediately preceding the date of grant of registration.

Composition to Regular scheme

Question 37: In case of change of scheme from composition scheme to Regular scheme
whether input tax credit on capital goods is eligible.

Answer:

Yes. In such a scenario, the registered person will be entitled to claim input tax credit on the
stock held (inputs, semi-finished goods or finished goods) and on the capital goods preceeding
the day when he is liable to pay tax under the regular scheme. The credit of capital goods shall
stand reduced by five percentage points for every quarter or part thereof from the date of the
issue of the invoice for such goods.

Exempt supply becomes taxable

Question 38: When an exempt supply becomes taxable supply then in such case credit on
inputs and capital goods exclusively used for such exempted supply is eligible? What about
input tax credit pertaining to capital goods used for both taxable and exempt supply?

Answer:
In terms of Section 18(1) (d) of the Act, where an exempt supply made by a registered person
becomes taxable supply, such a person will be entitled to claim credit of tax paid on stock held
(inputs, semi-finished goods or finished goods) relatable to exempt supply and on the capital
goods exclusively used for exempt supply preceding the day when the supply becomes taxable.
The credit of capital goods shall, however, stand reduced by 5 percentage points for every
quarter or part thereof from the date of the issue of the invoice for such goods. However, tax
paid on capital goods used for both, taxable and exempt supply will not be eligible as input tax
credit.

Question 39: a registered person who had taken ITC on such capital goods?
Answer:
In case of supply of capital goods or plant and machinery on which What is the tax implication
of supply of capital goods by ITC has been taken, the registered person shall pay an amount
equal to the ITC taken on the said capital goods or plant and machinery reduced by 5% per
quarter or part thereof from the date of invoice or the tax on the transaction value of such
capital goods, whichever is higher. However, in case of refractory bricks, moulds and dies, jigs
and fixtures when these are supplied as scrap, the person can pay tax on the transaction value.

Question 40: What happens where the details of inward supplies furnished by the recipient do
not match with the outward supply details furnished by the supplier in his valid return?

Answer:
In case of mismatch, the communication is made to the both the parties. If the mismatch is not
rectified, then the amount will be added to the output tax liability of recipient in the return for
the month succeeding the month in which discrepancy is communicated.

Question 41: Mr. A, a registered person was paying tax under Composition Scheme up to 30th
July. However, w.e.f. 31st July, Mr. A becomes liable to pay tax under regular scheme. Is he
eligible for ITC?

Answer:
Mr. A is eligible for ITC on inputs held in stock and inputs contained in semi- finished or finished
goods held in stock and capital goods as on 30th July. ITC on capital goods will be reduced by
S% per quarter or part thereof from the date of invoice [Section 18(1) (c)].

Question 42: How is the valuation of exempt supply done for the purpose of this chapter?

Answer:

For determining the value of an exempt supply as referred to in section 17(3)-

(a) the value of land and building shall be taken as the same as adopted for the purpose of
paying stamp duty; and
(b) the value of security shall be taken as one per cent. of the sale value of such security.

Questions from MTP and RTP of ICAI

Question 43: Ramoplast Soap Factory, a registered supplier, is engaged in manufacturing
beauty soaps - 'Forever Glow' in Mumbai. It has provided the following information pertaining
to purchases made/services availed in the month of January, 20XX: (MTP)

Particulars GST paid (rs.)

Soap making Machine 50,000
Motor vehicles for transportation of inputs 70,000
Membership of "Fit and Fine" health and fitness center for its 25,000
employees
Inputs purchased, but stolen from the factory 40,000

You are required to compute the input tax credit (ITC) available with Ramoplast Soap Factory
for the month of January, 20XX assuming that all the other conditions for availing ITC, wherever
applicable, have been fulfilled. (RTP)

Answer: Computation of ITC available with Ramoplast Soap Factory

Particulars Amount (rs.)

Soap making machine [ITC in respect of goods used in 50,000
course/furtherance of business is available in terms of section 16
of the CGST Act]
Motor vehicles for transportation of inputs [ITC in respect of 70,000
motor vehicles and conveyances is blocked, except when used,
inter alia, for transportation of goods, in terms of section
17(5)(aa) (ii) of the CGST Act]

Membership of "Fit and Fine' health and fitness centre for its Nil
employees [ITC in respect of membership of a club, health and
fitness centre is blocked in terms of section 17(5) of the CGST
Act]
Inputs stolen from the factory [ITC in respect of goods stolen is Nil
blocked in terms of section 17(5) of the CGST Act]
Total ITC Available 1, 20,000

Question 44: Govind, a registered supplier, is engaged in providing services in the neighboring
States from his registered office located in Mumbai. He has furnished the following details in
respect of the inward and outward supplies made during a tax period: - (RTP)
Particulars Rs.
Inter-State supply of service 1, 80,000
Receipt of goods and services within the state 1, 00,000

Assume the rates of taxes to be as under:-

Particulars Rate
CGST 9%
SGST 9%
IGST 18%

Note:

i) Both inward and outward supplies are exclusive of taxes, wherever applicable
ii) All the conditions necessary for availing the input tax credit have been fulfilled.

Compute the net GST payable by Govind during the given tax period. Make suitable
assumptions it required.

Answer: Computation of net GST payable by Govind

Particulars Rs.
IGST @ 18% payable on inter-State supply services [Being an inter- 32,400
State supply, IGST is payable on the same in terms of section S of [1,80,000 x 18%]
the IGST Act, 2017]
Less: ITC of CGST @ 9% paid on intra-State receipt of goods and 9,000
services
[Cross utilisation of CGST towards IGST] [1, 00,000 x 9%]
Less: ITC of SGST @ 9% paid on intra-State receipt of goods and 9,000
Services [1, 00,000 x 9%]
Net GST payable in Cash 14,400

Note:

1. CGST shall first be utilised towards payment of CGST and the amount remaining, if any,
be utilised towards the payment of IGST [Section 49 of the CGST Act, 20171.
2. SGST shall first be utilised towards payment of SGST and the amount remaining, if any,
may be utilised towards the payment of IGST [Section 49 of the CGST Act, 2017).
Question 45: Shipra Traders is a registered supplier of goods is Assam. It purchased value at
10,000 from Kartik Suppliers located within the same State. Kartik Suppliers charged CGST &
SGST separately in its invoice. Subsequently, Shipra Traders sold goods valuing 9,500 to Rabina
Manufactures located in Assam. 20% if the input purchased are still lying in stock and there was
no opening stock of goods. Rate of CGST and SGST on supply and purchase of goods is 9% each.
Calculate the net GST payable by Shipra Traders and input tax credit (ITC) to be carried forward,
if any- (RTP)

Answer: Computation of net payable by Shipra Traders

Particulars Value of CGST 9% (rs.) SGST 9% (rs.)

Supply (rs.)
GST payable on intra-State supply of goods 9,500 855 855
[being an intra-State supply, CGST and SGST is
payable on the same]
Less: ITC on intra-State purchase of goods 10,000 900 900
[ITC of CGST and SGST paid on intra - state
purchase is available in ful, even if some
inputs are lying in stock]
Net GST Payable Nil Nil
Input tax credit carried forward in Electronic 45 45
Credit Ledger

Question 46: Granite Textiles Ltd. purchases a needle detecting machine on 8th July, 2017 from
Makhija Engineering Works Ltd. for Rs.10, 00,000 (excluding GST) paying GST @ 18% on the
same. If availed the ITC of the GST paid on the machine and started using it for manufacture of
goods. The machine was sold on 22nd October 2018 for Rs.7, 50,000 (excluding GST), as second
hand machine to LT, Pvt. Ltd. The GST rate on supply of machine is 18% State the action which
Granite Textile Ltd. is required to take, if any, accordance with the statutory GST provisions on
the sale of the second - hand machine. (RTP)

Answer:

As per Sec 18 of the CGST Act, 2017 read with the CGST Rules, 2017 provides that if capital
goods or plant and machinery on which input tax credit has been taken are supplied outward by
the registered person, he must pay an amount that is the higher of the following:
 (a) input tax credit taken on such goods reduced by 5% per quarter of a year or part thereof
from the date of issue of invoice for such goods (i.e., input tax credit pertaining to
remaining useful life of the capital goods), or (b) tax on transaction value.
(b) As per sec 2 (92) "quarter" shall mean a period comprising three consecutive calendar
months, ending on the last day of March, June, September and December of a calendar
year; Accordingly, the amount payable on supply of needle detecting machine shall be
computed as follows:

Particulars Rs. Rs.

Input tax credit taken on the machine (10,00,000 x 18%) 1,80,000
Less: Input tax credit to be reversed @ 5% per quarter for the period 54,000
of use of machine

1) For the year 2017-18 = (Rs.1,80,000 x 5%) x 2 quarter 18,000

ii) For the year 2018-19 = ( 1,80,000 x 5%) x 4 quarter 36,000
Amount required to be paid (A) 1, 26,000
Duty leviable on transaction value ( Rs.7,50,000 x 18%) (B) 1, 35,000
Amount payable towards disposal of machine is higher of (A) and (B) 1, 35,000

Question 47: LMN & Co, an unregistered supplier under GST wants to claim input tax credit
and collect tax. Can it do so? (Practice Question)

Answer:
No, LMN & Co. cannot claim input tax credit and collect tax. A person without GST registration
can neither collect GST from his customers nor can claim any input tax credit of GST paid by
him. However, if LMN & Co. nevertheless wants to claim input tax credit and collect tax, it can
apply for voluntary registration under section 25(3) of CGST Act, 2017.

Question 48: Bharat Associates Pvt. Ltd. purchased machinery worth Rs.9, 00,000 (excluding
GST) on 20-07-2017 on which it paid GST @ 18% and availed the ITC. On 05-03-2018, it sold the
machinery for Rs.7, 00,000 (excluding GST) to Hindustan Associates Pvt. Ltd. The GST rate on
sale is 18%. What will be the course of action for Bharat Associates Pvt. Ltd. to follow under
CGST Act, 2017?

Answer:
If capital goods or plant and machinery on which input tax credit (ITC) has been taken are
supplied outward by a registered person, he must pay an amount that is higher of the
following:

(a) ITC taken on such goods reduced by 5% per quarter of a year or part thereof from the
date of issue of invoice for such goods or
(b) tax on transaction value. Accordingly, the amount payable on supply of machinery by
Bharat Associates Pvt. Ltd. shall be computed as follows:

Particulars Rs.
ITC taken in the machinery (Rs.9, 00,000 x 18%) 1,62,000
Less: ITC pertaining to the period of usage of the capital goods = (Rs.1,62,000 24,300
x 5%) x 3 quarters
Amount of reduced ITC based on percentage points (A) 1, 37,700
Duty leviable on transaction value ( Rs.7,00,000 x 18%) (B) 1, 26,000
Amount payable towards disposal of machinery is higher of (A) and (B) 1, 37,700

**Note:
In the above solution, amount of ITC to be paid (amount of reduced ITC based on percentage
points) has been computed on the basis of provisions of rule 40(2) of the CGST Rules, 2017 [ITC
reduced by 5% for every quarter or part thereof from the date of the issue of invoice].
However, the said amount can also be computed on the basis of provisions of rule 44(6) of the
CGST Rules, 2017 [ITC of remaining useful life in months computed on pro rata basis, taking the
useful life as 5 years].

Question 49: M/s. Shri Durga Corporation Pvt. Ltd. is a supplier of goods and services at
Kolkata. It has furnished the following information for the month of February, 20XX:

Particulars Amount
1 Intra-State sale of taxable goods including Rs.1,00,000 received as 4,00,000
advance in January, 20XX, the invoice for the entire sale value is issued
on 15th February, 20XX
2 Goods purchased from unregistered dealer on 20th February, 20XX 1, 00,000
(Inter-State purchases are worth Rs.30,000 and balance purchases are
intra-State)
3 Services provided by way of labour contracts for repairing a single 1, 00,000
residential unit otherwise than as a part of residential complex (It is an
intra-State transaction)
4 Goods transport services received from a GTA. GTA is paying tax 2,00,000
@12% (It is an inter-State transaction)

Compute net GST liability (CGST, SGST or 1GST, as the case may be) of M/s Shri Durga
Corporation Pvt. Ltd. for the month of February, 20XX. Assume the rates of GST, unless
otherwise specified, as under:
CGST 9%
SGST 9%
IGST 18%
Note:-
(1) The turnover of M/s. Shri Durga Corporation Pvt. Ltd. was Rs.2.5 crore in the previous
financial year.
(2) All the amounts given above are exclusive of taxes.

Answer: Computation of GST liability of M/s. Shri Durga Corporation Pvt. Ltd. for the month of
February, 20XX

Particulars Value of CGST SGST IGST

Supply
Intra -State sale of taxable goods [Note-1] 4,00,000 36,000 36,000
Goods purchased from unregistered dealer Nil Nil Nil
20th on February, 20XX [Note-2]
Services rendered by way of labour 1,00,000 9,000 9,000
contracts for repairing a single residential
unit otherwise than as a part of residential
complex [Note-3]
Goods transport services received from 2, 00,000 24,000
GTA [Note-4]
Total GST liability for the month of February, 45,000 45,000 Nil
2OXX
Less: Input tax credit available [Note-5] (24,000
(Rs.2, 00,000 x 12%) )-IGST
Net GST liability for the month of February, 21,000 45,000 Nil
20XX
Notes:

1. Section 12 of CGST Act, 2017 read with Notification No. 66/2017 CT dated 1S.11.2017
provides that the time of supply for all suppliers of goods (excluding composition
suppliers) is the time of issue of invoice, without any turnover limit.
Thus, liability to pay tax on the advance received in January, 20XX will also arise in the
month of February, when the invoice for the supply is issued.
2. All intra-State and inter-State procurements made by a registered person- from
unregistered person have been exempted from reverse charge liability, without any
upper limit for daily procurements up to 30,09.2019", However this notification of
extension has been cancelled in order to bring in effect of amendment act.
3. Services by way of pure labour contracts of construction, erection, commissioning, or
installation of original works pertaining to a single residential unit otherwise than as a
part of a residential complex are exempt vide Notification No. 12/2017 CT dated
28.06.2017, Labour contracts for repairing are thus, taxable.
4. As per Notification No. 13/2017 CT(R) dated28.06.2017, GST is payable by the recipient
on reverse charge basis on the receipt of services of transportation of goods by road
from a goods transport agency (GTA) provided such GTA has not paid GST @ 12%. Since
in the given case, services have been received from a GTA who has paid GST @ 12%,
reverse charge provisions will not be applicable.
5. Input tax credit is available for the services received from GTA. The input tax credit of
1GST can be used against 1GST, CGST and SGST in any order as per recent clarification
via circular provided the credit of IGST is completely utilised against IGST first. However
in the given question there is no 1GST liability & thus completely used the ITC of IGST
against CGST.

Question 50: Cloud Seven Private Limited, a registered supplier, is engaged in the manufacture
of taxable goods. The company provides the following information pertaining to GST paid on
the purchases made/input services availed by it during the month of February, 20XX;

Sr. No. Particulars Amount (rs.)

1 Trucks used for the transport of raw material 1,20,000
2 Foods and beverages for consumption of employees working 40,000
in the factory
3 Inputs are to be received in five lots, out of which third lot was 80,000
received during the month
4 Membership of a club availed for employees working in the 1,50,000
 factory
5 Capital goods (out of five items, invoice for one item was 4,00,000
missing and GST paid on that item was Rs.50,000)
6 Raw material (to be received in March, 20XX) 1,50,000

Determine the amount of input tax credit available with Cloud Seven Private Limited for the
month of February, 20XX by giving necessary explanations for treatment of various items. All
the conditions necessary for availing the input tax credit have been fulfilled.

Answer:

Computation of input tax credit (ITC) available with Cloud Seven Private Limited for the month
of February, 20XX

Amount (rs.)
Trucks used for the transport of raw material [Note-1] 1,20,000
Foods and beverages for consumption of employees working in the Nil
factory INote-2]
Inputs are to be received in five lots, out of which third lot was received Nil
during the month [Note-3]
Membership of a club availed for employees working in the Nil factory 50,000
[Note-4] Capital goods (out of five items, invoice for one item was 3,
missing and GST paid on that item was Rs.50,000) [Note-5]
Raw material to be received in March, 20XX [Note-6] Nil
Total ITC 4, 70,000

Notes:-

1. ITC on motor vehicles is disallowed in terms of section 17(5) of the CGST Act, 2017,
except when they are used inter alia, for transportation of goods.
2. ITC on food or beverages is specifically disallowed unless the same is used for making
outward taxable supply of the same .category or as an element of the taxable
.composite or mixed supply- [Section 17(5)].
3. When inputs are received in installments, ITC can be availed only on receipt of last
installment- [Section 16(2)].
4. Membership of a club is specifically disallowed under section 17(5) of the CGST Act,
2017.
 5. ITC cannot be taken on missing invoice. The registered person should have the invoice in
its possession to claim ITC [Section 16(2) of CGST Act, 2017].
6. Input tax credit is available only upon the receipt of goods in terms of section 16(2) of
CGST Act, 2017.

Question 51: Explain the meaning of the term "input tax" under section 2(62) of CGST Act,
2017.

Answer:

As per section 2(62) of CGST Act, 2017, "input tax" in relation to a registered person, means the
central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or
services or both made to him and includes-

(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-section (3) and (4) of section 5 of the IGST
Act;
(d) the tax payable under the provisions of sub-section (3) and sub-section (4) of section 9
of the respective SGST Act; or
(e) the tax payable under the provisions of sub-section (3) and sub-section (4) of section 7
of the UTGST Act,
but does not include the tax paid under the composition levy.

Question 52: Shridhar Co. Ltd., a registered supplier, is engaged in the manufacture of heavy
machinery. It procured the following items during the month of March.

Sr. No. Particulars GST Paid

1 Sweets for consumption of employees working in the factory 50,000
2 Raw material 1,00,000
3 Trucks used for the transport of raw material 2,00,000
4 Electrical transformers to be used in the manufacturing 4,00,000
process
Determine the amount of input tax credit available with Shridhar Co. Ltd., for the month of
March by giving necessary explanations for treatment of various items.
Note: All the conditions necessary for availing the input tax credit have been fulfilled. (CA IPC
MTP 2018)

Answer:

Sr. No. Particulars GST Paid

1 Sweets for consumption of employees working in the factory -
[Note-1]
2 Raw material [Note-2] 1, 00,000
3 Trucks used for the transport of raw material [Note-3] 2,00,000
4 Electrical transformers [Note-4] 4, 00,000
Total ITC 7,00,000

Notes:-

1. ITC on food or beverages is specifically disallowed unless the same is used for making
outward taxable supply of the same category or as an element of the taxable composite
oar mixed supply-Section 17(5)(b)(i).
2. Being goods used in the course or furtherance of business, ITC thereon is available in
terms of section 16(1)
3. Though ITC on motor vehicles has been specifically disallowed under section 17(5)(a),
ITC on motor vehicles used for transportation of goods is allowed under section
17(5)(aa)Cii).
4. Being gaods used in the course or furtherance of business, ITC thereon is available in
terms of section 16(1).

Question 53: Radiance Soap Factory, a registered supplier, is engaged in manufacturing beauty
soaps - "Glow 24x7' in Mumbai. It has provided the following information pertaining to
purchases made/services availed in the month of January, 2018: (CA IPC MTP 2018)

Particulars GST Paid (rs.)

Soap making machine 50,000
Motor vehicles for transportation of inputs 70,000
Membership of "Amaze" health and fitness centre for 25,000
its employees
Inputs purchased, but stolen from the factory 40,000

You are required to compute the input tax credit (ITC) available with Radiance Soap Factory for
the month of January, 2018 assuming that all the other conditions for availing ITC, wherever
applicable, have been fulfilled.

Answer:

Particulars GST Paid (rs.)

Soap making machine [Note-1] 50,000
Motor vehicles for transportation of inputs [Note-2] 70,000
Membership of "Amaze" health and fitness centre for Nil
its employees [Note-3]
Inputs purchased, but stolen from the factory [Note-4] Nil
Total ITC available 1,20,000

Notes:-

1. ITC in respect of goods used in course/furtherance of business is available in terms of

section 16 of the CGST Act.
2. ITC in respect of motor vehicles and conveyances is blocked, except when used, inter
alia, for transportation of goods, in terms of section 17(5) of the CGST Act.
3. ITC in respect of membership of a club, health and fitness centre is blocked in terms of
section 17(5) of the CGST Act.
4. ITC in respect of goods stolen is blocked in terms of section 17(5) of the CGST Act.

Question 54: Mr. Ekaant, a supplier registered in Delhi, is engaged in the business of sale and
purchase of plastic raincoats. He furnishes the following information pertaining to
inward/outward supply made by him for the month of July, 20XX:
Particulars Amount (rs. in lakh)
Value of inter-State outward supply to registered persons 30
Value of inter-State outward supply to registered persons 50
Value of inter-State outward supply to Unregistered persons 15
Value of inter-State inward supply to registered persons 10
Value of inter-State inward supply to registered persons 5
Value of inter-State inward supply to Unregistered persons 2

Following additional information is also provided by Mr. Ekaant:-

Particulars Amount (rs. in lakh)

IGST credit on capital goods purchased in the month of July 1.5
CGST/ SGST Credit on other inward supplies including credi t of 0.5
Rs.5,000 (CGST and SGST each) on account of membership of a club] (CGST & SGST
each)

Availed consultancy services from Mr. Sujit, lawyer located in Delhi 1

[Intra-State services]

The amount of ITC brought forward in the month of July, 20XX is as under:-
CGST: Rs.2 lakh
SGST: Rs.2 lakh
IGST: Rs.5 lakh
Calculate the net GST liability (CGST and SGST or IGST, as the case may be) to be paid in cash for
the month of July, 20XX by assuming the rates of GST as under:
CGST 9% SGST 9% IGST 18%
Note:
(i) All the amounts given above are exclusive of taxes.
(ii) All the conditions necessary for availing the ITC have been fulfilled. (CAL RTP May 19
New)

Answer:

Note 1:- Computation of net GST liability of Mr. Ekaant

Particulars Value Rs. CGST (rs.) SGST (rs.) IGST (rs.)

Total tax liability Value of intra- 1, 00,000 9,000 9,000 -
State legal consultancy inward
supplies liable to services i.e.
reverse charge mechanism (to
be paid in cash) (A) [Note-1]
Value of inter-State outward 30, 00,000 - - 5,40,000
supplies (BI)
Value of intra-State outward 65,00,000 5,85,000 5,85,000 -
supplies to registered as well as
unregistered persons (B2)
(Rs.50,00,000+ Rs.15,00,000)
Total (B) = (BI) +(B2) [GST 5,85,000 5,85,000 5,40,000
Payable]
Input tax Credit
Brought forward ITC 2,00,000 2,00,000 5,00,000
Value of intra-State inward 10,00,000 90,000 90,000
supplies from registered person
[Note-2]
Value of inter-State inward 5,00,000 - - 90,000
supplies person [Note-2]
Value of intra-State inward from 2,00,000
registered supplies from
unregistered person [Note-3]
IGST credit of capital goods 1,50,000
[Note-2]
Credit on other inward supplies 45,000 45,000 -
purchased in the month of July
less credit on membership of a
club [Note- 2 & 4]
Credit of legal consultancy 9,000 9,000
services [Note-2]
Total (c) 3,44,000 3,44,000 7,40,000

Computation of GST Payable

Particulars CGST (rs.) SGST (rs.) IGST (rs.)

Total GST Payable [Note 1] 5, 85, 000 5, 85, 000 5, 40, 000
Less: ITC (2, 00, (3, 44, 000) - (5, 40, 000)
000) 2- SGST 1-IGST
IGST
(3, 44, - -
 000) -
CGST
Net GST Payable 41, 000 2, 41, 000 Nil
Add: Tax payable under Reverse charge 9, 000 9, 000 -
Total GST payable 50, 000 2, 50, 000 Nil

Notes:-

1. Services supplied by an individual advocate to any business entity located in the taxable
territory by way of legal services, directly or indirectly are taxable under reverse charge
mechanism. Thus, tax is payable by the recipient (Mr. Ekaant) on said services to the
Government.
Further, as per section 49(4) of the CGST Act, 2017, amount available in the electronic
credit ledger [ITC amount] may be used for making payment towards output tax.
However, tax payable under reverse charge is not an output tax in terms of section 2(82)
of the CGST Act, 2017. Therefore, tax payable under reverse charge cannot be set off
against the input tax credit and thus, will have to be paid in cash.
2. Every registered person is entitled to take credit of input tax charged on any inward
supply of goods and/or services which are used or intended to be used in the course or
furtherance of his business in terms of section 16 of CGST Act, 2017.
Further "input tax" in relation to a registered person includes the tax payable under
reverse charge mechanism in terms of section 2(62) of the CGST Act, 2017.
3. Intra-State supplies received by a registered person from any unregistered supplier, are
exempt from the whole of the central tax leviable thereon under section 9(4) till
30.09.2019 [Notification No.8/2017 CT (R) dated 28.06.2017]. Since no tax has been
paid, so no credit is available. However this notification has been cancelled.
4. Input tax credit is not allowed in respect of membership of a club in terms of section
17(5) of CGST Act, 2017.
5. Input tax credit of 1GST has been used to pay IGST first and balance can be used against
CGST or SGST in any manner as per rule 88A read with circular for manner of utilisation
in that order.

Question 55: Le Marc Ltd. of Nashik, Maharashtra, a registered supplier, is engaged in

manufacturing taxable goods. It provides the following details of items purchased and services
availed by it from Gujarat, for the month of March, 20XX:
S. No. Particulars Value (Rs.)
1 Motor vehicle purchased for employees to be used for 1, 50,000
personal as well as business purposes
2 Motor vehicle purchased for transportation of goods within 2, 00,000
the factory
3 Food items for consumption of employees. These items were 2,000
supplied free of cost to the employees in lieu of services
rendered by them to the manufacturer in the course of
employment.
4 Rent-a-cab facility availed for employees to fulfill a statutory 36,000
obligation in this regard.

Calculate the amount of eligible input tax credit for the month of March,- 20XX. (CAI RTP May
19 New)

Answer: Computation of eligible input tax credit

S. No. Particulars Value (Rs.)

1 Motor vehicle purchased for employees to be used for -
personal as well as business purposes [Note-1]
2 Motor vehicle purchased for transportation of goods within 2,00,000
the factory [Note-1]
3 Food items for consumption of employees [Note-2] -
4 Rent a-cab facility given to employees [Note-3] 36,000
Total eligible input tax credit 2, 36,000

Notes:-

As per section 17(5) of the CGST Act, 2017:

1. ITC on motor vehicles and other conveyances is blocked except when they are used- (ii)
Sec 17(5) (aa) (ii) for transportation of goods.
Thus, in the given case, ITC on motor vehicle purchased for transportation of goods
within the factory will only be allowed
2. ITC in respect of food and beverages is blocked unless the same is used for making
outward taxable supply of the same category or as an element of the taxable composite
or mixed supply. Thus, in the given case, ITC of taxes paid on food for employees is not
allowed.
 3. ITC on supply of rent-a cab services is eligible for ITC as it is obligatory for an employer
to provide such facility to its employees. Thus as per the proviso to sec 17(5) (b) this
credit is allowed.

Question 56: CANWIN Ltd., a registered supplier, is engaged in the manufacture of Tanks. The
company provides the following information pertaining to GST paid on the purchases
made/input services availed by it during the month of January 2018:

Sr. No. Particulars Value (rs.)

1 Purchase of Machinery where debit note is issued 1, 15,000
2 Input purchased was directly delivered to Mr. Joe, a job worker 80,000
and a registered supplier
3 Computers purchased (Depreciation was claimed on the said GST 50,000
portion under the Income-Tax Act, 1961)
4 Works Contract services availed for construction of Staff quarters 4, 25,000
within the company premises

Determine the amount of ITC available to M/s. CANWIN Ltd. for the month of January 2018 by
giving brief explanations for treatment of various items. Subject to the information given above,
all the conditions necessary for availing the ITC have been fulfilled. (ICAI Suggested Nov 18)

Answer: Computation of input tax credit (ITC) available with CANWIN Ltd. for the month of
January 2018

Particulars Value (rs.)

Purchase of machinery where debit note is issued [Note-1] 1,15,000
Inputs directly delivered to a job worker supported by a valid document 80,000
Computers [Note-2] Nil
Works contract services availed for construction of staff quarters within the Nil
company premises [Note-3]
Total ITC 1, 95,000

Notes:-

1. Input tax credit on goods purchased on the basis of debit note which is a valid document
is allowed.
 2. Where depreciation has been claimed on the tax component of the cost of capital goods
and plant and machinery under the provisions of the Income- tax Act, 1961, the input
tax credit on the said tax component is not allowed.
3. Input tax credit on works contract services supplied for construction of an immovable
property is specifically disallowed except where it is an input service for further supply
of works contract service.

Question 57: M/s J & Co. Chartered Accountants, a partnership firm, having its registered and
head office in Mumbai and registered under the GST Act in the State of Maharashtra only. It
does not have any branches in other State. The gross receipts of the firm in the Financial Year
2017- 18 were Rs.60 lakh. Firm has submitted following information for the month of August,
2018:

Particulars Amount (excluding

GST)
Professional services provided and bills raised during the month for 1,00,000
providing services of ITR filing and income tax consultancy
Internal Audit of X Pvt. Ltd. at their office in Mumbai (registered in the 50,000
State of Maharashtra)
Statutory audit services provided to M/s Tirupati Trading Pvt. Ltd. at 70,000
Ahmedabad (registered in the State of Gujarat)

Firm has also furnished following information in respect of input services availed from
registered dealers for providing output services during the month August, 2018;

Particulars Amount (rs.) CGST SGST IGST

(Excluding GST)
Services availed from courier agency 5,000 450 450 Nil
Railway travelling expenses from 12,000 Nil Nil 600
Mumbai to Ahmedabad and Return
Ticket for conducting of audit of M/s
Tirupati Trading Pvt. Ltd. for 3 Tier AC
Service availed from another 20,000 1,800 1,800 Nil
professional firm at Mumbai amount is
paid without TDS u/s 1943 of Income
Tax Act
Notes:

(i) Rate of CGST, SGST and 1GST to be 9%, 9% & 18% respectively, on outward supplies.
(ii) All the conditions necessary for availing the ITC have been fulfilled.
(iii) Opening balance of available input tax credit is Nil for CGST, SGST and IGST.

Compute the net GST payable by M/s I & Co. for the month August, 2018 after adjusting the
GST credit. Brief reasoning should form part of your answer. (CA Inter Nov 18 Old)

Answer: Computation of net GST payable by M/s J &Co. for the month of August, 2018

S. No. Particulars CGST SGST (rs.) IGST (rs.)

(rs.)
1 Professional services and services of ITR filing 9,000 9,000 -
and IT consultancy Rs.1, 00,000]
2 Internal audit services [Rs.50,000] 4,500 4,500 -
3 Statutory audit services [Rs.70,000] - - 12,600
4 Total GST 13, 500 13, 500 12, 600
5 Less: ITC (Refer working note) 2, 250 2, 250 600
Net GST Payable 11, 250 11, 250 12, 000

Working note: Computation of ITC available for set-off

S. No. Particulars CGST SGST (rs.) IGST (rs.)

(rs.)
1 ITC on courier service [rs.5,000] 450 450 -
2 ITC on railway travelling expenses for - - 600
conducting of audit of M/s Tripati Pvt. Ltd.
[Rs.12, 000]
3 ITC on services availed from another 1, 800 1, 800 -
professional firm at Mumbai [Rs.20, 000]
Total ITC 2, 250 2, 250 600

Note: Services availed from professional firm at Mumbai being as intra state supply CGST &
SGST has been charged.
Question 58: Harshgeet Pvt. Ltd, a registered supplier, is engaged in the manufacture of taxable
goods. The company provides the following information pertaining to GST paid on the
purchases made/input services availed by it during the month of July, 2018:

S. No. Particulars GST Paid

1 Raw Material (to be received in September, 2018) 2, 50,000
2 Membership of a club availed for employees working in the 1, 45,000
factory
3 Inputs to be received in 5 lots, out of which 3rd lot was received 80,000
during the month
4 Trucks used for transport of raw material 40,000
5 Capital goods (out of 3 items, invoice for 2 items is missing and 1,50,000
GST paid on that item is Rs.80,000)

Determine the amount of tax credit available with Harshgeet Pvt. Ltd. for the month of July,
2018 by giving the necessary explanation for treatment of various items. All the conditions
necessary for availing the ITC have been fulfilled. (CA Inter Suggested Nov 18 Old)

Answer: Computation of ITC available with Harshgeet Pvt. Ltd. for the month of July, 2018

Particulars GST Paid

Raw Material [ITC not available as raw material is not received in July, Nil
2018]
Membership of a club availed for employees working in the factory Nil
[Blocked credit in terms of section 17(5) of the CGST Act, 2017]
Inputs to be received in 5 lots, out of which 3rd lot was received during Nil
the month [In case of goods received in lots, ITC can be taken only upon
receipt of the last lot]
Trucks used for transport of raw material [ITC of GST paid on motor 40,000
vehicles is allowed only when used, inter alia, for transportation of goods
in terms of section 17(5) of the CGST Act, 2017]
Capital goods [ITC of GST paid on items for which invoice is missing is not 70,000
available. So, ITC of Rs.80,000 is not available]
Total ITC available 1, 10,000
Question 59: M/s. Comfortable (P) Ltd. is registered under GST in Chennai, Tamil Nadu. It is
engaged in the manufacture of iron and steel products. It has carried out following transactions
in the financial year 20XX-XY:-
(a) Purchased 1,000 Metric Ton (MT) iron @ 1,000 per MT (excluding GST) from M/s. Hard
Ltd. of Chennai. M/s. Hard Ltd. has fulfilled the order as follows:
Date Quantity (MT) Taxable Value
28-Feb-20XY 200 2, 00,000
10-Mar-20XY 250 2, 50,000
25-Mar-20XY 250 2, 50,000
28-Mar-20XY 200 2, 00,000

Balance order requirement has been fulfilled by Hard Ltd. on 5-Apr-20XY. However, Hard Ltd.
has raised the invoice for full order at the time of dispatch of first lot, i.e. on 28-Feb-20XY. M/s.
Comfortable (P) Ltd. has made the full payment on 28-Feb-20XY for the order.
(b) Company has received IT engineering service from M/s. Dynamic Info-tech (P) Ltd. of
Chennai for Rs.11,00,000/- (excluding GST) on 28- Oct-20XX. Invoice for service
rendered was issued on 5-Nov- 20XX. M/s Comfortable (P) Ltd. made part-payment of
Rs.4, 13,000/- on 31-Dec- 20XX. Being unhappy with service provided by M/s Dynamic
Info-tech (P) Ltd., it did not make the balance payment. Deficiency in service rendered
was made good by M/s Dynamic Info-tech (P) Ltd. by 15-Feb-20XY. M/s. Comfortable (P)
Ltd. made payment of Rs.2, 95,000/- on 15-Feb-20XY towards full and final settlement
of the dues and did not pay the balance amount.
(c) Company has made the following intra State supplies (excluding GST) for the financial
year 20XX-XY:-

S. No. Particulars Amount (Rs.)

1 Value of intra-State supplies made to registered 10, 00,000
persons
2 Value of intra-State supplies made to unregistered 2, 00,000
persons

(i) Compute the GST liability (CGST, SGST or IGST, as the case may be) of M/s.
Comfortable (P) Ltd. for the financial year 20XX-XY:-
(ii) Compute the amount of input tax credit to be reversed in the FY 20XX- XY and/or in
the next FY 20XY-Y2, if any.
Assume the rates of GST as under:
CGST 9% SGST 9% IGST 18%
Note:
(i) All the conditions necessary for availing input tax credit have been fulfilled.
(ii) Ignore interest, if any (CA Inter MTP Mar 19)

Answer: i) Computation of net GST payable for the financial year 20XX-XY

Particulars Value (rs.) CGST (rs.) SGST (rs.)

Tax liability
Intra-State supplies made to registered persons 10,00,000 90,000 90,000
Intra-State supplies made to unregistered persons 2,00,000 18,000 18,000
Total (A) 1,08,000 1,08,000
Input Tax credit
Supply of iron in lots by M/s Hard Limited [Note-1] 10,00,000 - -
Supply of IT engineering service [Note-2] 11,00,000 99,000 99,000
Total (B) 99,000 99,000
Net GST payable (A)-(B) 9,000 9,000

Notes:-

1. Section 16 of CGST Act, 2017 provides that where the goods against an invoice are
received in lots or installments, the registered person shall be entitled to take credit
upon receipt of the last lot or installment. Although 900 tonnes of iron are received in
financial year 20XX-XY, the last lot of iron has been received after FY 20XX-XY only, i.e.
on 5, April 20XY, thus no input tax credit is available in FY 20XX-XY.
In view of above provisions, full input tax credit in respect of transaction (a) will be
claimed in financial year 20XY-20Y2 i.e. on receipt of last installment.
2. Section 16 of CGST Act, 2017 inter alia provides that every registered person is entitled
to take credit of input tax charged on supply of services to him which are used in the
course of business on receipt of the said services.

Thus, in view of the above mentioned provisions full input tax credit of Rs.1, 98,000/- can be
claimed in financial year 20XX-XY.

(ii) Section 16 of CGST Act, 2017 provides that where a recipient fails to pay to the supplier of
goods or services or both, other than the supplies on which tax is payable on reverse charge
basis, the amount towards the value of supply along with tax payable thereon within a period
of 180 days from the date of issue of invoice by the supplier, an amount equal to the input tax
credit availed by the recipient shall be added to his output tax liability, along with interest
thereon, in the prescribed manner

However, the recipient shall be entitled to avail of the credit of input tax on payment made by
him of the amount towards the value of supply of goods or services or both along with tax
payable thereon.

Since the full amount of value along with tax payable thereon has not been paid by M/s
Comfortable (P) Ltd. to M/s Dynamic Info tech (P) Ltd within a period of 180 days from the date
of issue of invoice, the proportionate amount of input tax credit availed needs to be reversed.
However, the reversal will be done in the financial year 20XY-YZ during when the time period of
180 days expire.

Input tax credit to be reversed in Financial Year 20XY-YZ

Particulars Amount (Rs.)

Total value of procurement of IT engineering service 11,00,000
Add: Total GST on the above value @ 18%[CGST + SGST] 1,98,000
Value including GST 12, 98, 000
Amount paid for the said service including GST [Rs.4, 13, 000 + Rs.2, 95, 7, 08, 000
000]
Amount [value along with tax payable thereon] not paid for the said 5, 90, 000
service
ITC to be reversed [Rs.5, 90,000 × 18/118] 90, 000

Apportionment of credit (ICAI Study Material)

Question 60: Eezee Footwears is a registered person having its place of business in Mumbai, is
engaged in manufacture of two varieties of Hawai slippers and five varieties of other sandals
and shoes of which Hawai slippers are exempted. Dyes are used in the manufacture of all
footwear however, bright pink is used only for one of the Hawai varieties, and black is used only
for the sandals and shoes. Blue and yellow are used for all the varieties. Brown is used for non-
business purposes & black is used for taxable purpose. Compute the amount of common credit
available to Eezee footwears Manufac Co. from the following
In formation inward supplies during the month –
Input tax on brown dye: Rs.10, 000
Input tax on bright pink dye: Rs.90, 000
Input tax on black dye: Rs.40, 000.
Input tax on blue dye: Rs.1, 00,000
Input tax on yellow dye: Rs.15, 000

Answer: As per sec 17 read with rule 42 the amount of common credit i.e.
C2 shall be computed as follows

Particulars Amount in rs.

Total input tax involved on inputs & input services in a tax T 2,55,000
period (10,000+ Rs.90,000 + Rs.40,000+ Rs.1,00,000 +
Rs.15,000)
Less: Input tax on inputs & input services that are intended (T1) 10,000
to be used exclusively for non-business purposes (Brown
Dye)

Less: Input tax on inputs & input services that are intended (T2) 90, 000
to be used exclusively for exempt supplies (Bright Pink Dye)
Less: Input tax on inputs & input services which are (T3) -
ineligible for credit [blocked credits]
ITC credited to Electronic Credit Ledger C1 1,55,000
Less: ITC on inputs & input services that are intended to be (T4) 40, 000
used exclusively for taxable supplies including zero rated
supplies
Common ITC available for apportionment C2 1, 15,000

Question 61: Keeping the facts of above question same compute the amount of common
credit to be apportioned towards exempt supplies by Ezee footwears manufacturing co. based
on following information relating to turnover of footwears is as follows –
Turnover of Hawai 1 plus Hawai 2: Rs.3crores (This is 'E')
Turnover of all varieties of taxable shoes and sandals: Rs.2crore
Total turnover of all footwear during the month: Rs.5crores (This is 'F')

Answer:
As per rule 42, Computation of credit attributable to exempt supplies (ineligible credit) by
apportionment of common credit
D1 = (E/F) x C2
Apportion C2 into-credit attributable to exempt supplies DI as under:

D1= (E/F) x C2
Where,
E = Aggregate value of exempt supplies-during the tax period
F = Total turnover in the State during the tax period
Note - If the registered person does not have any turnover during the said tax period, or the
above information is not available, the values for the last tax period may be used.
Thus, for the above case value of D1 is as below - Aggregate value of exempt supplies during
the tax period i.e. of Hawai i.e. E = Rs.3crores
Total turnover in the State during the tax period i.e. F = Rs.5Crores
Common ITC available for apportionment i.e. C2 = Rs.1, 15,000
Therefore D1 = (3, 00, 00,000 /5, 00, 00,000) x 1,15,000= Rs.69,000
Amount of Rs.69, 000 shall be the input tax pertaining to exempt supply.

Question 62: Mr. Himanshu, a registered supplier of chemicals, pays GST under regular
scheme. He is not eligible for any threshold exemption. He has made the following outward
taxable supplies for the month of September 2018:
Intra-State supply of goods Rs.25, 00,000
Inter-State supply of goods Rs.5, 00,000 He has also made the following inward supply :
Intra-State purchase of goods from registered dealer Rs.14, 00,000
Intra-State purchase of goods from unregistered dealer Rs.2, 00,000
Inter-State purchase of goods from registered dealer Rs.4, 00,000
Balance of ITC at the beginning of September 2018;
CGST Rs.95, 000
SGST Rs.60, 000
IGST Rs.50, 000
Additional Information:
• He purchased a car (Intra-State supply) used for business purpose at a price of Rs.6,
72,000/- (including CGST of Rs.36,000 & SGST of Rs.36,000 on September 15, 2018. He
capitalized the full value including GST in the books on the same date to claim
depreciation.
• Out of Inter-State purchase from registered dealer, goods worth ? 1,00,000 were
received on October 3, 2018 due to road traffic jams.
Note:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
 (ii) Both inward and outward supplies given above are exclusive of taxes, wherever
applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled except
mentioned above.
Compute the net CGST, SGST and IGST payable in cash by Mr. Himanshu for the month of
September, 2018. (CA Inter Exam May 19 New)
Answer: Computation of net GST payable in cash of Mr. Himanshu for September, 2018

Particulars Value (rs.) CGST (rs.) SGST (rs.) IGST (rs.)

Total tax liability Intra-State outward 25,00,000 2,25,000 2,25,000
supplies of goods
Intra-State outward supplies of goods 5,00,000 90,000
Total tax liability (A) 2,25,000 2, 25,000 90,000
Input Tax Credit (ITC)
Brought forward ITC 95,000 60, 000 50,000
Intra-State Purchase of goods from 14, 00,000 1, 26,000 1, 26,000
registered dealer [Note-1]
Inter-State purchase of goods from 3,00,000 - - 54,000
registered dealer [Note-1 and Note 4]
Intra-State goods from unregistered 2,00,000 - - -
dealer [Note-2]
Purchase of car used for business - - - -
purpose [Note-3]
Total ITC (B) 2,21,000 1,86,000 1,04,000

Particulars CGST SGST IGST

Total Output tax Liability 2,25,000 2, 25,000 90,000
Less: ITC of IGST - - 90,000
Balance of IGST 14,000
(1,04,000 -
90,000)
Less: ITC of IGST - 14,000 -
Less ITC of CGST & SGST 2, 21,000 1, 86,000 -
Net GST Payable in cash 4,000 25,000

Notes:
 1. Every registered person is entitled to take credit of input tax charged on any inward
supply of goods used/intended to be used in the course/furtherance of his business.
2. Intra-State supplies received by a registered person from any unregistered supplier,
applicable only specified cases after CGST Amendment Act, 2018
3. Input tax paid on capital goods cannot be availed as ITC if depreciation has been claimed
on such tax component. Moreover, ITC on motor vehicle (car) is blocked under section
17(5) of CGST Act, 2017.
4. A registered person is entitled to avail input tax in respect of any supply of goods to him
only if he has actually received the said goods. Since goods worth 1, 00,000 have not
been received by Mr. Himanshu in the month of September 2018, credit in respect of
same cannot be claimed in the said month.
5. Input tax credit of IGST has been used to pay IGST and CGST or SGST in any order and
manner as per rule 88A.

Question 63: Jamku Ltd, a registered person is engaged in the business of spices. It provides
following details for GST paid during October, 2018.

No. Particulars GST Paid C)

1 Raw spices purchase
- Raw spices used for furtherance of business 50, 000
- Raw spices used for personal use of Directors 20, 000

2 Electric machinery purchased to be used in the manufacturing 25, 000

process.
3 Motor vehicle used for transportation of the employee seating 55,000
capacity is II
4 Payment made for material and to contractor for construction of 1, 25, 000
staff quarter.

Determine the amount of ITC available to Jamku Ltd. for the month October, 2018 with all
related workings and explanations. All the conditions necessary for availing the ITC have been
fulfilled. (CA Inter Exam May 19. Old)

Answer: Computation of ITC available with Jamku Ltd. for the month of October 2018

Particulars GST paid (rs.)

Purchase of raw spices for furtherance of business [Note-1] 50, 000
Purchase of raw spices for personal use of directors [Note-2] Nil
Electric machinery purchased to be used in the manufacturing process 25,000
[Note-1]
Motor vehicle used for transportation of employee [Note-3] Nil
Payment made for material and to contractor for construction of staff Nil
quarter [Note-4]
Total ITC 75, 000

Notes:-

1. Every registered person is entitled to take credit of input tax charged on any supply of
goods to him which are used or intended to be used in the course or furtherance of his
business.
2. ITC is not available on goods used for personal consumption.
3. As per sec 17 (5)(a) of CGST Act, Motor vehicle for transportation of persons having
approved seating capacity of not more than 13 persons (including the driver), except
when they are used for making the following taxable supplies namely :
a) Transportation of passengers or
b) Further supply of such motor vehicles or
c) Imparting training on driving, such motor vehicles

Thus, ITC on motor vehicle used for transportation of the employee is blocked credit in
given case.

4. ITC is not available on goods or services or both received by a taxable person for
construction of an immovable property (other than plant or machinery) on his own
account including when such goods or services or both are used in the course or
furtherance of business.

Q 64: M/s. X Ltd. supplied taxable goods from the factory after manufacture in the month of
October 2017 for sale to a distributor for Rs.800000. M/s X Ltd has suppressed this transaction.
However, he deposited the GST @ 12% on these goods on 10-1-2018 against show cause notice
issued under Section 74 (when there is fraud) of the CGST Act, 2017 by the Central Tax Officer
and passed the order accordingly.
Whether distributor namely recipient of these goods is eligible to take input tax credit.

Ans: As per rule 36(3) of the CGST Rules, 2017, No credit on payment of tax due to fraud, wilful-
misstatement or suppression of fact etc. shall be allowed.
In the given case no input tax credit was available to registered person if the supplier has paid
tax in
pursuance of order where any demand has been confirmed on account of any fraud, wilful-
misstatement or suppression of facts and so on under Section 74 of the CGST Act, 2017.
Hence, input tax credit is not allowed to recipient of these goods (i.e. distributor in the given
case).

Q 64: M/s C Ltd Chennai procured goods 10,000 Kgs @ Rs.100 per Kg., from M/s D Ltd of Delhi.
These goods came to M/s C Ltd of Chennai in the following manner;

Date of No. kgs Date of Normal loss Abnormal No. kgs

dispatch dispached receipt in transit kgs loss in received
transit kgs
10th Oct 2000 15th Nov 2 Nil 1998
2nd Nov 5000 20th Nov 5 Nil 4995
3rd Dec 3000 1st Jan 1 20 2979

Invoice shows 10000 Kgs and GST @18%.

a) M/s C Ltd can avail the proportionate credit on 15 th Nov and 20th Nov.
b) M/s C Ltd is eligible for input tax credit if so when.
c) How much credit is allowed to M/s C Ltd.

Ans:
a) M/s C Ltd. cannot take proportionate credit on the quality received on 15th Nov and 20th
Nov.
b) M/s C Ltd. is eligible to avail the input tax credit on 1st Jan.
c) Input tax credit allowed = Rs. 179640
(10000 kgs * Rs. 100) * 18% * 9980 kgs /10000 kgs.

Note :
1) Goods received in lots ITC available only on receipt of last lot/instalment [1st proviso to
Section 16(2)]
2) Entire input tax credit is allowed in case of transit loss (i.e. normal loss). Whereas input
tax credit is not allowed to the extent of transit loss (i.e. abnormal loss).

Q 65: M/s. X Ltd. supplied taxable goods from the factory after manufacture in the month of
October 2017 for sale to a distributor for 5,00,000. However, he deposited the GST @12% on
these goods on 10-1-2018 against show cause notice issued under Section 74 (when there is
fraud) of the CGST Act, 2017 by the Central Tax Officer and passed the order accordingly.
During the month of December 2017, M/s X Ltd received goods worth Rs.500000 by paying GST
12%.
(a) Find the Net GST deposited by M/s X Ltd. into the Government Account on 10th January
2018.
(b) Your Ans is different if M/s X Ltd. paid GST 12% against show cause notice issued under
section
73 (when there is no fraud).
(c) Rework, M/s X Ltd. paid output tax by following self-assessment (i.e. when there is no
show cause notice issued)
Note: Ignore penalty and interest.

Ans (a): Statement showing Net GST deposited by M/s X Ltd. (where there is fraud Section 74
of the CGST Act):
Particulars CGST 6% SGST 6% Remarks
Output tax 48000 48000 (Rs.8 lac * 6%)
Less: ITC Not allowed Not allowed GST @12% paid on
(Since, it is paid Rs.5 lac is not
against the order allowed as ITC.
where there is
fraud)
Net GST liability 48000 48000

(b) Our Ans remain same as stated in (a) above.

(c) Statement showing Net GST deposited by M/s X Ltd. (where there is no show cause notice
issued):

Particulars CGST 6% SGST 6% Remarks

Output tax 48000 48000 (Rs.8 lac * 6%)
GST @12% paid on
Less:-ITC (30000) (30000) Rs.5 lac is allowed as
ITC.
Net GST deposited 18000 18000

Q 66: M/s A Ltd of Aluva (Kerala) receives the input service from M/s B Ltd of Bengaluru who
raises the invoice for supply of service on 17th December, 2017 and availed the credit on the
same date.
Find the time limit within which M/s A Ltd is required to pay the bill amount inclusive of tax to
supplier of service.
Also explain consequence if payment is not made within the stipulated time period as
mentioned in 2nd proviso to section 16(2) of the COST Act, 2017.
Re-credit is allowed if the payment is made to the supplier of service after expiry of time period
as mentioned in 2nd proviso to section 16(2) of the COST Act, 2017.
Ans: In the given case M/s A Ltd must pay to M/s B Ltd the value of services and GST payable
thereon by 15 th June 2018.
Working Note:
From To No. of days
18th Dec 2017 15th June 2018 180

In case M/s A Ltd does not pay by 15th June 2018, the credit availed by it will be added to his
output liability.
The amount will be added to their output tax liability with interest.
The 3rd proviso to Section 16(2) of the CGST Act, 2017, provides that the amount so reversed
can be again taken as a credit when the payment for receipt goods or services has been made
to the supplier of goods or services.
As per Rule 37(4) of the CGST Rules, 2017, the time limit specified in sub-section (4) of section
16 shall not apply to a claim for re-availing of any credit, in accordance with the provisions of
the Act or the provisions of this Chapter that had been reversed earlier.

Q 67: M/s X Ltd. has establishment in Chennai, and establishment in Hyderabad. Supply of
goods (open market value of Rs. 500000) made by M/s X Ltd,Chennai to X Ltd,Hyderabad. M/s X
Ltd. Chennai paid IGST of Rs. 60000. Accordingly M/s X Ltd. Hyderabad availed the input tax
credit of Rs. 60000. 2nd Proviso to Section 16(2) of CGST Act, 2017 is applicable in the given case
(i.e. to reverse the credit where payment is not made within 180 days from the date of invoice).
Advise.
Ans:
As per proviso to rule 37(1) of the CGST Rules, 2017, the value of supplies made without
consideration as specified in Schedule I of the said Act shall be deemed to have been paid for
the purposes of the second proviso to sub-section (2) of section 16.
In the given case M/s X Ltd. Hyderabad is not required to reverse the input tax credit. Since, as
per Section 25(4) of the CGST Act, 2017 two establishments are considered as establishment of
distinct person and accordingly, supply made by one establishment to another establishment
will be covered under Schedule 1 without consideration.
Q 68: M/s X Ltd. purchased input for Rs. 200000 vide Tax Invoice No. 12 dated 1 st December
2017. M/s X Ltd. has submitted annual return for the financial year 2017-18 on 15th September
2018 and return for September 2018 has been filed 19th Oct 2018. Find the time limit within
which input tax credit can be availed on input by X Ltd.
M/s X Ltd. wants to take input tax credit on such input on 30 th September 2018, advise.
Ans :
Time limit to avail the credit is earlier of the following:
a) 30th September 2018 (it means credit can be availed by 30th September 2018 and the
same can be shown in GSTR-3 return to file on or before 20th October 2018).
Or
b) 15th September
Therefore, M/s X Ltd has to avail the input tax credit on or before 15th September 2018.
Advise:
After 15th September, 2018, the registered taxable person cannot take credit based on invoice
pertaining to supply of goods or services for the period 1st April, 2017 to 31 March, 2018.
Hence, in the given case M/s X Ltd is NOT eligible to avail the input tax credit on 30th
September 2018.

Q 69: M/s X Ltd. delivered a machine to M/s Y Ltd. in January, 2018 under Invoice No. 180,
dated 21st January for Rs.500000 plus GST, and undertook trial runs and calibration of the same
machine as per the requirements of M/s Y Ltd. The amount chargeable for the past delivery
activities were covered in a debit note raised in May 2018 for Rs.125000 plus GST. M/s Y Ltd did
not file its annual return till October, 2018.
Find the time limit under section 16(4) of the COST Act, 2017 within which input tax credit can
be availed by M/s Y Ltd.
Ans:
Time limit to avail the ITC on machine (vide Invoice No. 180,dated 21.01.2018) is 20th October
2018.
Time limit to avail the ITC on debit note is also 20th October 2018.
Note :- Though the debit note was received in the next financial year (2018-19), it relates toan invoice received
Therefore, the time limit for taking ITC available on RS.500000 as well as on Rs.125000 is 20Th
October 2018; earlier of the date of filing the annual return for 2017-18 or the due date for
filing return for September 2018.
Q 70: M/s Vipin Ltd. purchased raw material ‘A’ 10000 kg @ Rs. 80 per kg. Plus GST. The said
raw material was used to manufacture product ‘P’. The other information’s are as under;
1) Processing loss : 2% on inputs ‘A’.
2) Transaction value of ‘P’ : Rs. 100 per kg.
3) Other material ‘M’ used in the manufacture of ‘P’ : Rs. 2 lac plus GST.
4) GST on capital goods imported during the period and used in the manufacture of ‘P’:
• Basic customs duty Rs. 20000
• IGST under customs under section 3(7) of the Customs Tariff Act, 1975 Rs. 10000;
5) Rate of GST on ‘A’ , ‘M’ and ‘P’ : 12%.
M/s Vipin Ltd. is not eligible for composition scheme under Section 10 of CGST Act, 2017
Compute:
1) Amount of input tax credit available and
2) Net GST payable by M/s Vipin Ltd.
Ans:
1) Statement showing eligible input tax credit of M/s Vipin

Particulars Value in Rs Working note

Raw material ‘A’ 96000 (10000kg * Rs. 80)* 12%
Other material ‘M’ 24000 200000 * 12%
Capital goods (imported) 10000 IGST allowed as ITC.
Total ITC 130000

2) Net GST liability of M/s Vipin

Input ‘A’ 10000kg out put ‘P’ 9800 kg

Rs.
GST payable on value of supply ‘P’ = 117600
(9800 kg * Rs. 100) * 12%
Less: ITC allowed = (130000)
Excess ITC c/f = (12400)
Q 71: M/s X Ltd manufacturer of textile products. Company received order from Government to
supply goods to defence (exempted supply). The turnover of the other taxable goods and
exempted goods Rs.4 crore and Rs.1 crore respectively. Common inputs on which GST paid
Rs.20,000.
Calculate the eligible ITC on common inputs?
Ans:
Common inputs credit Rs. 20000
Total turnover Rs. 5 crores
Credit attributable to exempted supplies Rs. 4000
(Rs. 20000 * Rs. 1 crore / 5 crore)
Eligible ITC is Rs. 16000 (i.e. 20000- 4000)

Q 72: M/s Lips Ltd., manufactures four types of ‘Nail polishes’, namely Sweety, Pretty, Beauty,
Tweety.
The Company has taken input tax credit of Rs.300000 on the common inputs used in the
manufacture of ‘Nail Polishes’. Common inputs also used partly for non-business purposes.
During the financial year 2017-18 (w.e.f. 1-7-2017) the company manufactured 1000 litres of
each type of ‘Nail Polishes’. The Company was not in a position to maintain separate set of
records with regards to inputs used for final products. GST payable on final goods @ 12 %.
You are required to calculate the net GST payable by M/s Lips Ltd. for the year 2017-18 from
the following data:

Product name Description Sale price

(Exclusive of GST)
Sweety Sale to Domestic Tariff Area Rs. 30 per 20ml. bottle
Sale to a Special Economic
Pretty Zone (SEZ) Rs.40 per 20ml. bottle
Beauty Sale to A Ltd. of USA Rs.50 per 20ml. bottle
Sale to Defence
Canteen(Exempted from
Tweety GST) Rs.60 per 20ml. bottle

Ans: Statement showing GST on outward supplies:

Product Description Sale price Transaction GST liable to Remarks
Name (Exclusive of value Rs. pay Rs.
GST)
Sweety Sale to Rs.30 per 1500000 180000 Rs.1500000(1000
Domestic 20ml. bottle litres * 1000ml./
Tariff 20ml * Rs.30)
Area GST= Rs. 180000
(Rs.1500000 *
12%)
Pretty Sale to a unit 2000000 Rs.2000000
of Zero (1000
SEZ(treated Rs.40 per rated litres * 1000ml./
as exports) 20ml. bottle supplies 20m * Rs.40)
Beauty Sale to A Ltd. 2500000 Rs.2500000
of Zero (1000
USA(export Rs.50 per rated litres * 1000ml./
sales) 20ml. bottle supplies 20ml * Rs.50)
Tweety Sale to 30,00,000 Exempted
Defence Rs. 3000000
Canteen Rs.60 per (1000 litres
(Exempted 20ml. *1000ml /20ml
from GST) bottle *Rs.60)
Total 9000000 180000

As per Section 17(2) of the CGST Act, 2017 read with rule 42(l)(i) and rule 42(l)(j) of the CGST
Rules,
2017 proportionate reversal of credit is as follows:

Particulars ITC reversal Rs. Working note

Input tax credit 100000 (Rs.3000000/Rs.9000000)
proportionate reversal on *Rs.300000
Credit
common attributable to non- 15000 Rs.300000*5%
business purposes
inputs [rule 42(l)(r)]on
Total
common inputs [rule 115000
42(1)(/)]
Therefore, quantum of eligible ITC (Rule 42(1)(k) of the CGST Rules, 2017) is Rs.185000/-
[ Rs.300000 - (100000 + 15000)]

Statement showing net GST liability or excess credit

Therefore, the GST payable on taxable supply of Rs.180000
goods
Add: ITC reversed (i.e. Output tax liability) Rs.115000
Total Tax liability Rs.295000

Less: ITC credit allowed Rs. 300000

Excess ITC can be carried forward into next Rs. 5000
month

Q 73: Assume in Q 72 above, M/s Lips Ltd., utilized the credit Rs.225000. Excess credit paid
on15th April 2018. Find the interest if any payable by M/s Lips Ltd.
Ans : As per Rule 42(2) of the CGST Rules, 2017 where the aggregate of the amount calculated
finally in respect of ineligible credit exceeds the aggregate of the amounts determined under
rule 42(1)(i) and (i), such excess shall be added to the output tax liability of the registered
person in the month not later than the month of September following the end of the financial
year to which such credit relates and the said person shall be liable to pay interest on the said
excess amount at the rate specified in sub-section (1) of Section 50 for the period starting from
the 1st day of April of the succeeding financial year till the date of payment.
Interest = Rs.296/-
(225000-185000)* 18% * 15/365)

Q 74: Y Ltd. manufactures taxable and exempted goods. Y Ltd. also simultaneously provides
taxable as well as exempted output services. Raw material 10,000 units were purchased @
Rs.100 per unit used commonly during the month of January 2018 to produce all final products.
GST paid on inputs 12%. Input services commonly used for all goods and services in the month
of January 2018. Total ITC on inputs and input services taken into books of account in the
relevant tax period is Rs.174000. Turnover for the month of January 2018 (excluding all taxes)

Particular Value of finished goods (Rs.)

Taxable supply of goods 200000
Exempted supply of goods
100000
(Rs80 .per unit)
Taxable supply of services 100000
Exempted supply of services 50000
Total 450000

You are required to compute the amount of reversal of input tax credit as per rule 42(1)(i) of
the CGST Rules,2017 of the month of January 2018.
Note: Each unit of exempted final product needs 2 units of raw materials. Assumed that there is
no process loss.
Ans:
Step 1: Calculate common input tax credit on inputs and input services which are used to
supply taxable as well as exempted output supplies:

Particulars Rs. Working note

Total ITC on inputs and input services 1,74,000 rule 42(1)(a)
Less: ITC on supplies exclusively used for the Nil rule 42(1)(6)
purpose other than business
Less: ITC on supplies exclusively used for 2,500u * Rs.100 X 12%
providing (30,000) [rule
exempted supplies 42(1)(c)]
Less: ITC not available under section 17(5) of the Nil rule 42(1)(d)
CGST Act, 2017
Input tax credit which are used to supply taxable
144000 rule 42(1)(e)
as well as exempted output supplies
(90000) (10,000u - 2,500u) *
Less: ITC on supplies used exclusively for taxable Rs.100
supply including Zero rated supply (i.e. ITC on X 12%. As per rule
normal supplies) 42(1)(f)
Common ITC, which are used to supply taxable as
well as exempted output supplies (denoted as 54000 As per rule 42(1)(h)
“C2”)

Step 2: Amount of reversal of input tax credit attributable towards exempted supplies rule
42(l)(i) of the CGST Rules, 2017 is as follows:
(Rs.150000/450000)* Rs.54000= Rs.18000/-
Working Note:
(1) Number of units of exempted final products 1,250 units (i.e. Rs. 100000/Rs.80 per unit =
1250 units)
(2) Since, each unit of exempted final product needs 2 units of raw materials. Raw material
used
exclusively for exempted final product 2,500 units (i.e. 1,250 units x 2 units = 2,500 units).

Q 75: Ram & Co., being a registered person under GST supplied the following in the month of
January 20XX:
Particulars Value in Rs.
Taxable supply of goods 2000000
Exempted supply of goods 500000
Sale of land 1250000
Recovery Agent services supplied to OK 250000
Bank
Deposit on which interest received 200000
Total 4200000

Common inputs for the relevant tax period is Rs.200000.

GST applicable rate on outward supply of goods @28%

Find the GST Liability?

Ans:
St. Showing net GST liability: Rs.

Output tax 560000

Add: ITC reversed 95238
Out tax liability 655238
Less: ITC (200000)
Net GST liability 455238
Working note:
1) Exempted supply:

Rs.
Exempted supply of goods 500000
Sale of land 1250000
Recovery Agent services supplied to OK Bank 250000
Total (2000000)

(2) Net ITC allowed = Rs.104762 (Rs.200000 – Rs.95238)

(3) GST liability on outwards supply

Rs.2000000 * 28% = Rs.560000

(4)ITC not allowed as per Rule 42(1)(i) of CGST Rules, 2017 200000 *20 L / 42 L = Rs.95238/-
 Sale of land and Recovery Agent to a banking company is treated as exempted supply as
per Section 17(3) of the CGST Act, 2017
W.e.f 25.1.2018, interest on deposits should not include in exempted supply. However, it is
included in total turnover.

Q 76: Soren Enterprises is in possession of certain capital goods and purchases more of them as
per the following particulars:

Input tax on Capital

Particulars Status of its use
Goods (Rs.)
Exclusively used for non-
Capital goods A 12000
business purpose.
Exclusively used for zero-
Capital goods B 24000 rated
supplies
Used both for taxable and
Capital goods C 60000
exempted supplies.
Capital goods D (has been Now there is change in use,
exclusively used for 2 years 120000 both for taxable and
for exempted supplies) exempted supplies.
Capital goods E (has been Now there is change in use,
exclusively used for 3 years 180000 both for taxable and exempt
for taxable supplies) supplies.

Useful life of all the above capital goods is considered as 5 years.

Apportion the input tax credit of capital goods, while being informed that aggregate value of
exempted supplies during the tax period being Rs.600000 and total turnover during the tax
period being Rs.1200000.
(CA Final May 2018 (new)) 7 Marks

Ans: Statement showing eligible ITC for the tax period is as follows:

Particulars Input tax on Status of its use Provision under

Capital Goods (Rs.) CGST
Capital goods A Not allowed Exclusively used for Rule 43(l)(a) of CGST
non- business Rules, 2017
 purpose.
Capital goods B 24000 Exclusively used for Fully allowed as per
zero- rated supplies Rule 43(l)(b) of
CGST Rules, 2017
Capital goods C 60000
Capital goods D 72000
Total ITC eligible for 156000
the tax period
Capital goods C, D 1700 Common credit Such credit, along
and E attributable to with
exempt supplies the applicable
interest,
shall be added to the
output tax liability of
Soren Enterprises

Working note:
1) As per rule 43(1)(c) of the CGST Rules, 2017 the amount of input tax in respect of capital
goods not covered under clauses (a) and (b) of Rule 43(1), denoted as ‘A’, shall be credited
to the electronic credit ledger and the useful life of such goods shall be taken as five years
from the date of the invoice for such goods:
Provided that where any capital goods earlier covered under clause (a) is subsequently
covered under this clause, the value of ‘A’ shall be arrived at by reducing the input tax at
the rate of 5% points for every quarter or part thereof and the amount ‘A’ shall be credited
to the electronic credit ledger;
Explanation- An item of capital goods declared under clause (a) of rule 43(1) on its receipt
shall not attract the provisions of sub-section (4) of section 18, if it is subsequently covered
under this clause.

Note: Rule 43 of CGST Rules, 2017 is subject to the provisions of Section 16(3) of the CGST
Act, 2017 (i.e. assessee should not avail depreciation on the portion of Tax paid on capital
goods)
Particulars Value in Rs. Working note
(Denoted ‘A’)
Used both for taxable and 60000 As per rule 43(1)(c) of COST
exempted supplies Rules,2017
Capital goods D (has been 72000 Proviso to rule 43(1 )(c) of CGST
exclusively used for 2 years for Rules, 2017.
exempted supplies). ITC 120000
Now there is change in use, both for Less:5% p. q. -48000
taxable and exempted supplies. for 8 quarters
1.20L*5%x8
ITC attributable for 72000
taxable and exempted
Capital goods E (has been 72000 Proviso to rule 43(1)(d)Rules, 2017
exclusively used for 3 years for ITC 180000
taxable supplies). Less: 5% p.q. for 12 -108000
quarters 1.8L* 5% * 12
Now there is change in use, both for ITC attributable for 72000
taxable and exempt supplies. taxable and exempted
Common credit 204000
the amount of input tax credit 3400 As per Rule 43(1)(e) of the CGST
attributable to a tax period on Rules, 2017 calculated as :
common capital goods during 204000/60=Rs. 3400
their useful life
the amount of common credit 1700 As per rule 43(1)(g) of the CGST Rules,
attributable towards exempted 2017 calculated as:
supplies Rs. 3400* Rs. 600000/Rs. 1200000.
NOTE: The amount ITC not allowed of Rs.1700 along with the applicable interest shall, during
every tax period of the useful life of the concerned capital goods, be added to the output tax
liability of the person making such claim of credit as per Rule 43(1)(h) of CGST Rules, 2017.

Explanation:-For the purposes of this clause, it is hereby clarified that the aggregate value of
exempt supplies and the total turnover shall exclude the amount of any duty or tax levied
under entry 84 of List I of the Seventh Schedule to the Constitution (i.e. Central Excise duty) and
entry 51 and 54 of List 2 of the said Schedule (i.e. Sales Tax);
Q 77: Oberoi Industries is a manufacturing company registered under GST. It manufactures two
taxable products ‘X’ and ‘Y’ and one exempt product ‘Z’. The turnover of ‘X’, ‘Y’ and ‘Z’ in the
month of April, 20XX was 2,00,000, 10,00,000 and 12,00,000. Oberoi Industries is in possession
of certain machines and purchases more of them. Useful life of all the machines is considered
as 5 years.
From the following particulars furnished by it, compute the amount to be credited to the
electronic credit ledger of Oberoi Industries and amount of common credit attributable towards
exempted supplies, if any, for the month of April, 20XX.

Particulars GST paid (Rs.)

Machine ‘A’ purchased on 01.04.20XX for being exclusively used for non- 19200
business purposes

Machine ‘B’ purchased on 01.04.20XX for being exclusively used in 38400

manufacturing zero- rated supplies

Machine ‘D’ purchased on April 1, 2 years before 01.04.20XX for being 192000
exclusively used in manufacturing product Z. From 01.04.20XX, such machine
will also be used for manufacturing products X and Y.
Machine ‘E’ purchased on April 1, 3 years before 01.04.20XX for being 288000
exclusively used in manufacturing products X and Y. From 01.04.20XX, such
machine will also be used for manufacturing product Z.

(CA Final RTP Nov 2018)

Ans: Statement showing Common ITC on Capital Goods as on 1st April 20XX

Particulars Value in Rs.(Denoted ‘A’) Working note

Capital goods C used both 96000 As per rule 43(1)(c) of CGST
for taxable and exempted Rules, 2017
supplies
Capital goods D (has been 115200 Proviso to rule 43(1)(c) of
exclusively used for 2 years CGST Rules, 2017.
for exempted supplies). ITC 192000
Now there is change in use, Less:5% p.q. -76800
both for taxable and for 8
exempted supplies. quarters
1.92 L * 5%
* *8
ITC 115200
attributable
for taxable
and
exempted
Capital goods E (has been Proviso to rule 43(1)(c) of
exclusively used for 3 years CGST Rules, 2017.
for taxable supplies). ITC 288000
Now there is change in use, Less:5% p.q. -172800
both for taxable and exempt for 12
supplies. quarters 1.92
L * 5% *8
ITC 115200
attributable
for taxable
and
exempted
Common credit 326400
The amount of input tax 5440 As per Rule 43(1)(e) of the
credit attributable to a tax CGST Rules, 2017 calculated
period on common capital as:
capital goods during their 326400/60=Rs. 5440
useful life
The amount of common 2720 As per Rule 43(1)(g) of the
credit attributable towards CGST Rules, 2017 calculated
exempted supplies as:
Rs. 5440* Rs. 1200000/Rs.
2400000.
Note: The amount ITC not allowed of Rs. 2720 along with the applicable interest shall,
during every tax period tax period of the useful life of the concerned capital goods, be
added to the output tax liability of the person making such claim of credit as per Rule 43(1)
(h) of CGST Rules, 2017.
Statement showing Total ITC to the Electronic Credit Ledger for the month of April 20XX:
Particulars Value in Rs. (Denoted ‘A’)
Capital goods B used exclusively for taxable supplies (i.e. 38400
Zero-rated supply)
Capital goods C used both for taxable and exempted 96000
supplies.
Capital goods D (has been exclusively used for 2 years for 115200
exempted supplies).
Now there is change in use, both for taxable and
exempted supplies.
Electronic Credit Ledger 249600

Q 78: X Bank of India has corporate office in Mumbai and branches in Chennai, Delhi and
Kolkata. Mumbai office provided services to Chennai office accordingly IGST paid. Office of
Chennai will avail the credit of IGST. Chennai office is required to reverse such credit? Explain.

Ans: As per Section 17(4) of the CGST Act, 2017 that reversal of 50% shall not be made for the
credit availed by Chennai office on services provided by corporate office. Thus, no credit
reversal shall be made for the credit availed on input services provided by one registered
person to another registered person holding same PAN.

Q 79: OK Bank has availed credit of Rs.2500000 lacs in the month of December 2017. Total
credit, out of which Rs.500000 pertains to non-business purpose and Rs.700000 pertains to
credit availed under 2nd proviso of section 17(4). Find the total input tax credit eligible to OK
Bank.
Note:-OK Bank opted to avail ITC an amount equal to 50% of eligible credit.

Ans: Statement showing eligible ITC to OK Bank for the month of December 2017:

Particulars ITC Amount in Rs. Remarks

Input tax credit attributable to non- Nil ITC fully not allowed
business purpose
ITC from its other establishment 700000 ITC fully allowed.
(2500000 - 500000 - 700000)
Other ITC 650000 * 50%
Total ITC allowed in Form GSTR-2 1350000
Q 80: M/s A Ltd. a registered person under GST law and purchased 10 cars for Rs. 45 lakh plus
28% GST. M/s A Ltd sold 8 cars for Rs. 55 lakh plus 28% GST.

Find the GST liability in the following two independent cases:

a) M/s A Ltd is a dealer of motor vehicles
b) M/s A Ltd is not a dealer of motor vehicles

Ans:
Statement showing net GST liability of M/s A Ltd.
Particulars M/s A Ltd. is a Remarks
dealer M/s A Ltd. is not a
in motor vehicles Rs. dealer in motor
in lacs vehicles Rs. in lacs
GST on Supply of Rs. 55 lacs
goods 15.40 15.40 *28%
Rs. 45 1acs*
Less: ITC (12.60) Not allowed 28%
Net GST liability 2.80 15.40

Q 81: M/s Parveen Travels transporting passengers from Chennai-Mumbai-Chennai. For this
purpose M/s Parveen Travels purchased Volvo Bus (air-conditioned) for Rs 55 lakhs plus GST
28%. M/s Parveen Travels is eligible for ITC on Volvo Bus in the following two cases:

1. M/s Parveen Travels paying GST 12% on supply of output supplies.

2. M/s Parveen Travels paying GST 5% on supply of output supplies.
Ans:-
Case (1). Yes. M/s Parveen Travels is eligible to avail the ITC on purchase of Volvo Bus.

Case (2). No. M/s Parveen Travels is not eligible to avail the ITC on capital goods and input
goods (except input services from similar line of business).
Note: AC contract/stage carriage other than motor cab GST @5% - with ITC of input services
only from similar line of business {vide Notification No. 31/2017-Central Tax (Rate),dated 13th
October, 2017)
Q 82: M/s MR Ltd. manufacturer of motor vehicles. Company purchased a passenger vehicle for
Rs.20 lacs plus GST 28% for transportation of their employees from their residence to factory
and from factory to their residence. M/s MR Ltd. is eligible to avail the credit on purchase
motor vehicle?
Ans: No. M/s MR Ltd. is not in the business of transporting passengers and hence credit on
purchase of motor vehicle is not allowed. Moreover, it is not used for taxable supply.

Note: If the taxable person transports its own employees free of cost it will not be covered by
the aforesaid clause and hence he will not be able to claim benefit of input tax credit in respect
of the same.
Q 83: Sukhee Bhava Hospital is a clinical establishment purchased four ambulances for Rs
32 lakhs plus GST 28%. Find the input tax credit available to Sukhee Bhava Hospital.
Ans: Input tax credit = nil
Note: since, supply of services of Sukhee Bhava is exempted from GST under health care
services.

Q 84: Ferrari Company for conducting Formulae One car races purchased 20 Racing Gars, for
Rs.80 lakhs plus GST 28%. Ferrari company is eligible for availing ITC on purchase of Racing Cars.
Ans: No. Ferrari Company can not avail the ITC on purchase of Racing Cars which are not
treated as passenger vehicles.

Q 85: Mr. Ram a school van driver and also registered person under GST law. He purchased
Omni vehicle for Rs.8 lacs plus GST 28%. Mr. Ram is eligible for ITC on this vehicle. Explain.
Ans: Since, Mr. Ram is a registered person supplying taxable services in the nature of
transportation of passengers, he is eligible to avail the ITC on motor vehicle.
If Mr. Ram supplies services to school, he is not eligible for ITC. Since, his supplies exempted
from GST.

Q 86: M/s Sharma Travels supplied rent-a-cab services to M/s Infosys Company for transporting
their employees (i.e. pickup and drop). Accordingly, M/s Sharma Travels charging monthly rent
of Rs.22500 per cab plus GST 12%. 10 Motor cabs purchased by M/s Sharma Travels for
Rs.85000 each plus GST 28% and used for transporting company employees. Find the Net GST
liability of M/s Sharma Travels for the financial year.

Ans:
Statement showing GST liability of M/s Sharma Travels for the Financial year:
Particulars Value in Rs. Remarks
Output supply: Rent-a-cab 324000 22500*12%*12months *
10Nos
Less: ITC on motor vehicle 238000 Since, M/s Sharma travel
using motor cabs for further
supply, ITC allowed.
85000 * 10 Nos * 28%
Net GST liability 86000
Therefore, M/s Sharma Travels is liable to GST for the Financial year Rs. 86000.

Q 87: M/s Maruti Driving School Pvt. Ltd. supplied taxable services in the month of October
2017 for Rs. 15 lacs (plus GST 18%) to provide training on driving. Company purchased two
vehicles for this purpose namely passenger vehicle for Rs.20 lacs plus GST 28% and goods
vehicle for Rs.33 lacs plus GST 28%. Find the net GST liability of M/s Maruti Driving School Pvt.
Ltd.
Ans:
GST on output supply Rs. 270000
Less: ITC
On passenger vehicle Rs. -560000
On goods vehicle Rs. -924000
Net Excess ITC c/f Rs. 1214000

Q 88: Course completion certificate/training offered M/s Sky Ltd. (Flying Training Institute)
purchased aircraft for Rs.22 crores plus GST 28%. Whether the flying institute is eligible for
input tax credit on purchase of air craft.

Ans: Yes. M/s Sky Ltd. (Flying Training Institute) is eligible to avail ITC.
Navigating means:Transport to direct the way that a ship, aircraft, etc. will travel, or to find a
direction across, along, or over an area of water or land, often by using a map.
2) Motor vehicles and other conveyances are used for transportation of goods:

17.27.1d Section 17(5)(a) motor vehicles and other conveyances ITC not allowed except
when they are used-

(2) for transportation of goods

Credit of GST paid on motor vehicle and other conveyance will be available when motor vehicle
and other conveyance are used for transportation of goods. The motor vehicle and other
conveyance can be sued for
(a) making outward supply of transportation of goods;
(a) transporting own goods.

Note: If the vehicle is used for supplying own goods if those goods are taxable supplies the
taxable person will be entitled to avail credit of such input tax paid on such vehicle.
Q 89: Mr. A buys a passenger car worth Rs.300000 with GST Rs. 80000. He deals in electronic
goods and uses the car to travel to his showroom.
1) Mr. A is eligible for ITC?
2) Rework if Mr. A purchased goods transport vehicle for transport his own electronics.
Ans :
1) In this case, even if the car is used for his business, ITC ?80,000 cannot be claimed.
2) Yes, ITC allowed.

Q 90: DHL courier purchased vehicles (i.e. two wheelers) for Rs.20 lacs plus GST 28% for
transport of goods.

Ans: No, since two wheelers cannot be registered as goods transport vehicles under Motor
vehicles Act.

Q 91: ABC Academy organises parents meeting and provides meal during meeting to students
and their parents. The supplier of food charged Rs.72500 plus GST 18%, under the category of
outdoor catering. Explain ABC Academy being provider of taxable supply of services namely
commercial training and coaching services is eligible to avail the credit of GST paid on outdoor
catering service.

Ans: GST paid on outdoor catering is not allowed as ITC even though such services are used for
business purpose. Since, it is specifically mentioned under Section 17(5)(b)(i) of the CGST Act,
2017 where credit is not allowed.

Q 92: Annapoorna caterings supply outdoor catering services to its customers by sub-
contracting the same. Sub-contractor supplied food items like ice creams. North Indian Meals,
South Indian Meals and so on to Annapoorna caterings. Sub-contractor raised invoice on
Annapoorna caterings for supply of outdoor catering services Rs.200000 plus GST 18%.
Annapoorna caterings supplied outdoor catering to its customers for Rs.210000 plus GST 18%.
Find the Net GST liability of Annapoorna caterings.

Ans: Statement showing net GST liability of Annapoorna caterings:

Particulars Value in Rs. Remarks
GST on outward supply 37800 Rs.210000 * 18%
Less: ITC from similar line of
business (36000) Rs.200000 * 18%
Net GST liability 1800
Q 93: Sky Ltd is engaged in supply of transport of passengers by air services. The company avails
outdoor catering services of M/s Anna Caterers in order to provide food and beverages to the
passengers. M/s Anna Caterers raises an invoice on Sky Ltd charging GST.
Sky Ltd. wants to avail the ITC on outdoor catering services supplied by M/s Anna Caterers.
Advise.

Ans: ITC shall be available where an inward supply of goods or services or both of a particular
category is used by a registered person as an element of a taxable composite or mixed supply.
Advise: In the given case, Sky Ltd will be entitled to avail the ITC of the GST paid to M/s Anna
Caterers since outdoor catering services forms part of taxable composite supply of passengers
by air services.

Q 94: Wipro Pro Ltd is a BPO which works on night shift basis. As per the Government
Notification, it has to provide rent a cab facilities to its employees who work on night shifts.
Whether, Wipro Pro is eligible to avail ITC on rent a cab services.
Ans: Yes. Wipro pro Ltd can claim ITC on the GST paid on such rent-a-cab services.

Q 95: Hotel King Pvt Ltd. provider of short-term accommodation services and also provides
picking up guest from airport. Accordingly, Hotel King Pvt. Ltd availed rent-a-cab services from
M/s X & Co. Rent-a-cab services provided by M/s X & Co to Hotel King Pvt Ltd. during Nov 2017
for Rs.200000 plus GST 18%.
Hotel King Pvt Ltd. provided short-term accommodation services to its customers (i.e. guests)
during Nov 2017 for Rs.1575250 plus GST 18%.
Find the Net GST liability of Hotel King Pvt Ltd. during the month of November 2017.
Ans:

Statement showing Net GST liability of Hotel King Pvt. Ltd for the month of Nov 2017
Particulars Value in Rs. Remarks
GST on outward supplies 283545 1575250 * 18%
Less: ITC on rent-a-cab (36000)
service 200000 * 18%
Net GST liability 247545
Note: In the given case Hotel King Pvt. Ltd. providing a composite supply of rent-a-cab and
accommodation service. The principal supply of service is accommodation service. Hence,
GST paid on rent-a-cab will be available as a credit to Hotel King Pvt. Ltd.

Q 96: Infosys Ltd. being a registered person under GST Law paid insurance premium for its
employees along with GST thereon. Infosys Ltd. can avail the ITC of GST paid on insurance
premium?
Ans: No. Infosys Ltd cannot avail the ITC benefit in the given case.

Q 97: M/s MRFL Ltd. being a manufacturer of taxable goods paid general insurance premium to
cover loss of stock of finished goods. Company wants to avail the GST paid on such premium as
input tax credit. Advise.
Ans: GST paid on general insurance premium to cover loss of stock of finished goods is well
allowed as input tax credit. Hence, M/s MRFL Ltd. is eligible to avail the tax paid on general
insurance premium as ITC.

Q 98: X Ltd is provider of rent a cab services to Infosys company. Infosys company using cab
services for following purposes.
Case 1: if Infosys uses cab services for transportation of their employees.
Case 2: if Infosys uses cab services for their prospective customers.
Case 3: if Infosys under an obligation of Law to provide such cab service to employees.
Find the applicability of input tax credit to Infosys Company?

Ans: As per Section 17(5)(b)(iii) of the CST Act, 2017 input tax credit on a rent cab services is
blocked and hence, ITC not allowed, except where -
(A) The Government notifies the services which are obligatory for an employer to provide
to its
employees under any law for the time being in force; or
(B) such inward supply of goods or services or both of a particular category is used by a
registered person for making an outward taxable supply of the same category of goods
or services or both or as part of a taxable composite or mixed supply
Case 1: ITC not allowed.
Case 2: ITC not allowed.
Case 3: ITC allowed.

Q 99: M/s X Ltd manufacture of taxable goods and registered under GST law. M/s X Ltd
assigned the contract in the month of January 2018, for Rs. 500000 plus GST 18% to M/s Y Ltd.
for constructing structural support of Hot Mix Plant, which is used for making taxable supply of
goods.

Accordingly M/s Y Ltd used cement, steel, iron, water, chemicals and labour to complete the
job. Entire work has been completed and payment also been completed and payment also be
received in the month of January 2018.
M/s X Ltd further provides the following information to find net GST liability of M/s X Ltd. for
the month of January 2018:

Inward supply Value in Rs. GST Rate Outward supply Value in Rs. GST Rate
Raw material 200000 18% Finished goods 1500000 28%
(10 Kgs)
Hot Mix Plant 600000 28%
Works contract 500000 18%
service
Note: There is process loss @ 1% while converting raw materials into finished goods.

Ans: Statement showing net GST liability for the month of January 2018 of M/s X Ltd.

Particulars GST (Rs.) Remarks

Output tax 420000 1500000 * 28%
Less: ITC on Input (36000) 200000 * 18%
ITC on Capital goods (168000) 600000 * 28%
ITC on Input service (90000) 500000 * 18%
Net GST liability 126000
Note : Hot Mix Plant is capital goods, hence ITC allowed.

17.27.2h Inputs and input services used for constructing of building or any other civil structures
ITC not allowed:

Q 100: M/s A Ltd. being a manufacture of laptops registered under GST. Company appointed
M/s B Ltd. for construction of factory building in the factory premises. Contract price is Rs. 120
lacs plus GST 18%. M/s B Ltd., supplied cement, steel and labour while executing the contract.
Whether M/s A Ltd is eligible to avail the input tax credit on such works contract service.

Ans: GST paid on works contract services which is used for land, building or any other civil
structures specifically excluded from availing input tax credit under section 17(5)(c) of the CGST
Act, 2017.

Therefore, in the given case M/s A Ltd is not eligible for input tax credit.

Q 101: Mr. X being a contractor undertaken construction work of an individual residential unit
otherwise than as part of a residential complex.

Your are required to Ans:

a) Mr. X is liable to pay GST where he under taken pure labour contract.
b) Mr. X is liable to pay GST where he under taken pure labour and material contract.
 c) Mr. X is gives contract to sub-contractor, can sub-contractor also get exemption if it is
pure labour contract.

Ans: As per Notification No. 12/2017- Central tax (Rate) “Services by way of pure labour
contracts of construction, erection, commissioning, or installation of original works pertaining
to a single residential unit otherwise than as a part of a residential complex.” are exempt from
GST.

a) Since, Mr. X under taken services by way of pure labour contracts of construction of
single residential unit is exempt from GST.
b) If in case Mr. X providing service with both labour and material i.e. termed as works
contract under GST. He wil be charged 18% GST.
c) Yes. Services provided by a sub-contractor to a contractor are also exempt as he is
providing labour for the construction of residential house.

Q 102: M/s Raji builders appoint M/s Viswa contractors for providing the service of plastering
of walls. As per terms of contract M/s Raji builders provides the entire material namely cement,
water, bricks and chemicals and so on. As a result M/s Viswa contractors does not use any
material.

Is it works contract service?

Ans: It cannot be considered as works contract service, as it does not involve the transfer of
property.

Q 103: M/s MR Ltd. manufacturer of laptops. Company appoints M/s RM Constructions for
constructing a new factory building. Terms and conditions of contract are as follows:

S.No. Particulars Value in Rs. Remarks

1. Land value 2 crore Land owned by M/s MR Ltd.
Material cost 30 lacs Material supplied by M/s RM
2. Constructions
3. Service cost 10 lacs Supplied by RM Constructions
a) Construction completed in the month of October 2017.
b) Assume Time of supply in the month of October 2017.
c) Applicable rate of GST 18%.
d) Fully payment made in the month of October 2017.
Output supplies of M/s MR Ltd during the month of October 2017 are ?20,00,000 plus GST 18%.
Find the net liability of GST in the hands of M/s MR Ltd. in the month of October, 2017.
Rework, if M/s MR limited is provider of works contract service.
Ans:
Net GST liability in the month of October 2017 is Rs.360000. (2000000*18%).
Note: works contract service is not input service to M/s MR Ltd.
Re-work:
Net GST liability in the month of October 2017 is

GST on output supply = Rs.360000

Less: ITC on Works contract service =Rs. (720000)
(Rs. 30 lacs + Rs. 10 lacs ) * 18%
Excess ITC c/f =Rs. (360000)
Note: works contract services are an input service to a supplier of works contract services.

Q 104: M/s P Ltd. appoints M/s Q Ltd. for laying of pipelines inside its factory premises which
resulting into movable property. For which M/s P Ltd. purchased pipelines for Rs.1000000 plus
GST 12%. On completion of works contract service M/s Q Ltd charged for Rs.200000 plus GST
18%. Find the eligible input tax credit to M/s P Ltd.

Ans: The credit of GST paid on pipelines inside the factor}^ will be available. Since, pipelines laid
inside the factory premises are in the course or furtherance of business (i.e. capital goods).
Therefore, input tax credit allowed is Rs. 120000.
GST paid on works contract services, which are used for laying of pipelines resulting into
movable property, is also qualify for claiming input tax credit of Rs.36000.
Therefore, total eligible input tax credit is Rs.156000.

Q 105: Ram is the chairman of reputed construction company. He ordered certain input goods
or services like cement, steel and labour to be used for the construction of his house. Cement
purchased was also used partly for the own company building (i.e. captive use).
Input tax credit allowed on purchase of cement?
Ans: ITC would not be available on purchase of cement including steel and labour (sec. 17(5)(d)
of the CGST Act, 2017).
Even if cement is used for own company building purpose ITC is not allowed.

Note: As per Section 17(5)(d) of the CGST Act, 2017, No ITC will be provided for materials used
in the
construction of immovable property of for furtherance of business. ITC will not be available for
the goods or services or both provided to a taxable person used in the construction of an
immovable property on his own account including when such goods or services or both are
used in the course or furtherance of business.
Q 106: Determine the amount of input tax credit available with Arihant Manufacturing Ltd. in
respect of the following items procured by them in the month of January 2018:

Items GST paid in Rs.

Raw materials 72000
Food and beverages & catering services are used in the 40000
guesthouse primarily for the stay of the newly recruited
employees.
Inputs used for making structures for support of plant and 125000
machinery
Capital goods used as parts and components for use in the 40000
manufacture of final product

Ans: Statement showing eligible input tax credit to Arihant Manufacturing Ltd.

Items GST paid in Rs.

Raw materials 72000
Food and beverages & catering services are used in the Not allowed
guesthouse primarily for the stay of the newly recruited
employees.
Inputs used for making structures for support of plant and 125000
machinery
Capital goods used as parts and components for use in the 40000
manufacture of final product
Total credit allowed 237000

Q 107: ABC India Ltd. is engaged in the manufacture of some taxable goods. It purchased the
following goods in the month of October, 2017:

Items GST paid in Rs.

Raw material used for the production of the final product 100000
Goods used for generation of electricity for captive consumption 20000
Goods used for providing free warranty – value of such free warranty 10000
provided by ABC India Ltd. is included in the price of the final product and
is not charged separately from the customers
Light diesel oil 5000
Note: ABC India Ltd. is also purchased High Speed Diesel oil by paying central excise duty of
Rs.12000, which is also used in the manufacturer of taxable output.

Compute the amount of input tax credit available to ABC India Ltd.
Ans: Statement showing Input tax Credit of ABC India Ltd.

Items ITC in Rs.

Raw material used for the production of the final product 100000
Goods used for generation of electricity for captive
consumption 20000
Goods used for providing free warranty 10000
Light diesel oil 5000
High Speed Diesel oil Not allowed
Total input tax credit 135000

Q 108: Mr. A of USA being technician came to India to assemble parts of machinery. He also
imported goods worth Rs.1000000 and paid following customs duties:
i. Basic customs duty is Rs.100000.
ii. Education Cess 2% plus 1% Secondary and Higher Education Cess together it is Rs.3000.
iii. Integrated Goods and Services Tax (IGST) of Rs. 198540.
In India Mr. A wants to register as non-resident taxable person and his estimated liability is
Rs.250000. How much Mr. A is liable to pay as advance tax?
Ans: Mr. A of USA is liable to pay advance tax of Rs.51460.
(i.e. 50000 - 198540)

Q 109: M/s Info Ltd. providing various facilities to their employees like club, sports facilities
etc. to ensure that the employees stay comfortably in the colony. It increases the efficiency of
employee. Examine the credit applicability in this case.
Ans: Expenses incurred in colony are in the course or furtherance of business. Hence, credit of
GST paid on such services will also be available to the taxable person.

Q 110: M/s Andhra ITC Ltd. purchased inputs and capital goods by paying GST to produce
electricity or steam, for manufacture of taxable goods. The electricity generated for use in
manufacture of goods is sometimes also supplied in the residential colony of employees.
Whether, M/s Andhra ITC Ltd. is eligible to avail the credit fully?
Ans: As per the GST Law provisions there is no requirement of use of electricity in manufacture
of goods. The only requirement is that the input or capital goods shall be used in the course or
furtherance of business. This view also confirmed by Hon’ble Andhra Pradesh High Court in the
case of ITC Ltd. 2013(32) STR 283 (AP).
Therefore, M/s Andhra ITC Ltd. is eligible to avail input tax credit.

Q 111: M/s X Ltd. sold goods to M/s Y Ltd. for Rs.200000 plus GST Rs.36000. M/s X Ltd. remitted
the GST on or before the due date. During the audit of M/s X Ltd books by the Central Tax
Department quantified the GST liability Rs.72000 and demanded to pay differential duty of
Rs.36000 under section 74 of the CGST Act, 2017. Finally, M/s X Ltd paid the differential GST of
Rs.36000.
M/s Y Ltd wants to avail the input tax credit of differential amount of GST, advise.
Ans: Since, the differential GST paid by M/s X Ltd. against show cause notice under section 74
of the CGST Act, 2017, will not be available as credit to M/s Y Ltd in view of clause (1) of section
17(5) of the CGST Act, 2017.

Q 112: M/s X Ltd becomes liable to pay tax on 1st December and has obtained registration on
15th December.
The GST paid goods lying in the premises of M/s X Ltd as on 30th November are as follows:
Particulars Value in Rs. (Excluding tax) GST Rs.
Raw material 200000 36000
Capital goods 500000 140000
Raw material lying work in 300000 54000
progress
Raw material lying in 1200000 216000
Finished Goods

You are required to Ans the following:

a) Eligible amount of input tax credit.
b) Time limit to submit declaration on common portal.
c) Whether any certification required while availing the credit, if so from whom.
Ans:
(a) Eligible input tax credit is Rs.306000/-
(b) Declaration in Form GST ITC-01 on or before 14th January should be submitted on
common portal of GSTN.
(c) Declaration regarding inputs tax credit shall be duly certified by a practicing Chartered
Accountant or a Cost Accountant if the aggregate value of the claim on account of
central tax. State tax. Union territory tax and integrated tax exceeds Rs.200000.
In the give case, since, input tax credit declared is Rs.306000. Therefore, certificate from
 a practicing Chartered Accountant or a Cost Accountant is required.
Note: M/s X Ltd cannot take ITC on capital goods.

Q 113: Mr. A applies for voluntary registration on 22nd November and obtained registration on
25th November.
Mr. A has stock on the following two dates:
Date Opening balance (units) Purchased (units) Sold (units)
st
21 November 12000 20000 8000

On 24th November, Mr. A purchased 5000 units and sold 15000 units.
On 24th November, Mr. A is also purchased plant and machinery for Rs.200000 plus GST 28%.
Mr. A purchased goods at uniform rate throughout the year at Rs.100 per unit plus GST paid
18%.
You are required to find the eligible input tax credit to Mr. A.
Ans: stock as on 24th November = 14000 units
Value of stock = Rs.1400000
(i.e. 14000 units X Rs.100 per unit).
Input tax credit eligible is Rs.252000/-.
Note: ITC on capital goods not allowed.
Q 114: Mr. C a registered taxable person, was paying tax at composition scheme upto 30th July.
However, w.e.f. 31 st July, Mr. C becomes liable to pay tax under regular scheme.
Other information:
(a) Input as on 30th July for Rs.354000 (inclusive of GST paid @ 18%).
(b) Capital goods purchased for Rs.500000 (invoice date 22nd April, GST 18%)
Find the eligible ITC to Mr. C.
Note: Mr. C not availed depreciation on the GST portion paid on capital goods.
Ans: Statement showing total ITC allowed to Mr. C as on 31st July
Particulars Value in Rs. Working note
ITC allowed on inputs 54000 354000 * 18/118
ITC allowed on capital goods 81000 ITC on capital 90000
goods
Less: 5% p.q. (9000)
(Rs. 90000*
5%*2)
Net allowed 81000
Total ITC allowed 135000

Q 115: The goods manufactured by Royal Ltd. have been exempted from GST with effect from
15th November 2017. Earlier these goods were liable to tax @ 18%. Its inputs were liable to GST
@ 12%.
Following information is supplied on 15th November 2017:
a. The inputs costing Rs. 144720 are lying in stock.
b. The inputs costing Rs.77184 are in process.
c. The finished goods valuing Rs.482400 are in stock, the input cost is 50% of the value.
Royal Ltd. also purchased capital goods for ?2,00,000 by paying GST 28% (invoice
dated 10th July 2017)
The balance in electronic credit ledger account shows credit balance of Rs.279104.
The department has asked Royal Ltd. to reverse the credit taken on inputs referred above.
However, Royal Ltd. contends that credit once validly taken is indefeasible and not required to
be reversed. Decide.
What would be your Ans if the balance in electronic credit ledger receivable account as on 15th
November 2017 were Rs.29104?
Ans:
Statement showing amount to be paid by Royal Ltd. as on 15 th November 2017
Amount to be
S.No. Particulars Workings
paid (Rs.)
1) Input lying in stock 17366 Rs. 144720*12/100=Rs. 17366
Inputs in process (i.e.
2) 9262 Rs. 77184* 12/100= Rs. 9262
Work in Progress)
Inputs contained in
3) finished goods lying in 28944 Rs. 482400 * 50%* 12/100= Rs. 28944
stock
Useful life as per rule 44(1)(b)=5 years (i.e.
60 months)
No. of months capital goods have been in
4) Capital goods 51333
use= 4 months 5 days (i.e. 5 months)
The useful remaining life in months = 55
months 200000* 28% * 55/60 = Rs. 51333
Amount to be paid by
5) 106905
Royal Ltd.

Amount payable by Royal Ltd. = Rs. 106905

Less: ITC receivable = Rs. (279104)
Excess ITC shall lapse = Rs. (172199)

Excess ITC in electronic credit ledger of Rs. 172199 shall lapse as 15th November 2017.
If the balance in electronic credit ledger as on 15 th November 2017 is Rs. 29104, then amount
payable is as follows:

Amount payable by Royal Ltd. Rs. 106905

Less: ITC Receivable Rs. (29104)
Amount payable by electronic cash ledger Rs. 77801

Q 116: M/s A Ltd. sold plant and machinery after being used in the manufacture of taxable
goods for Rs.400000 on 1st November, 2018. GST is payable on transaction value of plant and
machinery 18%. M/s A Ltd. was purchased this machine vide invoice dated 22nd November,
2017 for Rs.550000/- plus GST 18%.
M/s A Ltd. availed the credit on said plant and machinery. Find the amount payable by M/s A
Ltd. under section 18(6) of the CGST Act, 2017.
Ans:
Particulars Amount in T Working note
ITC taken on capital goods 99,000 5,50,000 X 18%
Less:- 25% reduction (24,750) No. of quarters = 5
5% X 5 = 25% reduction
Balance ITC 74,250
Tax on Transaction value 72,000 4,00,000x 18%
Therefore, M/s A Ltd is liable to pay an amount of Rs.74250/-.

W.e.f 15th November 2017 Restaurant Services (vide Notification No. 46/2017, dated 14 th
Nov, 2017)

S.No. Description Rate of GST

1 All stand-alone restaurants irrespective of air 2.5% CGST/SGST each
conditioned or otherwise without
Supply, by way of or as part of any service or in any ITC
other
manner whatsoever, of goods, being food or any
other
article for human consumption or drink provided by
a
restaurant, eating joint including mess, canteen or
takeaways including those located in residential or
lodging premises having declared tariff of any unit
 of
accommodation up to Rs.7,499/-.
2 Supply of (1) above, those located in residential 18% with ITC
premises
having declared tariff of any unit of accommodation
of Rs. 7500/- or more per day.
Explanation:- “declared tariff’ includes charges for all amenities provided in the unit of
accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any
other amenities, but without excluding any discount offered on the published charges for
such unit.
Revised rate of GST is not ‘optional’ in respect of restaurant services. Accordingly, credit
availed and
remaining unutilized as at 14th November 2017 will need to be extinguished in accordance
with section 18(4) of CGST Act.

Simplified approach:

Type of Restaurants/Hotels/Lodges GST Rate

All restaurants 5%noITC
Restaurants within hotels (room tariff 5% no ITC
<7,500)
Restaurants within hotels (room tariff 18% with ITC
>=7,500)
Outdoor catering 18% with ITC
Hotels & Lodges with tariff below Rs.1000 Exempt

Q 117: Hotel King Pvt. Ltd., supplying restaurant services in Mumbai. In the month of November
2017 supplied restaurant taxable services is as follows;
From 1st November 2017 to 14th November 2017 (GST 18%) =Rs.200000
th th
From 15 November 2017 to 30 November 2017 (GST 5%) =Rs. 800000
Input Tax Credit receivable account as on 14-11-2017 is Rs.22,500.
Capital goods purchased on 1st July 2017 for Rs.500000, IGST @ 18%. Hotel King Pvt., availed ITC
on capital goods.
Find the GST liability of Hotel King Pvt., for the month of November 2017?
Ans:
18% 5% Amount payable
output tax upto 14-11 -20 7 36,000 nil nil
output tax from 15th Nov
2017 nil 40,000 82,500
Less: ITC on inputs -22,500 NA NA
Net liab. On 20th Dec 2017
(by electronic cash ledger) 13,500 40,000 82,500

ITC receivable as on 14-11-2017=22500

Less: ITC on capital goods not allowed = (82500)

Amount payable = (60000)

(by electronic cash ledger)

Working note:
ITC on capital goods = 90000
Less: ITC on C.G. allowed =(7500)
ITC on capital goods not allowed = 82500

Q 118: Mr. A supplied goods to Mr. B for Rs.200000 plus GST 18%, vide Invoice No. 99, dated 5th
November 2017. Mr. B availed the ITC of Rs.36000 and confirmed in GSTR-2. However, Invoice
No. 99, dated 5th November, 2017 not reflected in GSTR-1, of Mr. A.
You are required to Ans the following:
a) When matching will takes through common portal of GSTN.
b) To whom discrepancy will be informed.
c) Time limit for rectification of discrepancy
d) Whether ITC is allowed to Mr. B, if Mr. A is not paid tax till 20th January 2018.
e) Mr. B communicated the problem to Mr. A, who looks into the issue and rectified the
discrepancy and included invoice no. 99 in his GSTR-3 for January 2018 accordingly he
paid tax on 20th Feb 2018. If so Mr. B can reduce his liability?
Ans:
a) Matching will take place only after the due date of GSTR-3 for the month of November
2017. In the given case matching will takes place after 20th December 2017.
b) Discrepancy is to be communicated by the common portal GSTN to supplier (i.e. Mr. A)
in the Form GST MIS-2 and GST MIS-1 to recipient of supply.
c) Time limit for rectification is 20th January, 2018 (i.e. Due date of filling FORM GSTR-3 for
the
month succeeding the month in which the discrepancy is made available). Mr. A should
 pay tax on it (as per Rule 71(4) of the CGST Rules, 2017).
d) Input tax credit of Rs.36,000 shall be added to the output tax liability of Mr. B in his
return to be furnished in FORM GSTR-3 for the month succeeding the month in which
the discrepancy is made available (i.e. 20th Feb 2018) with interest @18%.
e) As per section 42(7) of the CGST Act, 2017 Mr. B can reduce the amount from his output
tax
liability and the interest paid will be refunded to his electronic cash ledger account
under section 42(9) of the CGST Act, 2017.

Q 119: ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the
following items during the month of July.

S. No. Particulars GST paid (Rs.)

Electrical transformers to be used in the
1) manufacturing process 520000
2) Trucks used for the transport of raw material 100000
3) Raw material 200000
Confectionery items for consumption of
4) employees working in the factory 25000

Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving
necessary explanations for treatment of various items.
Note:-
a) All the conditions necessary for availing the ITC have been fulfilled.
b) ABC Co. Ltd. is not eligible for any threshold exemption.
Ans:
Computation of ITC available with ABC Co. Ltd. for the month of July
S.No. Particulars ITC (Rs.)
1) Electrical transformers 520000
2) Trucks used for the transport of raw material 100000
3) Raw material 200000
4) Confectionery items for consumption of nil
employees working in the factory
Total ITC allowed 820000
Q 120: XYZ Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with
XYZ Ltd. for the month of October, 2018 from the following particulars:

S.No. Inward supplies GST (Rs.) Remarks

One invoice on which GST payable was
1) Inputs ‘A’ 100000 Rs.10000, is missing
2) Inputs ‘B’ 50000 Inputs are to be received in two instalments.
First instalment has been received in October,
2018.
3) Capital goods XYZ Ltd. has capitalised the capital goods at full
120000 invoice value inclusive of GST as it will avail
depreciation on the full invoice value.
4) Input services 225000 One invoice dated 20.01.2018 on which GST
payable was Rs.50000 has been received in
October, 2018.

Note :
a) All the conditions necessary for availing the ITC have been fulfilled.
b) ABC Co. Ltd. is not eligible for any threshold exemption.
c) The annual return for the financial year 2017-18 was filed on 15th September, 2018.
Ans:

Computation of ITC available with XYZ Ltd. for the month of October, 2018

S.No. Inward supplies

1) Inputs ‘A’ 90,000 Rs. 100000 – Rs. 10000= Rs.90000
2) ITC allowed only when all instalments
Inputs ‘B’ Nil received
3) Capital goods Nil ITC not allowed. Since, GST paid on
such C.G. claimed depreciation [Sec.
16(3)]
4) Input services 1,75,000 Since, ITC not availed before filing
annual return [Sec. 16(4) of CGST Act,
2017].
Rs.225000 - Rs.50000= Rs.175000
Total ITC 2,65,000
allowed
Q 121: Shipra Traders is a registered supplier of goods in Assam. It purchased goods valued at
Rs. 10000 from Kartik Suppliers located within the same State. Kartik Suppliers charged CGST &
SGST separately in its invoice. Subsequently, Shipra Traders sold goods valuing Rs.9500 to
Rabina Manufacturers located in Assam. 20% of the inputs purchased are still lying in stock and
there was no opening stock of goods. Rate of CGST and SGST on supply and purchase of goods
is 9% each. Calculate the net GST payable by Shipra Traders and input tax credit (ITC) to be
carried forward, if any.

Ans: Statement showing GST payable or ITC carried forward:

Particulars CGST 9% SGST 9%
Outward supply 855 855
Less: ITC (900) (900)
Excess ITC c/f (45) (45)

Q 122: Krishna Motors is a car dealer selling cars of an international car company. It also
provides maintenance and repair services of the cars sold by it as also of other cars. It seeks
your advice on availability of input tax credit in respect of the following expenses incurred by it
during the course of its business operations:
a) Cars purchased from the manufacturer for making further supply of such cars. Two of
such cars are destroyed in accidents while being used for test drive by potential
customers.
b) Works contract services availed for constructing a car washing shed in its premises
(CA Final May 2018 RTP)
Ans:
The availability of input tax credit (ITC) in respect of the various expenses incurred by Krishna
Motors is discussed below:
a) ITC on cars purchased from the manufacturer for making further supply of such cars will
be allowed (i.e. exception to section 17(5)(a) of CGST Act, 2017).
However, ITC on the cars destroyed in accident will not be allowed as the ITC on goods
destroyed for whichever reason is specifically blocked under section 17(5)(h) of CGST
Act.
b) The car washing shed is not a plant and machinery and the works contract service is not
used for further supply of works contract service, ITC thereon will not be allowed
(Section 17(5)(c) of CGST Act, 2017).

Q 123: M/s XYZ, a registered supplier, supplies the following goods and services for
construction of buildings and complexes -
• excavators for required period at a per hour rate
• manpower for operation of the excavators at a per day rate
• Soil-testing and seismic evaluation at a per sample rate.
The excavators are invariably hired out along with operators. Similarly, excavator operators are
supplied only when the excavator is hired out.
M/s XYZ receives the following services:
• Annual maintenance services for excavators;
• Health insurance for operators of the excavators;
• Scientific and technical consultancy for soil testing and seismic evaluation.
For a given month, the receipts (exclusive of GST) of M/s XYZ are as follows:
• Hire charges for excavators Rs. 1800000
• Service charges for supply of manpower for operation of the excavator – Rs.20000
• Service charges for soil testing and seismic evaluation at three sites – Rs.250000.
The GST paid during the said month on services received by M/s XYZ is as follows:

• Annual maintenance for excavators – Rs.100000

• Health insurance for excavator operators – Rs.11000
• Scientific and technical consultancy for soil testing seismic evaluation – Rs. 100000.
Compute the net GST payable by M/s XYZ for the given month.
Assume the rates of GST to be as under:
Hiring out of input tax credit of GST is nil.
(CA Final May 2018 RTP)
Ans:
Computation of net GST payable by M/s XYZ

Particulars GST payable (Rs.)

Gross GST liability 263400
Less: Input tax credit 200000
Net GST liability 63400

Working note:
Particulars Value received Rate of GST GST payable (Rs.)
Hiring charges for excavators 1800000 12% 216000
Service charges for supply of 12% 2400
manpower for operation of 20000
excavators
Service charges for soil
testing and seismic
evaluation 250000 18% 45000
Gross GST liability 263400

Computation of Input Tax Credit available for set off

Particulars GST paid (Rs.) ITC available (Rs.)
Annual maintenance services
for excavators 100000 100000
Health insurance for
excavator operators 11000 Not allowed
Scientific and technical
consultancy 100000 100000
Total input tax credit
available 200000
COMPOSITION SCHEME
Q1. M/s X Ltd. being a manufacture of laptops has five factories in Chennai, Salem, Coimbatore and Madurai.

P.Y turnover in
Place lakhs(including GST
@18%
Chennai 1 67.91
Salem 22.00
Coimbatore 18.00
Madurai 20.00
Chennai 2 33.60
Total 161.51
M/s X ltd. is eligible for composition levy in the current year.

Ans: Aggregate turnover =161.51 * 100/118 =136,87,288 lakhs

Note: Since, Aggregate turnover in the preceding financial year does not exceed Rs. 1.5 crore and hence,
M/s X Ltd. is eligible for Composition Scheme.

Q2. M/s Y Ltd. being a trader of laptops has two units in Chennai and in Mumbai.

Place P.Y. turnover Rs. In lakhs

(Excluding taxes)
Chennai 52
Mumbai 12
You are required to answer the following:

a) M/s Y Ltd. is eligible for composition levy in the current year.

b) If so, M/s Y Ltd can opt composition scheme for Chennai location and normal scheme for Mumbai.
c) Need to give separate intimations for opting composition scheme in each state.

Ans:

a) Yes. M/s Y Ltd. is eligible to avail the composition scheme in both the states namely Tamil Nadu and
Maharashtra.

Since , M/s Y Ltd. has same PAN, and his aggregate turnover does not exceed Rs. One crore is eligible for
composition levy, even though the company has multiple registrations under GST.

b) No. M/s Y Ltd. cannot opt composition scheme for one location normal scheme for another location.
Where more than one registered person are having the same permanent account number (issued under
the Income-tax Act, 1961), the registered person shall not be eligible to opt for

the scheme under sub-section (1) of Section 10 of CGST Act, 2017 unless all such registered persons opt
to pay tax under that sub-section.
 c) Intimation to opt composition scheme in respect of any place of business in any state or Union Territory
shall be deemed to be intimation in respect of all other places of business registered on the same
permanent account number (PAN).

Q3. M/s X & Co., sells electrical cables, motors and wires. Company also undertake repair of switches, motor
sets. Turnover during preceding financial from sale of goods is Rs. 59 lakhs, whereas repairing unit is 1 lakh.
M/s X & Co., is eligible for composition scheme. Advice.

Ans: No. Since, M/s X & Co., deals party with supply of services. Therefore, the benefit of

Composition scheme will be denied to M/s X & CO.

Q4. Mr. A is a paper merchant own 5000 sq ft., shop at Chennai. Mr. A offered extra space available in their shop
to put up their advertisement. His turnover in the previous year from sale of goods Rs. 20 lakhs and
advertising services Rs. 2 lakhs. Mr. A is eligible for composition scheme in the current year.

Ans: No. Mr. A being a paper merchant charging services and hence, the benefit of composition scheme is not
allowed.

Q5. Hotel King pvt., Ltd. provider of restaurant services in New Delhi. They also serve beer, whisky and so on.
Turnover in the preceding previous year is Rs. 67 lakhs. Hotel king Pvt. Ltd. is eligible for composition
scheme in the current year.

Ans: Hotel King Pvt., Ltd., is not eligible for composition scheme. Since they are supplying the product, which is
not levied to GST (namely beer, whisky called as non-taxable supply).

Q6. Mr. C of Chennai is a retailer dealing with cell phones. He supplies goods to the person located in Chennai
and Pondicherry. Aggregate turnover in the preceding financial year is Rs. 45 lakhs. Mr. C wants to opt for
composition scheme in the current financial year.

Ans: No. When the person makes inter-state supply of goods benefit of composition scheme is prohibited.
Therefore, Mr. C will not be entitled to the benefit of composition scheme.

Q7. Peter England is a trader who sells his ready-made cloths online on amazon India (an Electronic Commerce
Operator). He received an order for Rs. 1200000 in the previous year. Peter England also supplied goods
from there out lets. Aggregate turnover of the company in the previous year was Rs. 2100000.
Peter England is eligible for composition scheme.

Ans: No. Peter England engaged in making supply of goods through an electronic commerce operator who is
required to collect tax at source under section 52 of CGST Act, 2017. Hence, peter England is not eligible for
composition scheme.

Q8. Hot Breads Pvt. Ltd. is the supplier of bakery products registered in the current financial year (2017-2018)
w.e.f. 1st oct., 2017. In the month of Oct.,2017 total taxable supplies Rs. 88 lakhs.

Answer the following question

 a) Company is eligible for composition Scheme?
b) If so company wants to pay tax @ 1 % being a trader. However, the Deputy Commissioner of Central
Tax contented that the assessee is liable to pay tax @ 5% under the food and Restaurant Services
category? Advise.

Ans:
a) Hot Breads Pvt. Ltd. is eligible for composition levy in the current year.
b) The supply of food and restaurant services category is the only service included under the composition
scheme. For a business to be categorised as food and restaurant services, there needs to be an element
of service involved.

In the given case, supply of bakery products, there is only a supply of goods i.e. food items but there is no
element of supply of service. Hence supply of bakery products is eligible to pay GST @ 1% under the Traders
category and not Food and Restaurant Services category.

Therefore, department contention is not correct.

Q9. Prem is running a consulting firm and also a fancy store, registered under the same PAN number. Turnover
of the fancy store is Rs. 6500000 and receipt of consultancy firm is 1000000 in the preceding financial year.

you are required to provide answers with supporting explanatory note for each answer to the following
questions:

1) Is prem eligible for composition scheme under CGST Act?

2) Whether it is possible for Prem to opt composition scheme only for fancy store?
3) If prem is running a restaurant with turnover of Rs. 6500000 instead of consultancy firm as well as a
fancy store, would he be eligible for composition scheme?

Ans:

1) As per section 10 (2) (a) of CGST Act, 2017 if a taxable person is engaged in the supply of services (other
than restaurant and outdoor catering service) is not eligible for Composition Scheme under CGST Act,
2017.
2) If a business is ineligible to opt for composition, then all other business registered under the same PAN
shall automatically ineligible for the composition scheme. So Prem is not eligible for composition
scheme only for fancy store.
3) Restaurant services and fancy store are eligible for the composition scheme provided the aggregate
turnover does not exceeds Rs. 1 crore (in case of special category status states Rs. 75 LAKHS).
Hence, prem is not eligible for Composition Scheme. Since, his aggregate turnover is 130 lakhs (i.e. more
than Rs. 1 crore).

Q10. Hotel king Pvt. Ltd. is a registered person under GST P.Y. turnover was Rs. 100 lakhs. Applicable GST
18%. Inputs cost Rs. 780000 (exclusive of GST 18% ). Profit margin is 40 % on cost. Find the invoice price and
advice the best option to pay tax
Composition levy Normal provision
Particulars Value in Rs. Provision Value in Rs. Q11. M
Cost of inputs 780000 Cost of inputs 780000
/s ABC
Add: GST 18 % on points 140400 Add: GST 18% on inputs Not cost
& Co.,
Total cost 920400 Total cost 780000
Add : profit margin 40% 368160 Add :profit margin 40 % 312000 made
Invoice price 1288560 Invoice Price 1092000 the
CGST 2.5% 32214 GST Liability followin
SGST 2.5% 32214 CGST SGST g
9% 9% supplies
Total GST liability 64428 Output tax 98280 98280 during
Less: ITC -70200 -70200 the
Net liability 28080 28080
month
Total Tax is Rs. 56160
of
month of October, 2017:
a) Restaurant, mobile dealership and textile manufacturing unit.
b) Rework, in the following restaurant, supply of mobile through an ecommerce operator.

Ans:
a) Yes. M/s ABC & co., is eligible for composition scheme in the current year.
b) No. M/s ABC & Co., is not eligible for composition scheme in the current year

Q12. If a person is liable to be registered on 11th Oct 2017 and he has applied for registration on 17th Oct
2017, what is the effective date of registration for composition levy.

Ans: Effective date is registration for composition levy is 11th Oct 2017.

Q13. A person is liable to be registered on 1st Oct 2017 and he has applied for registration on 17th nov 2017.
Registration granted on 20th Nov 2017.

What is the effective date of registration if he wants to opt composition levy?

Ans: The effective date of registration will be the date of grant of registration.

As a result effective date of registration will be effective date for opting for composition scheme (i.e. 20th nov
2017) provided no discrepancies found.

Q14. What is composition levy under GST as per section 10 of CGST Act?

Answer:
he composition levy is on alternative method of levy of tax designed for small taxpayers whose turnover is up to
Rs.1.5 Cr /Rs.75 lakhs in case of Special Category States except for state of Assam, Himachal Pradesh and
Jammu Kashmir (as per N/N 14/2019 CT dt 7/3/19) The objective of composition scheme is to bring simplicity
and to reduce the compliance cost for the small taxpayers.
Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed
percentage of his turnover every quarter, instead of paying tax at normal rate.

Q15. Explain the term 'aggregate turnover'. (MTP)

Answer:

Aggregate turnover includes the aggregate value of: _

(i) all taxable supplies,

(ii) all exempt supplies,
(iii) exports of goods and/or services and
(iv) all inter-State supplies of persons having the same PAN.

The above is computed on all India basis. Further, the aggregate turnover excludes central tax, State tax,
Union territory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is payable
under reverse charge is not taken into account for calculation of 'aggregate turnover [Section 2(6) of CGST
Act].

Q16. What is the threshold for opting to pay tax under the composition scheme as per section 10 of CGST
Act?

Answer:
The threshold limit for opting composition scheme is Rs.1.5 Cr/ Rs.75 lakh in case of special category states of
aggregate turnover in the preceding financial year. The benefit of composition scheme can be availed up to the
turnover of Rs.1.5Cr./ 75 lakh as the case may be in the current financial year.

Q17. Who are the persons not eligible for composition scheme as per section 10 of CGST Act?

Answer:

Following persons are not allowed to opt for the composition scheme u/s 10 :

a) a casual taxable person or a non-resident taxable person;

b) suppliers whose aggregate turnover in the preceding financial year crossed` 1.5Cr/75 lakhs;
c) supplier who has purchased any goods or services from unregistered supplier unless he has paid GST on
such goods or services on reverse charge basis;
d) supplier of services, other than restaurant service; over the limit of 10% of turnover in state or` Rs.5 lakh
which ever is higher
e) persons supplying goods which are not taxable under GST law;
 f) persons making any inter-State outward supplies of goods;
g) suppliers making any supply of goods through an electronic commerce operator who is required to
collect tax at source under section $2; and
h) a manufacturer of following goods:

S. No. Classification (Tariff item/Chapter) Description

1 2105 00 00 Ice cream and other edible ice, whether or not
containing cocoa
2 2106 90 20 Pan Masala
2A 2202 10 10 Aerated water
3 24 Tobacco and manufactured tobacco substitutes

Q18. What are the rates of tax applicable to a registered person under composition scheme?

Answer:

The category of registered persons, eligible for composition levy under section 10 shall pay tax at the rate as
specified in below table:

S. No. Categories of Central Rate State/ UTGST Total Rate As a % of

registered Person Rate UTGST Rate
1 Manufacturing other 0.5% 0.5% 1% Turnover in state
than goods notified Amended
2 Other suppliers 0.5% 0.5% 1% Turnover of
(normally trader) taxable supplies
of goods &
services
3 Composite supply of 2.5% 2.5% 5% Turnover in state
food or any other
article for human
consumption or drink
(other than alcoholic
liquor) Example:-
Restaurant

Q19. Explain the following in accordance with the provisions of GST Act pertaining to composition scheme u/s
10 :-
(i) Can a registered person, who purchases goods from a taxable person paying tax under the
composition scheme, avail credit of tax paid on purchases made from the composition dealer?
(ii) Can a person paying tax under the composition scheme issue a tax invoice under GST?
 (iii) Are monthly returns required to be filed by the person opting to pay tax under the composition
scheme?
(iv) Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his
inward supplies?

Answer:

(i) No, as the composition dealer cannot collect tax paid by him on outward supplies from his
customers, the registered person making purchases from a taxable person paying tax under the
composition scheme cannot avail credit.
(ii) No. He shall issue a bill of supply in lieu of tax invoice
(iii) No, Person opting to pay tax under composition scheme are required to electronically filed GSTR -
4 on yearly basis. However, they are required to furnish a statement every quarter or part thereof
containing the details of payment of self-assessed tax in FORM GST CMP-08 till the 18th of the
month succeeding such quarter. Due date of filing GSTR -4 is 30th April following the end of fin.
year 3.
(iv) As per sec 10(4), any taxable person opting to pay tax under the composition scheme cannot enter
the credit chain & thus cannot avail credit on his inward supplies.

Q20. In accordance with the provisions of GST Act, Give answers to the following pertaining to composition
scheme:-
1) Whether the composition scheme will be optional or compulsory?
2) A taxable person having same PAN can opt to pay tax under composition scheme by seeking separate
registration for branches?
3) Will a taxable person be eligible to opt for composition scheme only for one out of 3 business verticals?
4) Can composition scheme be availed if the taxable person effects inter- State supplies?
5) Can composition tax be collected from customers?

Answer:

1) It is an Optional scheme provided the eligibility criterion to opt the scheme is satisfied.
2) No. A registered person shall not be eligible to opt for the composition scheme unless all such registered
persons (branches having separate registration under a single PAN) opt to pay tax under composition
scheme
3) No. Composition scheme would become applicable for all the business verticals / registrations which are
separately held by the person with same PAN.
4) No. Composition scheme is applicable subject to the condition that the taxable person does not affect
inter-state outward supplies.
5) No. The taxable person under composition scheme is restricted from collecting tax.
Q21. How to compute 'aggregate turnover' to determine eligibility for composition scheme?

Answer: As per sec2(6) of CGST Act, Aggregate Turnover shall be computed as follows:

Includes :- Value of all outward supplies Excludes

Value of taxable supplies CGST
Exempt supplies SGST
Export of goods or services or both UTGST, IGST, Cess
Inter - State supplies of persons having the same Permanent Account Value of inward supplies on
Number to be computed on all India basis which tax payable under
reverse charge

Q22. XYZ Ltd. is a manufacturing company located in Bangalore. During the financial year 2018-19 total value
of supplies including inward supplies taxed under reverse charge basis are Rs.1,54,00,000. The breakup of
supplies is as follows:-
(i) Intra state supplies of goods chargeable to Nil rate of GST – Rs.25,00,000
(ii) Intra state supplies made under forward charge Rs.85,00,000
(iii) Intra state supplies of goods exempted under section II of CGST act Rs.19,00,000
(iv) Inward supplies of goods on which tax is payable under RCM –Rs.25,00,000

Explain whether XY2 is eligible to opt for Composition scheme in financial year 2019-20.

Answer: As per section 10(1) of CGST Act, a registered person, whose aggregate turnover in the preceding
financial year does not exceed Rs.1.5Crore may opt for payment of tax under composition scheme
(Notification No 14/2019 of Central Tax).

Firstly, we shall compute the aggregate turnover as per section 2(6) of CGST Act, which means the aggregate
value of –

• all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on
reverse charge basis),
• exempt supplies,
• exports of goods or services or both and
• inter-State supplies of persons having the same Permanent Account Number, to be computed on all
India basis
• Excludes:- Central tax, State tax, Union territory tax, integrated tax and cess.

Computation of aggregate turnover for the above case:-

S. No. Particulars Amount in (rs.)

i) Supplies chargeable to Nil rate of GST 25,00,000
 ii) Supplies made under forward charge 85,00,000
iii) Supplies of goods under exempted category 19,00,000
iv) Inward supplies of goods on which tax is payable Nil
under RCM (To be excluded)
Total 1,29,00,000 Since,

Since, the Aggregate turnover does not exceed Rs.1,50,00,000 during the preceding financial year i.e. 2018-19,
Thus XYZ Ltd. shall be eligible to opt for Composition Scheme for the financial year 2019-20.

Q23. CASE STUDY

A dealer 'X' has two offices in Delhi. How to determine whether 'X' is eligible to avail benefit of the composition
scheme, as turnover of both the offices for the financial year is Rs.36 lac and Rs.42 lacs respectively.

Answer:
As per section l10 of CGST Act, A registered person, whose aggregate turnover in the preceding FY does not
exceed Rs.1.5 Cr, other than special category states may opt to pay an amount calculated at the prescribed rates
during the current FY, in lieu of the tax payable by him. In the given case Mr. X can opt to avail the composition
levy scheme subject to fulfillment of condition of prescribed aggregate turnover limit as in the above case the
total turnover i.e. of both the offices is Rs.78 lacs it is within the prescribed limit thus it can opt for composition
scheme.

Q24. CASE STUDY

ABC Industries, a manufacturer in Mumbai, is engaged in supply of goods in Mumbai as well as Chennai (i.e.
inter-State supply of goods). Determine whether the ABC industries is eligible for composition scheme?

Answer:
As per section 10(2)(c) of CGST Act, A registered person engaged in making an inter-state outward supplies of
goods cannot opt for composition scheme.
Thus in the above case ABC industries cannot avail the benefit of composition scheme.

Q25. Determine whether the supplier in the following cases are eligible for composition levy provided their
turnover in preceding year does not exceed Rs.1.5Cr:
(i) Mohan is engaged in providing legal services in Rajasthan and is registered in the same State.
(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in
neighboring States.
(iii) Can supplier of Services opt for composition levy?
(iv) Can a person paying tax under composition scheme make supplies of goods to SEZ?
Answer:

(i) A supplier of services engaged in the supplies other than the supplies referred to in clause (b) of
paragraph 6 of Schedule II of CGST Act i.e. supply by way of or as part of any service or in any other
manner whatsoever, of goods, being food or any other article for human consumption or any drink,
is not eligible for composition levy. Since Mohan provides legal services, he is not eligible for
composition scheme.
(ii) A registered person engaged in making inter-state outward supplies of goods cannot opt for
composition levy. Thus, Sugam Manufacturers is not eligible for composition levy.
(iii) As per sec 10(2) (a) person engaged in supply of services shall not be eligible to opt for composition,
however an exception is given to category of supplies referred to in clause (b) of para 6 of schedule
II.
(iv) No. As per sec 10(2), Supplies to SEZ from domestic tariff area will be treated as inter-State supply &
as per one of the eligibility condition which states that, A person paying tax under composition
scheme cannot make inter-State outward supply of goods. Thus, for making supplies to an SEZ unit,
a person needs to take registration as a regular taxpayer.

Q26. CASE STUDY

Mohan Enterprises has two registered business units in Delhi. Its aggregate turnover for the preceding year for
both the business units was Rs.110 lakh.
It wishes to pay tax under composition levy for one of the units in the current year while under normal levy for
other units. You are required to advice Mohan Enterprises whether he can do so?

Answer:
A registered person with an aggregate turnover in a preceding financial year up to Rs.1.5 Cr is eligible for
composition levy in Delhi. Since the aggregate turnover of Mohan Enterprises does not exceed Rs.1.5 Cr, it is
eligible for composition levy in the current year.
However, all registered persons having the same Permanent Account Number (PAN) have to opt for composition
scheme. If one such registered person opts for normal scheme, others become ineligible for composition
scheme. Thus, Mohan Enterprises either have to opt for composition levy for both the units or under normal
levy for both the units.

Q27. CASE STUDY

Mr. Amar is running a consultancy firm and also a readymade garment showroom which are registered under
same PAN. Turnover of the showroom is Rs.55 lakh and Receipt of the consultancy firm is Rs.15 Lakh in the
preceding financial year.
a) Whether Mr. Amar is eligible for Composition Scheme? Whether there is any difference if Mr. Amar
wants to opt for composition only for Showroom?
 b) If instead of consulting agency Mr. Amar is running a Restaurant, whether he is eligible for
composition?
c) If the turnover of garment showroom is Rs.1.5 Cr in the preceding financial year and there is no
consultancy firm whether he is eligible for Composition?

Answer:

Legal Provision: As per section 2(6) of CGST Act, Aggregate turnover includes all supplies made by all the
persons registered under same PAN to be computed on all India basis.

Provided further that In case of manufacturer, trader or supplier of service as per clause (b) Para 6 schedule II
under sec 10(1) may supply services (other than those refer in clause (b) of paragraph 6 of schedule II), of value
not exceeding 10% of turnover in state or union territory in the preceding financial year or 5 lakh rupees,
whichever is higher.

As per section 10(2)(a) of CGST Act, any person engaged in supply of services is ineligible for composition levy.

a) No, Mr. Amar is not eligible for composition scheme as we assume that he engaged in supply of service
more than the limit as given above.
b) Restaurant services are eligible for the composition scheme. Hence Mr. Amar is eligible for Composition
Scheme. As per section 10(2) (a) exception is given to this category
c) Yes, Mr. Amar is eligible for composition scheme as turnover does not exceeds 1.5 Cr in the preceding
F.Y.

Note:- Since turnover of Mr. Amar exceeds Rs.50 Lakhs he is ineligible to opt for composition levy as per N/N
2/2019 also.

Q28. In accordance with provisions of GST Act, Give answers to the following pertaining to composition
scheme:-
(i) Can a person making application for fresh registration under GST opt for composition levy at the time of
making application for registration?
(ii) Can the option to pay tax under composition levy be exercised at any time of the year?
(iii) Can a person, who has already obtained registration, opt for payment under composition levy? If so,
how?
(iv) In case a person has registration in multiple states? Can he opt for payment of tax under composition
levy only in one state and not in other state?

Answer:
 (i) Yes. A Person can avail the option to pay tax under the composition scheme by filling the details in
Part B of FORM GST REG-01. This will be considered as intimation to pay tax under the composition
scheme.
(ii) No. The option is required to be given electronically in FORM GST CMP- 02, prior to the
commencement of the relevant financial year.
(iii) Yes. A person needs to give intimation electronically in Form GST CMP- 02 but it shall be
availed from beginning of the financial year only.
(iv) Composition scheme once opted it would be applicable for all business units having separate
registration within the state & all other registrations outside the state which are held by the person
with same PAN.

NO, he cannot opt for payment of tax under composition in one state & normal tax in another state for
same PAN.

Composition Scheme for Supplier of Services under

NN 02/2019 -CT

Q29. State the conditions to be fulfilled by supplier of services in order to avail the composition scheme under
N/N 2/2019 CT(R) dated 07/03/2019

Answer:

In order to avail the composition scheme, the supplier has to fulfill following conditions as per N/IN 2/2019 CT(R)
dated 07/03/2019

1. Supplies are made by a registered person:

a) whose aggregate turnover in PFY was Rs.50 lakhs or less
b) who is not eligible to pay tax under section 10(1) of CGST Act
c) who is not engaged in making any supply which is not leviable to tax under CGST Act
d) who is not engaged in making any inter-state outward supply
e) who is neither a casual taxable person nor a non-resident taxable person
f) who is not engaged in making any supply through an electronic commerce operator who is required to
collect tax at source u/s 52
g) who is not engaged in making supplies of the goods notified by Central Government
 2. The registered person shall not collect tax from the recipient on supplies made by him nor shall he be
entitled to any credit of input tax.
3. The registered person shall issue, instead of tax invoice, a bill of supply.
4. The registered person shall mention the following words at the top of the bill of supply, namely:-
'taxable person paying tax in terms of notification no. 2/2019- Central Tax (Rate) dated 07.03.2019, not
eligible to collect tax on supplies'.
5. The registered person opting to pay tax under this notification shall be liable to pay Central tax @3% and
State tax @3% on all outward supplies.
6. The registered person opting to pay tax at the rate of six percent (i.e. CGST 3% & SGST 3%) shall be liable
to pay Central and State tax on inward supplies on which he is liable to pay tax under sub-section (3) or,
as the case may be, under sub-section (4) of section 9 of CGST Act, at the applicable rates i.e. normal
rates.

Q30. Hyundai Service Center registered under GST in the state of Maharashtra provides car servicing to
various customers at intra-state level. The turnover of preceding financial year (PFY) 2017-18 was Rs.45
lakhs and turnover of 1st quarter of current financial year (CFY) 2018-19 was ? 48 lakhs which includes 30
lakhs from provision of service and Rs.18 lakhs from sale of goods such spare parts.
i. State whether Hyundai Service Center can opt for composition scheme in CFY 2018-19
ii. Determine the tax liability under N/N 2/2019 (Normal tax rates for goods - 12% and for services -
18%, tax rate under composition scheme - 6%)

Answer:

Legal Provision: As per N/N 2/2019 CT (R) dt. 07/03/2019, any registered person making intra-state supplies of
goods or services up to 50 lakhs in preceding financial year can opt for composition scheme for first supplies of
goods or services or both up to an aggregate turnover of S0 lakhs made on or after 1st day of April in current
financial year and such supplies will be liable to GST @ 6% (CGST - 3% & SGST - 3%) provided other conditions
have been satisfied as laid down in the said notification.

i. Hyundai Service Centre supply services along with goods at intra-state level to the ultimate recipient and
the aggregate turnover does not exceeds S0 lakhs in preceding financial year then it can opt for the
composition scheme of 6%. Supply of goods or services up to first 50 lakhs in current i) financial year
shall be liable for GST @ 6% instead of the given rates of 12% and 18%.
As the aggregate turnover of Hyundai Service Centre in 1st quarter of current financial year was Rs.48
lakhs, Hyundai Service Center is eligible for levying GST @ 6 % on entire turnover of Rs.48 lakhs.
ii. The Tax Liability of Hyundai Service Centre for the 1st quarter of CFY is as follows:
Particulars Turnover of Goods (rs.) Turnover of Service (rs.)
Value of Supply 18,00,000 30,00,000
CGST @ 3% 54,000 90,000
SGST @ 3% 54,000 90,000
Note: There is no restriction on supply of goods as per N IN 2/2019 along with supply of services

Author's Note: If transactions are B2C then it is advisable that person must opt for composition scheme

Mixed Category

Q31. CASE STUDY

M/s XY2 Pvt. Ltd, a manufacturer having the only registered place of business in the state of Maharashtra.
Determine the eligibility to opt for composition scheme and also compute tax liability of MIs XYZ Pvt. Ltd, on the
basis of following information assuming that total value of service provided by the company in Preceding
Financial Year (PFY) is within the allowed limit of section 10(1) except interest and restaurant service.

S. No. Particulars PFY 2018-19 (rs.) PFY 2019-20 (rs.)

1. Value of taxable supply of goods 90.00 lacs 20.00 lacs
2. Value of exempt supply of goods 20.00 lacs 5.00 lacs
3. Value of taxable supply of service 5.00 lacs 1.00 lacs
4. Value of exempt supply of service 3.00 lacs 0.50 lacs
5. Value of supply of restaurant service 15.00 lacs 1.50 lacs
6. Interest on loan/advances /deposits 4.00 lacs 1.20 lacs

Calculate GST payable under composition scheme for 1st quarter of CFY 2019-20

Answer:

Legal Provision: As per section 26) of CGST Act, 2017, aggregate turnover means the aggregate value of:

→ All taxable supplies (other than inward supplies under RCM)

→ Exempt Supplies
→ Export of goods or services or both and
→ Inter-state supplies of person having same PAN

to be computed on all India basis but it excludes central tax, state tax, union territory tax, integrated tax and
cess

a) Calculation of aggregate turnover of PFY 2018-19.

Particulars Rs. In lacs
Value of taxable supply of goods 90.00
Value of exempt supply of goods 20.00
Value of taxable supply of service 5.00
 Value of exempt supply of service 3.00
Value of supply of restaurant service 15.00
Aggregate turnover 133.00

Note: Interest on loan/advances/deposit shall not to be considered for calculation of aggregate turnover As the
aggregate turnover of XY2 Ltd. does not exceed 1.5 Cr. in the preceding fin. Yr. It is eligible to opt for
composition scheme

b) Calculation of value of supply of service to be allowed in CFY 2019-20 as per CGST Amendment Act,
2018
The applicable limit is 10% of turnover in state i.e. 13.3 lakhs or 5 lakhs whichever is higher. Actual
supply of service in CFY [taxable supply + exempt supply] = { 1.5 lakhs which is within limit Note: Interest
on loan/advances/deposits not to be considered in above limit
c) Calculation of GST on supply of goods and services except restaurant service

S. No. Particulars (rs.)

1. Value of taxable supply of goods 20,00,000.00
2. Value of exempt supply of goods 5,00,000.00
3. Value of taxable supply of service 1,00,000.00
4. Value of exempt supply of service 50,000.00
26,50,000.00
5. CGST @ 0.5% 13,250.00
6. SGST @ 0.5% 13,250.00
Total 26,76,500.00

d) Calculation of GST liability on restaurant service

Particulars (rs.)
Value of Supply 1,50,000.00
CGST @ 2.5 % 3,750.00
SGST @ 2.5 % 3,750.00
Total 1,57,500.00

Note:

i. Manufacturer shall pay composition tax @ 1% of turnover in state which also includes nil rate &
wholly exempt supply and for restaurant services the composite tax rate will be payable @ 5%
ii. Author's opinion as per above order: interest on loan to be excluded only from Aggregate turnover
& not from Turnover in State. Hence it should be added for calculation of GST liability but still there
is no clarification, hence, not taken for above calculation.
 Questions from RTP, MTP of ICAI

Q32. Pepper & Salt Ltd., registered in Madhya Pradesh has the turnover amounting to Rs.80 lakh in the
financial year 2018-19. It wants to avail the benefit of composition scheme in the year 2019-20. You are
required to advise Pepper and Salt Ltd. regarding the availability of composition scheme in the year 2019-20

Answer:
Pepper & Salt Ltd. can avail the benefit of the composition scheme in the year 2019-20 as the threshold for
composition scheme is Rs.1,5 Crore of aggregate turnover in the preceding financial year" under section 10(1) of
CGST Act, 2017 r/w N/N 14/2019 CT dt. 7/3/19. The benefit of composition scheme can be availed up to the
turnover of Rs.1.5 Crore in current financial year". However, it has to be ensured that Pepper & Salt Ltd. fulfills
the following conditions as given under section 10(2) of CGST Act, 2017:-
(i) Pepper & Salt Ltd. save as provided in sub sec (1) of sec 10 is not engaged in the supply of services
(ii) It is not engaged in making any supply of goods which are not taxable under the CGST Act/SGST Act/
UTGST Act.
(iii) Pepper & Salt Ltd. do not make any inter-State outward supplies of goods.
(iv) It does not supply goods through an electronic commerce operator.
(v) It does not manufacture ice cream, pan masala and tobacco etc.

Q33. Mr. Zaid, registered in Himachal Pradesh is engaged in making inter-State outward supplies of apparels.
The aggregate turnover of Mr. Zaid in the financial year 2018-19 is 70 lakh. He opted for composition levy in
the year 2019-20 and paid tax for the quarter ending June, 2019 under composition levy. The proper officer
has levied penalty on Mr. Zaid in addition to the tax payable by him.
You are required to examine the validity of the action taken by proper officer.

Answer:
The action taken by proper officer is valid in law.
Legal Provision: As per Section 10(1) of CGST Act, 2017 r/w N/N 14/2019 CT dt. 7/3/19. inter alia provides that
the benefit of composition levy can be availed by a registered person if the aggregate turnover in the preceding
financial year does not exceed Rs.1.5 crore.
However, the said threshold is reduced to 75 lakh in case of special category states. Further, section 10(2) inter
alia specifies that registered person is eligible to opt for composition levy if he is not engaged in making any
inter-state outward supplies of goods.
As per Section 10(5) provides that if a person who has paid under composition levy is found as not being eligible
for compounding then such person shall be liable to penalty to an amount equivalent to the tax payable by him
under the provisions of the Act i.e., as a normal taxable person and that this penalty shall be in addition to the
tax payable by him.
Explanation: As per the above stated provisions the action taken by the proper officer is valid in law.
In the given case, Mr. Zaid is engaged in making inter-State outward supplies of goods. So, he is not eligible to
opt for composition levy irrespective of aggregate turnover in the preceding financial year.
Also as per the provisions pertaining to penalty as stated provision above u/s 10(5). Thus, levy of penalty on Mr.
Zaid is valid in law in terms of this Section.

Q34. Mr. X is running a consulting firm and also a readymade garment showroom in Kolkata registered in
same PAN. Turnover of the showroom is Rs.70 lakh and receipt of consultancy firm is Rs.15lakh in the
preceding financial year. You are required to answer the following:
(1) Is Mr. X eligible for composition scheme?
(2) Is it possible for Mr. X to opt for composition scheme only for showroom? (CA Inter Suggested Nov 18
Old)

Answer:

A registered person, whose aggregate turnover in the preceding financial year did not exceed Rs.1.5 crore in a
State/UT R 75 lakh in case of Special Category States except Jammu and Kashmir, Assam & Himachal Pradesh],
may opt for composition scheme.

However, he shall not be eligible to opt for composition scheme if, inter alia, he is engaged in the supply of
services other than restaurant services.

(1) In the given case, since Mr. X is engaged in the supply of consultancy service, he will be eligible to opt for
composition scheme only if he provides services up to the specified limit as stated in the proviso.
(2) No, it is not possible for Mr. X to opt for composition scheme only for showroom as all the registrations
under the same PAN have to opt for composition scheme.

Questions from RTP, MTP of CMA

Q35. Hot Breads Pvt. Ltd is the supplier of bakery products registered in the current financial year (2017-18)
w.e.f. 1st Oct 2017. In the month of Oct 2017 total taxable supplies Rs.88 lakhs. Answer the following:
(1) Is the company eligible for Composition Scheme?
(2) If so company wants to pay tax @1% being a trader. However, the Deputy Commissioner of Central Tax
contended that the assesse is liable to pay tax @5% under the Food and Restaurant Services category?
Advise. (RTP - CMA Jun 2018)

Answer:
As per Section 10(1) of CGST Act, 2017 inter alia provides that the benefit of composition levy can be availed by
a registered person if the aggregate turnover in the preceding financial year does not exceed Rs.1.5 crore,
However, the said threshold is reduced to 75 lakh in case of special category states other than Assam, Himachal
Pradesh and Jammu & Kashmir.
Provided further that In case of manufacturer, trader or supplier of service as per clause (b) Para 6 schedule II
under sec 10(1) may supply services (other than those refer in clause (b) of paragraph 6 of schedule II), of value
not exceeding 10% of turnover in state or union territory in the preceding financial year or S lakh rupees,
whichever is higher.
(1) In a given case Hot Breads Pvt. Ltd. is trader in bakery product and eligible for composition levy in the
current year.
(2) The supply of food and restaurant services category is included under the composition scheme. For a
business to be categorized as food and restaurant services, there needs to be an element of service
involved.
In the given case, supply of bakery products, there is only a supply of goods i.e. food items but there is
no element of supply of service, Hence supply of bakery products is eligible to pay GST @1%, under the
Traders category and not Food and Restaurant Services category. Therefore, department's contention is
not correct.

Q36. Mr. H registered in Hyderabad, who is selling goods from Telangana to Tamil Nadu. Turnover of Mr. H is
73 lakhs in the preceding financial year. Whether Mr. H is eligible for Composition? Whether your answer
will change if Mr. H is making purchase from Tamil Nadu and selling goods in Telangana?

Answer:
Mr. H is not eligible for composition as he is making interstate outward supply. If Mr. H is making purchase from
Tamil Nadu then he is eligible for composition scheme as there is restriction on outward interstate supply not on
inward interstate supply.

Q37. M/s Sai Trading Company, an eligible registered dealer in goods making intra-state supplies within the
state of Andhra Pradesh, has reported an aggregate turnover of 78 Lakhs in the preceding financial year.
(1) Determine whether Sai Trading Company will be eligible for composition levy, as on 31-10-2017.
(2) Will your answer be different, if in the above scenario, M/s Sai Trading Company is making intra state
supply within the state of Jammu and Kashmir?

Answer:
(1) Section 10 of CGST Act, 2017 provides that a registered person, whose aggregate turnover in the
preceding financial year did not exceed Rs.1.5crore may opt for composition scheme, The turnover limit
is 75 lakh in case of Special Category States. However, for Jammu and Kashmir, Assam & Himachal
Pradesh the turnover limit is Rs.1.5 crore only.
 In the given case, the applicable turnover limit for composition scheme will be Rs.1.5crore as Andhra
Pradesh is not a Special Category State.
Further, since the aggregate turnover of the registered person in the given case does not exceed
Rs.1.5crore and it satisfies other conditions of composition scheme namely, not making inter-State
supplies of goods, it is eligible for composition levy.
(2) Since the turnover limit for determining the eligibility for composition scheme in the State of Jammu and
Kashmir is also Rs.1.5crore, Sai Trading Company will be eligible for composition levy with other
condition of not making inter-State supplies of goods being fulfilled.

Q38. M/s. Ginny and John Company is a partnership firm of interior decorators and also running a readymade
garment showroom. Turnover of the showroom was Rs.80 lakh and receipts of the interior decorators
service was 22 Lakh in the preceding financial year. With reference to the provisions of the CGST Act, 2017,
examine whether the firm can opt for the composition scheme ?
Will your answer change, if the turnover of the showroom was 70 lakh and receipts of the interior decorators
service was 22 Lakh in the preceding financial year?
Also discuss whether it is possible for M/s. Ginny and John Company to opt for composition scheme only for
showroom?

Answer:
A registered person, whose aggregate turnover in the preceding financial year did not exceed { Rs.1.5crore
[Rs.75 lakh in case of special category States except Jammu and Kashmir, Assam & Himachal Pradesh], may opt
for composition scheme vide section 10 of CGST Act, 2017.
Provided further that In case of manufacturer, trader or supplier of service as per clause (b) Para 6 schedule II
under sec 10(1) may supply services (other than those refer in clause (b) of paragraph 6 of schedule II), of value
not exceeding 10% of turnover in state or union territory in the preceding financial year or S lakh rupees,
whichever is higher.
In the given case, since M/s Ginny and John Company is engaged in supply of interior decorator's service, Shall
be eligible to opt for composition scheme if he provides services within the prescribed limit as specified in the
above proviso.
Therefore, the company will be eligible to opt for composition scheme if it provides services up to 10% of Rs.102
lacs i.e 10.2 lacs or Rs.5lacs whichever is higher, thus it can provide services up to limit of Rs.10.2 lacs.
In the second case, where the turnover in state preceding financial year is Rs.92 lacs (70 lacs + 22 lacs) it will be
eligible to opt for composition scheme if it provides services up to 10% of Rs.92 lacs i.e Rs.9.2 lacs or Rs.5lacs
whichever is higher, thus it can provide services up to limit of Rs.9.2 lacs in current year. Further, where more
than one registered persons are having the same Permanent Account Number, the registered person shall not
be eligible to opt for composition scheme unless all such registered persons opt to pay tax under composition
scheme.
Therefore, the answer will not change in the third case also as all the registrations under the same PAN are
required to opt for composition scheme.
Q39. Enumerate the persons who are not eligible to opt for Composition Scheme under section 10(2) of the
CGST Act, 2017 (CA Inter Exam. May 19 New)

Answer:
A registered person shall not be eligible to opt for composition scheme if:-
(i) He is engaged in supply of services other than supplies referred to in clause (b) of paragraph 6 of
Schedule II.
(ii) he is engaged in supply of goods not leviable to tax
(iii) he is engaged in inter-State outward supplies of goods
(iv) he is engaged in supply of goods through an electronic commerce operator
(v) he is a manufacturer of notified goods, namely, manufacturer of ice cream, pan masala, tobacco and
Aerated water.

Q40. Examine in relation to composition levy scheme under the CGST Act, 2017 and the rules made
thereunder in the following individual cases:
(1) Ketu is a manufacturer of ice-cream and pan masala in State of Maharashtra, His turnover for the year
does not exceed Rs.1Crore. He wants to register for composition levy scheme. Is he eligible for it?
(2) Jadhu of Gujarat opts for composition scheme during a financial year 2017-18, But on 10-02-2018 his
turnover crosses Rs.1Crore, can he continue under composition levy scheme.
(3) X Ltd. has 2 branches K & L in Delhi, having same PAN, Branch K opts for normal scheme. X Ltd. want to
continue composition levy in case of its branch L. Can X Ltd. continue composition levy only for branch
L? (CA Inter Exam. May 19 Old)

Answer:

(1) A registered person who is engaged in manufacture of, inter alia, ice cream and pan masala, is not
eligible to opt for composition levy even if his aggregate turnover does not exceed Rs.1crore, Therefore,
in the given case, Ketu is not eligible to opt for composition levy.
(2) The option to pay tax under composition levy availed of by a registered person lapses with effect from
the day on which his aggregate turnover during a financial year exceeds the threshold limit of Rs.1crore,
He needs to pay tax under normal scheme from that day.
Since in the given case, the turnover of Jadhu crosses { Rs.1crore on 10.02.2018, he cannot continue
under composition scheme from that day.
(3) Where person having the same Permanent Account Number, has more than one registration, the
registered person shall not be eligible to opt for composition scheme unless all such registered persons
opt to pay tax under composition scheme. In other words, all the registrations under the same PAN have
 to opt for composition scheme. In view of the same, in the given case, X Ltd. cannot continue with
composition scheme only for branch L.

Q41. (i) Mr. C of Chennai paid fees for online coaching obtained from a teacher located in USA for coaching
of Accountancy course for his son. Is it supply ? If so who is liable to pay GST. [2]
(ii) Mr. Sitaram is running a consulting firm and also a readymade garment show room,
registered in same PAN. Turnover of the showroom is `60 lakhs and receipt of the
consultancy firm is `12 Lakhs in the preceding financial year.
You are required to answer the following:

a) Is Mr. Sitaram eligible for Composition Scheme?

b) Whether it is possible for Mr. Sitaram to opt for composition only for Showroom?
c) Rework, if Mr. Sitaram is running a restaurant as well as readymade garment show room,
whether he is eligible for composition?
d) If the turnover of garment showroom is ` 75 Lakhs in the preceding financial year and there is
no consulting firm whether he is eligible for Composition? [6]

Answer:

ANS :

(i) Yes, it is supply. Even if receipt of this service is not for business or furtherance of business.Mr. C is not liable to pay
GST under reverse charge mechanism. It is exempt from GST. Since, it is not OIDAR service

(ii) (a) Mr. Sitaram is providing services in consulting firm hence he is not eligible for composition scheme.
b. If a business is ineligible to opt for composition then all other business registered under the same
PAN shall automatically ineligible for the composition scheme. So Mr. Sitaram is not eligible for
composition scheme only for showroom.
c. Restaurant services and readymade garments show room are eligible for the composition scheme.
Hence Mr. Sitaram is eligible for Composition Scheme, since, his aggregate turnover is ` 72 lakhs (i.e. less
than `1.5crore).

Yes, Mr. Sitaram is eligible for composition scheme as turnover of his firm does not exceed `1.5 crore

State the salient features of composite supply. Give an example of composite supply.
[6+1]
Answer:
a. The following are the salient features of composite supply -
1. Supply is made by a taxable person to a recipient.
2. Such supply consists of 2 or more taxable supplies of goods and/or services or any
combination thereof.
3. Such combination of 2 or more supplies of goods and/or services is naturally bundled.
4. Such naturally bundled goods and/or services is supplied in conjunction with each other in
the ordinary course of business.
5. Out of naturally bundled supply of goods and/ or services, one is principal supply ("principal
supply" means the supply which constitutes the predominant element of a composite supply
and to which any other supply forming part of that composite supply is ancillary).
6. If the above conditions are satisfied, GST is chargeable on the entire consideration at the
rate applicable on principal supply.

Example: Goods are packed and transported with insurance. The supply of goods, supply of
packing materials, transport service and insurance service is a composite supply. Supply of
goods is a principal supply. GST rate applicable on supply of goods will be applied on this
composite supply.
QUESTION
BANK
GST Exemptions
 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Question Bank of Exemptions Under GST

Category 1: General Questions

Q1. M/s Rama & Co., is a partnership firm registered under GST law. The partners decided to convert the
partnership into a limited liability partnership (LLP). The LLP takes over M/s Rama & Co., assets and liabilities
and continues to operate the same business. Is it a taxable supply?
Ans: It is not taxable supply. Since, transfer of business as a going concern to another person, then it will
not be supply (as per schedule 2 of CGST Act, 2017).
Note: If taxable person de-registered, he will be liable to pay GST.

Q2. what is the meaning of ‘government’?

Ans: As per section 2(53) of the CGST Act, 2017, ‘Government’ means the central Government. As per
clause (23) of section 3 of the general Clauses Act, 1897 the Government includes both the central
government and any State Government. As per clause (8) of section 3 of the said Act, the ‘Central
Government ‘, in relation to anything done or to be done after the commencement of the Constitution,
means the president. As per article 53 of the Constitution, the executive power of the Union shall be
vested in the President and shall be vested in the President and shall be exercised by him either directly
or indirectly through officer’s subordinate to him in accordance with the Constitution.

Further, in terms of Article 77 of the constitution, all executive actions of the Government of India shall
be expressed to be taken in the name of the President.

Therefore, the Central Government means the President and the officers subordinate to him while
exercising the executive powers of the Union vested in the President and in the name of the president.

Similarly , as per clause (60) of section 3 of the general clauses Act, 1897, the ‘state Government ‘, as
respects anything done after the commencement of the constitution, the executive power of the State
shall be vested in the governor and shall be exercised by him either directly or indirectly through officers
subordinate to him in accordance with the constitution.

Further, as per article 166 of the constitution, all executive actions of the Government of state shall be
expressed to be taken in the name of Governor. Therefore, State Government means the Governor or
the officers subordinate to him who exercise the executive powers of the State vested in the Governor
and in the name of the Governor.

Q3. Would a statutory body, corporation or an authority constituted under an act passed by the parliament
or any of the State Legislatures be regarded as ‘Government’ or “local authority” for the purposes of the
GST Acts?
Ans: A statutory body, corporation or an authority created by the Parliament or a State Legislature is
neither ‘Government’ nor a ‘local authority’. Such statutory bodies, corporations or authorities are

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normally created by the Parliament or a State Legislature in exercise of the powers conferred under
article 53(3) (b) and article 154 (2) (b) of the Constitution respectively.

It is a settled position of law (Agarwal v Hindustan steel AIR supreme court 1150) that man power of
such salutatory authority or body or bodies don’t become officers subordinate to the president under
article 53 (1) of the Constitution and similarly to the Governor under article 154 (1). Such a statutory
body, corporation or an authority as a juridical entity is separate from the state and cannot be regarded
as the central or a State Government and also do not fall in the definition of ‘local authority’. Thus,
regulatory bodies and other autonomous entities would not be regarded as the government or local
authorities for the purposes of the GST Acts.

Q4. Compute the duty payable under the customs Act, 1962 for an imported equipment based on the
following information:
(a) Transaction value of the imported equipment US $ 10000 (royalty and licence fee included in
transaction value US $ 100).
(b) Date of bill of Entry 25/4/2018 basic customs duty on this date 12% and exchange rate notified by
the Central Board of Excise and Customs US $1 = Rs. 65.
(c) IGST u/s 3(7) of the Customs Tariff Act, 1975: 12%.
a. Social Welfare Surcharge @ 10 % is applicable.
b. Importer is liable to pay IGST on import of royalty and licence fee?
c. Applicable rate of IGST on import of services namely royalty and license fee @ 18%.
d. Make suitable assumptions where required and show the relevant workings and round off
your answer to the nearest Rupee.
Ans:

Particulars Value in Rs. Working Note

Assessable value 656500 (10100 USD * Rs. 65)
Add: Basic Customs Duty 78780 Rs. 656500 * 12%
Add: 10% Social Welfare 7878 78780* 10%
Surcharge
Transaction value for IGST 743158
Add: IGST u/s 3(7) of cus. Tariff 89179 743158* 12%
Value of imports 832337
Total customs duty payable 175837

IGST payable on import of service Rs. 1170

(USD 100 * Rs. 65 * 18%)
Less: Exempted Rs. (883)
(i.e. 100 USD * Rs. 65)* 113.2%) *
12%
Net IGST payable Rs. 287

Note: Transaction value of royalty and license fee included in the value of imported goods is Rs. 6500 (i.e.
100 USD * Rs. 65)

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Q5. A contract awarded by Bombay Municipality corporation (BMC) for repair of a particular road to M/s
Batcha Ltd. of Mumbai with a total consideration of 12 lakhs with terms and conditions as stated that:
a) It is pure service (excluding works contract service or other composite supplies involving supply of
any goods) and
b) The entire work should be completed within 30 days.

The said work has been completed as per terms and conditions. Applicable rate of GST 18%.

a) Is it a taxable supply?
b) Rework if the contract is in the nature of works contract where material is involved (i.e. 40 % of the
Composite supply) in the value of contract. Is it taxable supply? If so who is liable to pay GST.
Note: previous turnover of M/s Batcha Ltd. was Rs. 22 crores

Ans: a) Pure services (excluding works contracts service or other composite supplies involving supply of any
goods) provided to the local authority exempt from GST therefore, in the given case M/s Batcha ltd. supplied
exempted service.

b) M/s supplied works contract which include material and hands it is taxable supply.

M/s Batcha ltd. Is liable to pay GST.

CGST 9%=Rs.108000

SGST 9%=Rs.108000

NOTE: It is assumed that metical value exceeds 25% of the total contract value.

Otherwise, it exempts from GST under entry no. 3A.

3A. W.e.f 25-1-2018 , composite supply of goods ands and services in which the value of supply of goods
constitutes not more then 25% of the value of the set composite supply provided to the CG,SG or UT or local
authority or a governmental AUTHORITY or a govt. Entity by way of any activity in relation to any function
interested to a municipality under article 243 W of the constitution.

Q6. A contract awarded by Chennai corp. For repair of a particular road to m/s Alak ltd. with a total
consideration of Rs.12lkhs (pure services). Applicable rates of GST 18%.
Find the following
a) Is it a taxable supply?
b) Rework if contract is in the nature of work contract where material of 4 lakhs is involved in value of
contract. Is it a taxable supply? If so, who is liable to pay GST.
Ans:
a) Pure services (excluding works contract service or other composite supplies involving supply of any
goods) provided to the local authority exempt from GST. Therefore, in the given case M/s Alak Ltd.
supplied exempted service.
b) M/s Alak Ltd. supplied works contract service which includes material and hence it is taxable supply.
M/s Alak Ltd. is liable to pay GST.
CGST 9% =Rs. 108000
SGST 9% = Rs. 108000

Note:

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(i) We.f. 25-1-2018, Composite supply of goods and services in which the value of supply of goods
constitutes not more than 25% of the value of the said composite supply is exempt from GST under
entry no. 3A of the NT No. 12/2017 as amended from time to time.
(ii) In the given case value of material @ 33% as a result not qualify for exemption.

Q7. Validate the following statement:

Charges recovered by the Government for regulation of land use like conversion of agriculture to non-
agriculture will be exempt from payment of GST?
Ans: The given statement is valid:
Covered under entry 4 of exemption Notification No. 12/2017, dated 28-06-2017-Central Tax (Rate).

Q8. validate the following statement:

Charges recovered by the government of India from local authority for construction of building like
granting approval of the plant is exempt from GST?
Ans: The given statement is valid:

Covered under entry 4 of exemption Notification No. 12/2017, dated 28-06-2017-Central tax (Rate).

Q9. Validate the following statement:

Grant received by the State Government from Central Government for implementing National Bio-gas
and Manure management Programme operating under Ministry of New and Renewable Energy is
taxable supply of service?
Ans: the given statement is invalid:
State government is bound to implement the centrally sponsored scheme on receipt of grant.
Consequently, state Governments are implementing agency and not service provider.
Therefore, there is no supply.

Q10. Examine whether GST is payable in the following case:

Speed post services by Department of Post to Union Territory of Lakshadweep.
Ans: GST is not payable in case of speed post services by department of post to Union territory of
Lakshadweep. The said service wholly from GST (Entry No. 8)
Exemption Notification inter alia provides exemption to services by the Department of Posts by way of
speed post, express parcel post, life insurance, and agency services provided to the Central Government,
state Government, Union territory.

Therefore, GST is payable, if such service is provided to a person other than Central Government/ State
Government/ Union Territory.

Q11. State Police provided protection services to the Judges of High Court in the month of July 2017.
The police protection is provided on payment of Rs 2,00,000. Is GST payable?
Ans: It is exempted service. Since, covered under entry No.8 (vide Notification No. 12/2017, dated
28.6.2017- Central Tax (Rate), it is exempted from GST.

Q12. The Chief Secretary to Finance Minister travelled from Delhi to Chennai by rail in an air-conditioned
coach on official trip. Cost of ticket is Rs1,200. Is it exempt from GST? Applicable rate of GST 5%.

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Ans: It is taxable supply of service. It is covered under entry 6(c) of Notification No. 12/2017, date
28.06.2017- Central Tax (Rate), GST will be levied under forward charge.

Q13. Passport is issued by the office of the External Affairs Ministry under Passport Act, 1967 to
individual. The fee of Rs 6500 paid by business entity in which such individual person is working. This
activity will attract GST?
Ans: The exemption from payment of GST would be available both cases, where fee is paid by individual
or by the business entity. The said activity is exempted from GST under entry no.61 of the Notification
No.12/2017, date 28.06.2017 Central Tax (Rate).

Q14. Vana Pvt. Ltd. received the following services from the Government of India during the taxable
period:
(i) application fee paid towards processing of application for issuance of advance authorization Rs.
12000.
(ii) security services provided by Government security agency for a period of four months for a total
consideration of Rs. 6000:
Jan 2018- Part Rs. 500
payment
Feb 2018-part Rs. 2000
payment
Mar 2018-part Rs. 2000
payment
april 2018-Part Rs. 1500
payment

(iii) Customs authorities have charged Merchant Over Time (MOT) fee for Rs. 1000 at the time of special
warehousing of goods.
Find the total GST payable by Vana Pvt. Ltd. if any?
Note: Previous Turnover of Vana Pvt. Ltd. if any?
Note: Applicable rate of GST 18%

Ans: statement showing GST liability of X Pvt. Ltd.

S. Particulars value in Remarks

No. Rs.
1 Application fee paid towards processing of application 12000 Taxable supply of service.
for issuance of advance authorization Since, amount exceeds Rs.
5000.
2 Security services provided by government security Nil Exempted supply of service
agency. under entry no. 9.
F.Y. 2017-18 Rs. 4500
F.Y. 2017-18 Rs. 1500

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The exemption shall apply only where the consideration

charged for such service does not exceed Rs. 5000 in a
financial year.

3 Merchant Overtime charges Nil Exempted supply of service

under Entry No. 65.
Total subject to tax under reverse charge 12000
Total GST liability 2160 12000* 18 %

Q15. M/s Lasa Ltd. paid penalty under section 49 of the CGST Act, 2017 Rs. 2000000 to the Government
Department in the month of Oct 2017. Is it taxable supply under the GST law?
Ans: It is not a supply of service. The fine or penalty chargeable by Government or local authority
imposed for violation of statute, bye-laws, rules or regulations are not leviable to GST. Such fines or
penalty are not recovered for tolerating non-performance of a contract.

Q16. contract awarded by Bombay Municipal Corporation (BMC) for repair of a particular road to M/s
Masa Ltd of Mumbai with terms and conditions that the entire work should be completed within 30
days. However, there is a delay of 10 days to complete the work. BMC charged liquidated damages of Rs.
120000 and the same recovered from M/s B ltd.
Applicable rate of GST 18%
Find the following:

a) Who is liable to pay GST on what amount?

b) Total GST liability if any?
Note: Previous year turnover of M/s Masa Ltd. was Rs. 88 lakhs.
Ans:
a) It is supply of service.
M/s Masa Ltd. being recipient of service is liable to pay GST on Rs. 1,20,000 (i.e. Reverse charge applicable).
Since, the contractor has performed the contract, but there is a delay of 10 days.

b) GST liability = Rs. 21,600

Note:

(i) It appears the liquidated damages recovered by local authority for delay in performance in contract will
not be covered under exemption list of GST. The contract has been performed in such cases; GST will be
payable on the same.
(ii) Services provided by Government or a local authority by way of tolerating non-performance of a
contract for which consideration in the forms of fines or liquidated damages is damages is payable to the
Government or the local authority under such contract; is exempted from GST.

Q17. For registration of a company whose nominal share capital does not exceeds Rs. 100000 paid
registration fees of Rs. 5000.
(a) Is it a taxable supply? Attract GST?
(b) Whether your answer is different if registration fee Rs. 6000?
Ans:

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(a) Exempted from GST vide Entry No. 47, Notification No. 12/2017- Central tax (Rate) Dt 28-06-2017.

(b) Our answer is not differ even if the registration fee Rs. 6000 under the entry no. 47.

Q18. X Ltd. covered under the factories Act, 1948. Inspector of factories certified the factory is safe for the
workers to carry their work and charged Government fee of Rs. 10000.
X Ltd. owned one more factory at another place, which is not covered under Factories Act, 1948.
However, X Ltd. obtained safety certificate for the factory from the Inspector of Factories by paying Rs.
15000 voluntarily. Is it taxable supply? Attract GST? If so, who is liable to pay GST.
Applicable rate of GST 18%.

Ans: X Ltd. being recipient of service from the Inspector of Factories is not liable to pay GST. Since,
certification relating safety of workers required under the Factories Act, 1948 covered under entry 47.

Another factory which is not covered under Factories Act, 1948 for which fee paid by X Ltd. voluntarily is
liable to pay GST under reverse charge mechanism.

CGST 9% on Rs. 15000= Rs. 1350

SGST 9% on Rs. 15000= Rs. 1350

Q19. A Ltd., becomes the successful bidder. The spectrum is assigned to A Ltd., for a total consideration of
Rs. 1000 crores in the month of June 2015.Government permitted to pay as one time charge payable, in
full upfront or in instalments as the case may be.
(a) A Ltd. chooses to make in instalments over a period of 5 years. Instalment due fallen on or after 1st
July 2017 is leviable to GST?
(b) Whether your answer is different if periodic payment required to be made by the assignee.

Ans: the exemption under entry 42 Notification No. 12/ 2017- Central Tax (Rate), dated 28-6-2017 shall
apply only to one-time charge, payable in full upfront or in instalments, for assignment of right to use
any natural resource or spectrum assigned. Hence, A Ltd. is not liable to pay GST.

The exemption shall not applicable to any periodic payment required to be by the assignee.

GST is payable on periodic payments due after 1/7/2017 in respect of spectrum assigned before 1/4/2016.

GST is liable to pay by A Ltd. (RCM applicable).

Q20. Is GST leviable on the fee/amount charged in the following situation/ cases:-
(a) A customer pays fees while registering complaints to consumer Disputes Redressal Commission
office and its subordinate offices. These fees are credited into State Customer Welfare Fund’s bank
are account.
(b) Consumer Disputes Redressal Commission office and its subordinate offices charge penalty in cash
when it is required.
(c) When a person files an appeal to Consumers Disputes Redressal Commission against order of District
Forum, amount equal to 50% of total amount imposed by the District Forum or Rs. 25000/-
whichever is less, is required to be paid.

Ans: As per CBEC circular No. 32/06/2018- GST dated 12th February 2018, fee paid by litigants in the
Consumer Disputes Redressal Commissions are not leviable to GST. Any penalty imposed by or amount
paid to these Commissions will also not attract GST.

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Thus, GST will not be levied in case of (1), (2) and (3) above.

Q21. The Government gives re-development of slum to L& T. As per the housing for ALL scheme, L & T
under taken original work in return entitled for 0.5 FSI (out of 1.5 FSI on the land of 10000 sq. Ft,) which
can be utilized for construction of free sale component. L& T in turn appointed DLF as contractor for
supplying the services of construction for allotment to slum dwellers. The contactor charges Rs. 900 per
sq. Ft of built-up area.
Find the following
a) Exempted value of supply.
b) Taxable value of supply
c) Taxable person
d) GST liability.
Applicable rate of GST 12% (with Input Tax Credit).
Note: Taxable person is willing to a avail benefit of ITC.
Answer 20:

a) Build up area (10000*1 FSI) 10000 sq. Ft.

Value of build-up area Rs. 90,00,000
(Rs. 900* 10000 sq. Ft.)
Value of exempted supply Rs. 90,00,000

b) Build up area (10000* 0.5 FSI) 10000 sq. Ft

Value of build-up area
(Rs. 900* 5000 sq. Ft.) Rs. 90,00,000
Value of taxable supply of service
Rs. 90,00,000

c) DLF is the person liable to pay GST under forward charge.

d) GST liability:
CGST 6% on Rs. 45 lakhs Rs. 2,70,000
SGST 6% on Rs. 45 lakhs Rs. 2,70,000

Services Rendered Rs. in lakhs

Basic mail services 100
Transfer of Money through money orders 500
Rural postal life insurance services 200
Distribution of mutual funds, bonds and pass port applications 500
Issuance of postal orders 300
Collection of telephone and electricity bills 100
Speed post services 500
Express parcel post services 200

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Q22. Department of Posts provided following services to general public during the month ended
30.09.20XX:

Compute the value of taxable service of Department of Posts for the month ended 30.09.20XX.

Notes:

1. Point of Supply for all the aforesaid cases fall during the month ended 30.09.20XX.
2. All the service charges stated above are exclusive of GST, wherever applicable.

Answer:

The above exemption falls within the purview of Exemption Notification 12/2017 Central Tax (Rate) Sl. No. 6
under chapter 99.

Services Rendered Rs. in lakhs

Basic mail services [Note a] 100
Transfer of Money through money orders [Note a] 500
Rural postal life insurance services [Note b] 200
Distribution of mutual funds, bonds and pass port applications [Note b] 500
Issuance of postal orders [Note a] 300
Collection of telephone and electricity bills [Note b] 100
Speed post services [Note b] 500
Express parcel post services [Note b] 200
Value of taxable service 1, 500

Notes:
a. Items that are not taxable
(i) Basic mail services known as postal services such as post card, inland letter, book post, registered
post provided exclusively by the Department of Posts to meet the universal postal obligations.
(ii) Transfer of money through money orders, operation of savings account, issue of postal orders,
pension payments and other such services
b. Items that are taxable
(i) Speed Post:
(ii) Express Parcel Post:
(iii) Life Insurance:
(iv)Agency Services: It includes distribution of mutual funds, bonds, passport application, collection of
telephone or electricity bills.

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Category III:
Transportation Services

Q1. Air bus ltd furnishes you the following information for computation of its GST liability for the month of
Oct 2017.
a) Passenger travelling from Mizoram to Chennai- 2000 passengers, Gross Value per ticket Rs. 2500.
b) Passenger travelling from Chennai- USA 500 passengers, USA-CHENNAI – 200 passengers, Gross
Value per ticket Rs. 45000.
c) Passengers travelling from Mumbai – Tripura – Mumbai with single ticket – 1000 passengers. Gross
value per ticket Rs. 5000

Air Bus Ltd. charging 40% passenger tax which is not included in the gross value per ticket.

Find the GST liability?

All passengers are travelled in economic class except point (b).

Ans: ST SHOWING S.T LIABILITY OF AIR BUS LTD. FOR Oct 2017.

a) From Mizoram to Chennai Exempted supply

b) Passenger travelling from Chennai-USA
(500 passengers * 4500) 22500000
Passengers tax 40 % 9000000

c) From Mumbai – Tripura –Mumbai Exempted supply

VALUE OF TAXABLE SUPPLY OF SERVICES 31500000
CGST 6% 1890000
SGST 6% 1890000
TOTAL TAX 3780000

Note: Compulsory Inclusions: Any taxes, fees, charges levied under any law other than GST law, are required
to be added to the price (if not already added) to arrive at the taxable value.

Q2. Compute value of taxable supply of services of Air Speed Air lines located in Chennai for transportation
of passengers by air from the following data relating to sums received exclusive of GST-
(i) Passengers embarking at Arunachal
(ii) Passengers where journey terminated at Assam: Rs. 4 lakhs;
(iii) Amount charged from passenger for flights starting from USA to Chennai: Rs. 250 lakhs;
(iv) Amount charged from passengers flying from Chennai to Sydney (Business class): Rs. 540 lakhs
(including passengers taxes levied by government and shown separately on Ticket: Rs. 100 lakhs). All
passengers booked ticket from Delhi Office of Air Speed Air lines.
(v) Passengers embarking from Chennai to Coimbatore (Economic class): Rs. 4 lakhs. Passengers booked
tickets from Chennai office of Air Speed Air lines.

Applicable rate GST 5% and 12%. Find the IGST, CGST & SGST if any.

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Q3. ST. SHOWING GST LIABILITY OF AIR speed Airlines:

Embarking at Arunachal Pradesh Exempted supply

Where journey terminated at Assam Exempted supply
From USA to Chennai Exempted supply
From Chennai to Sydney (business Tax) passenger tax 4,40,00,000
1,00,00,000
From Chennai to Coimbatore 4,00,000(Economic class)
VALUE OF TAXABLE SUPPLY OF SERVICES 54400000
IGST 12% on Rs. 54000000 6480000
CGST 2.5% on Rs. 400000 10000
SGST 2.5% on Rs. 400000 10000
TOTAL TAX 6500000

Note:

Compulsory Inclusions: Any taxes, fees, charges levied under any law other than GST law, are required to be
added to the price (if not already added) to arrive at the taxable value.

Q4. Compute the GST liability of Mr. Amar, an air travel agent, for the quarter ended December 31, 2017
using the following details:

Particulars Amount Rs.

Basic air fare collected for domestic booking of tickets 5000000
Basic air fare collected for international booking of tickets 8000000
Commission received from the airlines on the sale of domestic and international tickets 450000
Year ending bonus received from airlines 50000
In the above case, would be GST liability of Mr. A be reduced if he opts for the special provision for payment
of GST as per Rule 32(3) of the CGST Rules, 2017. The applicable rate of GST 18%.

Ans: ST. Showing GST liability of Mr. For the quarter ending 31 st Dec 2017:

Rs.
Commission received from the airlines on the sale of domestic and international tickets 450000
Year ending bonus or incentive 50000
Taxable supply of services 500000
GST @ 18% on Rs. 5 lakhs 90000

ST. Showing GST liability of Mr. A for the quarter ending 31st Dec 2017

Rs.
Basic air fare (domestic booking) (5000000* 5%) 250000
Basic air fare (international booking) (80000* 10%) 800000
Total taxable supply of service 1050000
GST 18% on Rs. 1050000 189000

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Note: The GST liability of Mr. A would not be reduced in the aforesaid option.

Therefore, special provision under Rule 32 (3) of CGST rules, 2017 is not economical.

Q5. Vanak Tours Co. has arranged four package tours during October 2017. The particulars of the services
and charges are as under:
(i) Tour 1: Charges received Rs. 35 lakhs. The package includes transportation, accommodation, food,
and tourist guide, entry fees for monuments.
(ii) Tour 2: Charges received Rs. 65 lakhs. The package includes transportation and accommodation for
stay.
(iii) Tour 3: Charges received Rs. 40 lakhs. The charges are solely for arranging accommodation for stay.
However, the bills issued to the clients do not mention it clearly that the charges are solely for
arranging the accommodation for stay.
(iv) Tour 4: Charges received Rs. 50 lakhs. (inclusive of charges of stay). The bill issued to the client’s
mentions it clearly that the charges are solely for arranging the accommodation for stay.

Compute the value of taxable supply of services and GST.

NOTE : Applicable rates of GST 5% and 18%. All transactions taken place at inter State level.

Ans: STATEMENT SHOWING GST OF RTS TOURS Co. for October 2017

Particulars Value (Rs) In lakhs Value Rs. In lakhs

Tour 1: Packaged tour 35

Tour 2: Transportation and Accommodation 65
Tour 3: Accommodation for stay 40
Tour 4: Accommodation for stay 50
Taxable supply of services 150 40
GST Rate 5% 18%
IGST 7.5 7.2

Less: ITC Not allowed Allowed

Net GST liability 7.5 7.2

Q6. Manasa travels Pvt. Ltd., located in new Delhi, is engaged in providing services of transportation of
passenger and discharges its GST liability by availing 5% tax rate. Value of services rendered by the
company during the month of Month of October, 2017 is Rs. 550000.
The company has sub-contracted part of its services to Vishal Cabs Pvt. Ltd., which is also engaged in
transportation of passenger. Total value of such sub-contracted services is Rs. 100000 and GST charged
@ 12%.

Determine the net GST liability of Manasa travels PVT. Ltd. *to be paid in cash) for the month of October,
2017.

Ans: Statement showing Net GST liability of Manasa Travels Pvt. Ltd., for the month of October 2017:

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Particulars Value in Rs. Working note

Output tax 27500 550000* 5%=Rs. 27500
Less: ITC on input service from similar line of business (5000) 100000*12 %=12000
12000 *5/12=Rs. 5000
Net output tax 22500
Under old regime of indirect taxes similar concept already exists:

As per Finance Act, 1994 under service tax provisions (Notification No. 08/2014-ST, dated 11th July, 2014)

Similar line of business:

CENVAT Credit on Input service of renting of motorcab has been taken under the provisions of the CENVAT
Credit Rules, 2004 in the following manner:

a) Full CENVAT credit of such input service received from a person who is paying service tax on 40% of
the value; or
b) Up to 40% CENVAT credit of such input service received from a person who is paying service tax on
full value.

However, it is pertinent to note that similar type of Notification is not issued under GST law so far. As a
result, supplier of service may claim 100% of GST credit on input services from similar line of business. In
such case supplier should pass the benefit of excess ITC (i.e. 7%) to recipient by reducing cost of supply.
Otherwise, it covered under Anti-profitering.

Q7. M/s Reshmi Ltd. is engaged in providing service of transportation of passengers, furnished the following
information in the month of October, 2017. Find the GST liability.
(i) Service of transportation of passengers by National waterways: Rs. 50 lakhs;
(ii) Service of transportation of passengers by State carriage (non- A/c): 5 lakhs;
(iii) Service of transportation of passengers by contract carriage for tourism: Rs. 120 lakhs (bills inclusive
of accommodation and transportation etc. Indicated as narration at the bottom of invoice);
(iv) Transportation of passenger from Mumbai to Chennai port in a vessel and such service is not for
tourism purpose: Rs. 12 lakhs;

Note: Reshmi Ltd. is willing to avail exemption benefits if any. Taxable supplies of Mr. R in the previous year
were Rs. 2 lakhs.

Ans: Statement showing service tax liability M/s Reshmi Ltd.

Nature of service Transport of passengers Rs. In lakhs

By national Waterways Exempted supply
By Stage carriage (non-A/c) Exempted supply
By contract carriage for tourism 120
(bills inclusive of accommodation and transportation etc.
Indicated as narration at the bottom of invoice)
In a vessel from Mumbai to Chennai and such service is not Exempted supply
for tourism
Taxable supply of services 120

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GST liability @5% on 120 lakhs (Note: input tax credit not 6
allowed)

Q8. Indian railway has provided following services-

(i) Transport of passengers by general class: Rs. 1500000;
(ii) Transport of passengers by sleeper class: Rs. 1000000;
(iii) Transport of passengers by 1st class air conditioned coach: Rs. 50000000;
(iv) Transport of passengers by 2 tire air-conditioned coach: Rs. 200000000;
(v) Transport of passengers by 3 tire air-conditioned coach: Rs. 300000000;

Compute value of taxable supplies and GST liability. Applicable GST rate is 5%.

Ans: Statement showing service tax liability

Nature of service transport of passengers Value in Rs.

General class Exempted supply
Sleeper class Exempted supply
1st class air-conditioned coach 50000000
2 tire air-conditioned coach 200000000
3 tire air-conditioned coach 300000000
Taxable supply of service 550000000
GST @ 5% on RS.55 crore 27500000

Q9. A GTA engaged in transport of goods by road. As per the general business practices, GTA also provided
intermediary and ancillary services such as loading/ unloading, packing, transhipment and temporary
warehousing, in relation to transportation of goods by road.
With reference to the provisions of GST law, analyse whether such services are to be treated as part of
the GTA service, being a composition supply, or as separate supplies.

Ans: CBIC has been clarified that ancillary services such as loading/ unloading, packing/ unpacking,
transhipment, temporary storage etc. Would from part of the goods transport agency’s (GTA) service if such
services are provided by a GTA in the course of transportation of goods and the charges for such services are
included in the invoice issued by the GTA, and not by any other person. Therefore, it is treated as composite
supply and principal supply is GTA supply.

Q10. Discuss whether GST is leviable in respect of transportation services provided by RR Goods Transport
Agency in each of the following independent cases:

Customer Nature of service provided Amount charged

(Rs.)
A Transportation of milk 2200000
B Transportation of books on a consignment transported in a single 130000
goods carriage
C Transportation of chairs for a single consignee in the goods carriage 600
Note: RR Goods Transport Agency registered person under GST law. Opted to pay CGST 6% and SGST @ 6%.

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Ans: Statement showing service tax liability of RR Goods Transport Agency:

Customer Nature of service Taxable Remarks

supply Rs.
A Transportation of milk Nil Exempted supply.
B Transportation of books on a consignment 130000 Taxable supply
transported in a single goods carriage
C Transportation of chairs for a single consignee in Nil Freight Rs. 600 is
the goods carriage exempted from GST
Total taxable supply 130000
CGST 6% on Rs. 130000 7800
SGST 6% on Rs. 130000 7800

Q11. Arya & Co., a goods transportation agency located in Delhi, transports a consignment of new colour
TVs from the factory of Zuma ltd. in Cochin, to the premises of a dealer in Jammu (Taxable territory). As
per mutually agreed terms between Arya & Co. and Zuma Ltd., the dealer in Jammu is the person liable
to pay freight. The amount of freight exclusive of taxes is Rs. 450000. State the persons liable to pay
freight. The amount of freight exclusive of taxes is Rs. 450000. State the person liable to pay GST and
amount of tax payable. Arya & Co. not availing input tax credit. Applicable tax rates for GTA are 5% and
12%.

Note: Consignment note issued by Arya &Co. for transporting goods.

Ans: Person liable to pay GST is dealer in Jammu (i.e. taxable territory). GST liability is as follows:

Total freight Rs. 450000

IGST 5% on Rs. 450000 Rs. 22500

Q12. Calculate the value of taxable service of ‘Xia’ Transport Company engaged in the business of
transport of goods by road. Give reasons for taxability or exemption of each item. No freight is received
from any of the specified category of consignor/ consignee. Suitable assumptions mat be made
wherever required.

Xia does not avail Input Tax Credit:

Rs.
a) Total freight charges received by ‘Xia’ during the year 1350000
b) Freight charges received for transporting fruits 125000
c) Freight collected for transporting small consignment for persons, who paid less than Rs. 75000
750 for each consignment
d) Freight collected for transporting goods in small vehicles for persons, who paid less than 150000
Rs. 1500 per trip
Applicable GST Rates 5% & 12%.

Note: Xia Transport Company is not availing ITC

Rework, ‘Xia’ transport company provided services of GTA to specified person and opted to pay 12% GST.

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Ans: As per Entry No. 21A: “services provided by a goods transport agency to an unregistered person,
including an unregistered casual taxable person, other than the specified recipients” also exempt from GST
(vide Notification No. 33/2017-Central Tax (Rate), dated 13-10-2017).

Therefore, in the given case ‘Xia’ Transport Company supply of services are fully exempted from GST.

Alternatively: ‘Xia’ transport company provided services of GTA to specified person and opted to pay 12%
GST.

Statement showing service tax liability of ‘Xia’ transport company:

Particulars Value in Remarks

Rs.
total freight charges received 1350000
Less: transportation of fruits 125000 Exempted supply of
service
Less: transporting small consignment for persons, who paid less 7500 -do-
than Rs. 1500 per trip
Less: transporting goods in small vehicles for persons, who paid less 150000 -do-
than Rs. 1500 per trip
Taxable value of supply of services 1000000
CGST 6% on Rs. 1000000 60000
SGST 6% on Rs. 1000000 60000

Q13. M/s Navatha a transporter registered under GST, located in Vijaywada. M/s Chacha Ltd. of Chennai
registered under GST, received services from M/s Navatha for transport of goods from its warehouse in
Vijaywada to Guntur. M/s Navatha delivered goods at Guntur.

Find the place of supply of service and GST?

Whether your answer is different, if M/s Chacha ltd. of Chennai is not a registered person under GST?

Ans: If the recipient is registered person:

POS=Chennai (i.e. location of recipient).

M/s Chacha LTD., is liable to pay IGST.

If the recipient is not a registered person:

POS = Vijayawada (i.e. Location at which such goods are handed over for their transportation).

M/s Chacha Ltd., of Vijayawada is liable to pay CGST & SGST.

Note: It is assumed that GTA is opted to pay 5% GST. Otherwise GTA is liable to pay GST where he opted 12%
GST.

Q14. Avakai & Co., a goods transportation agency located in Chennai, transports a consignment of new
Laptops from the factory of Aviran Ltd. in Cochin, to the premises of Aviran Ltd. Branch office in
Bengaluru. As per mutually agreed terms between Avakai & Co., and Aviran Ltd., Cochin the branch in

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Bengaluru is the person liable to pay freight. The amount of freight exclusive of taxes is Rs. 540000. State
the person liable to pay GST and amount of tax payable.

Avakai & Co., availing input tax credit. Applicable tax taxes for GTA are 5% and 12%.

Note: Consignment note issued by Avakai & Co. for transporting goods.

Ans: Person liable to pay GST is A & Co., (namely GTA).

IGST liability 12% on Rs. 540000= Rs. 64800

Q15. Compute taxable value for transport of goods by trail within India (al sums exclusive of all taxes)-
a) Transport of postal mails and postal bags: 55 lakhs;
b) Transportation of household effects: 50 Lakhs
c) Transport of petroleum products: Rs. 25 lakhs;
d) Transport of relief materials to flood affected area: Rs. 25 lakhs;
e) Transport of newspapers and magazines registered with registrar of newspapers: Rs. 15 lakhs
f) Transport of milk: Rs. 15 lakhs;
g) Transport of alcoholic beverages: Rs. 7 lakhs:
h) Transport of defence and military equipment’s: Rs. 40 lakhs;
i) Transport of chemical fertilizers: Rs. 90 lakhs;
j) Transport of other taxable goods: Rs. 200 lakhs (including Rs. 20 lakhs demurrages).

Ans: Statement showing GST liability:

Nature of service Rs. In lakhs

Transport of postal mails and postal bags 55
Transportation of household effects 50
Transport of petroleum products 25
Transport of relief materials to flood affected area Exempted supply
Transport of newspapers and magazines registered with registrar of newspapers Exempted supply
Transport of milk Exempted supply
Transport of alcoholic beverages 7
Transport of defence and military equipments Exempted supply
Transport of chemical fertilizers 90
Transport of other taxable goods 200
Taxable value of supply 427

Q16. Validate the following:

Alak Speed Airlines transported Fruits (i.e. agricultural produce) from Chennai airport to Meghalaya. It is
exempted supply of service under GST.

Ans: The given statement is invalid. Transportation of goods within India by Air, exemption not granted.
Hence, GST will be levied.

Q17. Examine whether GST is payable in the following case:

Raman cosa Ltd., has given on hire 7 trucks to Kaka transporters of Delhi (a goods transport agency) for
transporting goods in Central Chennai. The hiring charges for the trucks are Rs. 6200 per truck per day.

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Ans: GST is not payable in case of hiring of trucks to Kaka Transporters. The Exemption Notification No.
12/ 2017 CT (R) dated 28-06-2017/ Notification No. 9/ 2017 IT (R) dated 28-06-2017 provides exemption
to services by way of giving on hire inter alia to a goods transport agency, a means of transportation of
goods.

Q18. From the following information compute the value of taxable supply and GST payable thereon if all
charges are executive of GST.
a) Hiring of bus (capacity to carry 12) to APSRTC (a transport undertaking): Rs. 22 lakhs
b) Hiring of goods vehicle to a goods transport agency: Rs. 12 lakhs
c) Hiring of cars designed to carry passengers to a goods transport agency: 22 lakhs
d) Renting of dumpers: Rs. 15 lakhs
e) Hiring of audio-visual equipment’s for an event: Rs. 15 lakhs
f) Hiring of pandal or shamiana for organizing functions/events: Rs. 30 lakhs
g) Hiring of Agro machinery for use in agriculture: Rs. 11 lakhs

Assessee willing to avail the exemption benefits if any. Assume applicable rate of GST is 5%. Location of
supplier and place of supply in the same state.

Ans: Statement showing GST liability:

Nature of service Value Rs. In lakhs

Hiring of bus to APSRTC 22
Hiring of goods vehicle to a goods transport agency Exempted
Hiring of cars designed to carry passengers to a goods transport agency 22
Renting of dumpers 15
Hiring of audio visual equipment’s for an event 15
Hiring of pandal or shamiana for organizing functions/events 30
Hiring of agro machinery for use in agriculture Exempted
Taxable value of supply 104
CGST 2.5% 2.60
SGST 2.5% 2.60

Q19. Intoll India Consultants was under taken a contract to collect toll on commission basis from Noida
Toll Bridge Company (i.e. agency authorised to levy toll). Noida Toll Bridge Company collection in the month
of Oct 2017 Rs. 2 crores. Commission paid to Intoll India Consultants @ 5% on the gross receipts.

Find the exempted value of supply and taxable supply.

Ans:

Exempted value of supply 2 crores

Taxable value of supply 10 lakhs
(Rs. 2 crore * 5%)

Note: The activity of toll collection outsourced to any third-party agency who undertakes the work for
consideration is a taxable supply and GST will be levied.

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Q20. Find the taxability for the following independent cases.

a) Packing of pulses in retail packs for Rs. 42000.
b) Packing of tomato ketchup for Rs. 54000
c) Commission on sale of rice for Rs. 10125.
d) Storage of rice flour in the warehouse for Rs. 12000.

Ans:

a) Taxable supply of services

b) Taxable supply of services
c) Taxable supply of services
d) Taxable supply of services

Q21. Mr. Apan boarded Rajdhani Express (fully AC train) from Kanpur on July 5, 20XX and disembarked at
New Delhi. He hired a car from a local cab operator for the whole day on a lump sum consideration and
visited Delhi's historical monuments. In the night, he took the Metro to International Airport and
boarded a Height to Mumbai. At Mumbai Airport, he used a Radio taxi for going to his Hotel. Mr. A
returned to Kanpur from a different train, Pushpak Express in sleeper class.

With reference to Notification 12/2017 Central Tax (Rate), examine the leviability of GST on the various
modes of travel undertaken by Mr. A.

Ans:
As per Notification 12/2017 Central Tax (Rate) Sl. No. 17 under Heading 9964 states that
Service of transportation of passengers, with or without accompanied belongings, by-
(a) railways in a class other than-
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places located
in India; and
(e) metered cabs or auto rickshaws (including e-rickshaws).
Therefore, in the given case, GST leviability on the various passenger transportation services used by Mr. A
will be determined as under;
(i) Rail travel in AC train- Not covered under exemption and thus, liable to GST.
(ii) Travel in a car rented for the whole day on a lump sum consideration- Since travel by only metered
cabs is covered in exemption travel in a car rented for the whole day on a lump sum consideration
will be liable to GST.
(iii) Metro travel - Covered in exemption and hence, not taxable.
(iv) Air travel - Not covered under exemption and thus, liable to GST.
(v) Radio taxi travel - Not covered in exemption and thus, liable to GST. As per Notification 17/2017
Central Tax (Rate) GST to be paid by E- Commerce Operator on Reverse Charge Basis
(vi) Rail travel in sleeper class - Covered in Exemption and hence, not taxable.

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Q22. Discuss whether GST is chargeable in respect of goods transport agency service in each of the
following independent cases:
(i) Transportation of organic manures Rs.50,000.
(ii) Transportation of goods by a single goods carriage Rs.1,800
(iii) Transportation of military equipment's Rs.25,000
(iv) Transportation of polyester fibre Rs.15, 000
Necessary explanation is also to be given
Ans:
All the above cases fall within the purview of Sl. No. 21 of Exemption Notification 12/2017 Central Tax (Rate)
(i) Exempt. As per the aforesaid notification transportation of organic manure by goods transport
agency is exempt. Hence the same is not liable to GST
(ii) Taxable. As per the aforesaid notification transportation by goods transport agency where
consideration charged for the transportation of goods on a consignment transported in a single
carriage does not exceed Rs.1,500 is exempt. As in the above case the amount is exceeding the limit
the same is liable to GST
(iii) Exempt. As per the aforesaid notification transportation of military equipment's by goods transport
agency is exempt. Hence, the same is not liable to GST
(iv) Taxable. Transport of polyester fiber is not covered under exemption as per the aforesaid
notification hence, the same is liable to GST

Q23. Calculate value of taxable supply from the following information:

Particulars Rs.
Transportation of passengers in metered cab 25

Transportation of passengers by inland waterways 35

Transportation of passengers by a non-AC stage carriage 15
Transportation of passengers in a vessel for tourism purpose 40
Transportation by aerial tramway 10
Transportation of passengers by air terminating in Mizoram and Meghalaya 12
Passengers traveling by air from Assam to Kolkata and Kolkata to Mumbai (under 14
separate tickets (Assam Kolkata s lakhs and Kolkata Mumbai 9 lakhs)

Ans: As per Notification 12/2017 Central Tax (Rate) Sl. No. 17 under Heading 9964 states that Service of
transportation of passengers, with or without accompanied belongings, by-
(a) railways in a class other than-
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places located
in India; and
(e) metered cabs or auto rickshaws (including e-rickshaws).

As per Notification 12/2017 Central Tax (Rate) Sl. No. 15 under Heading 9964 states that

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Transport of passengers, with or without accompanied belongings, by –

(a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal;
(b) non air-conditioned contract carriage other than radio taxi, for transportation of passengers,
excluding tourism, conducted tour, charter or hire; or
(c) stage carriage other than air-conditioned stage carriage.

Particulars Rs.
Transportation of passengers in metered cab -

Transportation of passengers by inland waterways -

Transportation of passengers by a non-AC stage carriage -
Transportation of passengers in a vessel for tourism purpose 40
Transportation by aerial tramway [Note 1] 10
Transportation of passengers by air terminating in Mizoram and Meghalaya -
Passengers traveling by air from Assam to Kolkata and Kolkata to Mumbai (under 9
separate tickets (Assam Kolkata s lakhs and Kolkata Mumbai 9 lakhs)
Taxable value of taxable service 59

Note 1: Only normal tramway is exempted and not aerial tramway thus subject to levy of GST.

Q24. Discuss whether GST is payable in respect of transportation services provided by Raghav Goods
Transport Agency in each of the following independent cases: [ICAI Material]

Customer Nature of services provided Amount

charged
A Transportation of milk Rs.20,000

B Transportation of books on a consignment transported in a single goods Rs.3, 000

carriage
C Transportation of chairs for a single consignee in the goods carriage Rs.600

Ans:

Customer Nature of services Amount Taxability

provided charged
A Transportation of milk Rs.20,000 Exempt. Transportation of milk by goods
transport agency is exempt.

B Transportation of books on Rs.3, 000 GST is payable.

a consignment transported Exemption is available for transportation of goods
in a single goods carriage only where the consideration for transportation
of goods on a consignment transported in a single
goods carriage does not exceed Rs.1, 500.

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C Transportation of chairs for Rs.600 Exempt. Transportation of goods where

a single consignee in the consideration for transportation of all goods for a
goods carriage single consignee does not exceed Rs.750 is
exempted.

Q25. Lalat school has collected the following amount from various activities determine GST liability.

Sr. No. Particular (Rs.)

1 Tuition Fees 15 Lakh
2 Exam Fees 3 Lakh
3 Lab charges 1.5 Lakh
4 Annual Function & Trip Charges 2 Lakh
5 Sale of Brochures 1.2 Lakh
6 Sale of Books 0.8 Lakh
7 Sale of Stationery 0.2 Lakh
8 Placement services to corporates 3 Lakh

9 Renting of Auditorium for Conference 2.5 Lakh

10 Renting for Hall for marriage function 1.6 Lakh
11 Franchisee fees charge to other for operating the school 9 Lakh

Ans:

Sr. No. Particular (Rs.)

1 Tuition Fees [Note 1] -
2 Exam Fees [Note 1] -
3 Lab charges [Note 1] -
4 Annual Function & Trip Charges [Note 1] -
5 Placement services to corporates [Note 5] 3 Lakh
6 Renting of Auditorium for Conference[Note 5] 2.5 Lakh
7 Renting for Hall for marriage function [Note 5] 1.6 Lakh
8 Franchisee fees charge to other for operating the school [Note 5] 9 Lakh
Value of Taxable Services Value of Taxable
9 Sale of Books[Note 2] 1.2 Lakh
10 Sale of Stationery [Note 3] -
11 Sale of Brochures [Note 4] 0.2 Lakh
Value of Taxable Goods 1.4 Lakh
Notes:

1) Services provided by an educational institution to its students, faculty and staff are exempt. Hence,
the below are non-taxable
(a) Tuition Fees
(b) Exam Fees

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(c) Lab charges

(d) Annual function & Trip Charge
2) Brochures are taxable under GST. Since exemption is available for supply of services not for supply of
goods
3) Printed Books are taxed at NIL rate
4) Stationery is taxable under GST (boxes, pouches, wallets and writing compendiums, of paper or
paperboard, containing an assortment of paper stationery)
5) The following services are not stated in exemption and hence, taxable
(a) Placement Services
(b) Renting of Auditorium for Conference
(c) Renting of Hall for marriage function
(d) Franchisee fees charge to other for operating the school

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Category IV: Agricultural Services

Q1. Mark Agro Products Ltd, furnishes the following details of various services provided by it in the month of
August, 2017:
S.No. Particulars Amount (Rs.)
1 Rearing of silkworm and horticulture 250000
2 Plantation of tea and coffee 200000
3 Renting of vacant land for performing marriage ceremony 450000
4 Sale of wheat on commission basis 50000
5 Sale of rice on commission basis 200000
Compute the value of taxable supply of services and the GST liability of Mark Agro Products Ltd. for the
month of August, 2017. Assume rate of GST 18%.

Ans:
S.No. Particulars Amount (Rs.)

1 Rearing of silkworm and horticulture Exempted supply

2 Plantation of tea and coffee Exempted supply

3 Renting of vacant land for performing marriage ceremony 450000

4 Sale of wheat on commission basis Exempted supply

5 Sale of rice on commission basis 200000

Taxable supply 650000
GST 18% on Rs. 650000 117000

Q2. From the following information find GST liability of M/s A Ltd for the month of October, 2017:

Particulars Rs. in lakh

1) Renting of Agro-machinery 5
2) Cultivation of Ornamental flowers 2.5
3) Processing of Tomato ketchup under the brand name of Y Ltd. 3
4) Plantation of Rubber 3.5
5) Processing of Potato chips on job work basis 1.5
Assume applicable CGST 2.5% & SGST 2.5%.

Ans: Statement showing GST liability of M/s A Ltd for the month of October, 2017:

Particulars Rs. in lakh

1) Renting of Agro-machinery Exempted supply of service
2) Cultivation of Ornamental flowers -do-
3) Processing of Tomato ketchup under the brand name of Y Ltd. 3
4) Plantation of Rubber Exempted supply of service
5) Processing of Potato chips on job work basis 1.5

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Taxable supply of service 4.5

CGST 2.5% 0.11250
SGST 2.5% 0.11250

Q3. Validate the following:

a) State Government grant fresh license to slaughterhouses by charging fee of 12000. It is taxable
supply of service and GST will be levied.
b) Meat shops selling meat is taxable supply of goods and GST will be levied.

Ans:

a) the given statement is invalid: It is exempted supply of service under entry no. 4 12/2017-
Central Tax (Rate) dt.28-06-2017 and hence, GST will not be levied.
b) The given statement is invalid:
It is exempted supply of goods under Notification No.2/2017-Central Tax (Rate) Dt. 28-06-2017
and hence, GST will not be levied.
Q4. "Seed Farmers Association' is engaged in providing services relating to agriculture. It furnishes the
following details with respect to me activities under taken by them in month of May 20XX.

S.no. Particulars Rs.

1 Cultivation of ornamental flowers 42,000
2 Packing of tomato ketchup 54,000
3 Warehousing of potato chips 1,65,000
4 Sale of tea on commission basis 68,000
5 Packaging of pulses in retail packs 45,000
6 Training of farmers on use of scientific tools and agro machinery 10,000
7 Leasing of vacant land to a stud farm (rearing of horses) 1, 63,000
8 Grading of wheat according to its quality 42,000
9 Testing of samples from plants for pest detection 1,21,000
10 Rearing of silk worms 83,500
11 Storage of pulses 50,000

Compute the value of taxable service of 'Seed Farmer Association' for the month of May, 20XX. Assume that
the point of taxation in respect of all the activities mentioned above falls in the month of May, 20XX itself.

Ans: The above case falls within the purview of Exemption Notification 12/2017 Sl.- No. 54 under heading
9986

S.no. Particulars Rs.

1 Cultivation of ornamental flowers [Note i ] -
2 Packing of tomato ketchup [Note ii ] 54,000
3 Warehousing of potato chips [Note ii] 1,65,000

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4 Sale of tea on commission basis [Note i] 68,000

5 Packaging of pulses in retail packs [Note ii] 45,000
6 Training of farmers on use of scientific tools and agro machinery [Note -
iii]
7 Leasing of vacant land to a stud farm (rearing of horses) [Note iv] 1, 63,000
8 Grading of wheat according to its quality [Note ii] -
9 Testing of samples from plants for pest detection [Note v] -
10 Rearing of silk worms [Note vi] -
11 Storage of pulses [Note ii] -
Value of taxable service 4,95, 000

Note:

(i) Cultivation of plants is exempted; sale of tea leaves is covered under agricultural produce but sale of tea
is not exempt and hence subject to levy of GST.
(ii) Loading, unloading, packing, storage or warehousing of agricultural produce is covered under
exemption. However, agricultural produce means any produce of agriculture on which either no further
processing is done or such processing is done as is usually done by a cultivator or producer which does
not alter its essential characteristics but makes it marketable for primary market. Service by way of
storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jiggery,
raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu
leaves, coffee and tea.
a. Thus, warehousing of potato chips and Packing of tomato ketchup will be taxable as potato chips
and tomato ketchup is not an agricultural produce. Benefit of exemption is available only for the
activities make the goods marketable in a primary market. Packing of pulses in retail packs is not
necessary to make pulses marketable in primary market hence such activity is taxable.
b. It is specifically stated that process such as grading which does not alter the essential
characteristics of the agricultural produce but makes it only marketable for the primary market
hence, the same is not liable to GST
(iii) Agricultural extension services are exempt. The definition of Agricultural extension as per Para 2 (c) of
the aforesaid exemption notification it means application of scientific research and knowledge to
agricultural practices through farmer education or training
(iv) Rearing of horses is specifically kept out of the purview of agriculture hence, the same is liable to GST
(v) It is specifically stated that agricultural operations directly related to production of any agricultural
produce including testing is exempt
(vi) Rearing of silk worms’ falls within the scope of agriculture hence, the same is exempt.

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Category V: Immovable Property

Q1. Mr. Amar owns a residential building in a prime commercial locality. Basement of the building is leased
to Mr. Bomer, a wholesaler. One- fourth of the basement is used by Mr. B as his office and remaining
portion is used as a go-down for storing his merchandise.

Ground floor of the building is given on rent to Mr. Comer who uses the same as a guest house for
his business contacts. First floor of the building is occupied by Mr. Amar and his family. second floor is
given on rent to Mr. Danar who uses the same as his residence.

There is a large vacant land in the backyard of the building which is also given on rent to a parking
contractor, Mr. Evar who has set up a parking facility on the said land.

Separate rent/lease deeds have been executed in respect of each floor of the building and vacant
land given on rent/lease.

Examine the GST liability of Mr. Amar with respect to the residential building owned by him.

Ans: Renting of immovable property (whether residential or commercial) is supply of service as per Serial
No. 5 (a) of schedule 2. However, services by way of renting of residential dwelling for use as residential are
covered under exempted supply of services and are thus not liable to GST.

Since, Mr. A has let out different floors of his residential building to different tenants and separate rent/
lease deeds have been executed in respect of each other of such building and vacant land given on rent/
lease, principle of composite or mixed supply will not apply. In this backdrop, the taxability of each of the
floor of the building and vacant land owned by Mr. A is discussed as under:

(i) Basement: Leasing out of the basement of the building to Mr. Bomer would not be covered under
exemption list of services as Mr. Bomer uses the basement for commercial purpose. Thus, it would
be liable to GST as supply of service.
(ii) Ground floor: Renting of ground floor of the building to Mr. Comer for being used as a guest house
will not be covered under exemption list of services since Mr. Comer uses it for commercial purpose.
Thus, it would be liable to GST as supply of service.
(iii) First floor: Since Mr. Amar uses the first floor of the building himself, it would not be a supply and
thus, would not be liable to tax.
(iv) Second floor: Renting of second floor of the building to Mr. Danar for being used as a residence
would not be chargeable to GST as it is covered in exemption list of supply of services.
(v) Vacant land: Though vacant land is also an immovable property, renting thereof to Mr. Evar, a
parking contractor, will not be covered under exemption list of services since Mr. Evar uses it for
commercial purpose. Thus, it would be liable to GST.
Q2. QUEEN HOTEL LTD. PROVIDER OF ROOMS. Rent charged per day per room is as follows:

Rs.
Room rent 550
Furniture rent 400
AC rent 150
Refrigerator rent 50

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Less: Discount (50)

Net amount charged 1100
During the month of Oct 20XX, 20 rooms are let out throughout the month, and balance 35 rooms are let out
only for 15 days.

Input Tax Credit available Rs. 7500

The following GST rates are applicable for the hotel industry:

12%, 18%, and 28%.

Find the GST liability if any for the month of Oct 20XX.

Ans: working note:

(i) Since, Declared Tariff is Rs. 1150, Hotel Queen Ltd., is liable to pay GST @ 12%.

Statement showing GST liability of QUEEN HOTEL LTD

Particulars Value in Rs.

Taxable supply of services 1259500

GST liability :

Room rent 550

Furniture rent 400
AC rent 150
Refrigerator rent 50
Less: Discount (50)

Declared tariff 1100

(2) Taxable services

(20 rooms * 31 days * Rs. 1100) Rs. 682000

(20 rooms * 31 days * Rs. 1100) Rs. 577500

Total taxable services Rs. 1259500

6 % CGST 6 % SGST

Output tax 75570 75570

Less: ITC -3750 -3750

Total tax 71820 71820

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Q3. Is hostel accommodation provided by trusts to students covered within the definition of Charitable
activities and thus, exempt under SI. No. 1 of notification No. 12/2017-CT (Rate)?

Ans: As per CBEC Circular No. 32/06/2018-GST, dated 12th February 2018, Hostel accommodation services do
not fall within the ambit of charitable activities as defined in para 2(r) of Notification No. 12 /2017-CT (Rate).

However, services by a hotel, inn, guest house, club or campsite , by whatever name called, for residential or
lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or
equivalent are exempted.

Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand
rupees per day is exempt. (SI. No. 14 of Notification No. 12/2017-CT(Rate ) refers ).

Q4. Green Tree society provided following services in the month of Oct 2017:
(i) Banquet hall provided to a Member of the society on hire for the purpose of celebrating his son
birthday party for Rs. 25000.
(ii) Payment of electricity bill issued by third person, in the name of its members; collected Rs. 110000
from its members and paid to electricity department Rs. 100000.
(iii) Contribution per month per member is Rs. 5500 for 20 members and Rs. 2500 for 30 members has
been received in the Oct 2017.

Find the tax liability of the Green Tree Society for the month of Oct 2017.

Ans: Statement showing GST liability of Green Tree Society for the month of Oct 2017:

Particulars Amount (Rs.) Remarks

Banquet hall 25000 Taxable service
Service charges 10000 Taxable service
Maintenance charges 110000 5500*20
Total taxable value of supply of services 145000
GST @ 18% 26100

Q5. Omega Star Hotels Pvt. Ltd. provides the following information relating to their services for the month of
September, 2019: The hotel has 45 rooms in all, out of which 30 rooms were Deluxe Rooms with a
declared tariff of Rs.1, 200 per day. The other 15 rooms were Semi Deluxe Rooms with a declared tariff
of 800 per day. The hotel has the practice of offering 25% discount on Deluxe Rooms. The occupancy
ratio of the rooms on an average was 80%.

Receipts for serving food from air-conditioned restaurant Rs.6, 00,000. Gross receipt for serving food from
non-air-conditioned restaurant clearly demarcated and separately named Rs.4, 00,000. Compute the value
of taxable services and GST liability for the month of September, 2019 and provide explanations wherever
required.

Ans:

Particulars Rs.
Renting of Semi-Deluxe Rooms with declared tariff of Rs.800 per day [Note 1] -
Renting of Deluxe Rooms with declared tariff of per day-Declared Tariff Rs.1,200

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(Less Discount @ 25%) Rs.300

Net (Value of Supply) Rs.900
-
Serving of food in air-conditioned restaurant Rs.6,00,000
Serving of food in non-air-conditioned restaurant Rs.4,00,000
Value of taxable services Rs.10,00,000
Notes:

(i) As per Exemption Notification 12/2017 Central Tax (Rate) Sl. No. 14 under Heading 9963 states that
Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or
lodging purposes, having Value of supply of a unit of accommodation below or equal to one thousand
rupees per day or equivalent are exempt Hence, the above is not liable to GST As in the above case
Value of Supply is Less than 1,000 hence, the same is liable to GST

Q6. Mr. X, the owner of a residential building in a commercial locality, furnishes the following information
relating to the said building for the month June, 2019

S. No. Area of the Building Particular

1 Basement Leased to Mr. B, a wholesaler for a monthly rent of Rs.2, 40,000.
Mr. B uses one-fifth of the basement for his office and remaining
portion as a godown for storing his merchandise.

2 Ground Floor Given on rent to Mr. C for a monthly rent of Rs.60,000. Mr. C
uses the same as his residence

3 First Floor Occupied by Mr. X. and his family

4 Large vacant land in the Given on rent of Rs.5,40,000 per month to a parking contractor,
backyard Mr. E who has set up a parking facility on the said land.

5 Terrace Given on lease for quarterly rent of Rs.5,20,000 to M/s. Universe

Communications for erecting and maintaining a mobile
communication tower.

Compute the value of taxable service of Mr. X for the month June, 2019.

Notes:
(i) Separate rent/lease deeds have been executed in respect of each floor of the building and vacant
land given on rent/lease. Rent in respect of the various portions of the building, vacant land and the
terrace is received on the first day of each month.
(ii) Wherever applicable, GST is included in the rent receipts.

Answer:

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Renting of immovable property is classified supply of service as per Schedule II of CGST Act. Hence,
the same is liable to GST, However, renting of residential dwelling is specifically exempted as per Notification
12/2017 Central Tax (Rate) Sl. No. 12 under Heading 9963 or 9972
Since, Mr. X has let out different floors of his residential building to different tenants and separate
rent/ lease deeds have been executed in respect of each floor of such building and vacant land given on
rent/lease, principle of composite supply will not apply

Sr. No. Particulars Rs.

1 Rent received for basement-commercial use [Note 1] 2, 4 0,000

2 Rent received for ground floor-residential use [Note 2] -

3 First floor occupied for personal use [Note 2] -
4 Rent received for large vacant land in the backyard used for parking facility [Note 1] 5,40,000
5 Rent received for terrace given on lease [Note 1] 5, 20,000
Value of taxable service 13, 00,000

Notes:
(i) As per Schedule II of CGST Act renting of immovable property is treated as a supply of service.
Hence, the same is liable to GST
(ii) As per Exemption Notification 12/2017 Central Tax (Rate) SI. No. 12 under Heading 9963 or 9972
states that services by way of renting of residential dwelling for use as residence is exempt. Hence,
the same is not liable to GST

Notes:

1) As per the time of supply of provision invoice is issued on date of receipt of payment

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Category VI: Health Care Services

Q1. Synergy Waste Management (P) Ltd. provided following services to Apollo Hospitals Chennai during the
month of October, 2017:
(i) Collection, transportation, treatment & Disposal of Bio- Medical Waste for Rs. 525000.
(ii) Training on segregation of Bio-Medical Waste to Hospital Staff to further increase efficiency of Bio-
Medical Waste Management Services for Rs. 125000.
(iii) Laundry services for Rs. 50000.
(iv) Common Bio-medical Waste Treatment Facility services provided to
a. Aarvind Pharma Company during Oct 2017 for Rs. 200000.
Find the GST liability for the month of Oct 2017?

Answer: Statement showing Service Tax liability of Synergy Waste Management (P) Ltd.

Particulars Value in Remarks

Rs.
Collection, transportation, treatment & Nil Exempted supply of service
Disposal of Bio-Medical Waste
Training on segregation of Bio-Medical Nil Exempted supply of service
Waste
Laundry services 50000 Taxable service. Since, exemption is given to a
clinical establishment by way of treatment or
disposal of bio-medical waste.
Common Bio-medical Waste Treatment 200000
Facility services provided to Aarvind
Pharma Company

Total taxable supply of service 250000

GST 18% 45000

Q2. Validate the following statement:

Hospital charging room rent per day per room is Rs. 1200 on rooms provided to in- patients. It is exempted
supply of service.

Ans: the given statement is valid. It is treated as health care service and hence “room rent in hospitals is
exempt”.

Q3. Good Health Medical Centre, a clinical establishment, offers following services:
(i) Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of section
2(h) of Clinical Establishments Act, 2010.
(ii) Plastic surgeries. One such surgery was conducted to repair cleft lip of a new born baby.
(iii) Air ambulance services to transport critically ill patients from distant locations to the Medical Centre.

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(iv) Palliative care for terminally ill patients. On request, such care is also provided to patients at their
homes. (Palliative care is given to improve the quality of life of patients who have a serious or life-
threatening disease but the goal of such care is not to cure the disease).
(v) Alternative medical treatments by way of yoga.
(vi) Good Health Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells. Good Health Medical Centre is of the view that since it is a clinical
establishment, all the service provided by it as well as all the services provided to it are exempt from
payment of GST. You are required to examine the situation in the light of relevant exemption under
Notification 12/2017 of Central Tax (Rate) under SI, No. 73 and SI. No. 74.
(vii)Mr. Raj rehabilitation professional provide therapy service to Mr. Tushar who needed rehabilitation
to learn how to walk again after the car accident. You are required to examine the situation in the
light of relevant exemption under Notification 12/2017 of Central Tax (Rate) under Sl. No. 73 and Sl.
No. 74.

Ans:

(i) Not Exempt. Since Reiki healing is not a recognized system of medicine in terms of section 2(h) of Clinical
Establishments Act, 2010, it would not be exempt and thus, GST would be payable thereon.
(ii) Health care service does not include inter alia cosmetic or plastic surgery, except when undertaken to
restore or to reconstruct anatomy or functions of body affected due to congenital defects,
developmental abnormalities, injury or trauma.
Therefore, plastic surgeries will not be entitled to the said exemption and thus, GST would be
payable thereon.
However, plastic surgery conducted to repair a cleft lip will be eligible for exemption under the said
notification as it reconstructs anatomy or functions of body affected due to congenital defects (cleft lip).
(iii) Exempt. Health care service includes services by way of transportation of the patient to and from a
clinical establishment. Thus, air ambulance service to transport critically ill patients to Good Health
Medical Centre would be eligible for exemption under the said notification.
(iv) Exempt. Palliative care is a recognized system of medicine in terms of section 2(h) of Clinical
Establishments Act, 2010, the same would be eligible for exemption under the said notification,
Establishment or at the home of the patient or at any other place.
(v) Exempt. Since Yoga is a recognized system of medicine in terms of section 2(h) of Clinical Establishments
Act, 2010, the same would be eligible for exemption under the said notification.
(vi) Exempt. Services provided by cord blood banks by way of preservation of stem cells or any other service
in relation to such preservation are exempt from GST. Therefore, services provided in relation to
preservation of stem cells by the cord blood bank operated by Good Health Medical Centre will be
exempt from GST under Heading 9993.
It is important to note that exemption to health care services provided BY a clinical establishment
and not to services provided TO a clinical establishment. Only services provided by common bio-medical
waste treatment facility operates to clinical establishments by way of treatment or disposal of bio
medical waste or the processes incidental thereto are exempt from payment of GST under Sl. No. 75
Heading 9994. Therefore, Good Health Medical Centre's contention that since it is a clinical
establishment, all the services provided to it are also exempt from GST is not correct in law.
(vii)Exempt: As per Sl.no. 74A any service provided by any rehabilitation profession by way of rehabilitation,
therapy counseling and such other activity as covered by the rehabilitation counseling of India act,1992
at medical establishments, educational institutions, rehabilitation centers established by Central

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Government, State Government or Union territory or an entity registered under section 12AA of the
Income tax Act, 1961. Therefore, services provided by Mr. Raj is exempt

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Category VII:
Religious & Charitable Services

Q1. Examine whether GST is payable in the following case:

Ananda deepam charitable trust, registered under section 10 (23 C)(v) of the income Tax Act, 1961 manages
a temple in mylapore, Chennai. It has given on rent a community hall, located within temple premises, to
public for celebration of new year evening. Rent charged is Rs. 9499/-.

Answer 22: A trust or an institution registered under sub clause (5) of clause (23C) of section 10 of the
income tax Act, 1961, renting of its premises, community halls, kalyanmandapam or open area, and the like
where charges are Rs. 10000 or more per day; is taxable supply.

In the given case Ananda deepam Charitable trust, registered under Section 10 (23C) (5) of the Income Tax
Act, 1961 and given on rent for Rs. 9499/- per day. Hence, it is exempted from GST.

EXAMPLE 23: Kapleswara Charitable Trust registered under Section 12AA of the Income Tax Act, 1961.
Supplied the following services during the taxable period. Find the taxable supply or exempted supply from
the following:

a) Income from Navratri functions, other religious functions and religious poojas conducted for Rs.
212345/-
b) During Ganeshutsav or other religious functions, charitable trusts rent out their space to agencies for
advertisement hoarding, income from such advertisement Rs. 498765/-
c) Donation for religious ceremony is received with specific instructions to advertise the name of a
donor for Rs. 100001/-.

Answer 23:

Particulars Nature of Remarks

supplies
a) Income from navratri functions Exempted supply Meant of religious ceremony
etc.
b) Income for renting out space Taxable supply Advertisement services
c) Donation received with Taxable supply Donation is compensating against
reciprocity consideration.

Q2. Marry Charitable Trust registered under section 12 AA of the income tax and also registered person
under GST law.
Provided the following services in the month of October.

(i) Services by way of training or coaching in recreational activities relating to sports for Rs. 400000/-.
(ii) Fee from organising yoga camps or other fitness camps for Rs. 500500/-
(iii) Organizes fitness camps in reiki, aerobics, etc., and receive donation from participants Rs. 225000/-.

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(iv) Services of public libraries by way of lending of books, publications or any other knowledge enhancing
content or material for Rs. 20000
Assume applicable rate of GST for taxable supplies @ 18%.
Ans:
Particulars Value in Remarks
Rs.
Training or coaching in recreational Nil Exempted supply.
activities relating to sports
Fee from organising yoga camps or 500500 Since, not covered under advancement of religion,
other fitness camps spirituality or yoga, it is taxable supply.
Donation for organizes fitness camps 225000 Covered under health and fitness services, which is
in reiki, aerobics not exempted.
Public libraries Nil Exempted supply
Total 725500
GST 18% 130590 (725500 * 18%)

Q3. Chari charitable Trust registered under section 10 (23BBA) of the income tax and also registered person
under GST law.
Provided the following services in the month of October.
(i) Services by way of accommodations (i.e. Rest house) for Rs. 1000 per day for 12 days. This property
located within the precincts of the trust.
(ii) Fee from convection hall for Rs. 8000 per day for 4 days. However, this hall located outside the
premises of the Trust.
(iii) Shops situated within the premises of a religious place are rented out for Rs. 8000 per month.
(iv) Find the taxable supply and exempted supply of services.
Assume applicable rate of GST for taxable supplies @ 18%.

Ans:

Particulars Value in Rs. Remarks

Services by way of rest house 12000 Taxable supply
Fee from convection hall 32000 Taxable supply
Rent from shops situated within the premises of Nil Exempted supply Rs. 8000/-
a religious place under Entry No. 13 Exempted
supply.
Total 44000
GST 18% 7920 (44000*18%)

Renting of rooms where charges are Rs. 1000 or more per day;

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Q4. Sarva sugam Charitable Trust, a trust registered under section 12AA of the Income tax Act, 1961
provides the following information relating to supply of its services for the month of August 2017:

Compute the total taxable value of supply for the month of August 2017 assuming that the above amounts
are exclusive of GST. (CA Final May 2018 old Syl.)

Rs.
Renting of residential dwelling for use as a residence 1800000
Renting of rooms for pilgrims (Charge per day Rs. 1200) 800000
Renting of rooms for devotees (charges per day Rs. 750) 600000
Renting of kalyana madapam (charges per day Rs. 15000) 1200000
Renting of halls and open space (charges per day Rs. 7500) 1075000
Renting of shops for business (Charges per month Rs. 9500) 475000
Renting of shops for business (charges per month Rs. 12000) 750000

Ans:

Rs. Remarks
Renting of residential dwelling for use as a residence Nil Taxable
Renting of rooms for pilgrims (Charge per day Rs. 1200) 800000 Exempted
Renting of rooms for devotees (charges per day Rs. 750) Nil Taxable
Renting of kalyana madapam (charges per day Rs. 15000) 1200000 exempted
Renting of halls and open space (charges per day Rs. 7500) Nil Exempted
Renting of shops for business (Charges per month Rs. 9500) Nil Exempted
Renting of shops for business (charges per month Rs. 12000) 750000 Taxable
Total taxable supply 2750000

Q5. The Shirdi Sai Baba Trust is a religious trust under Section 12 AA of the Income Tax Act 1961. The trust
has a number of rooms, community halls and shops which it gives out on rent. Calculate the value of
taxable service taking into consideration the relevant notification. For the month of June 2019, it
furnishes the following details:

Sr. No. Particulars Rs.

1 Renting of Rooms 1,800
(i) 2 Rooms were rented for Rs.900 each per day 5,500
(ii) 5 Rooms were rented for Rs.1,100 each per day
2 Renting of Community Halls 75,000
(i)3 Community Halls for performance of wedding ceremonies for
Rs.25,000 per day
(ii) 1 Community Hall for performance of various religious ceremonies for 8,000
Rs.8,000 per day
3 The trust has 5 shops located just across the temple which it has rented to 75,000
individuals for running their business. These are retails mainly involved in
selling goods required for performing various religious ceremonies.
Each has been rented for Rs.15, 000 per month.

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4 Meditation Hall provided on rent for 100/day 3,000

Ans:

The relevant Notification applicable for the above is Exemption Notification 12/2017 Central Tax (Rate) Sl.
No. 13 under Heading 9963 or 9972 or 9995 or any other Heading of Section 9.

Sr. Particulars Rs.

No.
1 Renting of Rooms [Note 1] -
(i)2 Rooms were rented for Rs.900 each per day 5,500
(ii) 5 Rooms were rented for Rs.1,100 each per day
2 Renting of Community Halls [Note 2] 75,000
(i)3 Community Halls for performance of wedding ceremonies for Rs.25,000 per day
(ii) 1 Community Hall for performance of various religious ceremonies for Rs.8,000 per
day -
3 5 shops given on rent. 75,000
Each has been rented for Rs.15,000 per month. [Note3]
4 Meditation Hall [Note 4] -
Value of taxable service 1,55,500

Notes:
(i) Exemption is applicable for renting of rooms wherein the rent charged is less than Rs.1, 000 per day.
(ii) Exemption is applicable to renting of community halls wherein the rent charged is less than Rs.10, 000
per day.
(iii) Exemption is applicable to renting of shops wherein the rent charged is less than Rs.10,000 per month.
(iv) Meditation Hall falls under the purview of precincts of the religious place and hence the same is not
liable to GST

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Category VIII:
Education Sector Services

Q1. Ramakrishna Education Pvt. Ltd. provided following services in the previous year:
a) Manpower supply services to Higher Secondary School for Rs 12,00,000.
b) Housekeeping services to Kidzee (i.e. Pre-school education) for Rs 9,00,000.

In the current year Priyanka Saxena Classes Pvt. Ltd. received advertisement services for Rs 75,000 from
Indian Railways. Find the following:

(a) Who is liable to pay GST?

(b) Total tax liability if any?
(c) Rework, if the previous total turnover Rs 11,10,000 then find the GST liability in the C.Y.?

Note:

(i) Applicable rate of GST 18%

(ii) Priyanka Saxena Classes is located in Delhi

Ans:

P.Y. turnover (Rs 12 lakh + Rs9 lakh) =21,00,000

a) Since, aggregate turnover of the previous year exceeds Rs 20 lakh, in the current year recipient of
service is liable to pay GST under RCM.
b) GST 18% on Rs 75000 =13,500, rework
c) GST liability is nil, since P.Y. turnover not exceeds Rs 20 lakhs (vide Entry No.7 Notification
No.12/2017- Central Tax (Rate), dated 28-06-2017).

Q2. Transport facility provided by a school to its students through a fleet of buses and cabs owned by the
School.
Ans: Exempted supply of service. GST will not be levied.
Q3. Transport facility provided by a school to its students through a private Bus/Cabs Operator.
Ans: Exempted supply of service. GST will not be levied.

Q4. Service provided by a private transport operator to a school in relation to transportation of students to
and from a school.
Ans: Exempted supply of service. GST will not be levied.

Q5. Service provided by a School in relation to a tour to its students and staff.
Ans: Exempted supply of service. GST will not be levied.

Q6. Service provided by a private transport operator to a school in relation to a tour and travel services of
students and staff.
Ans: Taxable supply. GST will be levied.

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Q7. Mr. C a practicing CA provided services to CA Institute by way of teaching to Students.

Ans: Taxable supply

Q8. Restaurant services provided to the students of CA institute, which is accessible by the others also. Is it a
taxable service?
Ans: Taxable supply.

Q9. Security services provided by a Safety and Security Bureau in Chennai. Supplied security services to the
ICMAI New Delhi for Four months. Monthly charges Rs. 1200. Is it taxable supply of service? Applicable
GST 18%. Find the GST liability.
Ans: This given activity is a taxable supply of service. Security Bureau is liable to pay GST.
IGST liability= 864
(Rs. 1200pm * 4months) * 18%

Q10. Campus Interviews conducted by CMA Institute, by collecting entry fee from the corporate houses. Is
it a taxable supply of service under GST?
Ans: Yes. It is taxable supply of service

Q11. Hr. Sec. School provided auditorium hall on rent to Priyanka Saxena Classes in Delhi. Monthly
charges Rs. 121200 throughout the year (w.e.f. 1-7-2017). Is it taxable supply of service? Applicable GST
18%. Find the GST liability.
Ans: This given activity is a taxable supply of service. Hr. Sec. School is liable to pay GST. GST liability =
196344
(Rs. 121200 pm * 9 months) * 18%

Q12. Whether GST is payable on vocational training provided it is in designated trades and in other than
designated trades?
Ans: Private ITIs is qualify as an educational institution as defined under para 2(y) of Notification No.
12/2017-CT (Rate) if the education provided by these ITI’s is approved by NCVT or SCVT or Modular
Employable Skill course, approved by NCVT, run by a person registered with DG Training in Ministry of
Skill Development.

Therefore, services provided by a private it is in respect of designated trades are exempt from GST under
Entry No. 66 of NT 12/ 2017-CT(Rate).

However, services provided by a private ITI in respect of other than designated trades would be liable to pay
GST and are not exempt.

Q13. Whether GST is payable on the service, provided by a private Industrial Training Institute for conduct
of examination against consideration in the form of entrance fee and also on the services relating to GST
and are not exempt.
Ans: In case of designated trades, services provided by a private ITI by way of conduct of entrance
examination against consideration in the form of entrance fee will also be exempt from GST.

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Further, in respect of such designated trades, services provided to an educational institution, by way of,
services relating to admission to or conduct of examination by a private ITI will so be exempt.

It is further clarified that in case of other than designated trades in private ITI’s GST shall be payable on the
service of conduct of examination against consideration by such institutions.

As far as Government it is are concerned, services provided by a Government ITI to individual trainees/
students, is exempt under entry No. 6 of NT 12/2017-CT (Rate).

Q14. Indian Institute of management, Ahmedabad provided the following services in the month of July
2017:
a) Post Graduate Diploma in Management services provided to those candidates who selected through
Common Admission Test (CAT) for Rs. 25 lakhs.
b) Services provided by way of Executive Development Programme Rs. 55 lakhs.

Find the GST liability if rate of GST is 18%?

Answer 84:

a) Post Graduate Diploma in Management where admission to such programme is through Common
Admission Test (CAT) is exempted supply of service. Exempted from GST.
b) Executive Development Programme is taxable supply. GST is Rs. 9.9 lakh (Rs. 55 lakh * 18%)

Q15. Industrial and Technical Consultancy Organisation of Tamil Nadu Limited (ITCOT) is accredited for
conducting assessment for Modular Employable Skills (MES) courses under SDI scheme.

Following services provided in the month of Oct 2017:

1.) Skill development services for Rs. 20 lakhs;

2.) Skill Assessment examination and certification under SDI for Rs. 25 lakhs;
3.) Feasibility reports to various industries for Rs. 60 lakhs.
Find the GST liability?

Note:
1) ITCOT is a registered person under GST law.
2) Assume GST applicable 18%.

Ans: Statement showing GST liability

Particulars Value Rs. (lakhs) Remarks

Skill development services 20 Taxable supply of service
Skill Assessment examination and certification Nil Exempted supply of
service
Feasibility reports to various industries 60 Taxable supply of services
Total taxable services 80
GST 18% 14.4

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Category IX:
Entertainment Services

Q1. Mr. Rahul Sharma, a Jalandhar based comedian, hosted a comedy show at Singapore on birthday
occasion of Mumbai based actor Mr. Shahrukh khan’s son Abram.
Ans: POS =Mumbai (i.e. location of service recipient).
GST =IGST is liable to pay by Mr. Kapil Sharma

Q2. Mr. Kapil Sharma a jalandhar based comedian hosted a comedy show at Singapore with help of event
organiser located in Dubai.
Answer 64: POS = Singapore.
GST will not be levied.

Q3. Mr. M.S. Dhoni provided services to Chennai Super Kings (a franchisee) in a premier league. Is it a
taxable service?
Ans: Yes, it is taxable in the hands of Mr. M.S. Dhoni.
Since, the service of a player to a franchisee which is not a recognised sports body.

Q4. Mr. Krishnamachari Srinivasan provided services as umpire in a premier league (IPL). Is this service
taxable?
Ans: No, the given service is exempt from GST.
Since, services of an individual as umpire, provided directly to a recognised sport body (BCCI), shall be
exempt.

Q5. Mr. Alaf, a performing artist, provides the following information relating to August, 2017.

Receipts Rs.
Performing classical dance 98000
Performing in television serial 280000
Services as brand ambassador 1200000
Coaching in recreational activities relating to arts 210000
Activities in sculpture making 310000
Performing western dance 90000

Determine the value of taxable supply of services and GST payable by Mr. Alaf for August, 2017. GST @ 18%.

Answer 91:

Receipt from Value in Remarks

Rs.
Classical dance NIL Exempt as receipt is less than or equal to Rs.
150000
Performing in television serial 280000

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Brand ambassador 1200000

Coaching in recreational activities in relation Nil
to arts
Sculpture making 310000
Western dance 90000
Value of taxable supply of service 1880000
GST 18% 338400

Q6. Validate the following statement

The Dolma Lakhang Gompha in Himachal Pradesh, is unprotected heritage centre. The Archaeological
Survey of India (ASI) has provided funds for maintenance of such heritage centre. Admission to such
heritage centre is exempt from GST.
Ans: The given statement is invalid.

Admission to protected monument so declared under the Ancient Monuments and Archaeological sites and
Remains Act 1958 or any of the State Acts alone exempt from GST.

However, exemption not granted to unprotected heritage centres.

Q7. Kesar Maharaj, a renowned classical dancer gave a classical dance performance in an auditorium. The
consideration charged for the said performance is Rs.98,500. Is Kesar Maharaj liable to pay GST on the
consideration received for the said performance if such performance is not for promotion of any
product/services? If yes, determine his GST liability.

Will your answer be different if?

(i) Consideration charged by Kesar Maharaj for the said performance is 1,60,000?
(ii) Kesar Maharaj is a brand ambassador of a food product and aforesaid performance is for the
promotion of such food product?
(iii) Kesar Maharaj gives a contemporary Bollywood style dance performance?

Note: Wherever applicable, GST has been charged separately

Ans:

As per Notification 12/2017 Central Tax (Rate), SI. No. 78 Heading 9996 Services by an artist by way of a
performance in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre,

if the consideration charged for such performance is not more than Rs.1,50,000. However, exemption will
not apply to service provided by such artist as a brand ambassador.

Hence, in the above case Kesar Maharaj is exempt from GST as consideration for the classical dance
performance is Rs.98, 500 which does not exceed Rs.1, 50,000.

(i) If the consideration charged for the said performance by Kesar Maharaj is Rs.1,60,000, he will be liable
to pay GST on the same as although the performance is by way of classical art form of dance,
consideration charged for such performance has exceeded Rs.1,50,000

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(ii) If Kesar Maharaj is a brand ambassador of a food product and aforesaid performance is for the
promotion of such food product, he will be liable to pay GST as aforesaid exemption is not applicable to
service provided by an artist as a brand ambassador
(iii) If Kesar Maharaj gives a contemporary Bollywood style dance performance, such performance will not
be eligible for aforesaid exemption. The reason for the same is that although the consideration charged
does not exceed ,50,000, said performance is not in folk or classical art forms of dance. Hence, GST
would be payable on the same

Q8. RXL Pvt. Ltd. manufactures beauty soap with the brand name 'Forever Young'. RXL Pvt. Ltd. has
organized a concert to promote its brand. Ms. Ahana Kapoor, its brand ambassador, who is a leading film
actress, has given a classical dance performance in the said concert. The proceeds of the concert worth
1,20,000 will be donated to a charitable organization.

Whether Ms. Ahana Kapoor will be required to pay any GST? [ICAI Material]

Ans:

Services by an artist by way of a performance in folk or classical art forms of

(i) music, or
(ii) dance, or
(iii) theatre are exempt from GST, if the consideration charged for such performance is not more
than Rs.1, 50,000.
However, such exemption is not available in respect of service provided by such artist as a brand
ambassador. Since Ms. Ahana Kapoor is the brand ambassador of Forever Young' soap manufactured by RXL
Pvt. Ltd., the services rendered by her by way of a classical dance performance in the concert organized by
RXL Pvt. Ltd, to promote its brand will not be eligible for the above-mentioned exemption and thus, be liable
to GST, The fact that the proceeds of the concert will be donated to a charitable organization will not have
any bearing on the eligibility or otherwise to the above-mentioned exemption.

Q9. Whether the following services are exempt under this head or taxable?

Sr. Particular Amount in

No. (Rs.)
1 Services provided to a recognized sports body by an individual as a player, referee, 12,40,000
umpire, coach or team manager for participation in organized by a recognized
sports body
2 Service of a player to a franchisee which is not a recognized sports body 6,80,000
3 Services by a recognized sports body to another recognized sports body 1,20,000
4 Services by individuals such selectors, as commentators, curators, technical experts 6,90,000
5 Services of an individual as umpire, referee when provided directly to a recognized 1,20,000
sports body

Notes: Amount given above is exclusive of GST.

Ans:

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Sr. Particular Amount in

No. (Rs.)
1 Services provided to a recognized sports body by an individual as a player, referee, -
umpire, coach or team manager for participation in organized by a recognized sports
body [ Note 1]
2 Service of a player to a franchisee which is not a recognized sports body [Note 2] 6,80,000
3 Services by a recognized sports body to another recognized sports body -
4 Services by individuals such selectors, as commentators, curators, technical experts 6,90,000
[Note 3]
5 Services of an individual as umpire, referee when provided directly to a recognized -
sports body
Value of Taxable Supply 13, 70, 000

Notes:
(i) Exempt, As per Sl. No. 68 under Heading 9992 or Heading 9996 services provided to a recognized sports
body an a individual as a player, referee, umpire, coach or team manager for participation in a sporting
event organized by a recognized sports body.
(ii) Not Exempt. The service of a player to a franchisee which is not a recognized sports body is taxable.
(iii) As exemption is available to Individuals include player, referee, umpire, coach or team manager and not
selectors, commentators, curators or technical experts.

Q10. An individual acts as a referee in a football match organized by Sports Authority of India. He has also
acted as a referee in another charity football match organized by a local sports club, in lieu of a lump
sum payment. Discuss whether he is required to pay any GST.

Ans:
Services provided to a recognized sports body by an individual inter alia as a referee in a sporting
event organized by a recognized sports body is exempt from GST.
Since in the first case, the football match is organized by Sports Authority of India, which is a
recognized sports body, services provided by the individual as a referee in such football match will be
exempt under the said notification.
However, when he acts as a referee in a charity football match organized by a local sports club, he
would not be entitled to afore-mentioned exemption as a local sports club is not a recognized sports body
and thus, GST will be payable in this case.

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Category X:
Administration Services

Q1. The Resident Welfare Association (RWA) of Blue Heaven Building Housing Society in Delhi provides the
following information pertaining to amounts received by it in the month of month of Oct, 2017.

Particulars Rs.
Electricity charges levied by state Electricity Board on the members of RWA (The same was 350000
collected from members and remitted to the board on behalf of members)
Electricity charges levied by state Electricity Board on the RWA in respect of electricity 400000
consumed for common use of lifts and lights in common area. (Bill was raised in the name of
RWA. RWA collected the said charges by apportioning them equally 100 families and then,
remitted the same to the Board.)

Find the GST liability if any. The applicable rate of GST 18%.

Note:
(i) The gross receipts of RWA was Rs. 2450000 and
(ii) Electricity charges are charged separately, not forming part of monthly maintenance.

Ans: statement showing GST liability for the month of Oct 2017

Particulars Rs.
Electricity charges levied by state electricity Board on the members of RWA (i.e. pure agent NIL
reimbursement expenses).

RWA collected Electricity charges by apportioning them equally among 100 families and
then, remitted the same to the Board.) 400000
Value of taxable supply of service 400000
CGST 9% 36000
SGST 9% 36000

Q2. Robinson Bank Ltd furnishes the following information relating to services provided and the gross
amount received during the month of December 2017. Compute the value of taxable supply of services
and GST payable:

Rs. (lakhs)
1) Amount of commission received for debt collection service 10
2) Discount earned on bills discounted 4.5
3) Dealing in sale and purchase of forward contract 5.7
4) Charges received on credit card and debit card facilities extended 3.8
5) Penal interest recovered from the customers for the delay in repayment of loan 2.6
6) Commission received for service rendered to Government for tax collection 6

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7) Interest earned on reverse repo transaction 25

(show the workings with explanation wherever required)

Ans:

Rs. (lakhs)
1) Amount of commission received for debt collection service 10
2) Discount earned on bills discounted Nil
3) Dealing in sale and purchase of forward contract Nil
4) Charges received on credit card and debit card facilities extended 3.8
5) Penal interest recovered from the customers for the delay in repayment of loan 2.6
6) Commission received for service rendered to Government for tax collection 6
7) Interest earned on reverse repo transaction Nil
(show the workings with explanation wherever required)

Taxable supply of services 22.4

Total tax GST 18% 4.032

Q3. Xenda bank Ltd., furnishes the following information relating to services provided and the gross amount
received

Rs. (lakhs)
Merchant Banking Services 8
Asset Management (including portfolio management) 3
Services charges for services to the Government of India 1.5
Interest on overdraft and cash credits 2
Banker to the issue 5
Locker rent 2
Repayment of financial lease made by the customer to the bank Rs. Lakhs which includes a principal amount
of Rs. 50 lakhs.

Compute the value of taxable supply of services under “Banking and other financial services” as per the
Central Goods and Services Tax Act, 2017 and also find the CGST and SGST where rate of GST is 9% each.

Note: Input Tax Credit availed by the bank on the asset which is given on financial lease.

Ans: Statement showing GST liability of Xenda Bank Ltd

Particulars Rs. In lakhs

Merchant Banking Services 8
Asset Management (including portfolio management) 3
Services charges for services to the Government of India 1.5
Interest on overdraft and cash credits Nil
Banker to the issue 5

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Locker rent 2
Financial lease (supply of service) 80
Taxable supply of services 99.5
CGST 9% 8.955
SGST 9% 8.955

Q4. On 25th July 2017, Mr. Rama located in Chennai converted USD 100 into INR, actual exchange rate INR 62
per USD through Akbar Travel a money exchanger. RBI,s reference rate for buying and selling was Rs.
61/61.5 respectively on such date. Akbar Travel registered under GST and located at Chennai.
a) Find the value of supply as per Rule 32 (2)(a) of the CGST Rules, 2017 and GST where address of the
recipient is available with Supplier?
b) How much GST is liable to pay, in case where the RBI reference rate for a currency is not available.
Note: Applicable rate of GST 18%.

Ans:

a) The value of supply =(62-61)*100=INR 100

Thus, the value of taxable supply of Akbar Travel will be INR 100

Thus, the value of taxable supply of Akbar Travel will be INR 100 and GST will be levied on this amount.

GST= Rs. 18/-

9% CGST =Rs. 9

9% SGST =Rs. 9

b) The value of supply = Rs. (i.e. 1% of INR 6200)

GST = Rs. 11.16

9% CGST = Rs. 5.58

9% SGST = Rs. 5.58

Q5. Royal Financial Corporation located in Mumbai being a money exchanger provided the following service
in the month of July 2017 to M/s Infosys Bengluru.
a) US$ 1000 is changed into UK £ 571.4286 (i.e. 1 UK POUND=US $ 1.75).
b) RBI reference rate for that currency at that time for 1 US$ is Rs. 61 and for 1UK POUND = Rs. 85

Find the GST liability as per Rule 32 (2) (a) of the CGST Rules, 2017. Applicable rate of GST 18%.

Ans:

Taxable supply Rs. 486/-(Rs. 48571 * 1%)

IGST Rs. 87.43 (i.e. @ 18% on Rs. 486)
USD 1000* Rs. 61 Rs. 61000
UKP 571.4286* Rs. 85 Rs. 48571
Whichever is less is Rs. 48571

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Q6. Vasavi Ltd. exported some goods to LG Inc. of USA. It received US $ 9000 as consideration for the same
and sold the foreign currency @ Rs. 61 per US dollar. Compute the value of supply of money changing
service under GST law and rules made thereunder in the following cases:
a) RBI reference rate for US dollar at. That time is Rs. 62 per US dollar
b) RBI reference rate for US dollars is not available.

What would be the value of supply if US $9000 are converted into UK £ is Rs. 101 per UK Pound.

Ans:

a) In the given case, value of taxable service would be as follows: -

=Rs. (62-61) * 9000 USD=Rs. 9000
b) In the given case, value of taxable service would be as follows: -
1% of Rs. (61 * 9000 USD) =Rs.5490

In case neither of the currencies exchange is Indian rupee:

In the given case, value of taxable service would be 1% of the lower of the following:

a) US dollar converted into Indian Rupees (or)

b) UK pound converted into Indian rupees Value of taxable service
=$ 9000 * Rs. 63 = Rs. 567000 (or)
=£4500* Rs. 101=Rs. 454500
=1% of Rs. 454500=Rs. 4545/-

Q7. M/s Manda Ltd., Mumbai is an authorised money changer. It has entered the following transactions
(intra-state supplies) of money changing in the month of July 2017:
(i) 450 transactions of conversion of Dollar into Indian Rupees of Rs. 22000 per transaction;
(ii) 125 transactions of conversion of Dollar into Indian Rupees of Rs. 250 per transaction;

Input tax credit on input services Rs. 300000 (CGST Rs. 150000 & SGST Rs. 150000) and input goods Rs.
400000 (CGST Rs. 200000 & SGST Rs. 200000) is available. ITC on capitals goods is Rs. 250000 (capital
goods purchased in the current year as intra- state purchases).

Find GST payable as per Rule 32(2)(b) of the CGST Rules, 2017.

Ans:

(i) Conversion of Dollar into Indian Rupees

a. (Rs. 22000 * 1% =Rs. 220, whereas minimum is Rs. 250 per transaction).
b. 450 transactions * Rs. 250 =Rs. 112500.
(ii) Conversion of euro into Indian rupees
a. (up to Rs. 10 lakhs= Rs. 5500) + (Rs. 490 lakhs * 0.1%) = Rs. 54500
b. (maximum is Rs. 60000).
c. 125 transactions * Rs. 54500= Rs. 6812500
(iii) Statement showing net GST liability:

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Particulars CGST SGST Total Remarks

Output tax 623250 623250 1246500 (112500+6812500)*18%

Less: ITC on Note:
Input service (75000) (75000) (150000) ITC is allowed to avail 50% on inputs, input services
inputs (100000) (100000) (200000) and capital goods. Balance will lapse (as per Section
Capital Goods (62500) (62500) (125000) 17(4) of the CGST Act, 2017)
Net Output tax 385750 385750 771500

Q8. Whether GST will be levied on the exit-load on mutual funds?

Ans: Exit load in the form of a fee (whether or not as a fixed percentage of the investment) is liable to GST.
Even if the exit load is in the form of units in the fund, it may be concluded that the consideration received in
money was later converted to NAV units.

Q9. Kotak Mahindra Pension Fund provided the following services in a financial:
a) Annual premium of Rs. 6000 collected from each individual in relation to National Pension Scheme.
No. of subscribers 200.
b) Monthly premium collected Rs. 8750 towards general insurance to cover risk. No. of subscribers 500.
Applicable rate of GST 18%.
Find the GST liability.

Ans:

a) Annual premium of Rs. 6000 collected in relation to National Pension Scheme is Exempted from
GST.
b) Monthly premium of Rs. 8750 for 500 subscribers will attract GST @ 18%. Therefore, GST liability is
Rs. 787500 per month.
Q10. Mr. Kamar being a registered person under GST law provided the following services in the month of
Oct 2017:
a) Services provided to Gramina Bank located in rural area in the nature of Enrolment of
customers and charge Rs. 20000.
b) Disbursal of credit facilities to borrowers involving small amounts strictly as per the
instructions of the Bank locate in a village and collected Rs. 12250.
c) Facilitating the repayment of dues owed to the HDFC bank (Mylapore Branch, Chennai) by its
customers and collected fee Rs. 55000 from the bank.
d) Recovery agent services to the State bank of India, Mount Road Branch, Chennai, for Rs. 220500.
Find the GST liable to pay by Mr. Kamar applicable rate of GST @ 18%.
Ans:
Particulars Value in Rs.
Enrolment of customers in rural area bank Exempted supply
Disbursal of credit facilities as per bank located in rural area Exempted supply
Facilitating the repayment of loan to bank in urban area 55000
Recovery agent services to the SBI Reverse applicable
Total taxable supply 55000

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CGST 9% 4950
SGST 9% 4950

Q11. Arihant Life Insurance Company Ltd. (ALICL) has started its operations in the year 2017-18 (w.e.f. 1-
7-2017). During the year 2017-18, Arihant Life Insurance Company Ltd. (ALICL) has charged gross
premium of Rs. 180 lakh from policy holders with respect to life insurance policies; out of which Rs. 100
lakh have been allocated for investment on behalf of the policy holders.

Compute the GST liability of ALICL for the year 2017-18 under rule 32(4) of the CGST Rules, 2017

1) If the amount allocated for investment has been intimated by ALICL to policy holders at the time of
providing service.
2) If the amount allocated for investment has not been intimated by ALICL to policy holders at the time
of providing of service.
3) If the gross premium charged by ALICL from policy holders is not towards risk cover.
Applicable rate of GST 18%.

Ans:

1) GST liability of ALICL for the year 2017-18 will be computed as under:
=Rs. 14.40 lakhs (Rs. (180-100) lakh * 18%)
2) 25% of the 1st year premium is value of taxable supply. Thus, GST liability of ALICL for the year 2017-
18, being first year of its operations, will be computed as under:
value of taxable supply= Rs. 180 lakh * 25% =Rs. 45 lakh
GST liability = Rs. 8.10 lakh (i.e. Rs. 45 lakh * 18% )
3) GST liability of ALICL for the year 2017-18 will be computed as under:
=Rs. 32.40 lakh (Rs. 180 lakh * 18%)

Q12. LIC of India provides you the following information for the month of Oct 2017. You are required to
compute GST payable by the company if the company has opted to pay GST as per Rule 32(4) of CGST
Rules, 2017:
1) General policies: Total premiums collected Rs. 12000 lakhs (Out of which 1st year premium is Rs.
5000 lakhs)
2) Only risk cover policies: Premiums collected Rs. 500 lakhs.
3) Variable Insurance Policies: Premiums collected Rs. 8000 lakhs. (80% of the amount is allocated for
investments on behalf of policy holder for which policy holder is given separate break up in premium
receipts).

Note: Applicable rate of GST 18%. For all transactions location of supplier and place of supply is within
the same state.

Answer 59: Statement showing GST liability of LIC of India for the month of Oct 2017 under Rule 32(4)
of the CGST Rules, 2017:

Particulars Value Rs. in lakhs Working note

General policies 1250 5000*25%
1st Year premium

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2nd Year premium 875 7000*12.5%

Only Risk cover policies 500
Variable insurance policies 1600 (8000-6400)
premium
Total taxable supply of service 4225
CGST 9% 380.25 (4225*9%)
SGST 9% 380.25 (4225*9%)

Q13. Mr. X an event organiser, located in Chennai received an order from M/s Taxman publications,
Mumbai to conduct a book fair at Chennai. Find the place of service and GST in the following two cases:

Case 1: Taxman publications is a registered person.

Case 2: Taxman publications is an un-registered person.

Ans:

Case 1: Mumbai (i.e. location of recipient of service)

Mr. X of Chennai is liable to pay IGST.

Case 2: Chennai (i.e. location where the event is actually held)

Mr. X of Chennai is liable to pay CGST & SGST.

Q14. Mr. D of Delhi being an event organiser hosted an exhibition at Mumbai to exhibit the products of
exhibitor namely, Chennai Silks, Chennai, a registered person.

Ans:

POS = Chennai (i.e. location of service recipient)

GST is not liable to pay by Mr. C.

Q15. Mr. C of Chennai being an event organiser hosted an exhibition at Dhaka to exhibit the products of
exhibitor (namely Chennai silks) located Chennai.

Ans:

POS = Chennai (i.e. location of service recipient)

GST is not liable to pay by Mr. C.

Note: Services by an organiser to any person in respect of a business exhibition held outside India is
exempted from GST (vide Entry No. 52).

Q16. Mr. Donal of Delhi being an event organiser hosted an exhibition at Mumbai to exhibit the products
of exhibitor (namely M/s S Silks Ltd. of Singapore).

Ans: PPS =Mumbai

IGST is liable to pay by Mr. Donal of Delhi.

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Q17. M/s DLF Ltd., sponsored Rs. 20 Lakhs in respect of a Tournament organised by Board of Council for
Cricket in India (BCCI).
a) Is it a taxable supply of service?
b) If so who is liable to pay GST?

Ans:

a) Yes, the given service taxable supply of service.

b) M/s DLF Ltd., is liable to pay GST under reverse charge being a recipient of such sponsorship services
from BCCI.

Note: BCCI is not a National Sports Federation.

Q18. BCCI conducted a tournament in the month of October 20XX, in India (i.e. India Vs Australia) by
selling tickets in the following denominations:
a) 100000 tickets @ 295 per ticket
b) 10000 tickets @ 550 per ticket.
Find the GST rate if any?

Ans:

a) Where the consideration for admission is not more than Rs. 500 per person is exempted from GST.
b) GST liability is as follows:
Rs. 550 * 10000 tickets =Rs.5500000
CGST @ 14% =Rs. 770000
SGST @ 14% =Rs. 770000

Note:
1) Entry fee per person per ticket exceeding Rs. 250 fully taxable w.e.f. 25/1/2018, this limit is
increased to Rs. 500.
2) Admission to all sports events organised by recognised sports federations were to attract 28% GST.

Q19. Validate the following statement:

Indian Bank, Mount Road Branch in Chennai imported external asset management services is exempt
from GST.

Ans: The given statement is invalid. It is taxable supply of service and hence IGST will be levied.

Q20. Service provided by Indian tour operator to a Sri Lankan for a tour conducted in Bhutan. Is it taxable
supply?

Ans: It is exempted supply of service and hence GST will not be levied.

Place of supply= Location of supplier of service (Sec. 13(8) of the IGST).

However, specifically exempted from GST.

Q21. M/s Patil & Associates is a partnership firm engaged in providing legal services pertaining to
corporate affairs, legal consultancy & representational services. During the financial year it has provided
the following services:

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i) Represented a company appeal matter for MIs Shah& Shah Pvt. Ltd. being an unregistered person
under GST as falls below threshold limit for registration.
ii) Assisted Adv. Dhiraj for a legal matter relating to a criminal case of his client
iii) Legal consultancy services for a land related matter to its client Mr. Balal dev.
iv) Provided legal advice to the State Government for an official matter

Answer:

All the above cases fall within the purview of Sl. No. 45 of Exemption services

i) Exempt. As legal services includes representational services and in the given case as M/s Shah &
Shah Pvt. Ltd. being an business entity with an aggregate turnover up to such amount in the PFY as
maker it eligible for exemption from registration under GST falls under the list of exempt services.
Although the service provided by an Advocate are taxable under reverse charge as per sec 9(3) of
CGST Act, but for the given case this shall not be applicable.
ii) Exempt. As service is provided by a firm of advocate to an advocate is eligible for exemption
iii) Exempt. As service is provided by a firm of advocate to a person other than a business entity is
eligible for exemption.
iv) Exempt. As services provided to State Government is eligible for exemption.

Q22. Drew Bank Ltd. furnishes the following information relating to services provided during the month of
December, 20XX Compute the value of taxable service and GST payable.

S. No. Particular Rs.

1 Amount of commission received for debt collection service 10,00,000
2 Discount earned on bills discounted 6, 00,000
3 Dealing in sale and purchase of forward contract 20,00,000
4 Charges received on credit card and debit card facilities extended 3,80,000
5 Penal interest recovered from the customers for the delay in repayment of loan 12,00,000
6 Commission received for service rendered to Government for tax collection 6,00,000
7 Interest earned on reverse repo transaction. 2, 00,000
8 Interest on Credit Card 50,000

Answer:

S.No. Particular Rs.

1 commission received for debt collection service [Note 1] 10,00,000
2 Discount earned on bills discounted [Note 2] -
3 Dealing in sale and purchase of forward contract [Note 3] -
4 Charges received on credit card and debit card facilities extended [Note 4] 3,80,000
5 Penal interest recovered from the customers for the delay in repayment of loan [Note 12,00,000
5]
6 Commission received for service rendered to Government for tax collection [Note 6] 6,00,000

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7 Interest earned on reverse repo transaction. [Note 6] -

8 Interest on Credit Card [Note 7] 50,000
Total value of taxable service 32,30,000
GST @ 18% 5,81,400

Notes:
1) Banking services are provided by way of extending deposits, loans or advances in so far as represented
by interest are exempt. However, Commission received is not covered in Exemption hence, taxable
2) Bills discounting are a part of exemption of services till the extent of the discount
3) Forward contract comes under the purview of "Securities" as per Section 2 (101) of CGST Act. Securities
are specifically excluded from the definition of "Goods" and "Service" as per Section 2 (52) and Section 2
(102) respectively. Hence, the same would not be liable to GST.
4) Credit extended through credit and debit cards is not in the nature of loan or advance for interest and
thus, the charges received on account of such extended credit is in fact, the consideration for the
services rendered by way of credit card
5) Penal interest recovered from the customers for the delay in repayment of loan is a consideration for an
activity. Penal interest charged for delay in repayment of loan will be liable to GST.
6) They are financial instruments of short-term call money market that are normally used by banks to
borrow from or lend money to RBI. The margins, called the repo rate or reverse repo rate in such
transactions are nothing but interest charged for lending or borrowing money. Also, interest earned on
reverse repo transaction is exempt from GST.
7) Interest charges on loans and deposits have been exempted but interest on credit card is taxable.

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Category XI: Others

Q1. M/s Ram Ltd. of Chennai being importer furnished the following information:
1) CIF price of imported goods from Indonesia: USD 100000.
2) Submitted the bill of entry on 15-07-2017.
3) Rate of exchange is Rs. 65 per USD.

Note: the exact amount of fright paid by the foreign exporter to the foreign shipping line is not known. You
are required to answer:

a) Value of taxable supply

b) Who is liable to pay GST
c) Total tax liability

Answer 93:

Particulars Value in Rs. Remarks

CIF value of import 6500000 (100000 USD * Rs. 65)
a) Value of taxable supply of service (i.e. ocean freight)
b) Importer (Ram Ltd.) is liable to pay GST @ 5% on the taxable value of service
c) GST liability= Rs. 32500 (Rs. 650000 * 5%)

Q2. Compute the duty payable under the customs Act, 1962 for an imported equipment based on the
following information:
(i) Transaction value of the imported equipment US $ 10000 (royalty and licence fee included in
transaction value US $ 100).
(ii) Date of bill of Entry 25/4/2018 basic customs duty on this date 12% and exchange rate notified by
the Central Board of Excise and Customs US $1 = Rs. 65.
(iii) IGST u/s 3(7) of the Customs Tariff Act, 1975: 12%.
a. Social Welfare Surcharge @ 10 % is applicable.
b. Importer is liable to pay IGST on import of royalty and licence fee?
c. Applicable rate of IGST on import of services namely royalty and license fee @ 18%.
d. Make suitable assumptions where required and show the relevant workings and round off
your answer to the nearest Rupee.

Ans:

Particulars Value in Rs. Working Note

Assessable value 656500 (10100 USD * Rs. 65)
Add: Basic Customs Duty 78780 Rs. 656500 * 12%
Add: 10% Social Welfare 7878 78780* 10%
Surcharge
Transaction value for IGST 743158
Add: IGST u/s 3(7) of cus. Tariff 89179 743158* 12%
Value of imports 832337

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Total customs duty payable 175837

IGST payable on import of service = Rs. 1170

(USD 100 * Rs. 65 * 18%)

Less: Exempted

(i.e. 100 USD * Rs. 65)* 113.2%)* 12%= Rs. (883)

Net IGST payable = 287

Note: Transaction value of royalty and license fee included in the value of imported goods is Rs. 6500 (i.e.
100 USD * Rs. 65)

Q3. Examine the following independent services provided in the month of August, 2019 and determine
which of them are liable to GST in each of these cases:

Sr. No. Particulars Rs.

1 Services by way of waxing of apples to provide it an artificial sheen for 1,00,000
increasing its marketability
2 Admission to a Railway Museum 50,000
3 Transportation of patients to ABC Nursing Home and Bheem Multispecialty 1,20,000
Hospital, in an ambulance owned by XYZ Ltd.
4 Admission to a Telly Award Function [Value per ticket per person is Rs.510] 5, 10,000
5 Transportation of milk by a goods transport agency 1, 50,000

6 Services by way of artificial insemination of livestock 2, 15,000

Note: Wherever applicable, GST has been charged separately.

Answer:

Sr. No. Particulars Rs.

1 Services by way of waxing of apples to provide it an artificial sheen for -
increasing its marketability [Note 1]
2 Admission to a Railway Museum [Note 2] -
3 Transportation of patients to ABC Nursing Home and Bheem Multispecialty -
Hospital, in an ambulance owned by XYZ Ltd. [Note 3]
4 Admission to a Telly Award Function [Value per ticket per person is Rs.510] 5, 10, 000
[Note 4]
5 Transportation of milk by a goods transport agency [Note 5] -

6 Services by way of artificial insemination of livestock [Note 6] -

Value of taxable service 5, 10, 000

Notes:

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(i) As per Sl. No. 54 services by way of waxing of fruits which do not change/alter the essential
characteristics of the said fruits are exempt. Hence, the same is not liable to GST
(ii) As per Sl. No. 79 services by way of admission to a museum is exempt. Hence, the same is not liable to
GST
(iii) As per Sl. No. 74 ambulance services provided by an entity which is not a clinical establishment or an
authorized medical practitioner or paramedics are also exempt from GST
(iv) As per Sl. No. 81 services by way of right to admission to an award function is exempt up to Rs.50.
(v) As per Sl. No. 21 services provided by a goods transport agency, by way of transport in a goods carriage
containing milk, salt and food grain including flour, pulses and rice is exempt. Hence, in the above case
the same is not liable to GST
(vi) As per SI, No. 55A, services by way of artificial insemination of livestock is exempt Hence, in the above
case the same is not liable to GST

Q4. Answer with respect to applicability of GST in the following cases during the month of June, 2019
(i) Transport facility provided by a School to its students through a fleet of buses and cabs owned by
the School.
(ii) Transport facility provided by a School to its students through a private Bus/Cab Operator.
(iii) Service provided by a private transport operator to a School in relation to transportation of students
to and from a School.
(iv) Service provided in relation to repair or maintenance of aircraft owned by a State Government.
(v) Exhibiting movies on television channels.
(vi) Transport of foodstuff, agricultural produce, chemical fertilizers and newspaper registered with the
Registrar of Newspapers by a goods transport agency in a goods carriage.
(vii) Transportation of petroleum and petroleum products and household effects by railways.
(viii) Transportation of postal mails or mail bags by a vessel

Ans: Exempt. As per Sl. No. 66 services provided by an educational institution to its students are exempt.
Hence, the same is not liable to GST

(i) Exempt. As per Sl. No. 66 services provided by an educational institution to its students are exempt.
It doesn't matter whether Bus/Cab operator is a private one. Hence, the same is not liable to GST
(ii) Exempt. Services provided, to an educational institution, by way of transportation of students,
faculty and staff are exempt. Hence, the same is not liable to GST
(iii) Taxable. It is not covered under the purview of exemption. Hence, the same is liable to GST [As per
Sl. No. 6 services provided by Government in relation to aircraft inside an airport is exempt] (V)
Taxable. It is not covered under the purview of exemption. Hence the same is liable to GST
(iv) Exempt. As per Sl. No. 21 services provided by a goods transport agency by way of transportation of
foodstuff, agricultural produce, chemical fertilizers and newspaper registered with the Registrar of
Newspapers have been exempt. Hence, the same is not liable to GST
(v) Taxable, As per Sl. No. 20 certain criteria is specified for exemption, Transportation of petroleum
and petroleum products and household effects by railways has not been covered in exemption.
Hence, the same is liable to GST. [It is to be noted that petrol has been kept out of the purview of
GST]
(vi) Taxable. As per Sl. No. 20 certain criteria is specified for exemption. Transportation of postal mails
or mail bags by a vessel has not been covered in exemption. Hence, the same is liable to GST

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Note: Sr. No. are given for student reference, student need not to refer Sr. No. of exemption.

Q5. State whether the following services are covered in negative list of services under exemption:
(i) Service by the Department of Post by way of speed post, express parcel post, life insurance and
agency services provided to general public.
(ii) Service provided by way of supply of farm labour relating to agriculture.
(iii) Services by way of renting of residential dwellings for use as residence.
(iv) Services of funeral, burial, crematorium or mortuary and transportation of the deceased.
(v) Services by way of education as a part of an approved vocational education course.
(vi) Service of transportation of passengers with or without accompanied belongings, by Railways in
an air-conditioned coach.
(vii) Services by way of transportation of goods by road by a goods transportation agency.
(viii) Selling of space or time slots for advertisement broadcast by FM Radio.

Ans:

(i) No. Services by department of post by way of speed post, express parcel post, life insurance and
agency services provided to general public are liable to GST as per Sl. No. 6
(ii) Yes. Service provided by way of supply of farm labour relating to agriculture is exempt as per Sl. No.
54
(iii) Yes. Services by way of renting of residential dwellings for use as residence is exempted as per Sl.
No. 12
(iv) Services of funeral, burial, crematorium or mortuary and transportation of the deceased is covered
under Schedule III of CGST Act wherein the aforesaid activity shall not be treated as a supply of
service hence, the same is not liable to GST
(v) Yes. Services by an educational institution are exempt as per Sl. No. 66. Approved vocational
education course is included in the term educational institution as per the definition in Para 2 (y).
Hence, the same is not liable to GST
(vi) No. Service of transportation of passengers with or without accompanied belongings, by Railways in
an air-conditioned coach are liable to GST as per Sl. No. 17
(vii) No. As per Sl. No. 18 Service by way of Transportation of goods
a) by road except the services of –
(i) a goods transportation agency
(ii) A courier agency
b) by inland waterways
(viii) No. Selling of space or time slots for advertisement broadcast by FM Radio is not covered under
exemption. Hence, the same is liable to GST

Q6. Determine taxable value of supply under GST law with respect to each of the following independent
services provided by the registered persons: [ICAI Material]

Particulars Gross amount

charged (Rs.)
Fees charged for yoga camp conducted by a charitable trust 50,000

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Amount charged by business correspondent for the services provided to the rural 1,00,000
branch of a bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem cells 5,00,000
Amount charged for service provided by commentator to a recognized sports body 5, 20,000

Answer:

Particulars Gross amount

charged (Rs.)
Fees charged for yoga camp conducted by a charitable trust [Note -1] -

Amount charged by business correspondent for the services provided to the rural -
branch of a bank with respect to Savings Bank Accounts [Note -2]
Amount charged by cord blood bank for preservation of stem cells [Note -3] -
Amount charged for service provided by commentator to a recognized sports body 5, 20,000
[Note -4]

Notes:
(i) Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable
activities are exempt from GST. The activities relating to yoga are included in the definition of charitable
activities, So, such activities are exempt from GST.
(ii) Services by business facilitator or a business correspondent to a banking company with respect to
accounts in its rural area branch have been exempted from GST.
(iii) Services provided by cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation are exempt from GST.
(iv) Services provided to a recognized sports body only by an individual as a player, referee, umpire, coach or
team manager for participation in a sporting event organized by a recognized sports body are exempt
from GST. Thus, services provided by commentators are liable to GST.

Q7. Examine whether GST is exempted on the following independent supplies of services:
(i) Service provided by a private transport operator to Scholar Boys Higher Secondary School in relation
to transportation of students to and from the school.
(ii) Services provided by way of vehicle parking to general public in a shopping mall. [ICAI Material]

Ans:

(i) Yes. Services provided transport operator an educational institution by way of transportation of
students are exempted from GST.
(ii) No. Services provided by way of vehicle parking to general public are not exempted from GST.
Therefore, GST is payable on the same.

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Questions from MTP, RTP of CA

Q1. Ayushman Madical center, a clinical establishment, offers the following services:

Sr.No. Particulars Rs. *

i Reiki healing treatment. Such therapy is not recognized system of medicine in terms 10,
of selection 2(h) of Clinical Establishments Act, 2010. 00,000
ii Plastic Surgeries. 20,
[One such surgery was conducted to repair cleft lip of a new born baby. 00,000
Consideration of Rs.1,00,000 was charged for the same]
iii Air ambulance services to transport critically ill patients from distant location to 1,00,000
Ayushman Medical Center
iv Alternative medical treatments by way of Ayurveda. Such therapy is not a 2, 50,000
recognized system of medicine in terms of section 2(h) of Clinical Establishment Act,
2010

"excluding GST
Ayushman Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells. You are required to compute the value of supply and GST liability [CGST & SGST or
IGST) of Ayushman Medical Centre, if any, in the light of relevant GST provisions.
Note - All the services provided by Ayushman Medical Centre are intra- State supplies. Assume the rates of
CGST, SGST and IGST to be 9%, 9% and 18% respectively. (MTP 2018)

Answer:
Health care services provided by, inter alia, a clinical establishment in India are exempt from GST
vide Notification No. 12/2017 CT (R) dated 28.06.2017, The definition of 'health care services' stipulates that
such services must be provided in any recognized system of medicines.
As per section 2 (h) of Clinical Establishments Act, 2010, recognised system of medicine means
allopathy, yoga, naturopathy, ayurveda, homeopathy, siddha and unani system of medicines or any other
system of medicines as may be recognised by the Central Government. Accordingly, value of supply and GST
liability of Ayushman Medical Centre will be computed as follows:
Sr. Particulars Rs.
No.
i. Reiki Healing treatments 10,00,000
[Not a recognized system of medicines]
ii. Plastic Surgeries Rs.20,00,000 – Rs.1,00,000] 19,00,000
['Health care services' specially excludes inter alia, cosmetic or plastic surgery except
when undertaken to restore/reconstruct anatomy/ functions of body affected due to
congenital defects, developmental abnormalities, injury or trauma]

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iii. Air ambulance services to transport critically ill patients from distant locations to the Nil
Medical Centre ['Health care services' specifically includes services by way of
transportation of the patient to and from a clinical establishment]

iv. Alternative medical treatments by way of Ayurveda Nil

[Being a recognized system of medicines]
Value of supply 29, 00,
000
CGST @9% 2,61,000
SGST @9% 2,61,000

Note: Services provided by cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation are exempt from GST. Therefore, services provided in relation to preservation
of stem cells by the cord blood bank operated by Ayushman Medical Centre will be exempt from GST.

Q2. Wisdom Public School, a higher secondary school in Delhi, is of the view that no tax is payable on the
education provided by it to its students as education plays a significant and remedial role in balancing
the socio-economic fabric of the country.
Examine whether GST law provides any scope of exemption to supply of goods or services with particular
reference to the contention raised by school? (Practice Question)

Answer:
Yes, GST law provides the scope of exemption to supply of goods and services. Section II of CGST Act, 2017
provides that in the public interest, the Central or the State Government can exempt either wholly or partly,
on the recommendations of the GST council, the supplies of goods or services or both from the levy of GST
either absolutely or subject to conditions. Further, the Government can exempt, under circumstances of an
exceptional nature, by special order any goods or services or both.
As regards the contention raised by Wisdom Public School, the same is valid in law since Notification No.
12/2017 CT (R) dated 28.06.2017 specifically wholly exempts services provided by an educational institution
to its students, faculty and staff.

Q3. Divyakripa Trust, an entity registered under section 12AA of the Income-tax Act, 1961, has furnished you
the following details with respect to the activities undertaken by it. You are required to compute its tax
liability from the information given below: (RTP 2018)

Particulars Amount (Rs.)

Amount received for the Yoga camps organized for elderly people 4,83,000
Payment made for the services received from a service provider located in US, for the 5,50,000
purposes of providing "charitable activities"
Amount received for counselling of mentally disabled person 10,50,000
Amount received for renting of commercial property owned by the trust 1,50,000

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Amount received for activities relating to preservation of forest and wild life 12, 35,000

Note: Applicable CGST 9% and SGST 9% have been charged separately wherever applicable. Divyakripa Trust
is not eligible for composition levy.

Answer:

Computation of value of taxable supply made by Shri Krishna Pvt. Ltd.

Particulars (Rs.)
Amount received for the Yoga camps organized for elderly people Exempted
Supply
Payment made for the services received from a service provider located in US, for the Exempted
purposes of providing "charitable activities" Supply
Amount received for counselling of mentally disabled person Exempted
Supply
Amount received for renting of commercial property owned by the trust 1, 50,000

Amount received for activities relating to preservation of forest and wild life Exempted
Supply
CGST 9% x 1,50,000 13,500
SGST 9% x Rs.1, 50,000 13,500
Total GST Liability 27,000

Q4. A Ltd. becomes the successful bidder. The spectrum is assigned to A Ltd., for a total consideration of
Rs.1000crores in the month of June 2015. Government permitted to pay as one time charge payable, in
full upfront or in instalments as the case may be. A Ltd. chooses to make in instalments over a period of
5 years. Instalment due fallen on or after 1st July 2017 is leviable to GST? Whether your answer is
different if periodic payment required to be made by the assignee. (RTP 2018)

Answer: The exemption under entry 42 Notification No. 12/2017- Central Tax (Rate) Dt 28-06-2017shall
apply only to one-time charge, payable in full upfront or in instalments, for assignment of right to use any
natural resource. Hence, A Ltd. is not liable to pay GST.
The exemption shall not applicable to any periodic payment required to be made by the assignee. GST is
payable on periodic payments due after 1.7.2017 in respect of spectrum assigned before 1.4.2016, GST is
liable to pay by A Ltd. Reverse charge mechanism will be applicable

Q5. Examine whether supply of food and drink in the following independent cases is exempt from GST:-
(i) "Smart Kids" is a Play School located in Delhi. Smart Kids has outsourced the catering services for
supply of food and drink in the canteen of Play School to BTV Caterers, Delhi for a consideration of
Rs.8,00,000 per annum.
(ii) Wellness Hospital, a clinical establishment located in Tirupati, is specialized in diabetic treatment. The
hospital has its own canteen - Tasty Foods. The canteen serves the food and drink to the in-patients

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as advised by the doctors/nutritionists of the hospital. Apart from this, other patients (who are not
admitted) or attendants or visitors of the in-patients also take food and drink from the canteen.

(CA Inter RTP May 19 New)

Answer:

(i) Services provided to an educational institution providing services by way of pre-school education and
education up to higher secondary school or equivalent, by way of catering is exempt from GST vide
Notification No. 12/2017 CT (R) dated 28.06.2017 as amended. Thus, in the given case, services
provided by BTV Caterers to Smart Kids are exempt from GST.
(ii) Services by way of health care services provided by a clinical establishment, an authorised medical
practitioner or Para-medics are exempt from GST vide Notification No. 12/2017 CT (R) dated
28.06.2017 as amended. In this regard, CBIC has clarified that food supplied by the hospital canteen
to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare
services and is not separately taxable. Thus, it is exempt from GST.

However, other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are
taxable.

In view of the same, GST is exempt on the food supplied by Tasty Foods to the inpatients as advised by
doctors/nutritionists while other supplies of food by it to patients (not admitted) or attendants/visitors of
the in-patients is taxable.

Q6. Mr. Thiraj, a registered supplier of service in Bangalore (Karnataka State) has provided the following
information for the month of February 2018: (CAI Suggested Nov 18 New)

No. Particulars Amount (Rs.)

(i) Intra-state taxable supply of service 5,20,000

(ii) Legal fee paid to a lawyer located within the state 20,000
(iii) Rent paid to the State Govt. for his office building 20,000
(iv) Received for services towards conduct of exams in Loveall University, Pune 16,000
(recognized by law),being an inter-state transaction

Compute the net GST liability (CGST, SGST or IGST) of Mr. Thiraj for the month of February, 2018.
Rate of CGST, SGST and IGST are 9%, 9% and 187 respectively. All the amounts given above are exclusive of
taxes.

Answer:

Value of
CGST @ SGST@ IGST @
S. No. Particulars Supply
9% (Rs.) 9% (Rs.) 18% (Rs.)
(Rs.)
Output Supply
Intra-State taxable supply of services 5, 20,000 46,800 46,800

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Services towards conduct of exams in Loveall

16,000 Exempt
University, Pune [Note-1]
Inward Supply
Legal fee paid to lawyer located within State
20,000 1,800 1,800
[Note-2]
Rent paid to State Government for Office
30,000 2,700 2,700
Building [Note-3]
Total tax liability 51,300 51,300
Cash paid towards tax payable under reverse
4,500 4,500
charge [A] [Note-4]
Output tax payable against which ITC can be
46,800 46,800
set off
Less: ITC of tax paid on legal fees and rent (4,500) (4,500)
Output tax payable after set off of ITC [B] 42,300 42,300
Net GST liability [A] + [B] 46,800 46,800

Notes:

1. Since Loveall University provides education recognized by law it is an educational institution and
services provided to an educational institution, by way of conduct of examination by such institution
are exempt from GST.
2. In case of legal services provided by an advocate to any business entity GST is payable under reverse
charge by the recipient of service
3. In case of services supplied by, inter alia, State Government by way of renting of immovable
property to a person registered under the CGST Act, GST is payable under reverse charge by the
recipient of service
4. The amount available in the electronic credit ledger may be used for making payment towards
output tax, However, tax payable under reverse charge is not an output tax. Therefore, tax payable
under reverse charge cannot be set off against the input tax credit and thus, will have to be paid in
cash.

Q7. Decide with reason whether the following independent services are exempt under CGST Act, 2017:
i) M/s Fast Trans, a goods transport agency, transported relief materials meant for victims of
Kerala floods being a natural disaster, by road from Delhi to Ernakulam, for a Limited Co.
ii) Keyan Enterprises, an event organizer, provided services to Breathing Wall Ltd. by way of
organizing business exhibition at Pragati Maidan in New Delhi as part of Make in India initiative.

Answer:

i) Services provided by a goods transport agency, by way of transport in a goods carriage of, inter
alia, relief materials meant for victims of inter alia natural or manmade disasters are exempt
from GST. Therefore, services provided by M/s Fast Trans will be exempt from GST.
ii) Services provided by an organiser to any person in respect of a business exhibition held outside
India is exempt from GST. Since in the given case, the exhibition is organized in India, the
services of organization of event by Keyan Enterprises will not be exempt from GST.

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Q8. JP Charitable Institution, an entity registered under Section 12AA of Income Tax Act, 1961 and registered
in GST, has furnished you the following details with respect to the activities undertaken by it during the
month of January, 2018. You are required to compute its taxable value of GST from the information
given below, assuming that the rate of GST is 18%. Brief reasoning should be part of your answer. (CA
inter Nov (18 old)

Particulars Amount (rs.)

Excluding GST
Membership fees received from members 10,00,000
Amount received for advancement of educational programs relating to 4,00,000
abandoned or orphaned or homeless children
Amount received for renting of commercial property owned by Trust 5,00,000
Amount received for counseling of terminally ill person 3,50,000
Fees charged for Yoga Camp conducted by Trust 2,00,000
Amount received relating to preservation of forest & wildlife 6,00,000

Answer: Computation of value of taxable supply of I P Charitable Institution for the month of January, 2018

Particulars Amount (rs.)

Excluding GST
Membership fees received from members 10,00,000
Amount received for advancement of educational programs relating to Nil
abandoned or orphaned or homeless children
Amount received for renting of commercial property owned by Trust 5,00,000
Amount received for counseling of terminally ill person Nil
Fees charged for Yoga Camp conducted by Trust Nil
Amount received relating to preservation of forest & wildlife Nil
Taxable Value 15, 00, 000
Charitable activities provided by an entity registered under Section 12AA of the
Income-tax Act, 1961 are exempt.
Since JP Charitable Institution is registered under section 12AA of the Income-tax
Act, 1961 and activities mentioned at points (ii), (iv), (v) and (vi) are included in
charitable activities, the same are exempt.

Q9. Determine taxable value of supply under GST law with respect to each of the following independent
services provided by the registered persons: (CA Inter MTP Mar 19)

Particulars Gross amount

charged (rs.)
Amount charged for loading, unloading, packing and warehousing of potato chips 25,000

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Fees charged for yoga camp conducted by a charitable trust registered under 50,000
section 12AA of the Income-tax Act, 1961
Amount charged by business correspondent for the services provided to the rural 1,00,000
branch of a bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem cells 5,00,000
Amount charged for service provided by commentator to a recognized sports 6,00,000
body

Answer:

Particulars Gross amount

charged (rs.)
Amount charged for loading, unloading, packing and warehousing of potato chips 25,000
[Note 1]
Fees charged for yoga camp conducted by a charitable trust registered under Nil
section 12AA of the Income-tax Act, 1961 [Note 2]
Amount charged by business correspondent for the services provided to the rural Nil
branch of a bank with respect to Savings Bank Accounts [Note 3]
Amount charged by cord blood bank for preservation of stem cells [Note 4] Nil
Amount charged for service provided by commentator to a recognized sports 6,00,000
body [Note 5]

Notes:

1. Services by way of loading, unloading, packing, storage or warehousing of agricultural produce are
exempt from GST. Further, potato chips are manufactured through processes which alter the
essential characteristic of agricultural produce, thus is not covered under definition of agricultural
produce.
2. Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable
activities are exempt from GST. The activities relating to advancement of yoga are included in the
definition of charitable activities, So, such activities are exempt from GST.
3. Services by business facilitator or a business correspondent to a banking company with respect to
accounts in its rural area branch have been exempted from GST.
4. Services provided by cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation are exempt from GST.
5. Services provided to a recognized sports body only by an individual as a player, referee, umpire,
coach or team manager for participation in a sporting event organized by a recognized sports body
are exempt from GST. Thus, services provided by commentators are liable to GST.

Q10. Sun grow Pvt. Ltd. (a registered taxable person) having the gross receipt of Rs.50 lakh in the previous
financial year provides the following information relating to their services for the month of July, 2018.

S. No. Particulars Amount

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1 Running a boarding school 2, 40,000

2 Fees from prospective employer for campus interview 1,70,000
3 Education services for obtaining the qualification recognized by law of 3,10,000
foreign country
4 Renting of furnished flats for temporary stay to different persons 1, 20,000
(Rent per day is less than Rs.1,000 per flat)
5 Conducting Modular Employable Skill Course, approved by National 1, 40,000
Council of Vocational Training
6 Conducting private tuitions amount 3, 00, 000
7 Running material arts academy for young children 55, 000
8 Conducting career counselling session 1, 65, 000

Compute the value of taxable supply and the amount of GST payable. The above receipt as don’t include the
GST amount. Rate of GST is 18%

S. No. Particulars Amount

1 Running a boarding school [Services provided by an educational Nil
institute to its students, faculty and staff are exempt.]
2 Fees from prospective employer for campus interview [Not exempt] 1,70,000
3 Education services for obtaining the qualification recognized by law of 3,10,000
foreign country [An institution providing education services for
obtaining qualification recognized by a foreign country does not
qualify as educational institution. Thus, said services are not exempt.]
4 Renting of furnished flats for temporary stay of different persons Nil
[Services by a hotel, inn, guest house, club or campsite, by whatever
name called, for residential or lodging purposes, having Value of
Supply of a unit of accommodation below Rs.1,000 per day or
equivalent are exempt]
5 Conducting Modular Employable Skill Course [An institution providing Nil
Modular Employable Skill Course qualifies as educational institution,
Services provided by an educational institution to its students, faculty
and staff are exempt.]
6 Conducting private tuitions [Not exempt.] 3,00,000
7 Running martial arts academy for young children [Not exempt under 55,000
GST laws]
8 Conducting career counselling session [Not exempt under GST laws] 1,65,000
Value of taxable supply 10,00,000
GST payable @ 18% 1,80,000

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Questions from MTP, RTP of CMA

Q1.
(a) M/s. R Ltd. is engaged is providing service of transportation of passengers, furnished the following
information in the month of Oct 2017. Find the GST liability.
(1) Service of transportation of passengers by National Waterways: Rs.50 lakhs;
(2) Service of transportation of passengers by Stage carriage (non-A/c): Rs.5 lakhs;
(3) Service of transportation of passengers by contract carriage for tourism: 120 lakhs (bills inclusive
of accommodation and transportation etc. indicated as narration at the bottom of invoice);
(4) Transportation of passenger from Mumbai to Chennai port in a vessel and such service in not for
tourism purpose: Rs.12 lakhs;
Note: R Ltd. is willing to avail exemption benefits if any. Taxable supplies of Mr. R in the previous
year were Rs.22 lakhs.
(b) Find the taxability for the following independent cases:
1) Packing of pulses in retail packs for Rs.42,000.
2) Packing of tomato ketchup for Rs.54,000
3) Commission on sale of rice for Rs.10,125.
4) Storage of rice flour in the warehouse for Rs.12,000. (RTP 2018)

Answer: (a).

Nature of service [Transport of passengers] Rs. in lakhs

By National Waterways Exempted Supply
By Stage Carriage [Non-A/c] Exempted Supply
By contract carriage for tourism [bills inclusive of accommodation and 120
transportation etc. indicated as narration at the bottom of invoice]
In a vessel from Mumbai to Chennai and such services is not for tourism Exempted Supply
taxable supply of services 120
GST liability @ 5% on 120 lakhs (Note: input tax credit not allowed) 6

(b).

1. Taxable supply of services

2. taxable supply of services
3. taxable supply of services
4. taxable supply of services

Q2. Discuss whether GST is leviable in respect of transportation services provided by Raja Ram Goods
Transport Agency in each of the following independent cases:

Customer Nature of service provider Amount Charged (rs.)

A Transportation of milk 22,00,000
B Transportation of books on a consignment transported in a 1,30,000
single goods carriage
C Transportation of chairs for single consignee in the goods 600
carriage

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Note: Raja Ram Goods Transport Agency registered person under GST Law and opted to pay CGST 6% and
SGST @6%.

(b) Clean and Green Pvt. Ltd. provided the bio-medical waste treatment facility to a veterinary clinic. Is it
a taxable supply of service? If so, will GST be levied? (RTP 2018)

Answer: a) Statement showing GST liability of Raja Ram Goods Transport Agency

Nature of services Taxable Supply (rs.) Remarks

Transportation of milk Nil Exempted Supply
Transportation of books on a 1,30,000 Taxable Supply
consignment in the goods
carriage
Transportation of chairs for Nil freight Rs.600 is exempted from
single consignee in the goods GST
carriage
Total taxable supply 1,30,000

CGST 6% on Rs.1,30,000 7,800

SGST 6% on Rs.1, 30,000 7,800

(b) It is taxable supply of service.

Scope of the exemption under entry 75 of notification no. 12/2017- Central Tax (Rate) is restricted to
services provided by operators of the common Bio- medical Waste Treatment Facility to a clinical
establishment and not to veterinary clinic.

Q3. Mr X of an individual residential unit otherwise than as part of a residential complex. You are required to
answer:
1. Whether Mr. X is liable to pay GST where he undertaken pure labour contract?
2. Whether Mr. X is liable to pay GST where he undertaken both labour and Mr. X being a contractor
undertaken construction work material contract?
3. Mr. X gives contract to a sub-contractor. Can sub-contractor also get exemption if it is pure labour
contract? (RTP 2018)

Answer:

As per Notification No. 12/2017 Central tax (rate) -Services by way of pure labour contracts of construction,
erection, commissioning, or installation of original works pertaining to a single residential unit otherwise
than as a part of a residential complex. I are exempt from GST.

1. Since, Mr. X under taken services by way of pure labour contracts of construction of single
residential unit is exempt from GST.
2. If in case Mr. X providing service with both labor and material i.e. termed as works contract under
GST. He will be charged 12% GST.

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

3. Yes. Services provided by a sub-contractor to a contractor are also exempt as he is providing labor
for the construction of residential house.
Q4. Examine whether GST is exempted on the following independent supply of services:
(i) Teja & Co, a tour operator, provides services to a foreign tourist for tour conducted in Jammu &
Kashmir and receives a sum of Rs.3, 00,000.
(ii) Ms. Poorva acts as a Team Manager for Indian Sports League (15L), a recognised sports body, for
a Tennis tournament organised by Multi brand retail company and received a remuneration of
Rs.2, 00,000.

Answer:

(i) Services provided by a tour operator to a foreign tourist are exempt from GST provided such
services are in relation to a tour conducted wholly outside India. Thus, since in the given case,
services provided by Teja & Co. are in relation to a tour conducted within India, the same are not
exempt from GST.
(ii) Services provided by a team manager to a recognised sports body for participation in a sporting
event are exempt from GST provided said sporting event is organised by a recognized sports
body. Thus, since in the given case, the sporting event is not organised by a recognised sports
body, the services provided by Ms. Poorva are not exempt from GST.

Q5. Examine whether GST is payable in the following independent supply of services:
(i) Indiana Engineering College, a recognised educational institution, has conducted an entrance
test examination for various courses run by it and charged entrance fees from the applicants.
(ii) Ramfal Lalaji, an agriculturist, has stored sugarcane in a warehouse. He has taken fumigation
services in the said warehouse from Gupta Pest Control Co. for which he paid the consideration
of Rs.6,000.

Answer:

(i) Services provided by an educational institution by way of conduct of entrance examinations

against consideration in the form of entrance fee are exempt from GST vide Notification No.
12/2017 CT (R) dated 28.06.2017 as amended.

Since in the given case, services provided by Indiana Engineering College, an educational institution are by
way of conduct of entrance examination against entrance fee, the same is exempt and thus, GST is not
payable in this case.

(ii) Services by way of fumigation in a warehouse of agricultural produce are exempt from GST vide
Notification No. 12/2017 CT (R) dated 28.06.2017 as amended. In the present case, since Gupta
Pest Control Co. provides services by way of fumigation in the warehouse of sugarcane [being an
agricultural produce], said services are exempt and GST is not payable on the same.

Q6. With reference to the provisions of GST law, briefly answer the following questions:
a) Income is received by Maharashtra Government from renting of immovable property to Ganpati Morya
Pvt. Ltd., registered in Maharashtra (Turnover of the company was Rs.18 lakh in the preceding financial
year). Is GST payable in the present case? If yes, who is liable to pay the same?

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Answer:

Notification No. 12/2017 CT (R) dated 28.06.2017 has inter alia exempted the services provided by the
State Government to a business entity with an aggregate turnover of up to Such amount in preceeding
financial year as makes it eligible for exemption from registration under the CGST Act, 2017. However, the
same shall not apply to services by way of renting of immovable property.

In the given case, services by way of renting of immovable property is provided by Maharashtra
Government to Ganpati Morya Pvt. Ltd, registered in Maharashtra. Therefore, the above exemption will not
apply in this case even though the company is not liable to under CGST Act. Thus, GST is payable in the given
case.

Notification No. 13/2017 CT (R) dated 28.06.2017 as amended inter alia provides that reverse charge is
applicoble in case of services supplied by the State Government by way of renting of immovable property to
a person registered under the Central Goods and Services Tax Act, 2017. Thus, GST is payable by Ganpati
Morya Pvt. Ltd., being a registered person in the present case.

Q7. M/s. Apna Bank Limited, a Scheduled Commercial Bank has furnished the following details for the month
of August, 2018:

Particulars Amount (rs.) in Crores

(Excluding GST)
Extended Housing Loan to its customers 100
Processing fees collected from its customers on sanction of loan 20
Commission collected from its customers on bank guarantee 30
Interest income on credit card issued by the bank 40
Interest received on housing loan extended by the bank 25
Minimum balance charges collected from current account and saving account 01
holder

Compute the value of taxable supply. Give reasons with suitable assumptions. (CA Inter Exam May 19 New)

Answer:
Computation of value of taxable supply of M/s. Apna Bank Limited for the month of August, 2018
Particulars Amount in crores (rs.)
Housing loan extended to customers [Since money does not constitute goods Nil
or services, extending housing loan is not a supply.]
Processing fee collected on sanction of loan [Interest does not include 20
processing fee on sanction of the loan. Hence, the same is taxable.]
Commission collected on bank guarantee [Any commission collected over and 30
above interest on loan, advance or deposit are not exempt.]
Interest income on credit card issued by the bank [Services by way of 40
extending loans in so far as the consideration is represented by way of interest
are exempt from tax. However, interest involved in credit card services is not
exempt.]

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Interest received on housing loan [Services by way of extending loans in so far Nil
as the consideration is represented by way of interest are exempt from tax.]
Minimum balance charges collected from current account and saving account 01
holder [Any charges collected over and above interest on loan, advance or
deposit are not exempt.]
Value of taxable supply 91

Q8. Decide with reason whether the following independent services are exempt under CGST Act, 2017:
1. Gokul Residents' Welfare Association received Rs.9, 000 per month as contribution from each
member for sourcing of goods and services from third persons for common use of its members.
2. Mr. Vikalp, a performing artist, has received Rs.1, 58,000 from performance of classical dance and
Rs.90, 000 from acting in TV Serial during the month of June 2018. (CA Inter Exam May 19 New)

Answer:
1. Service by an unincorporated body or a registered non-profit entity, to its own members by way of
share of contribution up to an amount of Rs.7,500 per month per member for sourcing of
goods/services from a third person for the common use of its members in a housing society or
residential complex, is exempt.
In the given case, monthly contribution per month per member received by Gokul Residents' Welfare
Association exceeds Rs.7, 500.
Therefore, exemption will be available up to 7,500 and GST would be payable on the amount in excess of
Rs.7,500 (viz. Rs.1,500 in this case).
2. Services by an artist by way of a performance in folk or classical art forms of music, dance, or
theatre, if the consideration charged for such performance is not more than Rs.1,50,000 are exempt
from GST.
In the given case, since the consideration received by the performing artist Mr. Vikalp for performance
of classical dance is more than Rs.1, 50,000, said services are not exempt.
Further, consideration received for acting in TV serial is also not exempt since said performance is not in
folk/classical art forms of theatre.

Q9. Mr. Uttam Kumar a registered supplier of service in Kolkata, has provided following information for the
month of October, 2018:

No. Particulars Amount in (rs.)

Intra-State taxable supply of service 6,40,000
Amount received from Kapola Pvt. Ltd., for service provided to company. 5,00,000
(He is a director in Kapola P. Ltd.), being Intra-State transaction.
Paid legal fee to senior advocate for one legal matter within State, being 50,000
Intra-State transaction.
Amount received for service provided by him as commentator to a local 1,20,000
recognized sports body being Intra-State transaction

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 GST QUESTION BANK - CHAPTER: GST EXEMPTIONS

Amount received for acting as a coach in recreational activities relating 30,000

to sports, from one local charitable entity registered under section 12AA
of the Income Tax Act, 1961, being Intra- State transaction.

Compute the net GST liability (CGST, SGST or 1GST) of Mr. Uttam Kumar for the month of October, 2018.
Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively. All the amounts given are exclusive of CGST,
SGST and 1GST, wherever applicable. (CA Inter Exam May 19 Old)

Answer:
Computation of net GST liability of Mr. Uttam Kumar October, 2018

Particulars Amount (rs.) CGST (rs.) SGST (rs.)

Intra-State taxable supply of service 6, 40,000 57,600 57,600
Add: Amount received from Kapola Pvt. Ltd. for service 5,00,000 Nil Nil
provided to company, being intra-State transaction' [Note-1]
Add: Legal fee paid to senior advocate for one legal matter 50,000 4,500 4,500
within the State, being intra-State transaction[Note-2]
Add: Amount received for services provided as a commentator 1,20,000 10,800 10,800
to a local recognized sports body, being intra-State transaction
[Note-3]
Add: Amount received for acting as a coach in recreational 30,000 Nil Nil
activities relating to sports from one local charitable entity
registered under section 12AA of the Income Tax Act, 1961,
being intra-State transaction [Note-4]
Total Tax Payable 72,900 72,900
Less: Cash paid towards tax payable under reverse charge [A] 4,500 4,500
[Note-5]
Output tax payable against which ITC can be set off 68,400 68,400
Less: ITC of tax paid on legal fees paid to senior advocate 4,500 4,500

Output tax payable after set off of ITC [B] 63,900 63,900

Net GST liability [A] + [B] 68,400 68,400

Notes

1. Services supplied by a director of a company to the said company are taxable under reverse charge
and thus, the tax leviable thereon will be paid by the company
2. Services provided by a senior advocate by way of legal services are taxable under reverse charge and
thus, the tax leviable thereon will be paid by Mr. Uttam Kumar
3. Services provided to a recognized sports body by an individual as a player, referee, umpire, coach or
team manager for participation in a sporting event organized by a recognized sports body is exempt
from GST vide exemption notification. However, services provided as a commentator to a local
recognized sports body is taxable.

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4. Services by way of coaching in recreational activities relating to sports by charitable entities

registered under section 12AA of the Income-tax Act are exempt from GST vide exemption
notification.
5. The amount available in the electronic credit ledger may be used for making payment towards
output tax. However, tax payable under reverse charge is not an output tax. Therefore, tax payable
under reverse charge cannot be set off against the input tax credit and thus, will have to be paid in
cash.

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 Payment of Tax
Question 1: What are the payments of tax to be made in GST regime?

Answer:

1. Taxes to be paid are as follows:

CGST- Central Government A/c
SGST / UTGST - State Government A/c
These are on account of Intra State Supply
2. For any Interstate supply taxes to be paid are Integrated GST - IGST
3. In addition to the taxes required to be paid - TDS, TCS, Interest, Penalty, fees & other
additional payments wherever applicable.

Question 2: How many types of electronic ledger are there? (ICAI)

Answer:
(a) Electronic cash ledger
(b) Electronic credit ledger
(c) Electronic liability register

Question 3: Should the payment be made only from the account of the taxable person?

Answer:
There is no restriction on the account to be used of the taxable person for payment of the tax.
The payment can be made by a third party from his account using the GSTIN of the taxable
person to get the amount debited to the electronic cash ledger of the taxable person.

Question 4: Is there any order in which liability of a person shall be discharged or it can be
appropriated as per the convenience of the tax payer?

Answer:
No, every taxable person shall discharge his tax and other dues in the following order as per sec
49(8):
(a) self-assessed tax, and other dues related to returns of previous tax periods;

(b) self-assessed tax, and other dues related to return of current tax period;
(c) any other amount payable under the Act or the rules made thereunder including the
demand determined under section 73 or 74

Question 5: Write a short note on the following:-

(i) Tax dues

(ii) Other Dues

Answer:
(i) "Tax dues" means the tax payable under this Act and does not include interest, fee
and penalty.
(ii) "Other dues" means interest, penalty, fee or any other amount payable under the
Act or the rules made there under.

Question 6: Is HSN code for goods or accounting code for service relevant for payment of tax?

Answer:
The format of challan does not contain column to disclose the HSN code or the accounting
code, therefore, it is not relevant for payment of tax.

Question 7: Who will bear the commission charged by bank towards payment of taxes online?

Answer:
The commission charged by bank towards payment of taxes online shall be borne by the
taxable person making such payment.

Question 8: What is the procedure for payment of tax for a casual taxable person or non-
resident taxable person who is required to pay tax in advance for obtaining registration?

Answer:

As GSTIN will not be available with the casual taxable person or non-resident taxable person
required to pay tax in advance for obtaining registration, they will be provided a temporary
identification number using which the person can deposit estimated tax liability.

Question 9: Are principles of unjust enrichment applicable for payment made under GST? (ICAI)

Answer:
Yes, as per Section 49 (9) of the CGST Act, 2017 every person who has paid the tax on goods or
services or both under this Act shall, unless the contrary is proved by him, be deemed to have
passed on the full incidence of such tax to the recipient of such goods or services or both.

Question 10: What are the main features of GST payment process?

Answer:

Key Features of Payment process: -

➢ Electronically generated challan from GSTN common portal in all modes of payment and
no use of manually prepared challan
➢ Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of
payment of tax
➢ Convenience of making payment online
➢ Logical tax collection data in electronic format
➢ Faster remittance of tax revenue to the Government Account
➢ Paperless transaction
➢ Speedy Accounting and reporting
➢ Electronic reconciliation of all receipts
➢ Simplified procedure for banks
➢ Warehousing of Digital Challan

Question 11: State the name of output tax under GST, where any of the input tax credit under
GST can be availed?

Answer:

IGST, IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output tax liability
known as 1GST.

Challan

Question 12: Explain the following terms in brief (ICAI)

(a) E-FPB

(b) CPIN

(c) CIN

Answer:
 (a) E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks
which are authorized to collect payment of GST, Each authorized bank will nominate
only one branch as its E-FPB for pan India transaction.

The E-FPB will have to open accounts under each major head for al governments. Any
amount received by such E-FPB towards GST will be credited to the appropriate account
held by such E-FPB, For NEFT/RTGS Transactions, RBI will act as E-FPB.

(b) CPIN stands for Common portal Identification Number, It is created for every Challan
successfully generated by the taxpayer. It is a 14-digit unique number to identify the
challan. CPIN remains valid for a period of IS days.
(c) CIN or Challan Identification Number is generated by the banks, once payment in lieu of
a generated Challan is successful, It is a 17-digit number that is 14-digit CPIN plus 3-digit
Bank Code. CIN is generated by the authorized banks/Reserve Bank of India (RBI) when
payment is actually received by such authorized banks or RBI and credited in the
relevant government account held with them. It is an indication that the payment has
been realized and credited to the appropriate government account. CIN is
communicated by the authorized bank to taxpayer as well as to GSTN.

Question 13: What is the validity of challan FORM GST PMT-06 generated at the common
portal?

Answer:

The challan FORM GST PMT-06 generated at the common portal shall be valid for a period of
fifteen days.

Question 14: What are the special procedures to be followed for deposit of tax by way of NEFT
or RTGS?

Answer:

In order to deposit tax by way of NEFT or RTGS, the taxable person needs to generate a
mandate form along with the challan and submit it to Bank for processing.

Question 15: What are the differences between electronic cash ledger and electronic credit
ledger?

Answer:

In order to deposit tax by way of NEFT or RTGS, the taxable person needs to generate a
mandate form along with the challan and submit it to Bank for processing.
 Sl. Electronic cash ledger Electronic Credit ledger
No.
1 Can be used for payment of tax, interest, penalty Can be used only for payment
and other amounts of output tax
2 Credit to the ledger will be through payment vide Credit to the ledger will be
challans. through input tax credit
claimed as per FORM GSTR-2
(inward return)
3 Refund for excess balance in the cash ledger can be Refund for excess balance in
applied through GSTR-03 or 04 or 07 credit ledger may be refunded
only though the forms
specified

Electronic Cash Ledger

Question 16: What are the possible debits' and credits' to Electronic cash ledger?

Answer:

The possible debits' and credits' to Electronic cash ledger are as follows:

Debit Credit
i. Discharge of any i. Payment made through challan on receipt of CIN
liability in ii. Amount deducted under Section 51 and claimed in
accordance with FORM GSTR 02 by the registered taxable person
Section 49 from whom the amount was deducted omitted

iii. Amount collected under Section 52 and claimed in

FORM GSTR 02 by the registered taxable person
ii. Towards claim for from whom the said amount was collected
refund of any
amount iv. Reversal of amount debited earlier on account of
final rejection of refund (FORM GST PMT-03)

Question 17: Where one can see the payment made in GST portal?

Answer:

All payments will reflect in the 'electronic cash ledger' of the person. As the portal is common
for CGST, SGST, UTGST and IGST, all the payments will be reflected in a single electronic cash
ledger. However cross utilisation may not be allowed within the ledger
but a registered person may, on the common portal, transfer any amount of tax, interest,
penalty, fee or any other amount available in the electronic cash ledger under the Act to the
electronic cash ledger for Integrated tax, Central tax, State tax or Union territory tax or cess in
FORM GST PMT- 09 if declaration is given

Question 18: Will the input tax credit claimed by a taxable person get added to the balance in
electronic cash ledger?

Answer:

No, input tax credit will appear separately in the 'electronic credit ledger maintained in the
common portal.

Question 19: Should a taxable person maintain any minimum balance in the electronic cash
ledger? Answer:

There are no provisions in the GST Acts or rules which prescribes maintenance of minimum
balance in the electronic cash ledger.

Question 20: PQR Ltd. has the following tax liabilities under the provisions of act-

SI. Particulars RS.

No.
1 Tax liability of CGST, SGST/UGST, IGST for supplies made during 1,00,000
August 2017
2 Interest & Penalty on delayed payment and filing returns belonging to 20,000
August 2017
3 Tax liability of CGST, SGST/UGST, IGST for supplies made during 1,20,000
September 2017
4 Interest & Penalty on delayed payment and filing of returns belonging 20,000
to September 2017
5 Demand raised as per section 73 or section 74 under CGST Act, 2017 8,00,000
belonging to July 2017
6 Demand raised as per the old provisions of Indirect Taxes 1,00,000

PQR Ltd has 5,00,000 in Electronic Cash Ledger, Suggest PQR Ltd in discharging the tax liability

Answer: Balance in Electronic cash ledger can be used in the following manner to discharge tax
liability by X Ltd

Particulars Rs.
Balance available in Electronic cash ledger 5,00,000
Less:-
Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2017 1,00,000
Interest & Penalty on delayed payment and filing of returns belonging to August 20,000
2017
Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2017 1,20,000
Interest & Penalty on delayed payment and filing of returns belonging to 20,000
September 2017
Demand raised as per section 73 or section 74 under CGST ACT, 2017 2,40,000
Balance in electronic cash ledger NIL

The balance amount of 5,60,000 (38,00,000 - 2,40,000) towards demand raised under section
73 or section 74 under CGST Act, 2017 to be discharged before discharging liability of demand
rose under old provisions of Indirect Taxes.

Electronic Credit Ledger

Question 21: What are the possible debits' and credits' to Electronic credit ledger?

Answer:

The possible debits' and credits' to Electronic credit ledger are as follows;

Debit Credit
(i) Discharge of any liability in accordance (i) Input tax credit claimed;
with Section 49;
(ii) Towards claim for refund of unutilized (ii) Reversal of amount debited unutilized
amount. amount. earlier, on account of final
rejection of refund (FORM GST PMT-
03).

Question 22: Can one use Electronic credit ledger for payment of interest, penalty, and
payment under reverse charge? (ICAI)

Answer:

No, as per Section 49 (4) of the CGST Act, 2017 the amount available in the electronic credit
ledger may be used for making any payment towards 'output tax'. As per Section 2 (82) of the
CGST Act, 2017, output tax means, the CGST/SGST chargeable under this Act on taxable supply
of goods and/or services made by him or by his agent and excludes tax payable by him on
reverse charge basis. Therefore, input tax credit balance available in electronic credit ledger
cannot be used for payment of interest, penalty, and also for payment of tax under reverse
charge.

Question 23: Explain the manner of utilization of input tax credit ?

Answer:
As per sec 49(5) of CGST Act, The amount of input tax credit available in the electronic credit
ledger of the registered person shall be utilized as follows:-
Credit of 1st utilized for payment of Balance may be utilized
for payment of
IGST IGST CGST , or SGST/UTGST in
any manner
CGST CGST* IGST
SGST/UTGST SGST* IGST

*As per rule 88(A) credit of CGST & SGST can be utilised for payment only if credit of IGST has
been fully utilised.

Question 24: Will the Electronic credit ledger be debited only with matched input tax credit?

Answer:
No, the Electronic credit ledger be debited with matched, unmatched and also provisional input
tax credit.

Electronic Liability ledger

Question 25: What is Electronic tax liability register?

Answer:
Electronic tax liability register is a register to be maintained in the common portal of GST in
FORM GST PMT-01 to record all liabilities of a taxable person. Part-I is for recording return
related liabilities and Part-Il is for recording other than return related liabilities.
Question 26: What are the possible debits' and credits' to Electronic tax liability register?

Answer:
The possible debits' and credits' to Electronic tax liability register are as follows.
Debit Credit
• the amount payable towards tax, interest, • Electronic cash ledger (Payment of Amount
late fee or any other amount payable as per deducted u/s SI or amount collected u/s 52,
the return filed by the said person; amount payable on Reverse Charge basis,
• the amount of tax, interest, penalty or any amount payable u/s 10, any amount payable
other amount payable as determined by a towards interest, penalty, fee or any other
proper officer in pursuance of any proceeding amount under the Act)
under the Act or as ascertained by the said
person; • Electronic credit ledger
• the amount of tax and interest payable as a
result of mismatch under section 42 or section Relief given by the Appellate Authority or
43 or section 50; or or • any amount of Appellate Tribunal or Court
interest that may accrue from time to time. • Reduction in penalty (if any)

Computation of GST liability & utilization of Input tax credit

Question 27: The following are details of purchases and sales etc. effected by Smart Pvt. Ltd. a
registered manufacturer under CGST Act, 2017:

1) Purchased fabric material from local dealer Rs.47040 (including GST @ 12%)
2) Purchased textile material from local dealer Rs.94500 including GST@ 5%)
3) Purchased machinery for manufacture of taxable goods Rs.3, 18,600 (including GST @
18%), Depreciation @ 15% is charged.
4) Other direct and indirect expenses Rs.44, 570.
5) Profit margin on total cost @ 10%.
6) For the month November, 2017 only 80% production is sold within the state and
applicable GST rate being 18%.

Calculate the amount of CGST and SGST payable after utilizing input tax credit for the month of
November 2017 and no opening balance of input tax credit is available.

Answer:
Computation of Invoice Value and Tax liability:
Sr. No. Particulars (Rs.)
1 Purchase fabric material from local dealer 47040*100/112) 42,000
[WN]
2 Purchase of textile material from local dealer 90,000
(94500*100/105) [WN]
3 Depreciation expense [( 3,18,600 - 3,18,600 *18/118) * 40,500
15%]
4 Other direct & indirect expense 44,570
5 Total Cost of goods manufactured 2,17,070
6 Cost of goods sold ( 80 % of goods produced were sold) 1, 73,656
7 Add: Profit margin @ 10% 17,366
8 Total Sales Value 1,91,022

Working note: Credit will be available for CGST and SGST charged by local -suppliers. Hence the
same is not to be included in the cost.
Computation of CGST and SGST payable for the month of November, 2017 after utilizing the
available input tax-credit.
Particulars CGST SGST
Output tax liability for the month of November, 2017 @ 18% 17,191 17,192
(Being CGST 9% and SGST 9%) [i.e. 1, 91,022 * 18%]
Less: Eligible input tax credit in respect of purchases of -
Fabric material (42,000 * 12%) 2520 2520
Textile material (90,000 * 5%) 2250 2250
Capital goods (2, 70,000 * 18%) 24,300 24,300
Total input tax credit 29,070 29,070
CGST/SGST credit to be carried forward 11,879 11,879

Question 28: Girija automobiles Ltd. a registered manufacturer in state of Maharashtra

provides the following particulars for tax period of March, 2018.

(1) Inputs purchased within state Rs.1, 84,800 (includes GST @ 12%).
(2) Machinery purchased on 20.03.2018 for Rs.2, 50,000 (excludes GST @ 5%) from a trader
located in Karnataka, eligible for input tax credit. Depreciation rate is 15% p.a.
(3) Manufacturing expenses is Rs.65, 000
(4) Profit margin @ 5% on total cost
(5) Goods procured were sold outside Maharashtra with IGST @ 12% on sales.

Calculate the amount of CGST and SGST payable after utilizing input tax credit for the month of
March, 2018. There exists no opening balance of input tax credit.
Answer:
Computation of Invoice value and tax liability:
Particulars (Rs.)
Inputs purchased from local dealer [WN I] 1, 65,000
Depreciation expense 37,500
Manufacturing expenses 65,000
Total cost of goods manufactured 2,67,500
Add: Profit margin @ 5% on cost 13,375
Total Sales Value 2, 80,875
Output tax liability (IGST @12%) 33,705
Less:- Input tax credit available on:
Capital goods –
IGST @ 5% 12,500
Inputs tax credit –
> CGST 9,900
> SGST 9,900
IGST to be deposited in cash 1,405

Working note:

(1) Credit will be available for CGST and SGST charged by local suppliers, hence same is not
to be included in the cost.
(2) The credit of IGST available shall be first utilized and remaining amount shall be set off
against available balance of CGST and SGST in that order for payment of output tax
liability respectively and any amount remaining thereafter shall be paid in cash.

Question 29: M/s Nirmitee & co of Pune purchased goods from Mr. R of Chennai amounting to
Rs.1, 62,400 (including 12% 1GST) in month of January, 2018. He also purchased raw material
worth Rs.1, 56,000 from local dealer who has opted for composition scheme. He incurred Rs.45,
000 as direct and indirect expenses and added profit margin @ 5% of cost.
M/s Nirmitee sold 65% of finished goods to Mr. Raj of Bangalore with IGST
@ 18% and 15% of finished goods to Mr. K of Nagpur with CGST and SGST
@ 18% payable thereon.
Compute the net CGST, SGST and IGST liability and input tax credit if any, for the month of
January, 2018.

Answer:
Purchases of raw material from Mr. R of Chennai {WN-1} 1,45,000
Purchases of raw material from dealer opted for composition scheme { 1,56,000
WN -2}
Other direct and indirect expenses 45,000
Total Cost of goods manufactured 3, 46,000
Cost of goods sold (80% of goods produced were sold)
Add: Profit margin @ 5% of cost 2, 76,800
13,840
Total Sales Value 2, 90,640
Goods sold to Mr. Raj of Bangalore (65% of goods produced were sold) 2,36,145
(290640 / 80 * 65)
Goods sold to Mr. K of Nagpur (15% of goods produced were 54,495
sold)(290640/80 * 15)

Particulars CGST@ 9% SGST@ IGST @

(Rs.) 9% (Rs.) 18% (Rs.)
Goods sold to Mr. Raj of Bangalore - - 42,506
Goods sold to Mr. K of Nagpur 4904 4905 -
Less: Eligible input tax credit in respect of - purchases - - 17,400
of - Raw material (from Chennai)
CGST/SGST/IGST to be paid in cash 4904 4905 25,106

Working note:

(1) Credit will be available for 1GST charged by outside state suppliers; hence same shall
not be included in the cost.
(2) No input tax credit shall be admissible on purchases made from dealer who has opted
for the composition scheme.
(3) The credit of IGST is to be utilized for payment of IGST output tax liability first and if any
amount remains thereafter then such amount is to be utilized towards payment of CGST
and SGST liability in any manner as per sec 49A and 49B read with rule 88A and circular,
clarification.
Interest on delayed payment of tax (Section 50)

Question 30: What are the provisions in relation to interest under GST?

Answer:
Interest is applicable on delayed payment of tax at the rate to be notified (not exceeding 18%)
and on undue or excess claim of input tax credit or on undue or excess reduction of output tax
liability at the rate to be notified (not exceeding 24%), calculated from the from the day
succeeding the day on which such tax was due to be paid Interest is applicable in case of undue
or excess claim of input tax credit as per of CGST Section 50

Question 31: If there is default in payment of tax and filing of returns, interest is payable on
gross tax payable or net tax payable?

Answer:
Gross tax payable, if there is default in payment of tax and filing of returns, input tax credit will
become ineligible as per Section 16(2) of the CGST Act. Therefore, the taxable person will not
be allowed claim set-off of input tax credit for calculation of interest.

Question 32: There is no specific provision for interest under 1GST Act, does this mean interest
is not applicable for delay in payment of IGST?

Answer:
No, provision of Section S0 of the CGST Act has been made applicable to IGST Act vide
miscellaneous provision contained in section 20 of the IGST Act.

Question 33: Is payment of interest mandatory?

Answer:
Interest being compensatory in nature, it is mandatory. Further, Section 50 uses the word 'shall'
which also indicates that interest is mandatory
Question 34: In the month of September, Mr. Sumit has to made outward supplies of 1000000
on which he has to pay tax @12%.i.e Rs.1, 20,000. The amount of input tax credit available as
on date was Rs.70, 000. The last late to file GSTRI is 10th of the next month i.e.10th October.
Ashok made the payment on 5th December. Calculation of interest payment of tax is as follows:

Answer:
Tax payable Rs.1, 20,000
Interest shall be calculated from the next day of the due date of payment ie.21st October to the
actual date of payment i.e. 5th December. Interest is 120000*18% 46/365= Rs.2, 722

Question 35: M/s Asha Pvt. Ltd. reduced the amount of Rs.2, 25,000 from the output tax
liability in contravention of the provisions of section 42(10) of CGST Act, 2017 in the month of
January 2018 (vide invoice date 12/01/2018), which is ineligible credit at invoice level. As a
result a show cause notice was issued by Central tax department under section 74 of CGST act
along with interest. M/s Asha Ltd. paid the tax and interest on 5th March 2018. Find the
interest liability payable if any?
Note:- Ignore the penalty

Answer:
As per sec 42(10) read with section 50(3) of the CGST Act, 2017 amount reduced from the
output tax liability in contravention of the provision of section 42(7) shall be added to the
output tax liability of the recipient in his return for the month in which such contravention
takes place and such recipient shall be liable to pay interest on the amount so added at the rate
specified in section 50(3) of CGST Act 2017.
Therefore, applicable rate of interest is @ 24% per annum.
Due date for January month return is 20th Feb 2018
Interest = Rs.1923/- (Rs.2, 25,000*24%*13/365)
Note:- The number of days is from 21st February 2018 to 5th March 2018 i.e. 13 days
 Miscellanous

Question 36: Can IGST credit be utilized for payment of outward Compensation Cess?

Answer:
No, as per sec 49(5) of CGST Act the amount of input tax credit available as IGST cannot be
utilized towards the payment of Compensation cess.

Question 37: Can compensation cess balance be utilized towards payment of compensation
cess liability?

Answer:
Yes, as per the Compensation act the amount of compensation cess can be utilized for payment
of compensation cell liability.

Question 38: Mr. Jaitley being a registered person located at Pune (Maharashtra) attends a
conference organized at Delhi for which he books a room for his stay at Hotel IRIS located in
Laxmi nagar, Delhi. The property being located at Delhi raises a bill and charges CGST & SGST
payable at Delhi accordingly to Mr. Jaitley as per the provisions of place of supply. Determine
whether the credit of CGST & SGST charged at Delhi can be utilized for payment of taxes in
Maharashtra by Mr. Jaitley?

Answer:
No, as per one of the tweet by CBIC the amount of CGST & SGST of one state cannot be utilized
against CGST & SGST of another state.

Question 39: ABC limited filed the return for GST under section 39(1) for the month of
November on 20th, December showing self-assessed tax of Rs.2, 50,000 which was not paid.
(ICAI)
Explain what are the implications for ABC limited as per relevant provisions?

Answer:
As per section 2(117) of CGST Act, "valid return" means a return furnished under sub-section (1)
of section 39 on which self-assessed tax has been paid in full.
Hence, in such a case, the return is not considered as a valid return and also input tax credit will
not be allowed to the recipient of supplies.

Questions from MTP and RTP of ICAI

Question 40 LP Ltd., obtains registration for paying taxes under section 9 of CGST Act. He asked
his tax manager to pay taxes on quarterly basis. However, LP Ltd.'s tax manager advised the Co.
to pay taxes on monthly basis. You are required to examine the validity of the advice given by
tax manager? (Practice Question)

Answer:
The advice given by tax manager is valid in law. Payment of taxes by the normal tax payer is to
be done on monthly basis by the 20th of the succeeding month. Cash payments will be first
deposited in the Cash Ledger and the tax payer shall debit the ledger while making payment in
the monthly returns and shall reflect the relevant debit entry number in his return. However,
payment can also be debited from the Credit Ledger. Payment of taxes for the month of March
shall be paid by the 20th of April. Composition tax payers need to pay tax on Quarterly basis
and file return Annually.

Question 41: "A tax officer can suo-moto ask the assesse to pay tax on provisional basis."
Examine the validity of the statement. (Practice Question)

Answer:
The said statement is not valid. As a taxpayer has to pay tax on self- assessment basis, a request
for paying tax on provisional basis has to come from the taxpayer which will then have to be
permitted by the proper officer. In other words, no tax officer can suo-moto order payment of
tax on provisional basis. This is governed by section 60 of CGST Act. Tax can be paid on a
provisional basis only after the proper officer has permitted it through an order passed by him.
For this purpose, the taxable person has to make a written request to the proper officer, giving
reasons for payment of tax on a provisional basis. Such a request can be made by the taxable
person only in such cases where he is unable to determine:
a. the value of goods or services to be supplied by him, or
b. determine the tax rate applicable to the goods or services to be supplied by him.
In such cases the taxable person has to execute a bond in the prescribed form and with such
surety or security as the proper officer may deem fit.
Question 42: Answer the following with reference to GST Laws:
i) When is interest payable?

Answer:
Interest is payable in the following cases in terms of section 50 of CGST Act, 2017:-
• Delay / failure to pay tax, in full or in part within the prescribed period
• undue or excess claim of input tax credit
• undue or excess reduction in output tax liability.

Question 43: Sahil is a supplier of taxable goods in Karnataka. He got registered under GST in
the month of September, 20XX and wishes to pay his IGST liability for the month. Since he's
making the GST payment for the first time, he is of the view that he needs to mandatorily have
the online banking facility to make payment of GST; offline payment is not permitted under
GST. You are required to apprise Sahil regarding the various modes of deposit in the electronic
cash ledger. Further, advise him with regard to following issues:

(a) Are manual challans allowed under GST?

(b) What is the validity period of the challan?
(c) Is cross utilization among Major and Minor heads of the electronic cash ledger
permitted? (CA Inter RTP May 19 New)

Answer:
Section 49(1) of CGST Act, 2017 read with rule 87 of CGST Rules, 2017 provides that the deposit
in electronic cash ledger can be made through any of the following modes, namely:-
(i) Internet Banking through authorised banks;
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
(iv) Over the Counter payment through authorised banks.
Thus, offline mode is also permitted under GST.
(a) Manual or physical Challans are not allowed under the GST regime. It is mandatory to
generate Challans online on the GST Portal,
(b) E-challan is valid for a period of 15 days.
 (c) Amount entered under any Minor head (Tax, Interest, Penalty, etc.) and Major Head
(CGST, IGST, SGST/UTGST) of the Electronic Cash Ledger can be utilized only for that
liability. Cross-utilization among Major and Minor heads is not possible
but a registered person may, on the common portal, transfer any amount of
tax, interest, penalty, fee or any other amount available in the electronic cash ledger
under the Act to the electronic cash ledger for Integrated tax, Central tax, State tax or
Union territory tax or cess in FORM GST PMT-09 if declaration is given

Question 44: From the following information, compute the Net GST payable for the month of
March, 2018:- (CA Inter Suggested Nov 18 New)

Output GST Amount (Rs.) Opening ITC as per credit ledger

CGST 2,000 Nil
SGST 15, 000 1,000
IGST 24,000 37,000

Computation of net GST payable for the month of March, 2018

Answer:
Computation of net GST payable for the month of March, 2018

CGST (Rs.) SGST (Rs.) IGST (Rs.)

Output tax payable 2,000 15,000 24,000
Less: Opening ITC as per credit ledger (2,000)2 - (11,00)3 - (24,000)1 -
IGST IGST IGST
(1000) – SGST
Net GST payable Nil 3,000 Nil

Note: - Input tax credit of IGST is to be utilised completely first to pay IGST, & then if any
balance is to be utilised against CGST and SGST in any order as per rule 88A read with circular
no 98/2019, clarification.

Question 45 M/s: Maheshwari Corporation Pvt. Ltd. is a supplier of goods and services at
Bangalore, registered in the State of Karnataka, having turnover of Rs.200 lakhs in the last
financial year. It has furnished the following information for the month of June, 2018.
 Particulars Amount (Rs.) Excluding GST
1 Services provide by way of labour contract for 1, 30,000
repairing a single residential unit otherwise than as a
part of residential complex (it is an intra- State
transaction.)
2 Intra-State sale of taxable goods including Rs.50, 000 2,50,000
received as advance in April, 2018. The invoice for the
entire sale value is issued on 15th June, 2018

3 Goods transport services received from GTA, GTA is 1, 80,000

paying tax @ 12 % (It is an inter-State transaction.)
4 Goods purchased from unregistered dealer on 20th 80,000
June, 2018
(Inter-State purchases are worth 45,000 and balance
purchases were intra-State).

Compute net GST liability (CGST, SGST, IGST as the case may be) of M/s Maheshwari
Corporation Pvt. Ltd. for the month of June, 2018 assuming the rates of GST, unless otherwise
specified, as under:
CGST - 9%, SGST - 9%, IGST - 18% (CAI Suggested Nov 18 Old)

Answer:
Computation of net GST liability of M/s Maheshwari Corporation Pvt. Ltd.

Value of CGST SGST IGST

Supply (Rs.) (Rs.) (Rs.)
Services provided by way of labour contracts 1,30,000 11,700 11,700
for repairing a single residential unit otherwise
than as a part of residential complex [Services
by way of pure labour contracts of construction,
erection, commissioning, or installation of
original works pertaining to a single residential
unit otherwise than as a part of a residential
complex are exempt. Labour contracts for
repairing are thus, taxable.]
Intra State sale of taxable goods [Time of supply 2, 50,000 22,500 22,500
of goods is the time of issue of invoice. So,
advance received in April, 2018 will also be
taxed in June, 2018]
Goods purchased from unregistered dealer on Nil Nil Nil
20th June, 2018 [All intra-State and inter-State
procurement made by a registered person from
unregistered person have been exempted from
reverse charge liability.] [Note2]
Less: ITC of GST paid on GTA services received (21,600)1 - -
[Since GTA is paying tax @ 12%, tax is payable
under forward charge. Further, ITC of IGST
(Rs.1,80,000x 12% = 21,600) paid on the same is
available]
Net GST liability 12,600 34,200 Nil
Note 1:- Input tax Credit of IGST has been used to pay CGST as there is no IGST liability as per
rule 88A read with circular no 98/2019
Note 2:- This sec 9(4) was been suspended till 30.09.2019. However, this notification has been
cancelled in order to bring effect of CGST Amendment Act. Thus there is no liability on such
purchases as of now.

Question 46: Insight Ltd. is operating in West Bengal. The tax liability for the month of August,
2017 is as follows: (CA Inter Suggested Nov 18 Old)

SI. No. Tax Liability West Bengal (Rs.)

1 Output CGST payable 24,000
2 Output SGST payable 9,000
3 Output IGST payable 3,000
4 Input CGST 7,000
5 Input SGST 14,000
6 Input IGST 12,000
Calculate tax payable and carry forward for the month of August, 2017.

Answer:
Computation of net tax payable and carry forward for the month of August, 2017

Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)

Output CGST payable 24,000 9,000 3000
Less: Input tax credit [Refer note below] (9,000)2-IGST (9,000)- SGST (3000)1-
IGST
(7,000)-CGST
Net GST payable 8,000 Nil Nil

Note: ITC of IGST has been used to pay 1GST first and balance has been used against CGST first
in manner as specified in rule 88A read with circular, clarification.

Question 47: M/s Software Limited reduced the amount of Rs.2,00,000 from the output tax
liability in contravention of provisions of section 42(10) of the CGST Act, 2017 in the month of
December 2017, which is ineligible credit. A show cause notice was issued by the Tax
Department to pay tax along with interest. M/s Software Limited paid the tax and interest on
31st March, 2018. Calculate interest liability (Ignore penalty). (CA Inter Suggested Nov 18 Old)

Answer:
A taxable person who makes an undue or excess claim of input tax credit shall pay interest @
24% p.a. on such undue or excess claim. The period of interest will be from the date following
the due date of payment to the actual date of payment of tax.
Due date of payment is 20th January, 2018.
Period for which interest is due = 21st January, 2018 to 31st March, 2018 =70 days
Thus, interest liability = Rs.2,00,000 x 24% x 70/365
= Rs.9, 205 (approx.)

Question 48 Ms. Jimmy wants to adjust input tax credit for payment of interest, penalty and
payment of tax under reverse charge. Explain whether she can do so. (CA Inter Suggested Nov
18)

Answer: The input tax credit as self-assessed in the return of a registered person shall be
credited to his electronic credit ledger which may be used for making any payment towards
output tax "Output tax" inter alia excludes tax payable on reverse charge basis.
Thus, Ms. Jimmy cannot adjust input tax credit for payment of interest, penalty as also
for payment of tax under reverse charge.

Question 49: Sangam Ltd., obtains registration for paying taxes under section 9 of CGST Act. He
asked his tax manager to pay taxes on quarterly basis. However, Sangam Ltd.'s tax manager
advised the Company to pay taxes on monthly basis. You are required to examine the validity of
the advice given by tax manager? (CA IPC MTP 2018)

Answer:
The advice given by tax manager is valid in law., Payment of taxes by the normal tax payer is to
be done on monthly basis by the 20th of the succeeding month. Cash payments will be first
deposited in the Cash Ledger and the tax payer shall debit the ledger while making payment in
the monthly returns and shall reflect the relevant debit entry number in his return. However,
payment can also be debited from the Credit Ledger. Payment of taxes for the month of March
shall be paid by the 20th of April. Composition tax payers will need to pay tax on quarterly basis
& fill the return annually.

Question 50: M/s. Pradyumn Corporation Pvt. Ltd. a registered dealer of Mumbai furnishes you
following for the month of October, 2017

Particulars Amount (Rs.)

Intra State sale of Taxable goods (Out of above Rs.50, 000 was 2,00,000
received as advance in September, 2017)

Goods purchased from unregistered dealer (purchase on 20th 50,000

October,2017)
(10,000 in case of Interstate & Balance Intra-state)

Received for services by way of labour contracts for repairing a 50,000

single residential complex (it is Intra-State transaction)

Professional fees paid to Ms. Udadhi located in a non- taxable

territory (it amounts to Interstate transaction) 50,000

Compute GST Liability (CGST, SGST or IGST, as the case may be) of M/s. Pradyumn Corporation
Ltd. for the month of October, 2017. Assume the rates of GST as under:

CGST 9%
SGST 9%
IGST 18%
Note: Turnover of M/s. Pradyumn Corporation Pvt. Ltd. was 2 crore in the Previous Financial
Year

Answer:

Particulars Value of CGST (Rs.) SGST (Rs.) IGST (Rs.)

supply
Intra State sale of taxable goods [Note-1] 1, 50,000 13,500 13,500
Goods purchased from unregistered dealer Nil Nil Nil
on 20th October, 2017[Note-2]
Receipt for services rendered by way of 50,000 4,500 4,500
labour contracts for repairing a single
residential unit otherwise than as a part of
residential complex [Note- 3]
Professional fees paid to Ms. Udadhi 50,000 9,000
located in a non-taxable territory [Note-4]
Total GST liability for the month of 9,000 9,000 9,000
October, 2017

Notes:-
1. As per N/N 66/2017-CT, the time of supply in case of supply of good for advances shall be
date of issue of invoice or last date of issue of invoice. Thus, since GST liability would have
arisen on advance of Rs.50,000 received in September, 2017 in that month itself, the same has
not been included in the GST liability of the company for the month of October, 2017 (2,00,000-
50,000).
2. This sec 9(4) was been suspended till 30.09.2019. However, this notification has been
cancelled in order to bring effect of CGST Amendment Act. Thus there is no liability on such
purchases as of now.
3. Services by way of pure labour contracts of construction, erection, commissioning, or
installation of original works pertaining to a single residential unit otherwise than as a part of a
residential complex are exempt. Labour contracts for repairing are thus, taxable.
4. In case of service supplied by a person located in a non-taxable territory to a person other
than non-taxable online recipient, GST is payable under reverse charge by such recipient.

Question 51: M/s. Daksha Enterprises has made a cash deposit of Rs.10, 000 under minor head
'tax' of major head 'SGST'. It has a liability of Rs.2, 000 for minor head "Interest" under the
major head "SGST".
State whether M/s. Daksha Enterprises can utilise the amount available for payment of interest.
(CA Inter Exam May 19 New)
Note:- M/s Daksha Enterprises has not given declaration in FORM GST PMT- 09

Answer:
The cash available in any minor head of a major head cannot be utilised for any other minor
head of the same major head.
Therefore, in the given case, amount of Rs.10, 000 available under minor head 'tax' of major
head 'SGST' cannot be utilised for payment of liability of Rs.2, 000 under minor head 'interest'
of the same major head.

Question 52: What are the E-ledgers? State the entries to be debited to electronic liability
register under the CGST Act, 2017 and the CGST Rules, 2017. (CA Inter Exam May 19 Old)

Answer:
Electronic Ledgers or E-Ledgers, i.e., Electronic Cash Ledger and Electronic Credit Ledger, are
statements of cash and input tax credit in respect of each registered taxpayer, In addition, each
taxpayer shall also have an electronic tax liability register.
The entries to be debited to electronic liability register under the CGST Act, 2017 and the CGST
Rules, 2017 are as follows:-
(i) all amounts payable towards tax, interest, late fee and any other amount as per
return filed;
(ii) all amounts payable towards tax, interest, penalty and any other amount
determined in a proceeding by an Assessing authority or as ascertained by the
taxable person;
(iii) the amount of tax and interest payable due to mismatch;
(iv) any amount of interest that may accrue from time to time.

Question 53 Mr. George, a registered supplier of goods at Kerala who pays GST under regular
scheme, has made the following transactions (exclusive of tax) during April 2018;
Source Purchase (Rs.) Sales (Rs.) Tax Rate (Rs.)
New Delhi 5, 00,000 10, 00,000 18%
Trivandrum 2,50,000 8,00,000 9% each for SGST &
CGST
Total 7,50,000 18,00,000

He has complied with all the conditions for availing the ITC and has the following ITC credit on
01-04-2018:
Source Taxes (Rs.) Interest (Rs.) Penalty (Rs.)
CGST 30,000 1500 500
SGST 30,000 1500 500
IGST 1, 00,000 2000 500
Compute the net CGST, SGST and IGST payable by Mr. George during April 2018 in cash? (CA
Final May 19 New)
Will your answer differ if declaration in FORM GST PMT- 09 has been given?

Answer:-
Computation of net CGST, SGST and 1GST payable in cash by Mr. George during April 2018
Particulars Amount (Rs.) CGST @ 9% (Rs.) SGST @ 9% (Rs.) IGST @ 18% (Rs.)
Sales made outside 10,00,000 1, 80,000
Kerala (New Delhi)-
[Being inter-state
sale, the same is
liable to IGST]
Sales made in 8, 00,000 72, 0000 72,000 (1,80,000)
Trivandrum Less: ITC (52, 500)SGST (52,500)
available during April (10,000) IGST SGST
2018 for set off
[Refer Working Note
Below
Net tax liability 9,500 19,500 Nil
payable in cash

Working Note: ITC available during April 2018 is computed as under:

Opening balance of ITC 30,000 30,000 1, 00,000

Purchases from New Delhi [Being 5, 00,000 90,000
inter-State purchase, IGST would
have been paid on it.]
Purchases from Trivandrum
Total input tax credit
Note:
1) ITC of IGST has been utilized to pay IGST liability first and the balance ITC of 1GST has
been used to pay CGST or SGST, in any manner & in any order liability. Interest and
penalty paid are not available as credit.
2) In given case the 1GST balance has been fully used for CGST but student can used that
balance either equally for CGST & SGST or fully for SGST also and answer will vary
accordingly.
Yes, answer will be differ in given case if Mr. George file FORM GST PMT 09 in
that case he can utilize the balance of minor head of interest and penalty for payment of
CGST and SGST.
Balance available in interest head is Rs.5, 000
 Balance available in penalty head is Rs.1, 500
Net tax liability payable in cash is Rs.9, 500 + 19,500 = Rs.29, 000
Therefore, after declaration liability to pay in cash is Rs.29, 000 – Rs.5000-1500 = Rs.22,
500.
Question 54: M/s X Ltd. being a registered person supplying taxable goods in the following manner:

Particulars Rs.
intra-State supply of goods 180000
Intra-State supply of goods 130000
Intra- State purchases 130000
Inter-State purchases 150000
ITC at the beginning of the relevant tax period:
CGST 130000
SGST 130000
IGST 170000
a) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
b) Inward and outward supplies are exclusive of taxes.
c) All the conditions necessary for availing the input tax credit have been fulfilled.

Compute the net GST payable by M/s X Ltd during the tax period. Make suitable assumptions.

Ans: Statement showing input tax credit (i.e. Electronic Credit Ledger)

Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)

Opening balance 130000 130000 170000
Add: ITC for the tax 117000 117000 27000
period
Total credit 247000 247000 197000
Statement showing Net GST payable by M/s X Ltd for the period

Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.)

Output tax 162000 162000 234000
Less: ITC allowed -247000 -247000 -197000
Sub-total -85000 -85000 37000
Less: CGST credit 37000 37000 -37000
adjusted
Net GST liability Nil Nil Nil
Excess ITC c/f 48000 85000 Nil

Question 55: Mr. A has output Tax liability of Rs. 100000/- towards CGST & SGST/ UGST and Rs. 20000
towards IGST and also interest payable of Rs. 1800/-. Explain the manner of discharge tax liability by Mr.
A in the following two independent cases:

1) Input tax credit available of CGST & SGST is Rs. 25000/- each & IGST is Rs. 25000/-
2) Input tax credit not available.
Ans : case 1:

In case Input Tax credit available-

Ledger Particulars CGST SGST IGST Interest Total

payable
Electronic Output tax 50000 50000 20000 1800 121800
liability payable
Electronic Input tax 25000 25000 25000 75000
credit credit
ledgder
Net output 25000 25000 - 50000
tax liability
IGST Credit 5000 - - 5000
set off (Note-1)
Electronic Cash to be 20000 25000 - 1800 46800
cash ledger deposited (Note -2)
Note :

1) IGST Credit can be adjusted against CGST & SGST.

2) Interest cannot be adjusted with Input Tax Credit

Case 2: In case Input Tax credit is not available-

Ledger Particulars CGST SGST IGST Interest Total

payable
Electronically Output tax 50000 50000 20000 1800 121800
liability ledger payable
Electronic Cash Amount to 50000 50000 20000 1800 121800
ledger be deposited
Order of claiming input tax credit is as follows-

Question 55: Y Ltd is operating in two states Andhra States and Tamil Nadu. The tax liability for the
month of August 2017 is as follows-

S.No. Tax liability Andhra Pradesh (Rs.) Tamil nadu (Rs.)

1. Output CGST payable 25000 10000
2 Output SGST payable 10000 5000
3 Output IGST payable 3000 2500
4 Input CGST 8000 13000
5 Input SGST 15000 1500
6 Input IGST 12000 16000
Calculate the tax payable for the month of August 2017.

Ans : Net Tax payable for the month of August is as follows-

Particulars Andhra Pradesh Tamil Nadu

 CGST SGST IGST CGST SGST IGST
Output tax 25000 10000 3000 10000 5000 2500
Input credit available for setoff 8000 15000 12000 13000 1500 16000
Input credit adjusted 8000 10000 3000 10000 1500 2500
Tax payable after setting of ITC 17000 - - - 3500 -
- 5000 9000 3000 - 13500
Input Adjustment of ITC 9000 - (9000)(Note - 3500 (3500)
-1)
Net Tax payable in cash 8000 - - - - -
Input credit carry forwarded - 5000 - 3000 - 10000
to next month

Notes :

1) IGST Input tax credit can be adjusted Output tax of liability of IGST, CGST, SGST. UTGST (set off
can be done in same Order)
2) SGST Input tax credit cannot be adjusted against output CGST & Vice-Versa.
3) CGST & SGST Input Tax credit of one State cannot be adjusted against Output CGST & SGST of
other state (same principle is applicable to IGST credit also).

Question 56: X Ltd has following tax liabilities under the provisions Act-

S.No. Particulars Amount (Rs.)

1 Tax liability of CGST,SGST/ UGST, IGST for supplies made 100000
during August 2017
2 Interest & penalty on delayed payment and filing of 20000
returns belonging to August 2017
3 Tax liability of CGST,SGST/ UGST, IGST for supplies made 120000
during September 2017
4 Interest & penalty on delayed payment and filing of 20000
returns belonging to September 2017
5 Demand raised as per section 73 or section 74 under CGST 800000
Act, 2017 belonging to July 2017
6 Demand raised as per the old provisions of indirect Taxes 100000
X Ltd has Rs. 500000 in Electronic cash ledger. Suggest X Ltd in discharging the tax liability.

Ans : Balance in Electronic cash ledger can be used in the following manner to discharge tax liability by X
Ltd-
Particulars Amount
Balance available in Electronic cash ledger 500000
Less-

Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2017 (100000)
Interest & Penalty on delayed payment and filing of returns belonging to August 2017 (20000)
Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2017 (120000)
Interest & Penalty on delayed payment and filing of returns belonging to September (20000)
2017
Demand raised as per section 73 or section 74 under CGST Act, 2017 (240000)
Balance in electronic cash ledger Nil
The balance amount of Rs.560000 towards demand raised under section 73 or section 74 under CGST
Act, 2017 to be discharged before discharging liability of demand rose under old provisions of Indirect
Taxes.

Question 57: M/s Rajender Dyeing Pvt. Ltd. supplied goods worth Rs.10,00,000 to M/s Y Ltd in the
month of September, 2017 plus GST 12%.M/s Rajendra Dyeing Pvt. Ltd. paid the GST on 5th December
2018. The amount of input tax credit is 70,000 is available in the books. Find the interest payment if any
under section 50 of the CGST Act, 2017.
Ans:
Tax = Rs. 120000
Less: ITC =Rs.(70000)
Tax payable =Rs. 50000
Interest shall be calculated from the next day of the date of payment from 21st October, 2017 to the
actual date of payment i.e. 5th December, 2018.
Interest is Rs. 50000 * 18% * 411/365= Rs. 10134/-

Question 58: M/s Nose Ltd reduced the amount of ^2,25,000 from the output tax liability in
contravention of the provisions of section 42(10) of the COST Act, 2017 in the month of January 2018
(vide invoice date 12.01.2018), which is ineligible credit at invoice level. As a result a show cause notice
issued Central Tax Department under section 74 of the CGST Act, 2017 along with interest. M/s Nose Ltd
paid the tax and interest on 5th March 2018. Find the interest liability if any?
Note: - ignore the penalty.

Ans : As per section 42(10) read with section 50(3) of the CGST Act, 2017 amount reduced from the
output tax liability in contravention of the provisions of section 42(7) shall be added to the output tax
liability of the recipient in his return for the month in which such contravention takes place and such
recipient shall be liable to pay interest on the amount so added at the rate specified in section 50(3) of
the CGST Act, 2017.
Therefore,
Applicable rate of interest is @ 24% per annum.
January month return due date is 20th of February 2018.
Interest = Rs. 1923/-
(Rs.225000 * 24% * 13/365)
Note : from 21st February, 2018 to 5th March, 2018= 13 days

Question 59: X Ltd. manufactured and cleared taxable goods on 1st August, 2017 for Rs. 2000000 plus
GST 12%. After payment of GST on or before the due date, it is noticed that these goods are exempted
from GST and applied November, 2017. Department granted the refund on 23rd January, 2018.
Find the interest if any on delay refund.
Note: X Ltd. not passed ITC to recipient of supply.
Ans :
From 15th November 2017 to 22nd January 2018= 69 days
Less: from 15th November 2017 to 13th Jan 2018= (60) days
No. of days delay = 9 days
Interest = Rs. 355/- (i.e. 240000 * 6% * 9/365)
 REGISTRATION

Question 1: What is advantage of taking registration in GST?

Answer:
• Registration under Goods and Service Tax (GST) regime will confer following advantages to the
business: Legally recognized as supplier of goods or services.
• Proper accounting of taxes paid on the input goods or services which can be utilized for
payment of GST due on supply of goods or services or both by the business.
• Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on
the goods or services supplied to purchasers or recipients.
• Getting eligible to avail various other benefits and privileges rendered under the GST laws.

Question 2: Can a person without GST registration claim ITC and collect tax?

Answer:
No, a person without GST registration can neither collect GST from his customers nor can claim any
input tax credit of GST paid by him.

Question 3: LMN & Co, an unregistered supplier under GST wants to claim input credit and collect tax.
Can it do so?

Answer:
No, LMN & Co, cannot claim input tax credit and collect tax, A person without GST registration can
neither collect GST from him customer nor can claim any input tax credit of GST paid by him, However, if
LMN & Co. nevertheless wants to claim input tax credit and collect tax, it can apply for voluntary
registration under section 25(3) of CGST Act, 2017.

Question 4: What will be the effective date of registration?

Answer:
Where the application for registration has been submitted within thirty days from the date on which the
person becomes liable to registration, the effective date of registration shall be the date on which he
became liable for registration.
Where an application for registration has been submitted by the applicant after thirty days from the
date of his becoming liable to registration, the effective date of registration shall be the date of grant of
registration.

In case of a person taking registration voluntarily while being within the threshold exemption limit for
paying tax, the effective date of registration shall be the date of order of registration.

Question 5: What is the time limit for taking registration under GST Law?
Answer:
Every Person who is liable to be registered under Section22 or Section24 shall apply within 30 days from
the date on which he becomes liable to registration in such manner and subject to such conditions as
may be prescribed.
Further, a casual taxable person or a non-resident taxable person shall apply for registration at least S
days prior to the commencement of business.
Furthermore, every person who makes a supply from the territorial waters of India shall obtain
registration in the coastal State or Union territory where the nearest point of the appropriate baseline is
located.

Question 6: Whether the Registration granted to any person is permanent ?

Answer:
Yes, the registration once granted to any person is permanent except for non- resident taxable person
and casual taxable person unless surrendered, cancelled or suspended.

Question 7: What is aggregate turnover?

Answer:
As per sec 2(6) of CGST Act,
Aggregate turnover includes Aggregate turnover excludes
The value of taxable supplies and exported Inward supplies on which the recipient is
goods/services required to pay tax under Reverse Charge
Mechanism (RCM).

Exempted goods/services or both which attracts • Central tax (CGST),

nil rate of tax Or wholly exempt from tax and • State tax (SGST),
includes non- taxable supply. • Union territory tax and
• Integrated tax (IGST)
•
Inter-State supplies between distinct persons Compensation Cess
having same PAN

Question 8: Who are the persons liable to take a Registration under the GST Act?

Answer:

As per Section 22 of the CGST/SGST Act 2017, every supplier (including his agent) who makes a taxable
supply i.e. supply of goods and / or services which are leviable to tax under GST law, and his aggregate
turn over in a financial year exceeds the threshold limit of twenty lakh rupees shall be liable to register
himself in the State or the Union territory from where he makes the taxable supply.

In case of some special category states (as mentioned in Art. 279A(4)(9) of the Constitution of India), this
threshold limit for registration liability is ten lakh rupees for state of Manipur, Mizoram, Tripura and
Nagaland Besides, Section 24 of the Act mentions certain categories of suppliers, who shall be liable to
take registration even if their aggregate turnover is below the said threshold limit of 20 lakh rupees.
Note:- As per CGST Amendment act, amongst special category states Jammu and Kashmir, Arunachal
Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand the limit is enhanced Rs.20
lakhs

Question 9: From which State the taxable person should obtain registration?

Answer:
As per Section 22(1) a taxable person should obtain registration in every State from where he makes
taxable supply of goods or services or both.

Question 10: Whether the registered taxable person is required to display his certificate of registration?

Answer:
Yes, every registered taxable person shall display his registration certificate in a prominent location at
his principal place of business and at every additional place or places of business. Further, he has to
display his GSTIN in the name board exhibited at the entry of his principal place of business and at every
additional place or places of business.

Question 11: In order to be eligible for grant of registration, a person must have a Permanent Account
Number issued under the Income- tax Act, 1961. State one exception to it.

Answer:

A Permanent Account Number is mandatory to be eligible for grant of registration. One exception to this
is a non-resident taxable person. A non- resident taxable person may be granted registration on the
basis of other prescribed documents instead of PAN. He has to submit a self-attested copy of his valid
passport along with the application signed by his authorized signatory who is an Indian Resident having
valid PAN and application will be submitted in a different prescribed form [Section 25(6) & (7)].

Sec 22 - Person liable for Registration

Question 12 If a person is operating in different states, with the same PAN number, can he operate with
a single Registration?

Answer:
No. Every person will have to get registered separately for each of the State from where he makes
taxable supply if he is liable for registration in terms of Sub-section (1) of Section 22 of the CGST Act.
Question 13: If a person is registered under earlier law, whether he needs to be registered under GST
law compulsorily?

Answer:
As per section 22 (2) of the CGST Act, every person who, on the day immediately preceding the
appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under
this Act with effect from the appointed day.

Question 14: Mr. Aswin is a farmer with an annual turnover in relation to agriculture of Rs.15,50,000
lakh. Since it is agricultural income it is exempt from GST. However, Mr. Ashwin also supplies plastic
bags worth of Rs.5,50,000 being a taxable supply along with his crop and charges separately for this. Is
Mr. Ashwin required to register under GST? Advise

Answer:
Mr. Ashwin is required to register under GST because his aggregate turnover exceeds the threshold limit
of Rs.20 lakhs. The definition of aggregate turnover includes exempt supply.

Question 15: A dealer 'X' has two offices - one in Delhi and another in Haryana. The aggregate turnover
of both the offices is Rs. 25 lakh, Determine whether Mr. X requires a registration under GST? (ICAI)

Answer:
As per section 22(1) of CGST Act, In order to determine whether 'X' is liable for registration, turnover of
both the offices would be taken into account and only if the same exceeds Rs.20 lakh, X is liable for
registration.
Thus in the given case as the aggregate turnover of both the offices exceeds Rs.20 lakh it requires to
obtain registration.

Question 16: Rohan Oils, Punjab, is engaged in supplying machine oil as well as petrol. Supply of petrol
is not leviable to GST, but supply of machine oil is taxable. Examine whether Rohan Oils is required to
obtain a registration under GST? (ICAI)

Answer:
As per the definition of aggregate turnover value of exported goods/services, exempted goods/ services,
inter- State supplies between distinct persons having same PAN to be included in aggregate turnover,
thus in the given case in order to determine whether Rohan Oils is liable for registration, turnover of
both the supplies - non-taxable as well as taxable - would be taken into account and if the same exceeds
Rs.20 lakh, Rohan Oils is liable for registration.

Question 17: Mohini Enterprises has appointed M/s Bestfords & Associates as its agent. All the supplies
of goods are made by M/s Bestfords & Associates as agent of Mohini Enterprises. Examine whether such
supplies shall be included in computation of aggregate turnover in order to determine the liability to get
registered under GST? (ICAI)

Answer:
Aggregate turnover to include all supplies made by the taxable person, whether on his own account or
made on behalf of all his principals.
Thus in the above case all the supplies of goods made by M/s Best fords & Associates as agent of Mohini
Enterprises will also be included in the aggregate turnover of M/s Best fords & Associates. Irrespective
of the turnover limit as per sec 24 of CGST Act, 2017 & is required to obtain registration

Question 18: From the following information you are required to determine whether ABC Pvt. Ltd.
incorporated in Karnataka is liable to be registered under GST Act if company has effected following
supplies within the state of Karnataka.

SI.No. Particulars Rs.

1 Intra-State supply of goods chargeable with GST @ 18% 9,60,000

2 Intra-State supply of goods which are wholly exempt 5,40,000

from GST u/s II of CGST Act,2017 2

3 Intra-State supply of goods chargeable @ Nil rate 4,25,000

Total Value of supplies 19,25,000

Answer:
As per section 22(1) of CGST Act, Every supplier shall be liable to be registered under this Act in the State
or Union territory, other than special category States, from where he makes a taxable supply of goods or
services or both, if his aggregate turnover in a financial year exceeds 20 lakhs.
According to section 2(6) of CGST Act, 2017, "aggregate turnover" means the aggregate value of all
taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons
having the same Permanent Account Number, to be computed on all India basis but excludes central
tax, State tax, Union territory tax, integrated tax and cess;

Computation of Aggregate turnover:

SI.No Particulars Rs.

1 Intra-State supply of goods chargeable with GST @ 18% 9,60,000
(Note - 1)
 2 Intra-State supply of goods which are wholly exempt 5,40,000
from GST u/s II of CGST Act,2017 (Note -2)
3 Intra-State supply of goods chargeable @ Nil rate (Note- 4,25,000
3)
Total Value of supplies 19,25,000

Notes:-

(1) Intra-State supply of goods chargeable with GST @ 18% is specifically included for determination
of aggregate turnover.
(2) Intra-State supply of goods which are wholly exempt from GST u/s II of CGST Act, 2017 is to be
included for determination of aggregate turnover (3) Intra-state supply of goods chargeable with
Nil rate of GST is covered under the exempt supplies, hence it is to be included in computation
of aggregate turnover.

Question 19: Rishabh Enterprises- a sole proprietorship firm-started an air-conditioned restaurant in

Virar, Maharashtra in the month of February wherein the customers are served cooked food as well as
cold drinks /non-alcoholic beverages. In March, the firm opened a liquor shop in Raipur, Uttarakhand for
trading in alcoholic liquor for human consumption. Determine whether Rishabh Enterprises is liable to
be registered under GST law with the help of the following information:

Particulars February March (Rs.) *

(Rs.)*
Serving of cooked food and cold drinks/non- alcoholic beverages in 5,50,000 6,50,000
restaurant in Maharashtra
Sale of alcoholic liquor for human consumption in Uttarakhand - 5,00,000
Interest received from banks on the fixed deposits 1,00,000 1,00,000
Export of packed food items from restaurant in Maharashtra 1,50,000 2,00,000

* excluding GST, You are required to provide reasons for treatment of various items given above.

Answer:

Legal provision:-

As per section 22 of the CGST Act, 2017, a supplier is liable to be registered in the State/Union territory
from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a
financial year exceeds Rs.20 lakh.

However, if such taxable supplies are made from any of the specified special category States, namely,
States of Manipur, Mizoram, Nagaland, Tripura, he shall be liable to be registered if his aggregate
turnover in a financial year exceeds Rs.10 lakh.
As per section 2(6) of the CGST Act, 2017, aggregate turnover includes the aggregate value of:

(i) all taxable supplies,

(ii) all exempt supplies,
(iii) exports of goods and/or services and
(iv) all inter-State supplies of persons having the same PAN.

The above is computed on all India basis. Further, the aggregate turnover excludes Central tax, State tax,
Union territory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is
payable under reverse charge is not taken into account for calculation of 'aggregate turnover.
Discussion:- In the given question, since Rishabh Enterprises is engaged in making taxable supplies from
Maharashtra which is not a specified Special Category State, the threshold limit for obtaining
registration is Rs.20 lakh.

Supply of alcoholic liquor are non-taxable supplies in terms of section 9(1) of CGST Act, 2017.

In the light of the afore-mentioned provisions, the aggregate turnover of Rishabh Enterprises is
computed as under

Computation of aggregate turnover of Rishabh Enterprises

Particulars Turnover of February Cumulative Turnover

(Rs.) of February & March
(Rs.)
Serving of cooked food and cold drinks/non- 5,50,000 12,00,000 +
alcoholic beverages in restaurant in Maharashtra Rs.6,50,000]

Add; Sale of alcoholic liquor for human - 5,00,000

consumption in Uttarakhand [Note-1]

Add: Interest received from banks on the Fixed 1,00,000 2,00,000

Deposits [Note-2]

Add: Export of packed food items from restaurant 1,50,000 [Rs.1,00,000 +

in Maharashtra Rs.1,00,000]

Aggregate Turnover 8,00,000 22,50,000

Notes:

1. As per section 2(47) of the CGST Act, 2017, exempt supply includes non- taxable supply. Thus,
supply of alcoholic liquor for human consumption in Uttarakhand, being a non-taxable supply, is
an exempt supply and is, therefore, includible while computing the aggregate turnover.
 2. Services by way of extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount (other than interest involved in credit card services)
is exempt vide Notification No. 12/2017 CT (R) dated 28.06.2017. Thus, interest received from
banks on the fixed deposits is an exempt supply and is, therefore, includible while computing
the aggregate turnover.
Conclusion:-In the given case, Since Rishabh Enterprises was not liable to be registered in the
month of February since its aggregate turnover did not exceed Rs.20 lakh in that month.
However, since its aggregate turnover exceeds 20 lakh in the month of March, it should apply
for registration within 30 days from the date on which it becomes liable to registration.

Sec 23 - Person not liable to registration

Question 20: State the category of person not liable for registration?

Answer:
As per sec 23(1) of CGST Act, The following persons shall not be liable to registration, namely:-
(a) any person engaged exclusively in the business of supplying goods or services or both that are
not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and
Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.

Question 21: State which of the following suppliers are liable to be registered:

(a) Agent supplying goods on behalf of some other taxable person and its aggregate turnover does
not exceed 20 lakh during the financial year.
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land.

Answer:

(a) Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds 20
lakh in a State/UT R 10 lakh in Special Category States] in a financial year. However, as per
section 24, a person supplying goods/services or both on behalf of other taxable persons
whether as an agent or not is liable to be compulsorily registered even if its aggregate turnover
does not exceed 20 lakh during the financial year.
(b) As per section 23, an agriculturist who is only engaged in supply of produce out of cultivation of
land is not required to obtain registration. [As exclusively engaged in exempt supply]

Person engaged exclusively in supply of goods - NN 10/2019

Question 22: M/s Religare Trading corp is engaged in supply of variety of products located in state of
Karnataka & its turnover from the sale of following products is as follows-
Plastic chairs – Rs.5,60,000
Wooden tables - Rs.7,45,000
T.V stand – Rs.1,45,000
Wooden Shelf – Rs.7,50,000
Office portable chair - Rs.6,54,000
M/s Religare trading corp needs an advice as regard for whether it should obtain registration under GST
act or is there any exemption available to him. Also state whether your answer will change if M/s
Religare trading corp makes such supply from State of Telengana. You are required to advise him on this
stating relevant provision of GST act.

Answer:
Legal provision - As per sec 23(2) of CGST act, the Govt. may by notification specify the category of
persons exempted from obtaining registration under this act with this power notification no 10/2019 CT
dt 07/03/2109 was issued wherein the below category of persons are exempt from obtaining
registration under the said Act, namely,-
Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial
year does not exceed forty lakh rupees,
except, -
(a) persons required to take compulsory registration under section 24 of the said Act;
(b) persons engaged in making supplies of the goods such as Ice cream and other edible ice,
whether or not containing cocoa, Pan masala, All goods, i.e. Tobacco and manufactured tobacco
substitutes
(c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur,
Meghalaya, Mizoram, Nagaland, Pondicherry, Sikkim, Telangana, Tripura, Uttarakhand; and
(d) persons exercising option under the provisions of section 25(3), or such registered persons who
intend to continue with their registration under the said Act.
Discussion - As per the provisions stated above M/s Religare trading corp. is engaged exclusively in
supply of goods & its aggregate turnover shall be computed as follows to check if its within the limit to
avail the above exemption from registration –
Computation of Aggregate turnover of Religare trading corp.

S. No. Particulars Amount (rs.)

Sale of Plastic chairs 5,60,000
Sale of Wooden tables 7,45,000
Sale of T.V stand 1,45,000 Thus the aggregate
Sale of Wooden Shelf 7,50,000 turnover does not
Sale of Office portable chair 6,54,000
exceed the limit as
Aggregate turnover 27,54,000
stated in above
provisions by Rs.40 lacs & also the person is making exclusive supply of goods from state of Karnataka,
He is not required to take registration under GST.
If supply of goods is made from state of Telangana then he shall have to apply for registration as this
benefit is not available to certain category of states & Telengana is one amongst such state.

Question 23: M/s Shivani enterprises is engaged in trading of various fabric materials, on a whole sale
basis. It has a place of business located in Mumbai (MH) apart from it there is also an income in form of
interest earned from investment. The turnover from sale of fabric material is Rs.35 lakh and income
from interest is Rs.2,40,000. State whether M/s Shivani enterprises is required to obtain registration

Answer:
In the given case the aggregate turnover in the F.Y. is below 40 lakhs i.e. turnover from sale of fabric
material is Rs.35 lakh + income from interest is Rs.2,40,000 and is exclusively engaged in supply of
goods. However, it has an interest income which is classified as under supply of services. Thus, it will be
ineligible for this threshold exemption benefit of 340 lakhs and has to get registered.

Compulsory registration

Question 24: Enumerate the circumstances in which registration is compulsory?

State the exceptions to it if any.

Answer:

As per section 24 of the CGST Bill, the following categories of persons shall be required to be registered
compulsorily irrespective of the threshold limit:

(a) persons making any inter-state taxable supply;

(b) casual taxable persons making taxable supply;
(c) persons who are required to pay tax under reverse charge;
(d) non-resident taxable persons making taxable supply;
(e) persons who are required to pay tax as per provisions under section 9(5) of the CGST Bill.
(f) persons who are required to deduct tax under section 51;
(g) persons who are required to collect tax under section 56;
(h) persons who supply goods and/or services on behalf of other registered taxable persons
whether as an agent or otherwise;
(i) input service distributor whether or not separately registered under the Act;
(j) persons who supply goods and/or services, other than supplies specified u/s 9(5) of the CGST Bill
through such electronic commerce operator who is required to collect tax at source u/s 52;
Exemption from registration (N/N 65/2017-CT dt 15/11/2017)
 (k) every electronic commerce operator; who is required to collect tax at source under sec 52
(l) every person supplying online information and database access or retrieval services from a place

outside India to a person in India, other than a registered person;

(m) such other person or class of persons as may be notified by the Government on the
recommendations of the Council

Exceptions:-

i) Person making interstate supply of services if aggregate turnover is below Rs.20 Lakhs or
Rs.10 Lakh in case of special category states
ii) Person making interstate supply of handicraft goods if aggregate turnover is below Rs.20
Lakhs or 10 Lakh in case of special category states
iii) Person making supply of services other than supplies u/s 9(5) through such electronic
commerce operator who is required to collect tax at source u/s 52; provided aggregate
turnover is below ? 20 lakhs or 10 lakhs in case of special category states

Question 25: Whether homestays providing accommodation through an Electronic Commerce

Operator, below threshold limit are exempt from taking registration?
Accommodation through an Electronic Commerce Operator, below threshold limit are exempt from
taking registration?

Answer:

Notification No. 17/2017-Central Tax (Rate), has been issued making ECOS liable for payment of GST in
case of accommodation services provided in hotels, inns guest houses or other commercial places
meant for residential or lodging purposes provided by a person having turnover below R20 lakhs ( Rs.10
lakhs in special category states) per annum and thus not required to take registration under section
22(1) of CGST Act. Such persons, even though they provide services through ECO, are not required to
take registration in view of section 24(ix) of CGST Act, 2017.

Question 26: SP Ltd of Bangalore, Karnataka has effected intra state supplies of taxable goods
amounting 3 14,00,000 till 31.10.2017. On O1.1.2017 it has effected inter-state supply of taxable goods
amounting to Rs.2, 50,000. SP Ltd. is of the opinion that it is not required to get registered under GST
law since its aggregate turnover is not likely to exceed Rs.20 lakhs during the financial year 2017-18. As a
consultant of the company it requires advice relating to registration requirement.

Answer:
As per section 24 of CGST Act, 2017, person making interstate taxable supply are compulsorily required
to obtain registration. Thus, section 24 is an overriding section that makes it mandatory to obtain
registration by certain prescribed persons even though the conditions prescribed under section 22 are
not met. Hence, SP Ltd is mandatorily required to obtain registration.
As per section 25 of CGST Act, Every person who is liable to be registered under section 22 or section 24
shall apply for registration in every such State or Union territory in which he is so liable within thirty days
from the date on which he becomes liable to registration, in such manner and subject to such conditions
as may be prescribed. Thus, SP Ltd. is required to obtain registration up to 01.12.2017. Sec 25 Procedure
for registration

Question 27: State the time period within which registration needs to be obtained in each of the
following independent cases:
(a) Person liable to register u/s 22 or 24
(b) Casual Taxable Person
(c) Person making inter-State taxable supply

Answer:
Section 25(1) of the CGST Act stipulates the time-period within which registration needs to be obtained
in various cases. It provides the following time-limits:
In case of registration needs to be obtained
a. a person who is liable to be registered under within 30 days from the date on which he
section 22 or section 24 becomes liable to registration
b. a casual taxable person or a non- resident at least 5 days prior to the commencement of
taxable person business

c. As per section 24 of the CGST Act, person making inter-State taxable supply is liable to get
compulsorily registered except in case of inter- state supply of service. Therefore, such person
must obtain registration within 30 days from the date on which he becomes liable to
registration.

Question 28: Is possession of a Permanent Account Number (PAN) mandatory for obtaining a
Registration?

Answer:
Yes. Every person should have a Permanent Account Number issued under the Income Tax Act, 1961 in
order to be eligible for grant of registration under Section 25 of the CGST Act.
Provided that a person required to deduct tax under section SI may have, in lieu of a Permanent Account
Number, a Tax Deduction and Collection Account Number issued under the said Act in order to be
eligible for grant of registration.
However, as per section 25 (7) the CGST Act, PAN is not mandatory for a non-resident taxable person for
obtaining registration.

Question 29: Sugam Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. The
turnover of Sugam Services Ltd. exceeded Rs.20 lakh on 1st November. It is liable to get registered by
1st December [30 days] in the State of Madhya Pradesh. It applies for registration on 28th November
and is granted registration certificate on 5th December. What shall be the effective date of registration
in the given case? (ICAI)

Answer:
As per Rule 10 of CGST Rules, Where an applicant submits application for registration within 30 days
from the date he becomes liable to registration the effective date of registration shall be the date on
which he becomes liable to registration.
Thus in the given case, the effective date of registration of Sugam Services Ltd, will be 1st November.

Sec 26 - Deemed registration

Question 30: Explain the concept of Deemed registration under GST?

Answer:
These are the linking provisions between the Central Goods and Services Tax and State/Union Territory
Goods and Services Tax Act. By enabling these provisions, the burden of taking registrations under
various Acts has been removed
Thus, if a supplier takes a registration under one act it shall be deemed that the registration has also
been obtained under the other Act and vice-versa. Even otherwise the registration must be taken on the
common portal and is based on the PAN hence the registration will remain common across various Acts.
However, if the registration is rejected under the Central Goods and Services Tax, then such rejection
will be treated as if the registration has not been obtained under the Central Goods and Services Tax
even though it has been obtained in State/Union Territory Goods and Services Tax Act.
If an application for registration has been rejected under State/Union Territory Goods and Services Tax
Act then it shall be deemed that the same has been rejected under the Central Goods and Services Tax.

Sec 27 - Special provisions relating to Casual

Taxable Person and Non-Resident taxable person
Question 31: Who is a Casual Taxable Person?

Answer:
Casual Taxable Person has been defined in Section 2 (20) of the CGST Act. It means a person who
occasionally undertakes transactions involving supply of goods or services or both in the course or
furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union
territory where he has no fixed place of business.

Question 32: Who is a Non-resident Taxable Person?

Answer:
Non-resident Taxable Person means any person who occasionally undertakes transactions involving
supply of goods or services or both, whether as principal or agent or in any other capacity, but who has
no fixed place of business or residence in India in terms of Section 2 (77).

Question 33: What is the validity period of the Registration certificate issued to a Casual Taxable Person
and non-resident taxable person?

Answer:
The certificate of registration issued to a "casual taxable person" or a "non- resident taxable person"
shall be valid for a period specified in the application for registration or for a period of 90 days from the
effective date of registration, whichever is earlier.
However, the proper officer, at the request of the said taxable person, may extend the validity of the
aforesaid period by a further period not exceeding ninety days.

Question 34: Is there any Advance tax to be paid by a Casual Taxable Person and Non-resident Taxable
Person at the time of obtaining registration under this Special Category?

Answer:
Yes. A casual taxable person or a non-resident taxable person shall, at the time. of submission of
application for registration under section 27(1), make an advance deposit of tax in an amount equivalent
to the estimated tax liability of such person for the period for which the registration is sought. If
registration is to be extended beyond the initial period of ninety days, an advance additional amount of
tax equivalent to the estimated tax liability is to be deposited for the period for which the extension
beyond ninety days is being sought.
Question 35: Whether the amount deposited by a casual taxable person or non-resident taxable person
is refundable?

Answer:
Such deposited amount can be utilised against the output tax liability and balance amount shall be
refunded to the applicant subject to Section-54 of the CGST Act.

Question 36: Mr. Sanjay runs a retail shop for gold jewellery and is registered in Bangalore. Mr. Sanjay
is planning to sell the jewellery at an exhibition in Hyderabad, to be held from 1st March 2018 to 7th
March 2018. Advise time with regard to registration and payment of GST.

Answer:
Mr. Sanjay should apply for registration as a casual taxable person within 5 days prior to the date of
commencing the exhibition on 1st March2018. Mr. Sanjay should also make an advance deposit of the
estimated tax liability for the period from 1st March 2018 to 7th March 2018.

Question 37: Whether the amount required to be deposited as advance tax while taking registration as
a casual taxable person (CTP) should be 100% of the estimated gross tax liability or the estimated tax
liability payable in cash should be calculated after deducting the due eligible ITC which might be
available to CTP?

Answer:

1. It has been noted that while applying for registration as a casual taxable person, the FORM GST
REG-01 seeks information regarding the "estimated net tax liability" only and not the gross tax
liability.
2. It is accordingly clarified that the amount of advance tax which a casual taxable person is
required to deposit while obtaining registration should be calculated after considering the due
eligible ITC which might be available to such taxable person.

Sec 29 - Cancellation of Registration

Question 38: Whether the cancellation of registration certificate is permissible?

Answer:

Yes. Any Registration granted under this Act may be cancelled by the Proper Officer, in circumstances
mentioned in Section 29 of the CGST Act. Also, the proper officer may, either on his own motion or on
an application filed by the registered taxable person or by his legal heirs, in case of death of such person,
cancel the registration.
Question 39: Whether cancellation of Registration under the CGST Act means cancellation under SGST
Act also?

Answer:
Yes. The cancellation of registration under one Act (say the CGST Act) shall be deemed to be a
cancellation of registration under the other Act (i.e., the SGST Act). (Section 29 (4)).

Question 40: What happens when the registration is obtained by means of wilful mis-statement, fraud
or suppression of facts?

Answer:
In such cases, the registration may be cancelled from such date including any retrospective date by the
proper officer as per Section 29(2)(e).

Questions from MTP and RTP of ICAI

Question 41: Pure Oils, Delhi has started the supply of machine oils and high speed diesel in the month
of April, 20XX. The following details have been furnished by it for the said month:-

SI. No. Particulars Rs.

i. Supply of machine oils in Delhi 2,00,000
ii. Supply of high diesel in Delhi 4,00,000
iii. Supply made through Fortis Lubricants - an agent of Pure Oils in 1,75,000
Delhi
iv. Supply made by Pure Oils from its branch located in Punjab 1,80,000

Determine whether Pure Oils is liable for registration. Will your answer change, if Pure Oils supplies
machine oils amounting to Rs.2,50,000 from its branch located in Himachal Pradesh in addition to the
above-mentioned supplies?

Answer:
As per section22.of the CGST Act, 2017, a supplier is liable to be registered in the State/Union territory
from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a
financial year exceeds. Rs.20 lakh. However, if such taxable supplies are made from any of the specified
special category States, namely, States of Manipur, Mizoram, Nagaland, Tripura, he shall be liable to be
registered if his aggregate turnover in a financial year exceeds Rs.10 lakh.
As per section 2(6) of the CGST Act, 2017, aggregate turnover includes the aggregate value of:
(i) all taxable supplies,
(ii) all exempt supplies,
 (iii) exports of goods and/or services and
(iv) all inter-State supplies of persons having the same PAN.
The above is computed on all India basis. Further, the aggregate turnover excludes central tax, State tax,
Union territory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is
payable under reverse charge is not taken into account for calculation of 'aggregate turnover'. Section 9
of the CGST Act, 2017 provides that CGST is not leviable on five petroleum products i.e. petroleum
crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel. As per section 2(47)
of the CGST Act, 2017, exempt supply includes non-taxable supply. Thus, supply of high speed diesel in
Delhi, being a nontaxable supply, is an exempt supply and is, therefore, includible while computing the
aggregate turnover.
In the backdrop of the above-mentioned discussion, the aggregate turnover for the month of April, 20XX
is computed as under:
SI. No. Particulars Amount in (rs.)
1) Supply of machine oils in Delhi 2,00,000

2) Add: supply of high speed diesel in Delhi 4,00,000

3) Add: Supply made through Fortis Lubricant – an agent of Pure Oils I delhi 1,75,000

Add: Supply made by Pure Oils from its branch located in Punjab 1,80,000
4)
Aggregate Turnover 9,55,000

Since the aggregate turnover does not exceed 20 lakh, Pure Oils is not liable to be registered.
If Pure Oils made supply of machine oils amounting to Rs.2,50,000 from its branch in Himachal Pradesh
in addition to the above supply, then threshold limit of registration will be Rs.20 lakh for Himachal
Pradesh as per amendment act.
Aggregate Turnover in that case would be Rs.9,55,000 + Rs.2,50,000 = 12,05,000. So, if Pure Oils supplies
machine oils amounting to Rs.2,50,000 from %3D its branch in Himachal Pradesh, then it is not liable to
be registered.

Question 42: Mr. X of Mumbai often participates in the jewellery exhibition at Trade Fair in Delhi,
which is organised every year in the month of February. Mr. X applied for registration in January. The
proper officer demanded an advance deposit of tax in an amount equivalent to the estimated tax
liability of Mr. X.
You are required to examine whether any advance tax is to be paid by Mr. X at the time of obtaining
registration? (Practice Question)

Answer:

Yes, advance tax is to be paid by Mr. X at the time of obtaining registration. Since Mr. X occasionally
undertakes supply of goods in the course or furtherance of business in a State where he has no fixed
place of business, thus he qualifies as casual taxable person in terms of section 2(20) of CGST Act, 2017.
While a normal taxable person does not have to make any advance deposit of tax to obtain registration,
a casual taxable person shall, at the time of submission of application for registration is required, in
terms of section 27(2) read with proviso thereto, to make an advance deposit of tax in an amount
equivalent to the estimated tax liability of such person for the period for which the registration is
sought. If registration is to be extended beyond the initial period of 90 days, an advance additional
amount of tax equivalent to the estimated tax liability is to be deposited for the period for which the
extension beyond 90 days is being sought.

Question 43: Determine the effective date of registration in the following instances:

(i) The aggregate turnover of Madhu Ltd., engaged in taxable supply of services in the state of
Punjab, exceeded 20 lakh on 2Sth August, 2017. It applies for registration on 19th
September, 2017 and is granted registration certificate on 29th September, 2017.
(ii) What will be your answer, if in the above scenario, Madhu Ltd. submits the application for
registration on 27th September, 2017 and is granted registration on 5th October, 2017?

Answer:

A supplier whose aggregate turnover in a financial year exceeds ? 20 lakh in a State/UT RIO lakh in
Special Category States except Arunachal pradesh, Assam, Meghalaya, Sikkim, Himachal Pradesh,
Uttarakhand and Jammu & Kashmir] is liable to apply for registration within 30 days from the date of
becoming liable to registration (i.e., the date of crossing the threshold limit of 20 lakh/R 10 lakh). Where
the application is submitted within the said period, the effective date of registration is the date on which
the person becomes liable to registration; otherwise it is the date of grant of registration. In the given
case, the applicable turnover limit for registration will be 20 lakh as Punjab is not a Special Category
State.

(i) Since Madhu Ltd, applied for registration within 30 days of becoming liable to registration,
the effective date of registration is 25th August, 2017.
(ii) In this case, since Madhu Ltd. applies for registration after the expiry of 30 days from the
date of becoming liable to registration, the effective date of registration is 5th October,
2017.

Question 44: State with reason whether following statement is true or false:
"When the change in constitution of business results in change in PAN, the business entity can apply for
amendment of registration in prescribed manner within 15 days."

Answer:
The said statement is FALSE.
When a change in constitution of a business results in change of PAN of the registered person, the said
person shall apply for fresh registration. The reason for the same is that GSTIN is PAN based. Any change
in PAN would warrant a new registration.

Question 45: Luv & Kush Pvt. Ltd. of Srinagar, Jammu & Kashmir engaged in the supply of gifts items
provides you the following details:-

SI. No. Tax Liability Value in (Rs.)

1. Commencement of the business of supplying goods 01.08.20XX
2. Turnover exceeds Rs.10,00,000 on 15.08.20XX
3. Turnover exceeds Rs.20,00,000 on 05.09.20XX
4. Application for registration made on 28.09.20XX
5. Registration certificate granted on 06.10.20XX

The company seeks your advice as to how it should raise revised tax invoices for supplies made. Is there
any specific provision for issuance of revised tax invoices to unregistered customers? Explain.

Answer:
A supplier whose aggregate turnover in a financial year exceeds Rs.20 lakh in a State/UT
[Rs.10 lakh in special category states] is liable to apply for registration within 30 days from the date of
becoming liable to registration (i.e., the date of crossing the threshold limit of Rs.20 lakh/ Rs.10 lakh)
vide section 22 of CGST Act, 2017.
Where the application is submitted within said period, the effective date of registration is the date on
which the person becomes liable to registration; otherwise it is the date of grant of registration.
Every registered person who has been granted registration with effect from a date earlier than the date
of issuance of registration certificate to him, may issue revised tax invoices in respect of taxable supplies
effected during this period within I month from the date of issuance of registration certificate.
In the given case, Luv & Kush Pvt. Ltd is located in Jammu & Kashmir, a special category state. Though
the turnover limit for special category states is Rs.10 lakh, Jammu & Kashmir has opted for turnover limit
of Rs.20 lakh for the purpose of registration, Thus, since Luv & Kush Pvt. Ltd. has made the application
for registration within 30 days of becoming liable for registration, the effective date of registration
becomes the date on which the company becomes liable to registration i.e., 05.09.20XX.
Thus, Luv & Kush Pvt. Ltd. may issue revised tax invoices against the invoices already issued during the
period between effective date of registration (05.09.20XX) and the date of issuance of registration
certificate (06.10.20XX), within I month from 06.10.20XX.
Further, Luv & Kush Pvt. Ltd may issue a consolidated revised tax invoice in respect of all taxable
supplies made to unregistered dealers during such period. However, in case of inter-State supplies made
to unregistered dealers, a consolidated revised tax invoice cannot be issued if the value of a supply
exceeds Rs.2,50,000.

Question 46: Discuss the circumstances where registration is liable to be cancelled.

Answer:
Section 29(1) of the CGST Act, 2017 provides that the proper officer may, either on his own motion or on
an application filed by the registered person or by his legal heirs, in case of death of such person, cancel
the registration, in such manner and within such period as may be prescribed, having regard to the
circumstances where:
(a) the business has been discontinued, transferred fully for any reason including death of the
proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person, other than the person registered under sub-section (3) of section25, is no
longer liable to be registered under section 22 or section 24
Further, section 29(2) of the CGST Act, 2017 provides that the proper officer may cancel the registration
of a person from such date, including any retrospective date, as he may deem fit, where,--
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as
may be prescribed; or
(b) a person paying tax under section 10 has not furnished returns for three consecutive tax
periods; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for a
continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not
commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of facts
Further, the proper officer shall not cancel the registration without giving the person an opportunity of
being heard.

Question 47: Does cancellation of registration impose any tax obligations on the person whose
registration is so cancelled? Discuss. [CA IPC MTP 2018]

Answer:
Yes, as per section 29(5) of the CGST Act, every registered person whose registration is cancelled shall
pay an amount, by way of debit in the electronic cash ledger, equivalent to the credit of input tax in
respect of inputs held in stock and inputs contained in semi -finished or finished goods held in stock or
capital goods or plant and machinery on the day immediately preceding the date of such cancellation or
the output tax payable on such goods, whichever is higher.
Question 48: Determine with brief reasons, whether the following statements are True or False:
Registration under the CGST Act, 2017 can be cancelled by the proper officer, if the voluntarily
registered person has not commenced the business within three months from the date of registration.
[CA Inter Suggested Nov 18 New]

Answer:
The said statement is False. Registration under the CGST Act, 2017 can be cancelled by the proper
officer, if the voluntarily registered person has not commenced the business within six months from the
date of registration.

Question 49: State the persons who are not liable for registration as per provisions of Section 23 of
Central Goods and Service Tax Act, 2017. [CA Inter Suggested Nov 18 New]

Answer:

As per provisions of Section 23 of CGST Act, 2017, the persons who are not liable for registration are as
under-

(a) Person engaged exclusively in supplying goods/services/both that are wholly exempt from tax.
(b) Person engaged exclusively in supplying goods/services/both that are not liable to tax.
(c) Agriculturist to the extent of supply of produce out of cultivation of land.
(d) Persons only engaged in making supplies of taxable goods or services or both liable to reverse
charge.
(e) Persons making inter-State supplies of taxable services up to an aggregate turnover of Rs.20 lakh
( Rs.10 lakh in case of special category States).
(f) Casual Taxable Persons making taxable supplies of specified handicraft goods up to an aggregate
turnover of Rs.20 lakh (Rs.10 lakh in case of special category States) subject to specified
conditions.
(g) Persons making inter-State supplies of specified handicraft goods up to an aggregate turnover of
Rs.20 lakh & Rs.10 lakh in case of special category States) subject to specified conditions.
(h) Job workers making inter-State supply of services to a registered person up to an aggregate
turnover of Rs.20 lakh (Rs.10 lakh in case of special category States) subject to specified
conditions.
(i) Persons making supplies of services through an electronic commerce operator (other than
supplies specified under section 9(5) of the CGST Act) up to an aggregate turnover of Rs.20 lakh
(Rs.10 lakh in case of special category States).
Question 50: Mr. Allan, a non-resident person, wishes to provide taxable supply of goods. He has no
fixed place of business or residence in India. He seeks your advice on the following aspects, relating to
CGST Act, 2017:

(i) When shall he apply for registration?

(ii) Is PAN mandatory for his registration?
(iii) What is the period of validity of RC granted to him?
(iv) Will he be able to extend the validity of his registration? If yes, what will be the period of
extension? (CA Inter Suggested Nov 18 New)

Answer:

(i) Mr. Allan, being a non-resident person, should apply for registration, irrespective of the
threshold limit, at least 5 days prior to the commencement of business.
(ii) No, PAN is not mandatory for his registration.

He has to submit a self-attested copy of his valid passport along with the application signed by his
authorized signatory who is an Indian Resident having valid PAN,

However, in case of a business entity incorporated or established outside India, the application for
registration shall be submitted along with its tax identification number or unique number on the basis
of which the entity is identified by the Government of that country or its PAN, if available.

(iii) Registration Certificate granted to Mr. Allan will be valid for:

(a) Period specified in the registration application, or
(b) 90 days from the effective date of registration

Whichever is earlier,

(iv) Yes, Mr. Allan can get the validity of his registration extended. Registration can be extended
further by a period not exceeding 90 days.

Question 51:

(i) There is a dairy farm selling milk and milk products in Delhi. The turnover of his dairy farm is as
below:
Milk (Exempted): Rs.19,90,000 Butter (Taxable): Rs.50,000
What is the registration liability under GST for the above mentioned person assuming he has
same PAN?
(ii) Amit, a taxable person, is operating in Tamilnadu, Punjab and West Bengal, with the same PAN.
Can he operate with a single registration in West Bengal? (CA Inter Suggested Nov 18 Old)
Answer:

(i) Every supplier becomes liable to registration if his aggregate turnover in a financial year exceeds 20
lakh in a State/UT R 10 lakh in case of Special Category States).
Further, aggregate turnover, inter alia, means the aggregate value of all taxable supplies as well as
exempt supplies.
Thus, in the given case, aggregate turnover:
= Rs.19,90,000 + Rs.50,000 = Rs.20,40,000
Since aggregate turnover of the dairy farm in Delhi exceeds 20 lakh, it is liable to get registered.
(ii) No, Amit cannot operate with a single registration in West Bengal if he is making taxable supplies
from Tamilnadu and Punjab also. Every person who is liable to take a registration will have to get
registered separately for each of the States where he has a business operation and is liable to pay GST.
However, if he is not making taxable supplies from Tamilnadu and Punjab, he can operate with a single
registration in West Bengal.

Question 52: Can a person get himself voluntarily registered though he may not be liable to pay GST?
(CA Inter Suggested Nov 18 Old)

Answer:
Yes, a person, though not liable to be registered under sections 22 or 24 of CGST Act, 2017 may get
himself registered voluntarily. Once a person obtains voluntary registration, he has to pay tax even
though his aggregate turnover does not exceed Rs.20 Lakhs /Rs.10 Lakhs.

Question 53: The aggregate turnover of Vikas Enterprise of Mumbai (Maharashtra) has exceeded Rs.20
lakh on 25th January, 2018. It submits the application for registration on 15th February, 2018.
Registration certificate is granted on 20th February, 2018. Determine the effective date of registration
under CGST Act, 2017. (CA Inter Suggested Nov 18 Old)

Answer:

A supplier whose aggregate turnover in a financial year exceeds Rs.20 lakh in a State/UT Rs.10lakh in
Special Category States] is liable to apply for registration within 30 days from the date of becoming liable
to registration. Where the application is submitted within said period, the effective date of registration
is the date on which the person becomes liable to registration; otherwise it is the date of grant of
registration i.e. 25 Jan 2018.
 Questions from MPT, RTP of CMA

Question 54: Mr. X a dealer dealing with Intra State supply of goods and services has place of business
in India furnished the following information in the financial year 2017-18:

1. Sale of taxable goods by Head Office located in Chennai for Rs.1,00,000

2. Supply of taxable services by Branch office at Bengaluru for Rs.50,000
3. Supply of goods exempted from GST Rs.10,000
4. Supply of exempted services for Rs.2,00,000
5. Sale of goods acting as agent on behalf of principal for Rs.15,00,000.

Answer:
Statement showing aggregate turnover in a Financial Year

Particulars Value in
Sale of taxable goods by Head office located in Chennai 1,00,000
Supply of taxable services by Branch office at Bengaluru 50,000
Supply of goods exempted from GST 10,000
Supply of exempted services 2,00,000
Sale of goods acting as agent on behalf of principal 15,00,000
Aggregate turnover 18,60,000
Since, aggregate turnover does not exceed Rs.20 lakhs, Mr. X is not required to register under GST.

Question 55: State with brief reason, whether following suppliers of taxable goods are required to
register under the GST Law:

(i) Mr. Raghav is engaged in wholesale cum retail trading of medicines in the State of Assam. His
aggregate turnover during the financial year is 9,00,000 which consists of 8,00,000 as Intra-State
supply and Rs.1,00,000 as Inter-State supply.
(ii) Mr. S.N Gupta of Rajasthan is engaged in trading of taxable goods on his own account and also
acting as an agent of Mr. Rishi of Delhi. His turnover in the financial year 2017-18 is of Rs.12
lakhs on his own account and Rs.9 lakhs on behalf of principal, Both turnovers are Intra -State
supply. (CA Inter Exam May 19 New) Ans. Will Change

Answer:
(i) Person making any inter-State taxable supply of goods is required to obtain registration
compulsorily under GST laws irrespective of the quantum of aggregate turnover.
Thus, in the given case Mr. Raghav is required to obtain registration compulsorily under GST laws
even though his aggregate turnover does not exceed the threshold limit of Rs.20 lakh [since Assam is
a Special Category State but threshold limit applicable is 20 lakh] in the financial year.
 (ii) Persons who make taxable supply of goods on behalf of other taxable persons whether as an
agent or otherwise are required to obtain registration compulsorily under GST laws irrespective
of the quantum of aggregate turnover.
Aggregate turnover includes all supplies made by the taxable person, whether on his own account or
made on behalf of all his principals. Since Mr. S.N Gupta is also acting as an agent of Mr. Rishi of
Delhi, he is required to obtain registration compulsorily under GST laws.

Question 56: Answer the following questions with respect to casual taxable person under the CGST Act,
2017:

(i) Who is a casual taxable person?

(ii) Can a casual taxable person opt for the composition scheme?
(iii) when is the casual taxable person liable to get registered?
(iv) What is the validity period of the registration certificate issued to a casual taxable person?
(v) Can the validity of registration certificate issued to a casual taxable person be extended? If yes,
what will be the period of extension? (CA Inter Exam May 19 Old)

Answer:

(i) Casual taxable person means a person who occasionally undertakes transactions involving
supply of goods and/or services in the course or furtherance of business, whether as principal,
agent or in any other capacity, in a State/UT where he has no fixed place of business.
(ii) No, a casual taxable person cannot opt for the composition scheme.
(iii) A casual taxable person (CTP) is liable to obtain registration compulsorily under GST laws, at
least S days prior to commencement of business.

However, threshold limit of Rs.20 lakh (R10 lakh in case of Special Category States other than Jammu
& Kashmir) is available in case of CTP making taxable supplies of specified handicraft goods.

(iv) The registration certificate issued to a casual taxable person will be valid for:
(a) the period specified in the registration application, or
(b) 90 days from the effective date of registration whichever is earlier,
(v) Yes, the validity of registration certificate issued to a casual taxable person can be extended. It
can be extended by a further period not exceeding 90 days.

Question 57: Examine the liability of compulsory registration under section 24 of the CGST Act, 2017, in
each independent cases mentioned below:

(1) Meenu, a supplier in Maharashtra, is engaged in supply of potatoes within Maharashtra and also
outside Maharashtra, whose turnover exceeds threshold limit under GST Law.
 (2) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Total turnover of
machine oil is Rs.20 lakh and of petrol is R 15lakh.
(3) Tilu is working as an agent, he is supplying goods as an agent of Tiku (who is registered taxable
person) and its aggregate turnover does not exceed Rs.20 lakh during the financial year. (CA
Inter Exam May 19 Old)

Answer:

(1) Section 24 of the CGST Act provides that persons making any inter-State taxable supply of goods
are required to obtain registration .compulsorily under GST laws irrespective of the quantum of
aggregate turnover. However, an agriculturist, to the extent of supply of produce out of
cultivation of land, is not liable to registration.
Assuming that Meenu is engaged in cultivation and supply of potatoes, she is not liable to
registration irrespective of the fact that she is engaged in making inter-State supply and her
turnover exceeds the threshold limit.
Note: Any person engaged exclusively in the business of supplying exempted goods is not liable
to registration. Since potatoes are exempted goods, Meenu is not liable to obtain registration
irrespective of the fact that she is engaged in making inter-State supply and her turnover
exceeds the threshold limit.
(2) Section 24 of the CGST Act specifies the categories of persons who are required to be
mandatorily registered under GST irrespective of the quantum of their aggregate turnover.
In the given case, Jinu Oils does not fall in any of the specified categories.
Therefore, it is not required to obtain registration compulsorily under GST. However, as per
section 22 of the CGST Act, 2017, if the aggregate turnover of the person exceeds Rs 20 lakhs in
a financial year or exceeds Rs.10 lakhs for persons in a specified state, is liable for registration.
Aggregate turnover includes exempted turnover of goods or services; Accordingly, Jinu Oils is
liable obtain registration on the basis of the turnover since its aggregate turnover R3S lakh -
including turnover of exempt supply of petrol] exceeds the threshold limit of Rs.20 lakhs.

(3) Section 24 of the CGST Act provides that persons who make taxable supply of goods and/or
services on behalf of other taxable persons whether as an agent or otherwise are required to
obtain registration compulsorily under GST laws irrespective of the quantum of aggregate
turnover.
Therefore, Tilu will be mandatorily required to obtain registration.

Q 58: Mr. J has been involved in supplying taxable material in J&K, since, 1st July 2017. His turnover in
the month of Nov 2017 exceeded the limit of Rs. 20 lacs. Mr. J is required to register under GST law?
Ans: Taxable turnover exceeds Rs.20 lacs, and then the supplier shall apply for registration in the month
of Nov 2017. Therefore, Mr. J is required to register under GST law.

Q 59: Mr. C of Calicut is trading on his own goods and also acting as an agent of Mr. B of Bengaluru. Mr. C
turnover in the financial year 2017-18 is Rs.12 lacs in his own account and ?9 lacs on behalf of principal.
Whether Mr. C is liable to register compulsorily under GST law.
Ans: As per explanation 1 in computing the total turnover, both the value of supply on his own account
that is Rs.12 lacs and on behalf of principal Rs.9 lacs will be aggregated. Hence, the aggregate turnover
will be Rs.21 lacs. Mr. C is liable to register compulsorily under the GST law.

Q 60: Mr. Rajan is a farmer with an annual turnover in relation to agriculture of Rs.1800000 lakh. Since
this income is agriculture-related, the turnover is exempt from GST. However, Mr. Rajan also supplies
plastic bags worth of Rs.250000 (taxable goods) along with his crop and charges separately for this. Mr.
Rajan is required to register under GST Rs. Advise.
Ans: Mr. Rajan is required to register under GST because his aggregate turnover exceeds the threshold
limit of Rs.20 lakh.

Q 61:
Mr. X a dealer dealing with Intra State supply of goods and services has place of business in India furnished
the following information in the financial year 2017-18:
1. Sale of taxable goods by Head Office located in Chennai for Rs. 100000
2. Supply of taxable services by Branch office at Bengaluru for Rs.50000
3. Supply of goods exempted from GST Rs.10000
4. Supply of exempted services for Rs.200000
5. Sale of goods acting as agent on behalf of principal for Rs.1500000

Ans: Statement showing aggregate turnover in a Financial Year

Particulars Value in Rs.
Sale of taxable goods by Head Office located in Chennai 100000
Supply of taxable services by Branch office at Bengaluru 50000
Supply of goods exempted from GST 10000
Supply of exempted services 200000
Sale of goods acting as agent on behalf of principal 1500000
Aggregate turnover 1860000
Since, aggregate turnover does not exceed Rs.20 lakhs, Mr. X is not required to register under
GST.

Q 62: Mr. CA Manish, an unregistered person under GST, has place of profession in Bhubaneswar, Odisha,
supplies taxable services to Infosys Ltd, a registered person under GST in Bangalore.
Answer the following:
(a) Is it inter-State supply or intra-State supply.
(b) Who is liable to pay GST.
Note: Mr. CA Manish turnover in the P.Y. is Rs.18 lakhs.
Ans: Any person making inter-state supply has to compulsorily obtain registration and therefore in such
cases, section 5(4) of IGST will not come into play.
However, Services providers providing aggregate supplies including inter-state services up to Rs.20 lakh
will be exempted from GST.
(a) It is inter-State supply.
(b) Mr. C is not liable to pay IGST. Since, registration is not made mandatory to him.
Q 63: M/s Moon Pvt. Ltd. in corporate in Chennai on 1st July 2017 has the following details for the year
2017-18;

S.No. Particulars Value (Rs.in lacs)

Inter-State exempted supply of
1 goods 4.0
2 Intra-State supplies of services 5.0
3 Non-taxable supplies 2.0
4 Exempted supplies of services 7.60

M/s Moon Pvt. Ltd. is required to register compulsorily under GST Law, advise.
Whether your Ans is different if S.No. (i) above, inter-State taxable supply goods for Rs.4 lacs.

Ans: Aggregate turnover is as follows

S.No. Particulars Value (Rs.in lacs)

Inter-State exempted supply of
1 goods 4.0
2 Intra-State supplies of services 5.0
3 Non-taxable supplies 2.0
4 Exempted supplies of services 7.60
Aggregate turnover 18.60

Advise: Since, aggregate turnover of Moon Pvt. Ltd. does not exceeds Rs.20 lakhs, registration is not
compulsory in the financial year 2017-18.
Yes. Our Ans is different in the case of M/s Moon Pvt. Ltd. made interstate taxable supply of goods. As per
section 24 of the CGST Act, 2017 Person making any inter-state taxable supply of goods is required to
register under GST Law irrespective of his aggregate turnover. Therefore, M/s Moon Pvt. Ltd. is required
to register under GST Law.

Q 64: Mr. Gold runs a retail shop for handmade jewellery and is registered in Chennai. Mr. Gold is planning
to sell the jewellery at an exhibition in Mumbai, to be held from 1st January 2018 to 10th January 2018.
Advise him with regard to registration and payment of GST.
Ans : Mr. Gold should apply for registration as a casual taxable person within 5 days prior to the date of
commencing the exhibition on 1st January 2018. Mr. Gold should also make an advance deposit of the
estimated tax liability for the period from 1st January 2018 to 10th January 2018.

Q 65: M/s X Ltd is an advertising company located in Chennai and is registered as a normal taxable person
there. Now, they have secured an assignment to manage digital marketing for the Koti Deepothsavam
Festival, which will take place in Hyderabad, Telangana. This will require M/s X Ltd. to displace some
resources in Hyderabad until the festival is over. Advise M/s X Ltd. to obtain for separate registration in
the State of Telangana.
Ans: In this case, since M/s X Ltd does not have too many assignments coming from Hyderabad, they can
register as a Casual Taxable Person in Telangana for 90 days. This will enable the organizers of the festival
to take input credit on all GST paid to M/s X Ltd.

Q 66: M/s X Ltd. incorporated in Bangalore, with its business locations of selling and servicing of goods in
Bangalore, Chennai, Mumbai and Kolkata.
M/s X Ltd. an ISD situated in Bangalore receives invoices indicating Rs.4 lakhs of Central tax, Rs.4 lakhs of
State tax and Rs.7 lakhs of integrated tax on input service. Input services commonly used by the units of
M/s X Ltd. How these taxes are distributed by M/s X Ltd. to their other units.
Ans: M/s X Ltd. can distribute appropriate amount of central tax, State tax as well as integrated tax of
Rs.15 lakhs as credit of integrated tax amongst its locations at Chennai, Mumbai and Kolkata through an
ISD invoice containing the amount of credit distributed.
Appropriate amount of CGST, SGST and IGST will be transferred to Bangalore as such

Q 67: M/s XYZ Ltd, having its head Office at Mumbai, is registered as ISD. It has three units in
different states namely ‘Mumbai’, ‘Chennai’ and ‘Delhi’ which are operational in the current year. M/s
XYZ Ltd furnishes the following information for the month of December 2017. You are required to
distribute the below input tax credit.
(i) CGST and SGST paid on services used only for Mumbai Unit: Rs.300000/-
(ii) IGST, CGST & SGST paid on services used for all units: Rs.1200000/-
Total Turnover of the units for the Financial Year 2016-17 are as follows:-
Unit Turnover in Rs.
Turnover of Mumbai unit 50000000
Turnover of Chennai 30000000
Turnover of Delhi 20000000
Total turnover 100000000
Ans : Statement showing distribution of input tax credit:

Particulars Credit distributed to all the units

Total credit Mumbai Chennai Delhi
available

COST & SGST paid on services used only 300000 300000

0 0
For Mumbai Unit.
IGST, CGST & SGST paid on services 1200000 600000 360000 240000
used in all units. Distribution on
pro-rata basis to all the units which
are operational in the current year
Total 1500000 900000 360000 240000

Working note:
(1) CGST & SGST paid on services used only for Munibai Unit should be distributed only to that unit.
(2) Credit distributed pro rata basis on the basis of the turnover of all the units is as under:—
(a) Unit Mumbai: Rs.
(5,00,00,000/100000000) * 12,00,000 = 600000
(b) Unit Chennai:
(30000000/100000000) *12,00,000 = 360000
(c) Unit Delhi:
(2,00,00,000/10,00,00,000)*12,00,000 = 240000
Q 68: M/s Royal Ltd. have been applied for cancellation of registration and the same is effective from 15th
November 2017. Following information is supplied on 14th November 2017:
(i) The inputs costing Rs.144720 are lying in stock (GST paid 12%).
(ii) The inputs costing Rs.77184 are in process (GST paid 12%).
(iii) The finished goods valuing Rs.482400 are in stock, the input cost is 50% of the value. Royal Ltd.
also purchased capital goods for Rs.200000 by paying GST 28% (invoice dated 10th July 2017).
GST payable on inputs and finished goods as on the date of cancellation is Rs.279104.
GST payable on capital goods is Rs. 16000.
How much royal Ltd. has to pay an amount, by way of electronic cash as on 14th November 2017.

Ans: Statement showing amount to be paid by Royal Ltd. as on 14th November 2017
S.No. Particulars Amount to be paid Working
(Rs.)
1) Inputs lying in stock 17366 Rs.144720*12/100=Rs. 17366
2) Inputs in process (i.e. Work in 9262 Rs. 77184*12/100=Rs. 9262
progress)
3) Inputs contained in finished goods 28944 Rs. 482400*50% *12/100=Rs.
lying in stock 28944
Amount to be paid by Royal Ltd. 55572 Whichever is higher
Or
GST payable on supply of inputs and 279104
finished goods
Therefore, amount payable is 279104

S.No. Particulars Amount to be paid Working

(Rs.)
Capital goods 51333 Useful life as per rule
44(1)(b) = 5 years (i.e.
60 months).
No. of months capital
goods have been in use
= 4 months 5 days (i.e.
5 months)
Or
GST payable on Capital goods 16000
Therefore, amount payable is 51333

Q 69: Pure Oils, Delhi has started the supply of machine oils and high speed diesel in the month of April,
20XX. The following details have been furnished by it for the said month:-
S.No. Particulars Rs.
(i) Supply of machine oils in Delhi 200000
(ii) Supply of high speed diesel in Delhi 400000
(iii) Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi 375000
(iv) Supply made by Pure Oils from its branch located in Punjab 180000
• Excluding GST
Determine whether Pure Oils is liable for registration. Will your Ans change, if Pure Oils supplies
machine oils amounting to Rs.250000 from its branch located in Himachal Pradesh in addition to the
above-mentioned supplies?

Ans
S.No. Particulars Amount (in Rs.)
1 Supply of machine oils in Delhi 200000
2 Supply of high speed diesel in Delhi 400000
3 Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi Not addable
4 Supply made by Pure Oils from its branch located in Punjab 180000
Aggregate turnover 780000

Since, the aggregate turnover does not exceed Rs.20 lakh, Pure Oils is not liable to be registered.
If Pure Oils made supply of machine oils amounting to Rs.250000 from its branch in Himachal Pradesh in
addition to the above supply, then threshold limit of registration will be reduced to Rs.10 lakh as Himachal
Pradesh is one of the specified Special Category States.

Aggregate Turnover in that case would be Rs.780000 + Rs.250000 = Rs. 1030000. So, if Pure Oils supplies
machine oils amounting to Rs.250000 from its branch in Himachal Pradesh, then it is liable to be
registered.

Q 70: SNP Pvt. Ltd., Coimbatore exclusively manufactures and sells product ‘Z’ which is exempt from
GST vide notifications issued under relevant GST legislations. The company sells ‘Z’ only within Tamil
Nadu. The turnover of the company in the previous year was Rs.55 lakh. The company expects the sales
to grow by 20% in the current year. Owing to the growing demand for the product, the company
decided to increase its production capacity and purchased additional machinery for manufacturing ‘Z’
on 01.07.20XX. The purchase price of the capital goods was Rs.20 lakh exclusive of GST @ 18%.
However, effective from 01.ll.20XX, exemption available on ‘Z’ was withdrawn by the Central
Government and GST @ 12% was imposed thereon. The turnover of the company for the half year
ended on 30.09.20XX was Rs.40 lakh. The Board of Directors of SNP Pvt. Ltd. wants to know—

(a) Whether they have to register under GST?

(b) Whether they can take input tax credit on machinery purchased? If yes, then how much credit
can be availed?
Advice Board of Directors of SNP Pvt. Ltd. on the above issues with reference to the provisions of GST
law.

Ans:
(a) In the given case, the turnover of the company for the half year ended on 30.09.20XX is ?40 lakh
 which is more than the threshold limit of T20 lakh. Therefore, as per section 22 of CGST Act 2017,
the company will be liable to registration. However, since SNP Pvt. Ltd. supplied exempted goods
till 31.10.20XX, it was not required to be registered till that day; though voluntary registration
was allowed under section 25(3) of the CGST Act, 2017.
Therefore, the company needs to register within 30 days from 1.11.20XX (the date on which it
becomes liable to registration) in terms of section 25(1) of the CGST Act, 2017.
b) Statement showing ITC allowed on Capital goods:

Particulars Value in Rs.

ITC on capital goods 360000
Rs. 2000000* 18%=
Less: reduction 5% p.q. (36000)
From 1-7-2017 to 1-11-2017= 2 quarter.
360000 * 5% * 2 quarters=
Balance ITC allowed 324000

Q 71: Rishabh Enterprises - a sole proprietorship firm - started an air-conditioned restaurant in Virar,
Maharashtra in the month of February wherein the customers are served cooked food as well as cold
drinks/non-alcoholic beverages. In March, the firm opened a liquor shop in Raipur, Uttarakhand for
trading of alcoholic liquor for human consumption. Determine whether Rishabh Enterprises is liable to
be registered under GST law with the help of the following information:

February march
Particulars
(Rs.)* (Rs.)*
Serving of cooked food and cold drinks/non-alcoholic
beverages in restaurant in Maharashtra 550000 650000

Sale of alcoholic liquor for human consumption in Uttarakhand 500000

Interest received from banks on the fixed deposits 100000 100000
Export of packed food items from restaurant in Maharashtra 150000 200000
*excluding GST
You are required to provide reasons for treatment of various items given above.
(CA Final RTP May 2018)
Ans:

Particulars Turnover in Rs.

February:
Serving of cooked food and cold drinks/non-alcoholic beverages in restaurant 550000
in Maharashtra
Interest received from banks on the fixed deposits 100000
Export of packed food items from restaurant in Maharashtra 150000
Sub-total 800000
Note: Rishabh Enterprises was not liable to be registered in the month of
February
since its aggregate turnover did not exceed Rs.20 lakh in that month.
March
 Serving of cooked food and , cold drinks/non-alcoholic beverages in restaurant 650000
in Maharashtra
Sale of alcoholic liquor for human consumption in Uttarakhand 500000
Interest received from banks on the fixed deposits 100000
Export of packed food items from restaurant in Maharashtra 200000
Aggregate turnover 2250000
Note: However, since its aggregate turnover exceeds Rs.20 lakh in the month
of March, it should apply for registration within 30 days from the date on which
it becomes liable to registration.

Q72: Pari & Sons is an unregistered dealer. On 10th August, 2017 aggregate turnover of Pari & Sons
exceeds Rs.2000000. The firm applied for registration on 27th August, 2017 and was granted the
registration certificate on September, 2017.
Under CGST Rules, 2017, you are required to advise Pari & Sons as to what is the effective date of
registration in its case. It has also sought your advice regarding period for issuance of revised tax invoices.
5 Marks (CA Final (New) May 2018)
Ans:
Effective date of registration is 10th August 2017.
Period of revised tax invoices is from 10th August 2017 to 3 August 2017.

Q 73: With the help of the following information in the case of M/s Jay ant Enterprise, Jaipur
(Rajasthan) for the year 2017-18, determine the aggregate turnover for the purpose of registration under
CGST Act, 2017.
S.No. Particulars Amount in (Rs.)
1) Sale of diesel on which Sale Tax (VAT) is levied by
100000
Rajasthan Government
2) Supply of goods, after completion of job work, from the 300000
place of Jayant Enterprises directly by principal
3) Export supply to England (U.K.) 500000
Supply to its own additional place of business in
4) Rajasthan 500000
5) Outward supply on which GST is to be paid by recipient
100000
under reverse charge

All the above amounts are excluding GST.

You are required to provide reasons for treatment of various items given above.
5 Marks (CA Final (New) May 2018)
Ans: Statement showing aggregate turnover for the purpose of registration under CGST:
S.No. Particulars Amount in Remarks
(Rs.)
(i) Sale of diesel on which Sale Tax (VAT) is Non-taxable
100000
levied by Rajasthan Government goods included
(ii) Supply of goods, after completion of Nil Refer Note 1
job work, from the place of Jayant
Enterprises directly by principal
(iii) Export supply to England (U.K.) 500000 Included
(iv) Supply to its own additional place of Nil Not included
 business in Rajasthan
Outward supply on which GST is to be
(v) paid by recipient under 100000 Included
reverse charge
Aggregate Turnover 700000

The applicable turnover limit for registration, in the given case, will be ?20 lakh as Rajasthan is not a
Special Category State. Although, the aggregate turnover of M/s Jayant Enterprises does not exceed
Rs.20 lakh, it is compulsorily required to register in terms of section 24(i) of the COST Act, 2017
irrespective of the turnover limit as it is engaged in making inter-State supplies in the form of exports to
England.

Note: (1) Supply of goods, after completion of jobwork, by a registered jobworker shall be treated as the
supply of goods by the principal referred to in section 143 of the COST Act, 2017, and the value of such
goods shall not be included in the aggregate turnover of the registered job worker. It will be included in
the turnover of turnover of principal.

Q 74: Rajesh Dynamics, having its head office in Chennai, carries on the following activities with
respective turnovers in a Financial Year:

Rs.
Supply of petrol at Chennai 1800000
Value of inward supply on which tax is
payable on reverse charge basis 900000
Supply of transformer oil at Chennai 200000
Value of branch transfer from Chennai to 15000
Bengaluru without payment of
consideration
Value of taxable supplies at Manipur
Branch 1150000

It argues that it does not have taxable turnover crossing threshold limit of Rs.2000000 either at Chennai
or Bengaluru and including turnover at Manipur branch. It believes that the determination of aggregate
turnover is not required for the purpose of obtaining registration, but it is required for determining
composition levy. Decide based on the above facts:
1) The aggregate turnover of Rajesh Dynamics.
2) All conditions that fulfil the requirements for registration under CGST Act, 2017 in the given
circumstances.
4 Marks (CA Final (Old) May 2018)
Ans: Statement showing aggregate turnover of Rajesh Dynamics:

Rs.
Supply of petrol at Chennai 1800000
Value of inward supply on which tax is payable on reverse charge basis Nil
Supply of transformer oil at Chennai 200000
Value of branch transfer from Chennai to Bengaluru without payment of 150000
consideration
 Value of taxable supplies at Manipur Branch 1150000
Total 3300000

While calculating aggregate turnover under section 2(6) of the COST Act, 2017 taxable supply, non-taxable
supply and exempted supply should be considered. Since, turnover limit for registration in special category
status states is Rs. 1000000, Manipur Branch is required to register under GST.

Moreover, Rajesh Dynamics is liable to pay GST under reverse charge mechanism under Section 9(3) of
the CGST Act, 2017. In such case registration under GST is compulsory irrespective of turnover under
Section 24 of the CGST Act, 2017.
From the above it is evident that Rajesh Dynamics claim is not valid.
 TDS & TCS

TDS

Question 1: Who is liable to pay GST?

Answer:

General rule- Supplier of goods and services are liable to pay GST. Specific circumstances.

• Import supplies-Recipient of goods and services has to pay tax under reverse charge.
• The government may, on the recommendation of council by notification, specify categories
of services the tax on Intra-State supplies, of which shall be paid by the electronic
commerce operator, if such services are applied through it.
• TDS- If total value of supply under contract > ₹ 2.5 Lakhs, then Central and State
Government, Local authorities, Government agencies is liable to deduct TDS and pay the
same to the Government.
• TCS- E-commerce operators are required to collect tax (TCS) on the aggregate value of supply
reduced by returns in a month.

Question 2: What is Tax deduction at source?

Answer :
Tax deduction at source (TDS) is a mechanism wherein the recipient of goods or services or both will
deduct out of the amount payable to the supplier, an amount at a percentage of value of
supply and deposit the same to the account of the Government within the time prescribed.

Question 3: Who is liable to deduct tax at a source?

Answer:
The Central Government and State Government may mandate the following person to deduct tax at
a source.
• A department or establishment of the C entral and State Government,
• A local authority,
• Government agencies, or
• Such person or a category of person as may be notified by the Central and State Government on
the recommendation of council.
(a) An authority or a board or any other body,
(1) Set up by an act of parliament or a state legislature,
(2) Established by any government.
With 51% or more participation by way of equity or control, to carry out any function
(b) Society established by Central or a State Government or local authority under the
society registration act 1860
(c) PSU (Public Sector Undertakings).

Question 4: Whether person liable to deduct tax, even though if the supplier has charged GST in
his invoice?
Answer:
YES, the taxable person shall deduct the tax irrespective of whether GST is charged in the invoice or
not, for the purpose of deduction of tax value of supply shall be taken as a amount, excluding Central
tax, State tax, UT tax, Integrated tax and the Cess indicated in the invoice.

Question 5: What is the threshold limit for tax deduction at source?

Answer:
The threshold limit for tax deduction at source is ₹2.5 lakhs. For the purpose of the computation of
threshold limit, contract value needs to be considered and not the invoice value or the payment
amount. However for the purpose of ascertaining the threshold limit, the value of supply shall be
considered as a amount of excluding taxes.

Question 6: What are the compliances to be adhered by the deductor and specify the due date for
the same?

Answer:
The following are the compliances to be adhered by the deductor and specify the due date for the same:
1. Payment of TDS- The deductor is liable to pay the amount deducted from the supplier to
the Government within the 10 days of subsequent month.
2. Issue of certificate-The deductor is liable to issue certificate to the deductee within 5days
from the date of payment of tax to the Government mentioning therein contract value,
rate of deduction, amount deducted, amount paid to the Government etc.

Question 7: What will happen if deductor fail to issue TDS certificate within the time prescribed?(ICAI)

Answer:
As per section 51(4) of the CGST Act, 2017, if any deductor fails to furnish to the deductee, the certificate
after deducting at source within five days of crediting the amount so deducted to the Government,
the deductor shall pay, by way of a late fee a sum of one hundred rupees per day from the day after
the expiry of such five days period until the failure is rectified, subject to a maximum amount
of five thousand rupees.

Question 8: State the categories of person to whom the provisions of TDS are not applicable?

Answer:
Notwithstanding anything contained in N/N 50/2018-CT dt 13/09/2018, TDS provisions are
not applicable to the following categories of person:
➢ Authorities under the Ministry of Defence Even though it ’s a Department or establishment of
CG or SG, Local authority or Government agencies, w.e.f 01/10/2018.
➢ Supply of goods or services or both from a PSU to another PSU, whether or not a distinct person.
➢ Supply of goods or services or both which take place between one person to another namely, a
department or a establishment of CG or SG, local authority or Government agencies and person
specified under clause(d) of section 51(1) of the said act.
Also in following situation TDS provision are not applicable:
➢ Total value of taxable supply ≤ ₹2.5 lakh under a contract.
➢ Contract value > ₹2.5 lakh for both taxable supply and exempted supply, but the value of
taxable supply under said contract ≤ ₹ 2.5 lakh.
 ➢ Receipt of services which are exempted. For example services exempted under notification no.
12/2017-Central tax (rate) dated 28/06/2017 as amended from time to time.
➢ Receipt of goods which are exempted, for example goods exempted under
notification no.02/2017-Central tax (rate) dated28/06/2017 as amended from
time to time.
➢ Goods on which GST is not leviable. For example petrol, diesel. Petroleum crude, Natural gas,
aviation turbine fuel (ATF) and alcohol for human consumption.
➢ Where a supplier had issued an invoice for any sale of goods in respect of which tax was required
to be deducted at source under the VAT law before 01/07/2017. But where the payment of such
sale is made on or after 01/07/2017[section 142(13 ) refer].
➢ Where the location of the supplier and place of supply is in a state(s)/UT(s) which is
different from the State/ UT where recipient is register.
➢ All activity or transaction specified in schedule 3 of CGST/SGST Act 2017 irrespective of the
value.
➢ Where the payment relates to a tax invoice that has been issued before 01/10/2018.
➢ Where any amount was paid in advance prior to 01/10/2018 and the tax invoice has
been issued on or after 01/10/2018,to the extent of advance payment made before
01/10/2018
➢ Where tax is to be paid on reverse charge by the recipient i.e., the deductee.
➢ Where the payment is made to an unregistered supplier.
➢ Where the payment relates to “Cess” component.

Question 9: The municipal corporation of Chennai deducts CGST at a source@1% from the payment to
be made to a notified supplier on 4th July. Determine the TDS requirement to be compiled by
Municipal Corporation

Answer:
As per section 51 of CGST Act, the amount deducted as tax shall be remitted into the Treasury on or
before 10th August and also TDS certificate with the above mentioned detailed has to be issued on
before 15th of August to the supplier.

Question 10: M/s Asha Pvt Ltd has its place of business in Mysore supplied goods worth ₹2,75,000 the
value of supply include GST @5% during month of August to a Government Agency located at Banglore.
Determine the amount of tax deducted at source.

Answer:
As per section 51 of CGST Act, The Government has mandated the following categories :-
1. A department or establishment of the Central Government or State Government.
2. Local authority
3. Government Agencies
4. Such person or a category of persons as may notified by Government on recommendations of
the council
To deduct tax at the rate of one percent from the payment made, or credited to the supplier of
taxable goods or services or both, where total value of such supply under contract exceeds ₹
2,50,000. For the purpose of deduction of tax specified, the value shall be taken as the amount
excluding GST amount.

In the given case the amount of tax to be deducted shall be computed as follow:
 PARTICULARS ₹
a) Value of supply(including GST) 2,75,000
b) Less GST @5%{ value of GST=2,75,000*5/105} 13,095
c) Value of supply(excluding GST) 2,61,905
d) Amount of TDS (e+f) 5,238
e) CGST@1% of (c) 2,619
f) SGST@1% of (c) 2,619

Thus as computed above the amount of TDS to be deducted by the Government Agency shall be
₹ 5,238.

Question 11: Aasma Ltd had supplied goods to local authority for ₹7,56,000(inclusive of GST@12%),
Determine the amount of tax to be deducted at source. Also determine the interest liability if
the amount of tax deducted at source on 15/10/2017 is deposited as on 20/12/17.

Answer:
As per provision of section50(1) of the GST Act, the local authority has to deduct tax@1% CGST and 1%
SGST from the payment made or credited to the supplie r taxable goods or services or both, where the
total value of such supply under a contract, exceeds ₹2,50,000 . such tax has to be paid to the
Government by the deductor in 10 days after the end of the month in which such deduction is made,
otherwise interest shall be levied @18% p.a. for the period for which the tax or any part thereof
remains unpaid.
Hence, the amount of tax to be deducted at source shall be 1% of CGST and 1% of SGST of ₹6,75,000
[7,56,000-81,000 i.e. GST@12%]=₹13,500.
Computation of interest on delay in deposit of TDS:-
Sr. Particulars
No.
a) Due date of deposits of TDS 10.11.2017
b) Date of payment of GST 20.12.2017
c) Period of delay(in days) (b-a) 40
d) Amount of TDS 13,500
Interest payable @18% for delay in payment 266
{d *18% *c / 365 days}

Question 12: Finance department is making a payment of ₹3 lakh to a supplier of ‘printing

and stationery’. Whether TDS is required to be deducted?

Answer:
In the given case, the total contract value of taxable supply is more than ₹2, 50,000 deduction is
mandatory.

Question 13: Education department is making payment of ₹5 lakh to a supplier of printed books
and printed or illustrated post cards where payment for books is ₹2 lakh and ₹3 lakh is for other
printed or illustrated post cards.

Answer:
Yes, deduction is required in respect of payment of ₹3 lakh only i.e. for payment in respect of
taxable supply. Books are exempted goods; no deduction is required in respect of supply of books.
However,
payment involving ‘ Printed or illustrated post cards ’ is for supply of goods and value of supply is > ₹ 2.5
lakh ; so deduction is required.

Question 14: Fisheries department is making a payment of ₹10 lakh to a contractor for supplying
labour for digging a pond for fisheries.

Answer:
No, this supply of service is exempt in terms of Sl. No. 3 of notification no.
12/2017 Central tax (rate) dated 28.06.2017 and hence deduction is not
required.

Question 15: Health department is making payment of ₹10 lakh to a supplier of hearing aids.

Answer:
This supply of goods is exempt in terms of Sl. No.142 of notification no.2/2017- Central Tax (rate) dated
28.06.2017 as amended and hence deduction is not required.

Question 16: XYZ a government agency entered into the contract with Mr. Raj prior to 01.10.2018.
Contract value was ₹10 lakhs, against which an advance payment of ₹3 lakhs was made to him on the
date contract entered on 12/12/ 2018; XYZ agency is making balance payment of ₹7 lakhs to Mr. Raj.
Discuss whether tax is required to be deducted on what amount?

Answer:
Tax is not required to be deducted when payment has been made prior to 01/10/2018 , whether tax
has been issued on or after 01/10/2018 , regarding advance payment made.
Since XYZ, government agency made advance payment of ₹3 lakhs before 01/10/2018, therefore tax is
not required to be deducted on the advance payment made. However tax is required to be deducted
when the balance payment of ₹7 lakhs is made.

Question 17: Health department of West Bengal receives a taxable service from MNO Company of
West Bengal. What would be the nature of TDS to be deducted here and what would be the rate of
deduction?

Answer:
In the given case,
Location of supplier and place of supply is in the same state i.e., West Bengal.
Location of recipient – West Bengal
So, Health department is required to deduct CGST and SGST as it is an Intra- state transaction
The DDO of health department is liable to deduct TDS (1%CGST and 1% SGST) While making payment to
MNO company as in this case the supplier or the vendor ’s and the DDO’s office (the place of supply) both
is in West Bengal.

Question 18: Mr. S has deducted GST amounting to ₹50,000/- in the month of November’18. He
filed return on 16.12.2018. Is he liable to pay late fee?

Answer:
Yes he is liable to pay late fee of ₹600/- at the rate of ₹100 per day for delay of 6 days (11.12.2018-
16.12.2018). Maximum amount of late fee payable is capped at ₹5000/-. Similar late fee is applicable
under SGST Act/UTGST Act.
Question 19: Supplier Y of Mumbai enters into an agreement for sale of land worth ₹12,00,000
to finance Deptt. of Govt. of Goa. Is TDS applicable for the given activity?

Answer:
The above activity is not a supply as it is not covered in Schedule III of CGST/SGST Act 2017. Therefore
there is no need of deduct TDS on sale of land even though the value exceeds the value of ₹25,00,000.

Question 20: Supplier Y of Mumbai makes taxable supply worth ₹10,000/- and exempted supply worth
₹20,000/- in an invoice/bill of supply to finance department of GOI located in New Delhi where
contract for supply for ₹6,00,000/- (₹2,60,000 for taxable supply including GST and ₹3,40,000/- for
exempted supply). The rate of GST is 18% following payment is being made by GOI to Y: ₹10,000/- (value
of taxable supply) +₹1,800 (Integrated Tax) + ₹20,000/- (value of exempted supply)
Whether any deduction of tax is required?

Answer:
As per section 51 of CGS Act, the govt. has mandated the following categories:
a) A department or establishment of the Central Government or State Government or,
b) Local authority
c) Government agencies
d) Such person or a category of person as may notified by Government on recommendation
of the council.
To deduct tax at the rate of 1% from the payment made or credited to the supplier of taxable goods
or services or both, where total value of such supply under contract exceeds ₹2,50,000. For the
purpose of deduction of tax specified, the value shall be taken as the amount excluding GST
amount.
Value of taxable supply in the contract =₹2, 60,000/- (Including GST)
Value of such contract excluding tax =260000*100\118= ₹220340/-
Since the value of taxable supply of contract does not exceed ₹2.5 lakhs, deduction of tax is not required.

Question 21: Define the term E-commerce and E-commerce operator.

Answer:
As per section 2(44), E-commerce means the supply of goods or services or both including digital
product over digital and electronic network.
As per section 2(45), E- commerce operator means any person owns, operates or manage digital or
electronic facility or platform for electronic commerce.

Question 22: Is it mandatory for E-commerce operator to obtain registration? (ICAI)

Answer:
Yes, the benefit of threshold exemption is not available to e-commerce operators and they would
be liable to be registered irrespective of the value of supply made by them.

Question 23: Whether a supplier of goods or services supplying through e-commerce operator would
be entitled to threshold exemption? (ICAI)
Answer:
No, the threshold exemption is not available to such supplier s and they would be liable to be
registered irrespective of the value of supply made by them. This requirement however, is
applicable only if the supply is made through such electronic commerce operator who is required to
collect tax at source.

Question 24: Will an e-commerce operator liable to pay tax in respect of supply of goods or
services made through it, instead of actual supplier? (ICAI)

Answer:
Yes, but only in case of certain notified services under section 9(5). In such cases tax shall be paid by the
electronic commerce operator if such services are supplied through it and all the provisions of the act
shall apply to such electronic commerce operator as if he is the person liable to pay tax in relation to
supply of such services.

Question 25: Will threshold exemption be available to electronic commerce operators liable to pay
tax on notified services? (ICAI)

Answer:
No, threshold exemption will not available to e-commerce operator who is required to pay tax
on notified services provided through them.

Question 26: Is every e-commerce operator required to collect tax on behalf of actual supplier? (ICAI)

Answer:
Yes, every e-commerce operator not being an agent is required to collect tax where consideration
with respect to the supply is being collected by the e-commerce operator.

Question 27: Can electronic commerce operator sell goods or services on his own behalf? (ICAI)

Answer:
Yes, there is no such restriction under GST. However it would be treated as any other form of supply of
goods or services and chargeable to tax accordingly. Since the goods or services are supplied on his own
behalf, provision of collection of tax at source does not apply to such transaction.
The said 1% would be on the net value of taxable supplies made through the electronic commerce by
other suppliers where the consideration with respect to such supplies is to be collected by
electronic commerce operator.
Where net “value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or
services or both, other than services notified under section 9(5) of the CGSTAct,2017, made during any
month by all registered persons through the operator reduced by the aggregate value of taxable
supplies returned to the supplier during the said month.

TCS

Question 28: Explain the applicability of TCS in accordance with the provision of GST Act.
Answer:

As per section 52 of CGST Act, the provisions of TCS applicable are as follows:
 TCS

Personal liable Threshold limit Rules of Value for Due date of

to collect tax at collection under collection of payment of TCS to
source CGST tax at source Government

Nil
Electronic Not
commerce exceeding 1% Net value
operator of taxable
Within 10
supply
days from
the end of
the month

The rate of TCS as notified by CBIC is 0.5% of CGST and 0.5% of SGST.

Question 29: Does the net value of taxable supplies include all the transaction made through
electronic commerce?

Answer:

No, net value does not include transactions pertaining to supply of services notified by the government
under section 9(5) of the CGST Act,2017. Net value of taxable supplies is the aggregate value of taxable
supplies of goods or services or both, other than services notified under section 9(5) of the CGST
Act,2017, made during any month by all the registered taxable persons through the operator reduced
by the aggregate value of taxable supplies returned to the supplier during the said month.

Question 30: Is there any threshold limit specified for collection of tax at source?

Answer:

No, there is no threshold limit specified.

Question 31: Whether the rate of tax of 1% specified in section 52 is CGST or SGST or a combination of
both CGST and SGST?

Answer:

The rate of TCS as specified in CGST Act,2017 is payable under CGST and the equal rate of TCS is
expected under SGST Act also, in effect aggregating to 2%.

Question 32: Is electronic commerce operator liable to collect tax at source if the consideration
for supplies is not collected by him? (ICAI)

Answer:
As per the provision of section 52(1), an electronic commerce operator shall collect tax at source
only where the consideration in respect of supplies is to be collected by the operator.

Question 33: Are there any deductions allowable while computing the tax collection at source? (ICAI)

Answer:

Yes, the taxable supplies returned to the supplier on the electronic commerce are allowed as a
deduction while calculating the net value.

Question 34: What is the time at which the tax should be collected at source by the
electronic commerce operator? (ICAI)

Answer:

No clarity in section 52, However, it may be constructed to be the date of collection of consideration
by electronic commerce operator on behalf of the supplier.

Question 35: Are there any powers vested with the government to enhance the rate of tax in
collection of tax at source in future? (ICAI)

Answer:

No, section 52 does not vest any powers with authority to increase the rate of tax more than 1% in
case of collection of tax at source.

Question 36: How can actual suppliers claim credit of this TCS? (ICAI)

Answer:

TCS which is deposited bythe E-commerce operator into government account will be reflected in the
cash ledger of the registered supplier (on whose account such collection has been made) on the basis of
the valid return filed by the E-commerce operator. The same can be used at the time of discharge of tax
liability in respect of the supplies by the registered supplier.

Question 37: Explain matching concept for electronic commerce operator with suitable real
life example? (ICAI)

Answer:

As per section 52(8) of CGST Act, details of outward supplies furnished by every operator for the month
of tax collected shall be matched with the corresponding details of outward supplies furnished by
concerned supplier.

Example=PQR limited sold iphone 6s mobile via shopkart (e-commerce operator) to customer worth
₹55,60,000 for the month of November and some customers returned iphone worth ₹9,60,000, so
net supply for the month of November would be ₹(55,60,000-9,60,000)= ₹46,00,000.
Now as per section 52(4) of CGST Act, Shopkart will have to furnish statement, electronically, containing
the net outward supply worth ₹ 46,00,000 up to the 10th December which is to be matched with
the detailed outward supply furnis hed by PQR limited under section39.

Question 38: What will be the treatment of availment of input tax credit in case of default in
filling of return and payment of tax? (ICAI)

Answer:

If there is default in payment of tax and filling of returns, input tax credit will become ineligible as
per section 16 (2) (d) of the CGST Act, and interest will be calculated on gross tax payable.

Question 39: State whether Tax collected at source under section 52 of CGST Act, will be applicable
in below mentioned scenarios-

a) Titans sell watch on his own through its own website?

b) ABC limited who is dealer of titan brand sells watch through flipkart, Amazon etc.? (ICAI)

Answer:

Answer for both the scenarios is as follow:

As per section 52 of CGST Act, every electronic commerce operator not being an agent, shall collect an
amount calculated at such rate not exceeding one percent, as may be notified by the government on
the recommendations of the council of the net value of taxable supplies made through it by the
other supplier where the consideration with respect to such supplies is to be collected by the
operator .

a) Hence if the person sells on his own, TCS won’t be applicable.

b) If ABC limited who is dealer of titan brand sells watches through flipkart , Amazon etc;
then provision of TCS will be applicable to flipkart, Amazon etc.

Question 40: Mr. X is a supplier selling his own product through a website hosted by him. Does he fall
under the definition of “An electronic commerce operator”? Whether he required to collect TCS on
such supplies? (ICAI)

Answer:

As per the definition in section 2(44) and 2(45) of the CGST Act, 2017, Mr. X will come under the
definition of an “electronic commerce. However according to the section 52 of the Act ibid, TCS is
required to be collected on the net value of taxable supplies made through it by other suppliers
where the consideration is to be collected by the ECO. In cases where someone is selling their own
product through website, there is no requirement to collect tax at source as per the provisions of
this section. This transaction will be liable to GST at the prevailing rates.

Question 41: If we purchase goods from different vendors and are selling them on our website under
our own billing. Is TCS required to be collected on such supplies? (ICAI)

Answer:
No, according to the section 52 of the CGST Act , 2017.TCS is required to be collected on the net value of
taxable supplies made through it by other suppliers where the consideration is to be collected by the
ECO.
In this case, there are two transactions- where we purchase goods from the vendors and where we sell
it through our website. For the first transaction, GST is leviable, and will need to be paid to our vendor
on which credit is available for us.
The second transaction is a supply on our own account and not by other supplier and there is no
requirement to collect tax at source. The transaction will attract GST at the prevailing rates. Therefore
tax is not required t collected on such supplies.

Question 42: Foreign e-commerce operator do not have place of business in India since they
operate from outside. But their supplier and customers are located in India. So, in this scenario will
the TCS provision be applicable to such e-commerce and if yes, how will foreign e-commerce
operator obtain registration?

Answer:

Where registered supplier is supplying goods or services through a foreign e-commerce operator to a
customer in India. Such foreign e- commerce operator would liable to collect TCS on such supply and
would be required to obtain registration in each State/UT. If the foreign e-commerce operator does
not have physical presence in particular State/UT, he may appoint an agent on his behalf.

Question 43: Under e-commerce model, customer books a hotel via ECO-1 who in turn is integrated
with ECO-2 who has agreement with the hotelier. In this case, ECO-1 will not have any GST information of
the hotelier. Under such circumstances, which e-commerce operator should be liable to collect tax?

Answer:

TCS is to be collected by that e-commerce operator who is making payment to the supplier for
the particular supply happening through it, which in this case will be ECO-2.

Question 44: Ritesh Enterprises, registered in Delhi is engaged in supply of various goods and services
exclusively to government departments, agencies etc . and person notified under section 51 of the CGST
Act, 2017. It has provided the information relating to the supplies made, their contract values and
the payment due against each of them in the month of October,20×× as under:

Particular Total contract value Payment due in

(inclusive of October,20××
GST)(Rs) (Rs)
1 Supply of stationary department Kolkata 2,60,000 15,000

2 Supply of car rental services to municipal 2,95,000 20,000

corporation of Delhi
3 Supply of a heavy machinery to public sector 5,90,000 25,000
undertaking located in Uttarakhand
4 Supply of taxable goods to Delhi office of 6,49,000 50,000
National Housing Bank a society
established by government of India under
the society registration Act,1860
You are required to determine amount of tax, if any, to be deducted from each other of the
receivable given above assuming the rate of CGST, SGST and IGST as 9%,9% and 18% respectively. (Ca
final MTP Apr19)

Answer:

As per section 51 of the CGST Act,2017 read with section 20 of the IGST Act, 2017 and notification
no,. 50/2018 CT 13.09.2018, with effect from 01.10.2018, following person are required to deduct
CGST @ 1% [ Effective tax 2% (1% CGST + 1% SGST/ UTGST)] or IGST @ 2% from the payment made/
credited to the supplier (deductee) of taxable goods or services or both, where the total value of
such supply, under a contract exceeds ₹2,50,000.

a) A department or establishment of the central government or state government or,

b) Local authority
c) Governmental Agencies
d) An authority or a board or any other body
I. Set up by an Act of parliament or a state legislature or
II. Established by any Government with 51% or more participation by way of equity
or control, to carry out any function or,
e) Society established by Central Government or the State Government or a local authority
under the societies Registration Act,1860,or
f) Public sector under takings.

Further, for the purpose of deduction of tax, the value of supply shall be taken as the
amount excluding CGST, SGST/ UTGST, IGST and GST compensation cess indicated in the
invoice.

Since in the given case, Ritesh enterprises is supplying goods and services exclusively to Government
department , agencies etc and person notified under section 51 of the CGST Act,2017, applicability
of TDS provision on its various receivable is examined in accordance with the above mention
provision as under:

Particulars Total Payment CGST SGST IGST

contract due
value
(Rs)
Supply of stationery to 2,60,000 15,000
Fisheries Department,
Kolkata (Note 1)
Supply of car rental services to 2,95,000 20,000
municipal corporation of Delhi
(Note 2)
Supply of a heavy machinery to 5,90,000 25,000 500
Public sector Undertaking
located in Uttarakhand (Note 3)
 Supply of taxable goods to Delhi 6,49,000 50,000 500 500
office of National Housing Bank,
a society established by
government of India under the
societies registration act
,1860(Note 4)
NOTE:-

1. Being an inter- state supply of goods, supply of stationary to Fisheries Department,

Kolkata is subject to IGST @ 18%. Therefore , total value of taxable supply [excluding
IGST] under the contract is as follow:

= Rs 2, 60,000 × 100/118

= Rs 2, 20,339 (rounded off)

Since total value of supply under the contract does not exceeds Rs.2 , 50,000
tax is not required to be deducted.
2. Being an intra- state supply of services, supply of car rental services to Municipal
Corporation of Delhi is subject to CGST and SGST @9% each. Therefore, total value of
taxable supply [excluding CGST and SGST] under the contract is as follow.
= Rs. 2,95,000 × 100/118
= Rs. 2, 50,000
Since the total value of supply under the contract does not exceed Rs. 2, 50,000, tax is
not required to be deducted.
3. Being an inter- state supply of goods, supply of heavy machinery to PSU in
Uttarakhand is subject to IGST @ 18%. Therefore , total value of taxable supply \
excluding IGST] under the contract is as follows:
= Rs. 5, 90,000×100/118
= Rs. 5, 00,000
Since the total value of supply under the contract exceeds Rs. 2, 50,000, PSU in
Uttarakhand is required to deduct tax @ 2% of Rs. 25000, i.e. Rs. 500.
4. Being an intra-state of supply of goods, supply of taxable goods to National Housing
Bank, Delhi is subject to CGST and SGST @ 9% each, therefore total value of taxable
supply [ excluding CGST and SGST] under the contract is as follows:
= Rs 6, 49,000×100/118
=Rs 5, 50,000 (rounded off)
Since the total value of supply under the contract exceeds Rs 2,50,000, National
Housing Bank, Delhi is required to deduct tax @ 2% (1% CGST and 1% SGST) of Rs
50,000; i.e. Rs 1000..

Question 45: Manihar enterprises, registered in Delhi, is engaged in supply of various goods and
services exclusively to Government departments, Agencies etc. and person notified under section 51 of
the CGST Act,2017. It has provided the information relating to the supplies made , their contract
values and the payment due against each of them in the month of October,20×× as under:
 Particular Total contract value Payment due in
(Inclusive of GST) (Rs) October,20×× (Rs)
1 Supply of stationary to fisheries 2,60,000 15,000
Department , Kolkata
2 Supply of car rental services to 2,95,000 20,000
Municipal Corporation of Delhi
3 Supply of a heavy machinery to 5,90,000 25,000
public sector undertaking located
in Uttarakhand
4 Supply of taxable goods to Delhi office 6,49,000 50,000
of National Housing Bank, a society
established by Government of India
under the societies registration
Act,1860
5 Interior decoration of Andhra Bhawan 12,39,000 12,39,000
located in Delhi, Service contract is
entered into with the Government of
Andhra Pradesh ( registered only in
Andhra Pradesh)
6 Supply of printed books and printed post 9,72,000 50,000 for printed
cards to a West Delhi post office [out of books and 20,000 for
total contract value of ₹ 9,72,000, printed post cards
contract value of supply of
books(exempt from GST) is ₹ 7,00,000
and for supply of printed post cards
(taxable under GST) is
₹ 2,72,000]
7 Maintenance of street light in 3,50,000 3,50,000
Municipal Area of East Delhi. [The
maintenance contracts entered into
with the Municipal Corporation of
Delhi also involve replacement of
defunct lights and other spares.
However the value of supply of goods is
not more than 25% of the value of
composite supply] an activity in
relation to any function entrusted to
a Municipality under article 243w of
the constitution.

You are required to determine amount of tax, if any, to be deducted from each of the receivable given
above assuming the rate of CGST, SGST and IGST as 9%,9% and 18% respectively. (CA final RTP May 2019)

Answer:

As per section 51 of the CGST Act,2017 read with section 20 of the IGST Act ,2017 and Notification
no.50/2018 CT 13.09.2018, with effect from 01.10.2018, following person are required to deduct CGST
@ 1% [ Effective tax 2% (1% CGST and 1% SGST/UTGST)] or IGST @ 2% from the payment made/credited to
supplier (deductee) of taxable goods or services or both , where the total value of such supply , under a
contract, exceeds ₹ 2,50,000;

a) A department or establishment of the central government or state government; or

b) Local authority ;or
c) Governmental agencies; or
d) An authority or a board or any other body
I. Set up by an Act of parliament or a state legislature or
II. Established by any government.

With 51% or more participation by way of equity or control; to carry out any
function

e) Society established by the central government or a state government or a local authority

under the society registration act,1860 or,
f) Public sector under takings
Further for the purpose of deduction of tax, the value of supply shall be taken as the
amount excluding CGST, SGST/UTGST, IGST and GST Compensation cess indicated in the
invoice.
Since in the given case , Manihar Enterprises is supplying goods and services exclusively to
government department, agencies etc. and persons notified under section 51 of the CGST Act
2017, applicability of TDS provision on its various receivables is examined in accordance with the
above mention provision as under:

Particular Total Payment CGST SGST IGST

contract due
value
(Rs)
1 Supply of stationery to 2,26,000 15,000 - - -
Fisheries Department,
Kolkata ( Note 1)
2 Supply of car rental services to 2,95,000 20,000 - - -
Municipal Corporation of Delhi
(Note 2)
3 Supply of heavy machinery 5,90,000 25,000 500
to public sector
undertaking located in
Uttarakhand (Note 3)
4 Supply of taxable goods to Delhi 6,49,000 50,000 500 500
office of the National Housing
Bank, a society established by
the government of India under
the society registration Act
1860
(Note 4)
5 Interior decoration of Andhra 12,39,000 12,39,000 -
Bhawan located in Delhi
(Note 5)
6 Supply of printed books or 9,72,000 -
printed post cards to a West
Delhi post office (Note 6)
7 Maintenance of street lights in 3,50,000 3,50,000 -
municipal areas of East Delhi
(Note 7)
NOTE:-
1) Being an inter- state supply of goods, supply of stationary to Fisheries
department, Kolkata is subject to IGST @ 18%. Therefore, total value of taxable
supply [excluding IGST] under the contract is as follows:
=₹ 2,60,000×100/118
=₹ 2,20,339 (rounded off)
2) Being an intra- state, supply of services, supply of car rental services to Municipal
Corporation of Delhi is subject to CGST and SGST @ 9% each. Therefore total
value of taxable supply [ excluding CGST and SGST] under contract is as follow:
=₹ 2,95,000×100/118
=₹ 2,50,000
 Since the total value of supply under the contract does not exceed ₹ 2,50,000, tax
is not required to be deducted
3) Being an inter- state of supply of goods, supply of heavy machinery to PSU in
Uttarakhand is subject to IGST@ 18%. Therefore total value of taxable supply
[excluding IGST] contract is as follow
=₹ 5,90,000×100/118
=₹ 5,00,000
Since the total value of supply under the contract exceeds ₹ 2,50,000, PSU in
Uttarakhand is required to deduct tax @2% of ₹ 25,000 i.e. ₹ 500
4) Being an intra –state supply of goods, supply of taxable goods to National Housing
Bank, Delhi issubject to CGST and SGST @9% each. Therefore total value of
taxable supply[excluding CGST and SGST] under the contract is as follows:
=₹ 6,49,000×100/118
=₹ 5,50,000(rounded off)
Since the total value of supply under the contract exceeds ₹2,50,000, National
Housing Bank , Delhi is required to deduct tax @ 2% (1%CGST +1% SGST) of
₹50,000, i.e. ₹ 1000
5) Provision to section 51(1) of the CGST Act, 2017, stipulates that no tax shall be
deducted if the location of the supplier and the place of supply is in a State/
Union territory which is different from the state or as the case may be,
Union territory of registration of the recipient.
Section 12(3) of the IGST Act, 2017, inter alia,, stipulates that the place of supply
of services, directly in relation to an immovable property, including services
provided by interior decorators, shall be the location at which the
immovable property is located or intended to be located. Accordingly the
place of supply of the interior of decoration of Andhra Bhawan shall be
Delhi.
Since the location of the supplier (Manihar Enterprises) and the place of supply
of Delhi and the state of registration of the recipient – Government of
Andhra Pradesh is Andhra Pradesh; no tax is liable to be deducted in the given
case.

6) If the contract is made for both taxable supply and exempted supply, tax shall be
deducted if the total value of taxable supply in the contract exceeds ₹ 2,50,000.
Being an intra- state of supply of goods, supply of printed post cards to a West
Delhi Post Office is subject to CGST and SGST @9% each. Therefore , total value of
taxable supply ( excluding CGST and SGST) under the contract is as follows:
=₹ 2,72,000×100/118
= ₹ 2, 30,509(rounded off)
Since the total value of taxable supply under the contract does not exceed ₹
 2,50,000 tax is not required to be deducted.
7) Composite supply of goods and services in which the value of supply of goods
constitutes not more than 25% of the value of the said composite supply
provided to, inter-alia, local authority by way of any activity in relation to any
function
 entrusted to a Municipality under article 243w of the constitution is exempt
from GST. Thus maintenance of street light ( an activity in relation to a
function entrusted to a Municipality) in Municipal area of East Delhi involving
replacement of defunct lights and other spares where the value of supply of
goods is not more than 25% of the value of composite supply is a services exempt
from GST. Since tax is liable to be deducted from the payment made or credited
to the supplier of taxable goods or services or both, no tax is required to be
deducted in the given case as the supply is exempt.

Answer will remain unchanged even if Manihar Enterprises is registered under

composition scheme. Tax will be deducted in all cases where it is required to be
deducted under section 51 of the CGST Act, 2017, including the scenarios when
the supplier is registered under composition scheme.

Question 46: Yash Shoppe, a registered supplier of jaipur, is engaged in supply of various goods and
services exclusively to Government department, agencies, local authority and person notified
under section 51 of the CGST Act, 2017.

You are required to briefly explain the provision relating to tax deduction at source under section 51
of the CGST Act, 2017 and also determine the amount of tax, if any to be deducted from each of the
receivables given below (independent case)assuming that the payments as per the contract values are
made on 31.08.2018. The rates of CGST, SGST and IGST may be assumed to be 6%,6% and 12%
respectively.

1) Supply of computer stationery to Public Sector Undertaking (PSU) located in Mumbai. Total
contract value is ₹ 2,72,000 (inclusive of GST)
2) Supply of air conditioner to GST department located in Delhi. Total contract value is ₹ 2,55,000
(exclusive of GST)
3) Supply of generating renting services to Municipal Corporation of Jaipur. Total contract value is ₹
3,50,000 (inclusive of GST)

Answer:

As per section 51 of the CGST Act , 2017, Government departments, agencies, local authority and notified
person are required to deduct tax @2%(1% CGST and 1%SGST/UTGST) or IGST @ 2% from payment made
to the supplier of taxable goods and/or services where the total value of such supply [excluding tax and
compensation cess indicated in the invoice], under a contract exceeds ₹ 2,50,000.

Since in the given case, Yash Shoppe is supplying goods and services exclusively to Government
department, agencies, local authority and person notified under section 51 of CGST Act, 2017,
applicability of TDS provision on its various receivables is examined in accordance with the above
mentioned provision as under:
 S.N Particular Total contract value Tax to be deducted
o. due to be
received(excluding CGST@1% SGST@1% IGST@2%
GST) (Rs.) (₹) (₹) (₹)
1 Supply of computer 2,42,857[2,72,000×100/
stationery to PSU in
Mumbai [ since the 112]
total value of supply
under the contract
[excluding IGST(being
inter- state supply)]
does not exceed ₹
2,50,000 tax is not
required to be
deducted]
2 Supply of air 2,55,000 - - 5,100
conditioner to GST
department in Delhi
[ since the total
value of supply
under the
contract[excluding
IGST(being inter-
supply)] exceeds ₹
2,50,000, tax is
required to be
deducted]
3 Supply of generator 3,12,500[[3,50,000×100 3,125 3,125
renting services to
Municipal /112]
Corporation of Jaipur
[Since the total value
of supply under the
contract[excluding
CGST and SGST ( being
intra- state
supply)]exceeds ₹
2,50,000, tax is
required to be
deducted]

Question 47: Supplier X m Q 1: Supplier X makes supply worth Rs. 11800/- (inclusive of GST) to a
Municipality where contract for supply is for Rs. 1500000/-. The rate of GST is 18%. Supplier and the
deductor are in the same state.
Find the following:
a) TDS to be deducted by Municipality?
b) Net payment to Suppier X after TDS?
Ans 1:
a) Yes.
b) Following payment is being made by this Municipality to X: Rs. 10000 (value of supply) + Rs. 900
(Central Tax) + Rs. 900 (State Tax).
Value of supply =Rs. 10000/- (Rs. 11800 * 100/118)
Tax to be deducted from payment: Central Tax = 1% on Rs. 10000/- = Rs. 100/-; State Tax= 1% on Rs.
10000/- = Rs. 100/-
Payment due to X after TDS as per GST provisions: Rs. 11600/- (i.e. Rs. 11800 – 200)

Question 48:- Supplier Y of Mumbai makes taxable supply worth Rs.10000/- & exempted supply worth
Rs. 20000/- in an invoice/bill of supply to Finance Deptt. of GoI located in New Delhi where contract for
supply is for Rs.600000/- (Rs.260000 for taxable supply including GST and Rs.340000 for exempted
supply). The rate of GST is 18%. Following payment is being made by Gol to Y: Rs.10000/- (value of
taxable Supply) + Rs.1800 (Integrated Tax) + Rs.20000/- (value of exempted Supply). Whether any
deduction of tax is required?
Ans: No.
Value of taxable supply in the contract
= Rs.260000/- (including GST)
Value of such contract excluding tax= 260000x100/118=Rs.220340/-
Since, the value of taxable supply in the contract does not exceed Rs.2.5 Lakh, deduction of tax is not
required.

Q 49: Supplier ZA is a person registered under the composition scheme in Jharkhand who makes
taxable supply worth Rs. 10000/- to a Local Authority of Jharkhand where value of taxable supply
under the contracts forRs.255000/-
Find the TDS if any?
Ans:
Following payment is being made by the Local Authority of Jharkhand to ZA:
Rs.10000/-
Value of taxable supply under the contract is Rs.255000/- which is more than Rs.2.5 Lakh and hence
deduction of tax is required.
TDS towards:
CGST = 1% on Rs. 10000 = Rs. 100
SGST = 1% on Rs. 10000= Rs. 100
Total TDS = Rs. 200

Q 50: X Ltd supplier has received two different purchase orders from Education Department a unit of
State Government of Tamil Nadu specified under Section 51. The details of two purchase orders are-
a) Purchase Order No. 001 for Rs. 300000(inclusive of tax Rs. 60000)
b) Purchase order No. 002 for Rs. 350000.
Person has received goods in the month of July 20XX. The bills are approved and payment is made on
15-8-20XX.
Find the following-
a) Quantum of TDS and person liable to deduct TDS u/s 51.
 b) Last date of payment of TDS
c) Date of furnishing certificate to supplier (i.e. Form GSTR-7A)
d) Date of furnishing return (i.e. From GSTR-7)
e) Penalty for late furnishing of Form GSTR-7A
Ans:
a) TDS @ 2% on Purchase Order No. 002= Rs. 7000
(Rs. 350000* 2%)
Person liable to deduct TDS is education Department of T.N. State.
Note: Purchase Order No. 001, value after deducting tax Rs. 240000 (i.e. Rs. 300000-60000) and not
attract TDS provision u/s 51 of CGST Act, 2017
b) Last date of payment of TDS is 10-09-20XX
(i.e. Specified person shall be paid to the credit of the appropriate Government within 10 days after the
end of the month in which such deduction is made)
c) Date of furnishing certificate to supplier (i.e. Form GSTR-7A)
Last date = 15-9-20XX
(i.e. certificate is required to be furnished within 5 days of crediting the amount to the appropriate
Government)
d) Date of furnishing return (i.e. From GSTR-7)
Last date of furnishing return = 10-09-20XX
(i.e. Submit return in Form GSTR-7 within 10 days after the end of the month in which deduction was
made).
e) Penalty for late furnishing of Form GSTR-7A
If the certificate is not furnished (in our Q by 15-9-20XX) the person will be liable for payment of late
fee of Rs. 100 per day from 16-9-20XX until the failure is rectified or Rs. 5000 whichever is less.
Note : late filing of return with only IGST payment then therevis no penalty.
akes supply worth Rs. 11800/- (inclusive of GST) to a Municipality where contract for supply is for Rs.
1500000/-. The rate of GST is 18%. Supplier and the deductor are in the same state.
Find the following:
c) TDS to be deducted by Municipality?
d) Net payment to Suppier X after TDS?

Ans:
c) Yes.
d) Following payment is being made by this Municipality to X: Rs. 10000 (value of supply) + Rs. 900
(Central Tax) + Rs. 900 (State Tax).
Value of supply =Rs. 10000/- (Rs. 11800 * 100/118)
Tax to be deducted from payment: Central Tax = 1% on Rs. 10000/- = Rs. 100/-; State Tax= 1%
on Rs. 10000/- = Rs. 100/-
Payment due to X after TDS as per GST provisions: Rs. 11600/- (i.e. Rs. 11800 – 200)

Q 51:- Supplier Y of Mumbai makes taxable supply worth Rs.10000/- & exempted supply worth
Rs. 20000/- in an invoice/bill of supply to Finance Deptt. of GoI located in New Delhi where contract for
supply is for Rs.600000/- (Rs.260000 for taxable supply including GST and Rs.340000 for exempted
supply). The rate of GST is 18%. Following payment is being made by Gol to Y: Rs.10000/- (value of
taxable Supply) + Rs.1800 (Integrated Tax) + Rs.20000/- (value of exempted Supply). Whether any
deduction of tax is required?
Ans: No.
Value of taxable supply in the contract
= Rs.260000/- (including GST)
Value of such contract excluding tax= 260000x100/118=Rs.220340/-
Since, the value of taxable supply in the contract does not exceed Rs.2.5 Lakh, deduction of tax is not
required.

Q 52: Supplier ZA is a person registered under the composition scheme in Jharkhand who makes
taxable supply worth Rs. 10000/- to a Local Authority of Jharkhand where value of taxable supply
under the contracts forRs.255000/-
Find the TDS if any?
Ans:
Following payment is being made by the Local Authority of Jharkhand to ZA:
Rs.10000/-
Value of taxable supply under the contract is Rs.255000/- which is more than Rs.2.5 Lakh and hence
deduction of tax is required.
TDS towards:
CGST = 1% on Rs. 10000 = Rs. 100
SGST = 1% on Rs. 10000= Rs. 100
Total TDS = Rs. 200

Q 53: X Ltd supplier has received two different purchase orders from Education Department a unit of
State Government of Tamil Nadu specified under Section 51. The details of two purchase orders are-
c) Purchase Order No. 001 for Rs. 300000(inclusive of tax Rs. 60000)
d) Purchase order No. 002 for Rs. 350000.
Person has received goods in the month of July 20XX. The bills are approved and payment is made on
15-8-20XX.
Find the following-
f) Quantum of TDS and person liable to deduct TDS u/s 51.
g) Last date of payment of TDS
h) Date of furnishing certificate to supplier (i.e. Form GSTR-7A)
i) Date of furnishing return (i.e. From GSTR-7)
j) Penalty for late furnishing of Form GSTR-7A
Ans:
f) TDS @ 2% on Purchase Order No. 002= Rs. 7000
(Rs. 350000* 2%)
Person liable to deduct TDS is education Department of T.N. State.
Note: Purchase Order No. 001, value after deducting tax Rs. 240000 (i.e. Rs. 300000-60000) and not
attract TDS provision u/s 51 of CGST Act, 2017
g) Last date of payment of TDS is 10-09-20XX
(i.e. Specified person shall be paid to the credit of the appropriate Government within 10 days
 after the end of the month in which such deduction is made)
h) Date of furnishing certificate to supplier (i.e. Form GSTR-7A)
Last date = 15-9-20XX
(i.e. certificate is required to be furnished within 5 days of crediting the amount to the
appropriate Government)
i) Date of furnishing return (i.e. From GSTR-7)
Last date of furnishing return = 10-09-20XX
(i.e. Submit return in Form GSTR-7 within 10 days after the end of the month in which
deduction was made).
j) Penalty for late furnishing of Form GSTR-7A
If the certificate is not furnished (in our Q by 15-9-20XX) the person will be liable for payment of
late fee of Rs. 100 per day from 16-9-20XX until the failure is rectified or Rs. 5000 whichever is
less.
Note : late filing of return with only IGST payment then therevis no penalty.

Q 54: Peter England is a trader who sells his ready-made clothes online on Amazon India. He receives
an order for Rs.12000 in the month of July 20XX, inclusive of tax and
commission 2%. Amazon charges a commission of Rs.200. Applicable GST Rs.1800. Find the TCS in the
hands of Amazon.
Note: there are sales returns of Peter England products from other customer for Rs.2000 in the month
of July 20XX.

Ans: Amazon would therefore need to deduct 1% tax (TCS) on the amount, excluding the money paid
as commission and GST. Amazon would thus be deducting tax for Rs.80 (1% of Rs.8000).
Working Note: Rs.
Supply of goods 12000
Less: sales returns (2000)
Balance 10000
Less: GST 18% (1800)
Less: Commission (200)
Net value of taxable supplies 8000
Tax Collected at Source 1% 80

Q 55: Flipkart Online Services Pvt. Ltd an Electronic Commerce Operator (ECO) has supplied product ‘A’
from supplier Sri Ram Ltd to various customers aggregating to Rs.50 lakhs for the month of July 20XX.
Further there are sales returns of product ‘A’ sold in the month of May, June and July 20XX amounting
to Rs.20 lakhs during the month of July 20XX.
Find the following:
a) Who is liable to pay GST and TCS?
b) Amount of TCS.
c) Due date of deposit of TCS?
Ans 2:
a) GST is liable to pay by Sri Ram Ltd. (i.e. supplier of Goods). TCS is required to deposit into
Government account by Electronic Commerce Operator.
b) TCS = Rs.30000[(Rs.50 lakhs-20 lakhs) *1 %]
c) Due date of deposit of TCS = 10th Aug 2017
 Liability to pay in Certain Cases
Question:1

Avataar Industries, a registered person under GST, has sold whole of its business to Rolex
Manufactures. Determine the person liable to pay GST, interest or any other penalty under GST law
[determined before sale, but still unpaid] due from Avataar industries upto the time of such transfer.

Answer:

Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in Part,
by sale, gift, lease, leave and license, hire or in- any other manner whatsoever, the taxable person
and the person to whom the business is so transferred shall, jointly and severally, be liable wholly or
to the extent of such transfer, to pay the tax, interest or penalty due from the taxable person up to
the time of such transfer, whether such tax, interest or penalty has been determined before such
transfer, but has remained unpaid or is determined thereafter. Thus, in the given case, Avataar
industries and Rolex Manufacturers shall, jointly and severally, be liable wholly or to the extent of
such transfer, to pay GST, interest or any penalty [determined before sale, but still unpaid] due from
Avataar industries upto the time of such transfer.

Question:2

ABC Manufacturers Ltd. Engages Raghav & Sons as an agent to sell goods on its behalf. Raghav &
sons sells goods to Swami Associates on behalf of ABC Manufactures Ltd. Determine the liability to
pay GST payable on such goods as per the provisions of section 89 of the CGST Act.

Answer:

Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his
principal shall, jointly and severally, be liable to pay the tax payable on such goods under this Act.

Thus, in the given case, ABC Manufacturers Ltd. And Raghav & Sons shall, jointly and severally, be
liable to pay GST payable on such goods.

Question:3

A person, liable to pay GST, interest and penalty under GST law, dies. Determine the person liable to
pay the GST, interest and penalty due from such person under GST law determined after his death if
the business carried on by such person is continued after his death by legal representative.

Answer: Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person,
liable to pay tax, interest or penalty under this act, dies, then if a business carried on by the person is
continued after death by his legal representative or any other person, such legal representative or
other person, shall be liable to pay tax, interest or penalty due from such person under this Act,
whether such tax, interest or penalty has been determined before his death but has remained
unpaid or is determined after his death.

Question:4

In the question3 above, would your answer be different if the business carried on by the person who
has died, is discontinued after his death.

Answer: Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person,
liable to pay tax, interest or penalty under this Act, dies, then if a business carried on by the person
is discontinued, whether before or after his death, his legal representative shall be liable to pay, out
of the estate of the decreased, to the extent to which the estate is capable of meeting the charge,
the tax, interest or penalty due from such person under this Act, whether such tax, interest or
penalty has been determined before his death but has remained unpaid or is determined after his
death.

Question:5

What happens to the GST liability when the estate of a taxable person is under the control of court
of words?

Answer: Where the estate of a taxable person owning a business in respect of which any tax, interest
or penalty is payable is under the control of the count of Wards/Administrator General/Official
Trustee/Receiver or Manager appointed under any order of a count, the tax, interest or penalty shall
be levied and recoverable from such court of Wards/Administrator General/Official Trustee/Receiver
or Manager to the same extent as it would be determined and recoverable from a taxable person.

Question:6

Whether the transferor of business is liable to pay tax / interest / penalties even in respect of the
transactions undertaken after the transfer of business?

Answer: No. The transferor of business is liable to pay tax / interest / penalties arisen (whether
determined prior to transfer or post transfer) upto the date of transfer of business.

Question:7

Whether the agent is liable for tax in case of transaction made by him on behalf of the principal?

Answer: Yes. When an agent supplies or receives any taxable goods on behalf of the principal both
agent and principal are jointly and severally liable in respect of tax payable on such goods.

Question:8

Principal are jointly and severally liable in respect of tax payable on such goods?

Answer: No. The transferor of business is liable to pay tax / interest / penalties arisen (whether prior
to transfer or post transfer) upto the date of transfer of business.

Question:9

What is the responsibility of the liquidator in the course of winding up the company?

Answer: The receiver of assets / liquidator shall within 30 days from the date of appointment
intimate the Commissioner of his appointment. Thereafter, the Commissioner may provide the
details that the Company may be liable to pay tax, interest or penalty.

Questions from MTP, RTP, of ICAI

Question:10

Explain the provisions relating to liability for GST in case of company in liquidation (section 88 of the
CGST Act, 2017). [CA Final May18 New].

Answer:
The provisions relating to liability for GST in case of company in liquidation provided under section
88 of the CGST Act, 2017 are :- Where any company is being wound up whether under the orders of
a court or Tribunal or otherwise, every person appointed as liquidator/receiver of assets of a
company shall give the intimation of his appointment to the Commissioner within 30 days of his
appointment.

The commissioner shall ascertain the amount which in the opinion of the Commissioner would
be sufficient to provide for any tax, interest or penalty which is then, or is likely thereafter to
become, payable by the company. He shall communicate the details to the liquidator within 3
months of the receipt of intimation of appointment of liquidator.

When any private company is wound up and any tax, interest or penalty determined under the
CGST Act on the company for any period, whether before or in the course of or after its liquidation,
cannot be recovered, then every person who was a director of such company at any time during the
period for which the tax was due shall, jointly and severally, be liable for the payment of such tax,
interest or penalty.

However, director shall not be liable if he proves to the satisfaction of the Commissioner that
the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his
part in relation to the affairs of the company.

Question:11

With the reference to the provisions of CGST Act, 2017, explain the liability of partners of firm to pay
tax? [CA Final MTP 2018]

Answer:

Section 90 of the CGST Act explains the liability of the partners of firm to pay tax as under:- Partners
of the firm jointly and severally liable to pay any tax, interest or penalty o the firm: Notwithstanding
any contract to the contrary and any other law for the time being in force, where any firm is liable to
pay any tax, interest or penalty under this Act, the firm and each of the partners of the firm shall,
jointly and severally be liable for such payment.

Retiring partner liable to pay any tax, interest or penalty of the firm due up to the date of his
retirement:

Where any partner retires from the firm, he or the firm, shall intimate the date of retirement of the
said partner to the commissioner by a notice in that behalf in writing and such partner shall be liable
to pay tax, interest or penalty due up to the date of his retirement whether determined or not, on
that date.

However, if no such intimation is given within 1 month from the date of retirement, the liability of
such partner shall continue until the date on which such intimation is received by the Commissioner.
Question:12

Discuss the liability to pay in case of an amalgamation/merger under section 87 of the CGST Act,
2017. [CA Final RTP Nov18] (CA final RTP Nov19)

Answer:

Section 87 of the CGST Act, 2017 stipulates that when two or more companies are amalgamated or
merged in pursuance of an order is to take effect from a date earlier to the date of the date of the
order and any two or more of such companies have supplied or received any goods or services or
both to or from each other during the period commencing on the date from which the order takes
effect till the date of the order, then such transactions of supply and receipt of the respective
companies and they shall be liable to pay tax accordingly.

Notwithstanding anything contained in the said order, for the purposes of the CGST Act,
2017, the said two or more companies shall be treated as distinct companies for the period up to the
date said order. The registration certificates of the said companies shall be cancelled with effect
from the date of the said order.

Question:13

Discuss the liability of the retiring partner of a firm to pay any tax, interest or penalty, if any, leviable
on the firm under CGST/ IGST/ SGST Act. [CA Final Exam Nov. 18 Old]

Answer:

Where any partner retires from the firm, he or the firm, shall intimate the date of retirement of the
said partner to the commissioner by a notice in that behalf in writing. Such partner shall be liable to
pay tax, interest or penalty due up to the date of his retirement whether determined or not, on that
date.

However, if no such intimation is given within 1 month from the date of retirement, the liability of
such partner shall continue until the date on which such intimation is received by the Commissioner
[Section 90 of the CGST Act, 2017].

Q 14: M/s X Pvt Ltd. (with 3 directors A, B & C) decided to wind up its affairs on 1st August after
suffering losses. It appoints Mr. CA as liquidator on 15th August.
You are required to Ans the following:
a) Liquidator is required to inform to the Commissioner about his appointment if so within
which period?
b) Commissioner is required to specify the liability of the company if so within which period
and to whom he has to inform?
c) Who is liable to pay GST dues and what is the time limit?
d) If A & B unable to pay GST liability then who is liable to pay?
Ans 1:
a) Mr. CA must then inform the Commissioner regarding his appointment within 30 days, i.e.,
on or before 14thSeptember.
b) The Commissioner informs the liquidator within 3 months from the date of receipt of
intimation from liquidator, that M/s X Pvt. Ltd. owes taxes for tax period. Let us assume the
 Commissioner intimated tax dues on 20th November.
c) M/s X Pvt. Ltd. has Ltd. has months to pay i.e. till 20th February, 2018. However, the
company fails to pay. In this case, the 3 directors A, B & C will be held liable to pay the full
amount.
d) If A & B fail to pay then C alone will have to pay entire due. However, if C proves that the
non-payment of taxes was not due to his personal negligence, then he will be exempt from
the liability of paying the company’s taxes.
 Miscellaneous topics
Tax invoice, Debit & Credit Notes
Q 1: Jain & Sons is a trader dealing in stationery items. It is registered under GST and has undertaken
following sales during the day:

S.No. Recipient of supply Amount (Rs.)

1 Raghav Traders – a registered retail dealer 190

2 Dhruv Enterprises – an unregistered trader 358

3 Gaurav – a Painter (unregistered) 500

4 Oberoi Orphanage – an unregistered entity 188

5 Aaradhya - student (unregistered) 158

None of the recipient require a tax invoice (Raghav Traders being a composition dealer).

Determine in respect of which of the above supplies, Jain & sons may issue a Consolidated Tax
Invoice instead of Tax Invoice at the end of the day?

Ans:Jain & Sons can issue a Consolidated Tax Invoice only with respect to supplies made to Oberoi
Orphanage [worth Rs.188] and Aaradhya [worth T158] as the value of goods supplied to these
recipients is less than Rs.200 as also these recipients are unregistered and don’t require a tax
invoice.

As regards the supply made to Raghav Traders, although the value of goods supplied to it is less than
Rs.200, Raghav Traders is registered under GST. So, Consolidated Tax Invoice cannot be issued.

Consolidated Tax Invoice can also not be issued for supplies of goods made to Dhruv Enterprises and
Gaurav although both of them are unregistered. The reason for the same is that the value of goods
supplied is not less than Rs.200.

Q 2: Consider a situation where a consignor is required to move goods from City X to city Z. He
appoints Transporter A for movement of his goods. Transporter A moves the goods from City X to
City Y. For completing the movement of goods i.e., from City Y to City Z, Transporter A now hands
over the goods to Transporter B. Thereafter, the goods are moved to the destination i.e. from City Y
to City Z by Transporter B. How would the e-way bill be generated in such situations?
Ans : It is clarified that in such a scenario, only one e-way bill would be required. Part A can be filled
by the consignor and then the e-way bill will be assigned by the consignor to Transporter A.
Transporter A will fill the vehicle details, etc. in Part B and will move the goods from City X to City Y.
On reaching City Y, Transporter A will assign the said e-way bill to the Transporter B. Thereafter,
Transporter B will be able to update the details of Part B. Transporter B will fill the details of his
vehicle and move the goods from City Y to City Z.

Q 3: Consider a situation where a consignor hands over his goods for transportation on Friday to
transporter. However, the assigned transporter starts the movement of goods on Monday. How
would the validity of e-way bill he calculated in such situations?
Ans : In the given situation. Consignor can fill the details in Part A on Friday and handover his goods
to the transporter. When the transporter is ready to move the goods, he can fill the Part B i.e. the
assigned transporter can fill the details in Part B on Monday and the validity period of the e-way bill
will start from Monday.

Offences and Penalties under GST

Q 1: M/s R Pvt. Ltd. supplied goods worth Rs.1000000 to M/s Y Ltd in the month of October, 2017
plus GST 12%.M/s R Pvt. Ltd. paid the GST on 5th January 2019. ITC of ?70,000 is available in the
books in September 2017. Calculate interest and penalty for delay in filing of October 2017 return if
any. Rework if dues paid against order under section 74 (dated 1st July 2018) of the CGST Act, 2017
(i.e. recovery of dues in case of fraud).
Ans:
Interest = Rs. 10134
(i.e. (120000-70000) * 18% * 411/365)
Total Penalty is Rs. 10000.
(i.e. Rs. 5000 (CGST) plus Rs. 5000(SGST)).
(411 days * Rs. 50 = Rs. 20550 CGST and SGST of Rs. 20550 or Rs. 10000 whichever is less)
Rework:
Interest = Rs. 32430/-
(i.e. 120000* 24% * 411/365)
Total penalty is Rs. 120000
100% * Rs. 120000= Rs. 120000(CGST + SGST)
Or
Rs. 20000 (i.e. Rs. 10000 each Act.)
Whichever is higher.

Q 2: Ans the following Qtion:

1) Shagun started supply of goods in Vasai, Maharashtra from 01.01.20XX. Her turnover
exceeded Rs.20 lakh on 25.01.20XX. However, she didn’t apply for registration. Determine
the amount of penalty, if any, that may be imposed on Shagun on 31.03.20XX, if the tax
evaded by her, as on said date, on account of failure to obtain registration is Rs. 126000.
2) Sagar, managing director of Telecom Solutions Ltd., is issued a summon to appear before the
central tax officer to produce the books of accounts of Telecom Solutions Ltd. in an inquiry
conducted on said company. Determine the amount of penalty, if any, that may be imposed
on Sagar, if he fails to appear before the Central tax officer.

Ans:
1) Section 122(1)(xi) of the CGST Act, 2017 stipulates that a taxable person who is liable to be
registered under the CGST Act, 2017 but fails to obtain registration shall be liable to pay a
penalty of:
a) Rs.10000 or
b) an amount equivalent to the tax evaded [Rs. 126000 in the given case],
whichever is higher.
Thus, the amount of penalty that can be imposed on Shagun is Rs. 126000.
2) Section 122(3)(d) of the CGST Act, 2017 stipulates that any person who fails to appear
before the officer of central tax, when issued with a summon for appearance to give
evidence or produce a document in an inquiry is liable to a penalty which may extend to
Rs.25000. Therefore, penalty upto Rs.25000 can be imposed on Sagar, in the given case.

Q 3: X Pvt. Ltd. supplied taxable goods worth Rs.100000 from Cochin to Chennai on 12th July, 2018 by
road in a vehicle owned by ABC Transport Company. These goods are seized by the proper officer
while in transit in contravention of the provisions under Section 129 of the COST Act, 2017.
Applicable rate of GST 18%.
Find the total payment in the following independent cases:
Case 1: Owner of the goods forward for payment of such tax and penalty.
Case 2: Owner of the goods does not come forward for payment of such tax and penalty.
Case 3: if the goods are exempted goods.

Ans:
Particulars Case (a) Case (b) Case (c): Exempted Goods
When owner When owner
When owner When owner
comes forward does not come
comes forward does not come
forward
forward
value of goods 100000 100000 100000 100000
GST @ 18% 18000 18000 Nil Nil
Penalty 18000 50000 2000 5000
Total Payment 36000 68000 2000 5000
Working note:
1) If the owner of the goods comes forward - in this case, 100% penalty (equal to the amount
of tax) will be charged.
If the owner does not come forward — 50% of the value of goods reduced by the tax
amount paid thereon.
2) For exempted goods :-
2% (if owner comes forward) or 5% of value of goods (if owner does not come forward)
OR
Rs.25,000
whichever is less.

Q 4: From the details given below determine the maximum amount of fine in lieu of confiscation
leviable under 130 of CGST Act, 2017 on:
1) The goods liable for confiscation.
2) On the conveyance used for carriage of such goods.

Details are as follows:

Cost of the goods for owner before GST 1500000
Market value of goods 2000000
GST on such goods 360000
You are also required to explain relevant legal provisions in brief.
(CA Final May 2018 (new)) 5 Marks
Ans:
1) Fine in lieu of confiscation u/s 130 of CGST Act, 2017 = Rs.1640000/-
(Rs.2000000 – Rs.360000)
2) Fine in lieu of confiscation u/s 130 of CGST Act, 2018 = Rs.360000/-
Note :
a) Fine leviable shall not exceed the market value of the goods confiscated, less the tax
chargeable thereon:
b) Any such conveyance is used for the carriage of the goods or passengers for hire, the owner
of the conveyance shall be given an option to pay in lieu of the confiscation of the
conveyance a fine equal to the tax payable on the goods being transported thereon.
Q 5: Discuss the prosecution, arrest and bail implications, if any, in respect of the following cases
pertaining to the period November 2017:
1) 'Ram’ avails input tax credit of Rs.162 lakh without actual receipt of excisable goods.
However, he is yet to utilize the same (i.e. Yet to confirm this credit in his GSTR-2A return).
2) 'Rahim’ wilfully evades payment of tax of Rs.275 lakh.
3) ‘Robert’ fails to supply information sought by the Central Tax Officer. The amount of GST
involved is Rs.8 lakh.
4) ‘Lakshman’ collects Rs.585 lakh as tax from its clients but deposits only Rs.25 lakh with the
Central Government.
5) ‘Karthik’ collects Rs.265 lakh as IGST from its clients and deposits Rs.261 lakh with the
Central Government by falsifies or substitutes financial records or produces fake accounts or
documents.

Ans:
person Offence Prosecution/ Arrest Bail
imprisonment
Ram No offence . Not applicable Not applicable
because
utilization of ITC
not confirmed in
his return GSTR-
2R
Rahim Non- cognizable Upto 3 years with Arrest can be Bailable Offence
offence (Section fine (Section ordered by (Section 132(40)
132(1)(e)) 132(1)(ii)) Commissioner of
Central Tax.
Robert Non-cognizable Not applicable No Arrest can be Not applicable
offence (Section (since, tax ordered by
132(1)(k)) evasion not Commissioner of
exceeds Rs. 100 Central Tax .
lakh)
Lakshman Congnizable Upto 5 years with Arrest can be Non- Bailable
offence Section fine (Section ordered by Offence (Section
132 (1)(d) 132(1)(i)) Commissioner of 132(5))
Central Tax
without arrest
warrant
karthik Non-congnizable Upto 6 months or Arrest can be Bailable Offence
offence (Section with fine or with ordered by (Section 132(4))
132(1)(f)) both (Section 132 Commissioner of
(1) (iv) Central Tax.
If Rahim, Robert, Lakshman and Karthik are convicted for subsequent offences:
Prosecution for subsequent offences [Section 132(2) of the CGST Act,
Person 2017]
Rahim Imprisonment upto 5 years with fine
Robert Imprisonment upto 5 years with fine
Lakshman Imprisonment upto 5 years with fine
Karthik Imprisonment upto 5 years with fine

Q 6: M/s X Pvt. Ltd., issued invoice without supply of supply of goods for Rs. 20 crore. Central Tax
Authority issued a show cause notice by demanding following:
CGST & SGST 18% = Rs. 3.6 crore
Penalty 100% of Tax due = 3.6 crore
Interest 24% p.a.
You are required to Ans the following:
a) Is it cognizable offence?
b) Quantum of punishment if M/s X Pvt. Ltd., has been convicted.
Ans:
a) It is non –cognizable Offence.
b) Quantum of punishment:
Section Tax amount Quantum of Congnizable or Bailable or non-
involved punishment by non-cognizable bailable
imprisonment
132(1)(ii) >Rs. 200 lakhs Upto 3 years with Non- cognisable Bailable
≤Rs. 500 lakhs fine
Note :
1) Minimum imprisonment is 6 months unless special or adequate reasons are noticed by the
Judiciary.
2) If the assesse committed second and subsequent time then irrespective of evasion of tax,
maximum imprisonment up to 5 years.

Q 7: An assessee has been served with show cause notice (SCN) demanding CGST & SGST of Rs.
200000 each on 30th November, 2017 and the same is adjudicated against him on 12th January, 2018.
However, such adjudication order has been received by the assesee on 14th January, 2018.
Find the penalty under section 73 of the CGST Act, 2017 in the following independent cases:
a) Assessee paid tax, interest on 2nd December 2017.
b) Assessee paid tax, interest and penalty if any on 14th January, 2018.
Ans:
a) Penalty = nil
Since, tax and interest paid within 30 days from the date of issuance of show cause notice.
Note: It means we should count no. of days (i.e. 30 days) from the date of receipt of SCN.
b) Penalty = Rs. 40000 ((i.e. 400000 * 10% = Rs. 40000 or Rs. 20000(i.e. 10000 each Act.)
whichever is higher)

Q 8: An assessee has been served with show cause notice (SCN) demanding CGST & SGST of
Rs.200000 each on 20th December 2017 and the same is adjudicated against him on 12th Jan 2018
with tax, interest and penalty under section 74. However, such adjudication order has been received
by the assessee on 14th January, 2018.
Find the penalty under section 74 of the CGST Act, 2017 in the following independent cases:
a) Assessee paid tax, interest and penalty if any on 8th November 2017.
b) Assessee paid tax, interest and penalty on 2nd December 2017.
c) Assessee paid tax, interest and penalty on 2 nd Feb 2018.
d) Assessee paid tax, interest and penalty on 12th Feb 2018.

Ans:
a) Penalty = Rs.60000(Rs. 400000 * 15%)
b) Penalty = Rs.60000(i.e. same as above)
c) Penalty = Rs. 200000(Rs. 400000 * 50%)
d) Penalty = Rs. 200000(Rs. 400000* 50%)

Note: Maximum penalty = Rs. 400000 or Rs. 20000 whichever is higher

Note : in thecase of CCus &CEx.v Ashok Kumar Tiwari 2015 (37) STR 727 (ALL), 30days count
reckoned from next day of receipt but not from the date of issue of order.

Q 9: Rajul has been issued a show cause notice (SCN) on 31.12.2021 under section 73(1) of the GGST
Act, 2017 on account of short payment of tax during the period between 01.07.2017 and
31.12.2017. He has been given an opportunity of personal hearing on 15.01.2022. Advice Rajul as to
what should be the written submissions in the reply to the show cause notice issued to him.
(CA Final RTP May 2018)

Ans: The SCN has been issued for the period between 01.07.2017 to 31.12.2017 which falls in the
financial year (FY) 2017-18. Due date for furnishing annual return for the FY 2017-18 is 31.12.2018
and 3 years’ period from due date of filing annual return lapses on 31.12.2021. Thus, SCN under
section 73(1) ought to have been issued latest by 30.09.2021.
Since the notice has been issued after 30.09.2021, the entire proceeding is barred by limitation and
deemed to be concluded under section 75(10) of the CGST Act, 2017.

Assssment
Q 1: M/s Ram Ltd. manufactured and cleared goods under provisional assessment, in the month of
July, 2017, by paying tax of Rs.50000 on the 20th August, 2017 [i.e. due date of filing GSTR-3], a
further tax of Rs.90000 is paid on the 15th November, 2017, and on the same day the documents for
final assessment are submitted by the assessee. Final assessment order is issued on the 18th
November, 2017, assessing the tax payable on goods as Rs.150000, and consequently the assessee
paid a tax of Rs.10000 on the 30th November, 2017. Find the total interest payable by the assessee?

Ans: No interest shall be payable on Rs. 50000.

Interest shall be payable on Rs. 90000 from the 21 st August, 2017 to 15th November, 2017 as due
date for payment of tax of Rs. 150000 is the 20th August, 2017.
Therefore, No. of days delay= 102 days.
Rs. 90000 * 18/100 * 87/ 365= Rs. 3861
Rs. 10000* 18/100* 102/365 = Rs. 503
Total interest payable = Rs. 4364

Q 2: Kulbhushan & Sons has entered into a contract to supply two consignment of certain taxable
goods. However, since it is unable to determine the value of the goods to be supplied by it, it applies
for payment of tax on such goods on a provisional basis along with the required documents in
support of its reQt.
On 12.01.20XX,the Assistant Commissioner of Central Tax issues an order allowing payment of tax on
provisional basis indicating the value on the basis of which the assessment is allowed on provisional
basis and the amount for which the bond is to be executed and security is to be furnished.
Kulbhushan & Sons complies with the same and supplies both the consignment of goods on
25.01.20XX thereafter paying the tax on provisional basis in respect of both the consignments on
19.02.20XX.
Consequent to the final assessment order passed by the Assistant Commissioner of Central Tax on
21.03.20XX, a tax of Rs. 180000 becomes due on 1st consignment whereas a tax of Rs. 420000
becomes refundable on 2nd consignment.
Kulbhushan & Sons pays the tax due on 1st consignment on 09.04.20XX and applies for the refund of
the tax on 2nd consignment same day. Tax was actually refunded to it on 05.06.20XX.
Determine the interest payable and receivable, if any, by Kulbhushan & Sons in the above case.
(CA Final IDT RTP Nov 2018)
Ans: In the given case , due date for payment of tax on goods cleared on 25.01.20XX under
provisional assessment is 20.02.20XX.
In view of the provisions of section 60(4), in the given case, Kulbhushan & Sons is liable to pay
following interest in respect of 1st consignment:
= Rs. 180000* 18% * 48/365
= Rs. 4261 (rounded off)
Further, section 60(5) of the CGST Act, 2017 stipulates that where the tax liability as per final
assessment is less than in provisional assessment i.e. tax becomes refundable consequent to the
order of final assessment, the registered person shall be paid interest at the rate specified under
section 56 (6% p.a.) from the date immediately after the expiry of 60 days from the date of receipt of
application of refund (09.04.20XX), interest is not payable to Kulbhushan & Sons on tax refunded in
respect of 2nd consignment.
Q 3: Whether proper officer can proceed suo-moto to assess the tax liability of any person on
possession of relevant evidence?
Ans: No, the proper officer has no obtain prior permission of Additional/ Joint Commisioner to
proceed to assess the tax liability.

Q 4: Whether the summary assessment can be initiated based on mere change in opinion of proper
officer?
Ans: No, mere change in opinion cannot be treated as evidence for initiation of summary
assessment .

Q 5: Whether the summary assessment can be initiated on previously filed return (u/s 34 and u/s
40)?
Ans: Summary assessment can be initiated on any taxable person. Submission of return u/s 39 and
u/s 45 is not prerequisite.

Q 6: Is there any form prescribed for order of summary assessment?

Ans: The order of summary assessment under Section 64(1) shall be issued in FORM GST ASMT-16).

Q 7: What is the remedy available to the taxable person if the order passed u/s 64 is erroneous?
Ans: On an application made in FORM GST ASMT-17 within 30 days by taxable person from the date
of receipt of order passed summary assessment order the Additional/ Joint Commissioner may
withdraw such order and follow the procedure laid down in Section 73 or 74 which provides for
determination of tax liability on account of tax not paid other than fraud, wilful mis-statement etc.,
or otherwise. (Sub-section 2)

Q 8: Whether the Additional/ Joint Commissioner can withdraw the summary assessment order only
on application by the taxable person?

Ans: The Additional/ Joint Commissioner can, on his own motion may withdraw the summary
assessment order in the event such order is erroneous and thereafter may follow the procedure laid
down in Section 73 or 74 which provides for determination of tax liability on account of tax not paid
other than fraud, wilful misstatement etc., or otherwise.

The order of withdrawal or, rejection of the application under Section 64(2) shall be issued in FORM
GST ASMT-18.

Audit

Q 1: X Pvt. Ltd., received a notice under Section 65(3) of the CGST Act, 2017 on 15th November 2017.
Date on which documents required 1st December 2017
Date on which documents made available to 15th December 2017
the Department
Date of actual institution of audit at X Pvt. Ltd., 5th January 2018
premises
Find the following:
a) Date of commencement of audit?
b) Date by which audit should be completed in normal course?
c) Date by which audit should be completed (including extended period)?

Ans :
Particulars Date Remarks
a) Date of commencement of 5th January 2018 Date on which documents made
Audit available to the Department (i.e.
15th December 2017)
Or
Date on actual institution of audit at
the place of business (i.e. 5th January
2018),
Which ever is later

b) Date by which audit should 4th April 2018 Section 65(4) of the CGST Act, 2017
be completed in normal the audit under sub-section (1) shall
course? be completed within a period of 3
months from the date of
commencement of the audit.
c) Date by which audit should 4th October 2018 Provided that where the
be completed (including commissioner is satisfied that audit
extended period)? in respect of such registered person,
 cannot be completed within 3
months, he may, for the reasons to
be recorded in writing, extent the
period by a further period not
exceeding 6 months.

Section 65 (5) of the CGST Act, 2017 during the course of audit, the authorised officer may require
the registered person,-

1) To afford him the necessary facility to verify the books of accounts or other documents as he
may require;
2) To furnish such information as he may require and render assistance for timely completion
of the audit.
Section 65(6) of the CGST Act, 2017 on conclusion of audit, the proper officer shall, within 30
days, inform the registered person, whose records are audited, about the findings, his rights and
obligations and the reasons for such findings.

Section 65(7) of the CGST Act, 2017 where the audit conducted under sub-section (1) results in
detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly
availed or utilised, the proper officer may initiated action under section 73 or section 74.

Q 2: Assesse accounts have already been audited under Income-Tax Act, 1961 by a Chartered
Accountant, and thus, do not require any other audit under section 66 of the CGST Act, 2017.

Ans :
Section 66 of the CGST Act, 2017 provides that Commissioner may order such special audit even if
the accounts of such person have been audited under any other law for the time being in force.
Therefore, the fact that assesses accounts have been audited under Income-tax Act, 1961 will not
have any bearing on special audit ordered under Section 66 of the CGST Act, 2017.

Refund
Q 1: How soon will refund in respect of export of goods or services be granted during the GST
regime?

Ans: a) How In case of refund of tax on inputs used in exports:

• Refund of 90% will be granted provisionally within seven days of acknowledgement of
refund
application.
• Remaining 10% will be paid within a maximum period of 60 days from the date of receipt of
application complete in all respects.
• Interest @ 6% is payable if full refund is not granted within 60 days.
b) In the case of refund of IGST paid on exports:
Upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter
from the common portal, the Customs shall process the claim for refund and an amount equal to the
IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.

Q 2: M/s X Ltd. manufacture of exempted excisable goods for export. Company availed input stage
rebate (ITC on inputs) used in the manufacture of exported goods. Whether the company is eligible
for refund of ITC on inputs?
Ans: Under IGST law a person engaged in export of goods which is an exempt supply is eligible to
avail input stage credit for zero rated supplies. Once goods are exported, refund of unutilized credit
can be availed under Section 16(3)(a) of IGST Act, 2017 and Section 54 of the CGST Act, 2017 and the
rules made there under.

Q 3: what do you mean refund under section 54 of CGST Act, 2017?

Ans: As per explanation to section 54 of the CGST Act 2017 refund includes refund of tax paid on
zero- rated supplies of goods or services or both
OR on inputs or input services used in making such zero-rated supplies, or refund of tax on the
supply of goods regarded as deemed exports, or refund of unutilized input tax credit as provided
under section 54(3) of the CGST Act, 2017.

Q 4: Under what circumstances it may be beneficial to claim refund of un-utilised credit when exports
of goods or services are made without payment of tax. [Section 54(3) of the CGST Act, 2017]
Ans: If assessee has negligible balance of tax in Capital Goods Input Tax Credit Account, and more
credit in inputs and input services it is advisable to claim refund of un-utilised credit when exports of
goods or services are made without payment of tax (Section 54(3) of the CGST Act, 2017.

Q 5: Under what circumstances it may be beneficial to pay IGST on export of goods and claim rebate
(i.e. Refund) under rule 96 of the CGST Rules, 2017.

Ans: If assessee has balance of tax in Capital Goods Input Tax Credit Account, it is advisable to pay
duty (i.e. IGST) on export and claim refund, as balance in Capital Goods Input Tax Credit Account is
never refundable.

Q 6: How to excute Bond required for exporting without payment of IGST?

Ans: Following are the instructions on how to execute Bond required for exporting without payment
of IGST.
Step 1: Bond has to be executed when your turnover in the previous year is less than Rs.
1,00,00,000/- (now please refer master circular CBIC Circular No. 8/8 /2017-GST, dated 4th
October, 2017 with regard to export given above).
Step 2: Bond of amount equivalent to the tax liability (usually annual liability) has to be executed on
non- judicial stamp paper in the favour of President of India, through the concerned Assistant
Commissioner.
Step 3: In the bond, exporter has to mention the Bank Guarantee amount which is equivalent to 15%
of the bond value (or lesser if allowed by Assistant Commissioner).
Step 4: Stamp Paper for Bond can be of value Rs.500/- or more (or as prescribed by concerned
Assistant Commissioner). Stamp paper should be purchased from your own State (same jurisdiction)
i.e. where the concerned Range Office is located. It should be purchased in the name of exporter
(with address).
Bond-Language does not fit well on single page, so you have to use second page. Second page can be
any blank page to print the extra content.
Step 5: Exporter has to self-sign the bond on first page as well as on second page. Second page has
to be signed by two witnesses. Then, Bond has to be attested by a Notary.
Step 6: Exporter has to submit self-signed copy of own ID-Proof (Like Aadhar Card). You also have to
submit the copies of ID-Proofs (Like Aadhar Card) of witnesses, which has to be self-signed by him.

Q 7: X Ltd., a unit in SEZ, received services from various service providers in relation to authorized
operations in SEZ during the month July, 2017. The following details are furnished for the month
July, 2017:
i) Value of Taxable services used exclusively for authorised operations within SEZ: Rs.500000
(exemption from GST availed).
ii) Value of Taxable Services used by SEZ units and DTA units: Rs.800000. GST paid @ 18%.
iii) Value of Taxable Service used wholly for DTA units: Rs.300000. GST paid @ 18%.
iv) Export Turnover of SEZ Unit: Rs.10000000
v) Turnover of DTA Unit: Rs. 6000000
Compute the ITC and amount of refund if any?
Note: All input services used by SEZ for its authorised operations only.

Ans 7: Statement showing ITC & refund of X Ltd. (a unit of SEZ)

S.No. Particulars Value of ITC Rs. Refund Remarks
input Amount Rs.
services Rs.
1 Input services 500000 Nil Since, no tax Input seused
paid on exclusively
inputs no for
refund is authorised
allowed operations
2 DTA as well as Zero 800000 54000 90000 (Rs. 8L*
rated supply 18%)*
100L/160L
3 Input services only 300000 54000 Nil 300000 * 18%
for DTA
4 Total 108000 90000

Q 8: Super Engineering Works, a registered supplier in Haryana, is engaged in supply of taxable

goods within the State. Given below are the details of the turnover and applicable GST rates of the
final products manufactured by Super Engineering Works as also the input tax credit (ITC) availed on
inputs used in manufacture of each of the final products and GST rates applicable on the same,
during a tax period:

Products Turnover*(Rs.) Output GST ITC availed (Rs.) Input GST Rates
Rates
A 500000 5% 54000 18%
B 350000 5% 54000 18%
C 100000 18% 10000 18%
*excluding GST
Determine the maximum amount of refund of the unutilized input tax credit that Super Engineering
Works is eligible to claim under section 54(3)(ii) of the CGST Act, 2017 provided that Product B is
notified as a product, in respect of which no refund of unutilised input tax credit shall be allowed
under said section.
Ans:

Turnover of Tax payable

Maximum inverted rated on such
Amount of supply of Net ITC inverted
Refund= goods
* -
 Adjusted total rated supply
turnover of goods
Maximum amount of Refund = Rs. 37105/-
((500000/950000)* 118000)- 25000.

Circular No. 37/11/2018 GST dated 15.03.2018 has clarified that the exporter receiving goods at
concessional rate of tax @ 0.1% (0.05% CGST + 0.05% SGST & 0.1% IGST) will be eligible to take
credit of the concessional tax so paid by him. The supplier who supplies goods at the concessional
rate will be eligible for refund on account of inverted tax structure as per the provisions of section
54(3)(ii) of the CGST Act. However, it may be noted that the exporter of such goods can export the
goods only under LUT / bond and cannot export on payment of integrated tax.

Demand & Adjudication

Q 1: Whether, The CGST Act, 2017 provides for assessment in case of registered taxable person who
does not furnish returns under Section 39 and 45?
Ans: In terms of Section 62(1) of the CGST Act, 2017, the proper officer is empowered to assess the
tax liability on such registered taxable person to the best of his judgment taking into account all the
relevant materials which is available, or which is gathered and issue an assessment order in FORM
GST ASMT-13 within a period of five years from the date specified under Section 44 for furnishing of
the annual return for the financial year to which the tax not paid relates. (Section 62(1) read with
Rule 100 (1) of the CGST Rules)

Q 2. Is there any additional opportunity provided for taxable person to submit a return even after
passing an assessment order under Sec 62(1)?
Ans: Yes, if the registered person furnishes a valid return within thirty days from the date of service
of best judgment assessment order under Section 62 (1), the said assessment order shall be deemed
to have been withdrawn. (Sub-section 2)

Q 3: Whether the registered person will get immunity from interest & late fee leviable if assessment
order passed under Section 60(1) is withdrawn?
Ans: No, registered person will still be liable for interest under section 50(1) and late fee under
Section 47 of CGST Act. (Sub-section 2)

Q 4: Whether, The CGST Act, 2017 provides for assessment of taxes on the unregistered taxable person
who fails to take registration even though liable to do so? What will be the procedure of such
assessment?

Ans: If a taxable person fails to obtain registration even though liable to do so or whose registration
has been cancelled under section 29(2) but who was liable to pay tax, the proper officer may assess
the tax liability to the best of his judgement after providing opportunity of being heard to such
person.
The proper officer shall issue a notice to a taxable person in FORM GST ASMT-14 containing the
grounds on which the assessment is proposed to be made on best judgment basis.
The registered person will be allowed a time of fifteen days to furnish his reply.

Q 5: What is the Time limit for passing the assessment order on the unregistered person?

Ans: The proper officer, in relation to assessment of taxes on the unregistered taxable person, shall
issue the assessment order in FORM GST ASMT-15 within 5 years from the date specified under
Section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

Appeals & Revisions under GST

Q 1: X Ltd. received a protective demand notice from the department Assistant Commissioner of
Central Tax on 1.9.2017 under Section 73 of the CGST Act, 2017 where
Rs.
CGST & SGST due =500000
Interest =@ 15% p.a. for no. of days delay.
Penalty =10% of tax due or Rs. 10000 whichever is
higher

The assessee went for appeal and filed the case in the Appellate Authority on 25.9.2017. this appeal
has been taken up for hearing on 06-10-2017.

Case 1: How much has to pay as pre-deposit of duty under section 107(6) of the CGST Act, 2017 and
date of pre-deposit of duty by X Ltd. to entertain appeal by the Appellate Authority (i.e.
Commissioner (Appeals)).

Case 2: Whether your Ans is different if the assessee appeals only part of the amount say Rs. 300000
is in dispute arising from the said order.

Ans:
Case 1: Pre-deposit is Rs. 50000 (500000 * 10%) is to deposit on or before 6th October 2017.
Case2: Disputed amount Rs. 300000:

Pre-deposit is Rs. 200000 plus Rs. 60000 (Rs.300000* 20%) together is Rs. 260000, it is inaddition to
pre-deposite of Rs. 30000.

Q 2: Considered the Q 1 where Appellate Authority passed the order against the assessee, if so how
has to pay as pre-deposit of duty under section 112(8) of the CGST Act, 2017 to entertain appeal by
the Goods and services Tax Appellate Tribunal (GSTAT).

Ans :
Pre-deposit is Rs.100000 (500000 * 20%) it is inaddition to pre-deposit of Rs. 50000.
Case 2: Disputed amount Rs.300000:
Pre-deposit is Rs. 200000 plus Rs. 60000 (Rs.300000 * 20%) together is Rs. 260000, it is inaddition to
pre-deposit of Rs. 30000.

Q 3: In an order dated 30.08.2017 issued to M/s. Ram & Sons, the commissioner of Central Tax (i.e.
Revisionary Authority) has confirmed a tax demand of Rs.5050000 and imposed a penalty of equal
amount under CGST Act, 2017.
M/s Ram & Sons deposits the required amount of pre-deposit on 10.09.2017 and files an appeal with
GSTAT. GSTAT decides the appeal in favour of M/s. Ram & Sons on 10.11.2017. M/s Ram & Sons
submits a letter seeking refund of the pre deposit on 30.11.2017 and the department acknowledge
the application on the same day. The pre- deposit is refunded to M/s Ram & Sons on 15.03.2018.
Compute the amount of interest payable on refund of such pre-deposit, if any under section 115 of
the CGST Act, 2017.
Ans: Interest = Rs. 46322/- (As per Section 115 of the CGST Act, 2017)
(Rs. 5050000 * 20%) * 9/100 * 186/365

Month No. of day delay

Sep 2017 21
Oct 2017 31
Nov 2017 30
Dec 2017 31
Jan 2018 31
Feb 2018 28
Mar 2018 14
Total 186
Note :
1) Refund granted on 15.03.2018, hence no interest is to be paid on the day on which refund is
paid.
2) Interest of Rs. 46322/- has to pay as per respective SGST Act in addition to CGST.

Advance Ruling
Q 1: Obama, a non-resident intents to supply taxable services under a joint venture in collaboration
with a non-resident, but has entertained some doubts about its valuation.
Rafi, Obama’s friend, has obtained an ‘Advance Ruling’ from the Authority for Advance Rulings on an
identical point. Obama proposes to follow the same ruling in his case. Obama has sought your advise
as his consultant whether he could follow the ruling given in the case of Rafi. Explain with reasons.
(CA Final RTP May 2015 modified)

Ans: An advance ruling is binding only on the applicant who has sought it. In the given problem, in
view of the aforesaid provision, Obama cannot make use of the advance ruling pronounced in the
identical case of his friend, Rafi. Obama should obtain a ruling from the Authority of Advance Ruling
by making an application along with a fee of Rs. 5000.

Q 2: Mr. R owns a sole proprietorship firm, ‘Safe and Super Importers’. Mr. R has never been to any
place outside India. The firm proposes to purchase a product. Mr. R is not sure of the correct
classification of the product under GST. His Tax Consultant has informed him that the said
classification issue has been decided by the GSTAT in a different case. However, Mr. R does not want
to take any chances and is desirous of obtaining a ruling from the Authority for Advance Ruling
under GST Law with respect to the classification of the product to be purchased by it.

Ans: A resident firm can also apply for AAR. The sole proprietorship will have to satisfy the test of
residency as per section 2(42) of the Income Tax Act, 1961 to be eligible to apply for an advance
ruling.
Therefore, Safe and Super Importers, being a resident proprietorship firm, is an eligible applicant for
advance ruling.
Since in the given case, Qtion intented to be raised by Safe and Super Importersis already decided by
the GSTAT, advance cannot be sought by it.

Q 3: Ranjan intends to start selling certain goods in Delhi. However, he is not able to determine
1) The classification of the goods proposed to be supplied by him (as the classification of said
goods has been contentious) and 2) the place of supply if he supplies said goods from Delhi
to buyers in U.S.
Ranjan’ stax advisor has advised him to apply for the advance ruling in respect of these issues. He
told Ranjan that the advance ruling would bring him certainty and transparency in respect of the said
issues and would avoid litigation later. Ranjan agreed with his view but has some apprehensions.

In view of the information given above, you are required to advise Ranjan with respect to following:
i) The tax advisor asks Ranjan to get registered under GST law before applying for the
advance ruling as only a registered person can apply for the same. Whether Ranjan needs
to get registered?

ii) Can Ranjan seek advance ruling to determine a) the classification of the goods proposed to
be supplied by him and (b) the place of supply, if he supplies said goods from Delhi to
buyers in U.S.
iii) Ranjan is apprehensive that if at all advance ruling is permitted to be sought, he has to seek
it every year. Whether Ranjan’s apprehension is correct?
iv) The tax advisor is of the view that the order of Authority for Advance Ruling (AAR) is final
and is not appealable. Whether tax advisor’s view is correct?
v) Sambhav – Ranjan’s friend – is a supplier registered in Delhi. He is engaged in supply of the
goods, which Ranjan proposes to supply at the same commercial level that Ranjan
proposes to adopt. He intends to apply the classification of the goods as decided in the
advance ruling order to be obtained by Ranjan, to be goods supplied by him in Delhi.
Whether Sambhav can do so?
(CA Final RTP May 2018)
Ans:
i) Advance ruling under GST can be sought by a registered person or a person desirous of
obtaining registration under GST law (Section 95(c) of the CGST Act, 2017). Therefore it
is not mandatory for a person seeking advance ruling to be registered.
ii) Section 97(2) of the CGST Act, 2017 stipulates the Qtions/matters on which advance ruling
can be sought. It provides that advance ruling can be sought for, inter alia, determining
the classification of any goods or services or both. Therefore, Ranjan can seek the
advance ruling for determining the classification of the goods proposed to be supplied
by him.
Determination of place of supply is not one of the specified Qtions/matters on which
advance ruling can be sought under section 97(2). Further, section 96 of the CGST Act,
2017 provides that AAR constituded under the provisions of an SGST Act/UTGST Act shall
be shall be deemed to be the AAR in respect of that State/Union territory under CGST
Act also.
iii) Section 103(2) of the CGST Act, 2017 stipulates that the advance ruling shall be binding
unless the law, facts or circumstances supporting the original advance ruling have
changed. Therefore, once Ranjan has sought the advance ruling with respect to an
eligible matter/Qtion, it will be binding till the time the law, facts and circumstances
supporting the original advance ruling remain same.
iv) No, the law advisor’s view is not correct. As per section 100 of the CGST Act, 2017, if the
applicant is aggrieved with the finding of the AAR, he can file an appeal with Appellate
Authority for Advance Ruling (AAAR). Similarly, if the concerned/jurisdictional officer of
CGST/SGST does not agree with the findings of AAR, he can also file an appeal with
AAAR.
v) Section 103 of the CGST Act provides that an advance ruling pronounced by AAR is binding
only on the applicant who had sought it and on the concerned officer or the
jurisdictional officer in respect of the applicant. This implies that an advance ruling is not
applicable to similarly placed other taxable persons in the State. If is only limited to the
person who has applied for an advance ruling.
Thus ,Sambhav will not be able to apply the classification of the goods that will be
 decided in the advance ruling order to be obtained by Ranjan, to be goods supplied by
him in Delhi.

Others
Q 1: M/s X Ltd. being a dealer in new car solda Petrol Car on which applicable GST rate is 28%
and GST Cess rate is 1%. Transaction value is Rs. 500000. Find the GST Liability?

Ans:
Rs.
Transaction value 500000
CGST 14 % 70000 (i.e. Rs. 500000 * 14%)
SGST 14% 70000 (i.e. Rs. 500000 * 14%)
Cess 1% 5000 (i.e. Rs. 500000 * 1%)
Invoice price of the car 645000

Q 2: Can input credit be availed on Cess paid on inward supply of these goods?

Ans: Yes, input credit can be availed on Cess paid on inward supplies. However, credit of cess
paid can be utilized only towards payment of Cess liability.