INDIRECT TAXATION

GST (Section – A)
PART - I
(All questions are compulsory in Part – I)

1(a) Choose the correct option from among the four alternatives given: 1*5= 5

(i) Levy of indirect tax on goods and services may lead to

a. Inflation

b. Deflation

c. Reflection

d. None of the above

ANSWER: a. Inflation

(ii) Who is empowered to make law for matters containing in List I of Schedule VII of the Constitution
of India

a. State Government

b. Central Government

c. Both Central and State Government

d. None of the above

ANSWER: b. Central Government

(iii) The transaction value for computation of value of supply can be rejected if

a. The buyer and seller are related and price is not the sole consideration

b. Products are sold at very low margins

c. Maximum retail price is greater than the transaction value

d. All of the above

ANSWER: a. The buyer and seller are related and price is not the sole consideration

(iv) Gifts not exceeding ________ in value in a financial year by an employer to an employee shall
not be treated as supply of goods or services or both.

a. Rs. 30,000

b. Rs. 25,000

c. Rs.50,000

d. None of the above

ANSWER: c. Rs. 50,000

(v) GSTN is:

a. 51% government owned company with paid up capital of Rs.10 crore

b. 50% government owned company with paid up capital of Rs.10 crore

c. 100% government owned company with paid up capital of Rs. 10 crores

d. None of these

ANSWER: c. 100% government owned company with paid up capital of Rs. 10 crores

(b) Match the following: 1 * 5 = 5

COLUMN A COLUMN B
1. Progressive nature A. Tax on tax
2. Export of goods B. Barter
3. GST Council C. Direct tax
4. Cascading effect D. Zero rated supply
5. Supply E. 279A

ANSWER:
COLUMN A COLUMN B
1. Progressive nature C. Direct Tax
2. Export of goods D. Zero rated supply
3. GST Council E. 279A
4. Cascading effect A. Tax on tax
5. Supply B. Barter

(c) State whether the following statements are True or False: 1 * 5 = 5

(i) Union Finance Minister is the chairperson of the GST Council (ANSWER: True)

(ii) A manufacturer of building bricks cannot opt for composition scheme. (ANSWER: True)

(iii) A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated
drinks and fruit juices when supplied for a single price is a composite supply. (ANSWER: False)

(iv) Services provided to the Reserve Bank of India is exempt. (ANSWER: False)
(v) Imposition of tax on tax was serious problem in the pre-GST regime (ANSWER: True)

(d) Fill in the blanks: 1 * 5 = 5

(i) Tax, of which incidence and impact fall on two different persons, is known as _______

(ii) A shopkeeper selling storage water bottles along with refrigerator, is an example of _______

Supply.

(iii) Any taxes, duties, cesses, fees and charges levied under any law excluding _______, if charged
separately by the supplier shall form part of the value of supply.

(iv) Services by way of loading, unloading, packing, storage or warehousing of _______ is exempt
supply.

(v) No input tax credit shall be availed by a registered person in respect of invoices, etc. the details of
which are not available in Form GSTR _______

ANSWER:

(i) Indirect
(ii) Mixed
(iii) GST
(iv) Rice
(v) 2B

Part – II

(Answer any four questions in Part – II)

2. (a) What are the benefits of being registered under GST? (8)

A. For business and industry (any three points)

Easy compliance: A robust and comprehensive system would be the foundation of the GST regime
in India. Therefore. all tax-paver services such as registrations. returns. payments. etc. would be
available to the tax pavers online. which would make compliance easy and transparent.
Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures are
common across the country, thereby increasing certainty and ease of doing business. In other words,
GST would make doing business in the country tax neutral, irrespective of the choice of place of
doing business.
Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across
boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce
hidden costs of doing business.
Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to
an improved competitiveness for the trade and industry.
Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST,
complete and comprehensive set-off of input goods and services and phasing out of Central Sales
Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the
competitiveness of Indian goods and services in the international market and give boost to Indian
exports. The uniformity in tax rates and procedures across the country will also go a long way in
reducing the compliance cost.

B. For central and state Governments (any three points)

Simple and easy to administer: Multiple indirect taxes at the central and state levels are being
replaced by GST. Backed with a robust end-to-end IT system, GST would be simpler and easier to
administer than all other indirect taxes of the Centre and State levied so far.
Better controls on leakage: GST will result in better tax compliance due to a robust Il infrastructure
Due to the seamless transfer of input tax credit from one stage to another in the chain of value
addition, there is an inbuilt mechanism in the design of GST that would incentivize tax compliance by
traders.
Higher revenue efficiency: GST is expected to decrease the cost of collection of tax revenues of the
Government, and will therefore, lead to higher revenue efficiency.
Boost to 'Make in India' initiative: GST will give major boost to the 'Make in India' initiative of
government of India by making goods and services produced in India competitive in the national as
well as international market.

C. For the consumer (both points)

Single and transparent tax proportionate to the value of goods and services: Due to multiple indirect
taxes being levied by the Centre and State, with incomplete or no input tax credits available at
progressive stages of value addition, the cost of most goods and services in the country today are
laden with many hidden taxes. Under GST, there would be only one tax from the manufacturer to
the consumer, leading to transparency of taxes paid to the final consumer.
Relief in overall tax burden: Because or efficiency gains and prevention of leakages. the overall tax
burden on most commodities will come down, which will benefit consumers.

(b) Mr. Dev a famous cricketer furnishes you with the following information of the various
receipts for the month ended 30-09-2022. You are required to compute value of taxable supply: (4)

S.N Particulars Rs.

.
(1) Receipts from Sports Authority of India for participation in recognised sport 50 lakhs
(2) Receipts from franchisee of Indian Premier league (not a recognised sports body) 75 lakhs
(3) Receipts from acting as brand ambassador for corporate client 22 lakhs
(4) Receipts of sports training academy to coach young players 15 lakhs

ANSWER:

S.N Particulars Rs.

.
(1) Receipts from Sports Authority of India for participation in recognised sport Exempt
(2) Receipts from franchisee of Indian Premier league (not a recognised sports body) 75 lakhs
(3) Receipts from acting as brand ambassador for corporate client 22 lakhs
(4) Receipts of sports training academy to coach young players Exempt
Value of taxable supply 97 lakhs
 (c) Does the GST Law empower the Government to exempt supplies from the levy of GST? (3)

ANSWER:

Yes. 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. It has also
been provided in the SGST Act and UTGST Act that any exemption granted under CGST Act shall be
deemed to be exemption under the said Act.

3. (a) Mr. Ram is a travel agent. The following particulars are furnished by him. (4)

Particulars Basic Fare Other charges and fee Taxes Total ticket value

Domestic bookings Rs. 1,00,000 Rs. 5,000 Rs. 4,000 Rs. 1,09,000
International bookings Rs. 3,00,000 Rs. 20,000 Rs. 15,000 Rs. 3,35,000

ANSWER:

Computation of taxable value:

Particulars Basic Fare Prescribed Value of supply

%
For Domestic Booking 1,00,000 5% 5,000
For International Booking 3,00,000 10% 30,000
Total 35,000

(b) Following are the particulars, relating to one of the machines sold by S Ltd. to A Ltd. in the
month of February 2023 at list price of Rs. 8,50,000 (exclusive of taxes and discount) Further,
following additional amounts have been charged from ACD Ltd:

Sl.No Particulars Rs.

.
(i) Municipal taxes chargeable on the machine 55,000
(ii) Outward freight charges (Contract was to deliver machine at A Ltd.'s factory i.e., 75,000
F.O.R. contract)

Additional information:

a.S Ltd. normally gives an interest-free credit period of 30 days for payment, after that it charges
interest a 1% p.m. or part thereof on list price. A Ltd. paid for the supply after 45 days, but S Ltd.
waived the interest payable.
b.S Ltd. received & 50,000 as subsidy, from one non-government organization (NGO) on sale of such
machine. This subsidy was not linked to the price of machine and also not considered in list price of
& 8,50,000.

c. A Ltd. deducted discount of § 15,000 at the time of final payment, which was not as per
agreement.

d. S Ltd. collected & 8,500 as TCS (tax collected at source) under the provisions of the Income Tax
Act, 1961.

Compute the value of taxable supply as per the provision of GST laws, considering that the price is
the sole consideration for the supply and both parties are unrelated to each other. (8)

ANSWER:

Computation of taxable value of supply:

Particulars Rs.
List Price (exclusive of tax and discount) 8,50,000
Municipal taxes chargeable on the machine [Only GST is required to be excluded] 55,000
Outward freight charges (Contract was to deliver machine at A Ltd.'s factory i.e., F.O.R. 75,000
contract)
Interest on delayed payment as the same is waived by S Ltd. -
Receipt of subsidy from NGO [as it is not directly linked with the machine] -
Discount [as it is post supply discount] -
TCS [as it is an interim levy not having the characteristics of tax] -
Taxable value of supply 9,80,000

3.(c) What is the time of supply of goods in case of tax payable under reverse charge? (3)

ANSWER:

The time of supply will be the earliest of the following dates:

a) date of receipt of goods; or

b) date on which payment is made; or

c) the date immediately following 30 days from the date of issue of invoice by the supplier.

Where it is not possible to determine the time of supply under the above three clauses, the time of
supply shall be the date of entry in the books of account of the recipient of supply.

4.(a) Ms. Sonam, a registered supplier in Mumbai has provided the following details in respect of her
supplies made Intra-State for the month of March 2023:

Particulars Rs.
List price of goods supplied intra-state (without considering following items) 3,30,000
Packing expenses charged separately in the invoice 10,800
 Discount of 1% on list price of goods was provided (recorded in the invoice of goods)

Compute the value of taxable supply. (5)

ANSWER:

Computation of value of taxable supply:

Particulars Rs.
List price of goods supplied intra-state 3,30,000
Packing expenses charged separately in the invoice 10,800
Discount of 1% on list price of goods was provided (recorded in the invoice of goods) (3,300)
Value of taxable supply 3,37,500

(b) When does the liability to pay GST arise in respect of supply of services? (4)

ANSWER:

Section 13 of the CGST/SGST Act provides for time of supply of services. The time of supply of
services shall be the earlier of the following namely,

a.the date of issue of invoice by the supplier if the invoice is issued within the period prescribed
under section 31 or the date of receipt of payment whichever is earlier; or

b. the date of provision of service, if the invoice is not issued within the period prescribed under
section 31 or the date of receipt of payment whichever is earlier.

c. the date on which the recipient shows the receipt of services in his books of account, in case
where the provisions of clause (a) and (b) do not apply.

(c) State Government authorize a lottery whose particulars are as under

a. Face value per ticket: § 1000,

b. The price as notified by official gazette: & 600.

Compute value of supply.

Further, how shall your answer differ if the price mentioned in (b) is & 1,050 instead of & 600. (6)

ANSWER:

Higher of the following shall be considered as value of supply:

Particulars When notified price is When notified price is

Rs. 600 Rs.1,050
100/128 of face value of ticket i.e., Rs. 1,000 781.25 781.25
* 100/128
100/128 of notified price i.e., 468.75 820.31
- Rs. 600 * 100/128
- Rs. 1,050 * 100/128
 Value of supply (being higher of the above) 781.25 820.31

5.(a) Compute the taxable value of supply of service of A Ltd. for the month of June 2022 from the
following information: (8)

S.N. Particulars Rs.

(1) Entry fees received for cultural programme organised in open theatre where 5,00,000
the ticket price is Rs. 200
(2) Receipts on account of stand-alone ride in a mall 2,00,000
(3) Receipts of video parlours for exhibiting movies 2,00,000
(4) Auxiliary services provided in capacity of an event manager for organising an 15,00,000
event
(5) Receipts from running Natraj Circus 8,00,000
(6) Receipts on account of admission to award function where the consideration 5,00,000
for admission is Rs. 400 per person
(7) Receipts on account of admission to musical performance where the 10,00,000
consideration for admission is Rs.1,000 per person
(8) Receipts on account of admission to recognised sporting event where the 10,00,000
consideration for admission is Rs.1,000 per person.
(9) Receipts on account of admission to non - recognised sporting event where the 10,00,000
consideration for admission is Rs. 1,000 per person
(10) Receipts of amusement park 15,00,000

ANSWER:

Computation of value of taxable supply:

S.N. Particulars Rs.

(1) Entry fees received for cultural programme organised in open theatre [Entry Exempt
8]
(2) Receipts on account of stand-alone ride in a mall 2,00,000
(3) Receipts of video parlours for exhibiting movies 2,00,000
(4) Auxiliary services provided in capacity of an event manager for organising an 15,00,000
event
(5) Receipts from running Natraj Circus Exempt
(6) Receipts on account of admission to award function where the consideration Exempt
for admission is Rs. 400 per person
(7) Receipts on account of admission to musical performance where the 10,00,000
consideration for admission is Rs.1,000 per person
(8) Receipts on account of admission to recognised sporting event where the 10,00,000
consideration for admission is Rs.1,000 per person.
(9) Receipts on account of admission to non - recognised sporting event where 10,00,000
the consideration for admission is Rs. 1,000 per person
(10) Receipts of amusement park 15,00,000
Value of taxable supply 64,00,000
5.(b) On the basis of following information, you are requested to compute value of taxable supply
and GST: (7)

Particulars Rs.
a) Advertisement through hoardings 1,00,000
b Performances as folk-dance artist 80,000
)
c) Hotel room @ Rs. 2,500/- per room 1,50,000
d Rent received for residential dwelling use as residence per month 20,000
)
e) Received from outdoor catering service 1,50,000
f) Received by a professional training centre 1,80,000
g) Received from service by way of transportation of passengers by inland waterways 50,000
Assuming GST @ 18% i.e., CGST - 9% & SGST – 9%

ANSWER:

Particulars Rs.
a) Advertisement through hoardings 1,00,000
b) Performances as folk-dance artist [Exempt as per entry 78] Exempt
c) Hotel room @ Rs. 2,500/- per room 1,50,000
d) Rent received for residential dwelling use as residence per month Exempt
e) Received from outdoor catering service [Exempt as per entry 12] 1,50,000
f) Received by a professional training centre 1,80,000
g) Received from service by way of transportation of passengers by inland waterways Exempt
[Exempt as per entry 17]
Value of taxable supply 5,80,000
Tax on above
- CGST [ Rs. 5,80,000 * 9%] 52,200
- SGST [ Rs. 5,80,000 * 9%] 52,200

6.(a) List down the restrictions on the supplier of services opting for composition scheme [Sec.
10(2A). (5)

ANSWER:

Restriction on the supplier of services opting for composition scheme [Sec. 10(2A)]

The registered person, being supplier of services, are eligible to composition scheme if:

a. he is not engaged in making any supply of goods or services which are not leviable to tax under
this Act;

b. he is not engaged in making any inter-State outward supplies of goods or services;

C. he is not engaged in making any supply of goods or services through an electronic commerce
operator who is required to collect tax at source u/s 52;

d. he is not a manufacturer of notified goods" or supplier of notified services; and

e. he is not a casual taxable person or a non-resident taxable person

6.(b) Mr. Kedar provides consultancy services to Mr. Nath worth & 50,000.

08.04.2022 An advance of Rs. 10,000 is received from Mr. Nath

10.04.2022 The consultancy services are provided
16.05.2022 Mr. Kedar receives balance payment of Rs. 40,000 and records it in his books.

What will be the time of supply assuming Mr. Kedar issues the invoice on:

Situation 1 - 15.04.2022

Situation 2 - 15.05.2022 (5)

ANSWER:

Situation 1

In the given case,

Date of issue of invoice (which is within 30 days of the supply of 15.04.2022

service)
Date of payment
- Rs. 10,000 08.04.2022
- Rs. 40,000 16.05.2022

If the invoice is issued within the prescribed time period, the time of supply will be the date of
receipt of payment or date of issue of invoice whichever is earlier. Hence, for & 10,000, the time of
supply will be 08.04.2022 which is the date of receipt of advance payment. For the balance amount,
the time of supply will be 15.04.2022 which is earlier of 15.04.2022 (date of invoice) and 16.05.2022
(date of receipt of payment).

Situation 2

If invoice is not issued within the prescribed time period, the time of supply will be the earlier of the
date of completion of service and the date of receipt of payment. Here, invoice is issued on
15.05.2022 which is after the prescribed time period. So, for © 10,000, the time of supply will be
08.04.2022 which is the date of receipt of advance payment. For the balance amount, the time of
supply will be 10.04.2022 which is earlier of 10.04.2022 (date of completion of service) and
16.05.2022 (date of receipt of payment).

6.(c) Mr. Viswa enters into a contract for supply of goods worth Rs. 10, 00,000 with Mr. Nath on 10th
April 2022. Such goods are removed with an invoice dated 12th April 2022 on 13th April 2022 for
delivery to Mr. Nath. The terms of the contract demanded the payment against such supply to be
made within 60 days beyond which a late payment charge of Rs. 20,000 will have to be paid by Mr.
Nath. Mr. Nath makes the payment of Rs.10,00,000 along with the late payment charges on 15th
July 2022. What will be the time of supply in respect of the entire amount? (5)

ANSWER:
In sec. 12(2), the time of supply in respect of & 10, 00,000 will be the date of issuance of invoice or
last date of issuance of invoice. Last date of issuance of invoice will be the date of removal where
supply involves movement of goods.

- Date of issuance of invoice: 12th April 2022

- Last date of issuance of invoice: 13th April 2022 (date of removal)
- The date of payment is immaterial as per Notification no. 66/2017-CT dated 15th
November 2017.

So, the time of supply will be 12th April, 2022 in respect of & 10, 00,000.

However, in respect of the time of supply for the amount of & 20,000 paid as late payment charges,
time of supply as per sec. 12(6) has been stated to be the date on which the supplier receives the
addition in value. Here, the additional amount of & 10,000 is received on 15th July 2022. Hence, the
time of supply for this amount will also arise on 15th July 2022.

7. You are required to write short notes on any three out of four sub questions: (3 * 5 = 15)

a. Features of indirect tax.

b. Inter-state supply

c. Disadvantages of composition scheme

d. Pure agent

ANSWER:

a. Features of indirect tax:

- Incidence and impact fall on two different persons
- Tax is recovered from the assessee, who passes such burden to another person. Thus, it
does not pinch the taxpayer.
- Levied on goods and services. Thus, this type of tax leads to inflation and have wider base.
- E.g., GST, Customs Duty, etc.
- Regressive in nature i.e., all persons will bear equal wrath of tax on goods or service
consumed by them irrespective of their ability.
- Useful tool to promote social welfare by checking the consumption of harmful goods or sin
goods through higher rate of tax.

b. Inter-state supply
i. Supply of goods from one state or union territory to other state or union territory.
ii. Supply of service from one state or union territory to other state or union territory.
iii. Import of goods till they cross customs frontier.
iv. Import of service.
v. Export of goods or service.
vi. Supply of goods/services to/by SEZ.
vii. Any other supply in the taxable territory which is not intra state supply.
c. Disadvantages of composition scheme

The disadvantages of registering under GST composition scheme are as under:

- A limited territory of business. The dealer is barred from carrying out inter-state
transactions
- No Input Tax Credit available to composition dealers
- The taxpayer will not be eligible to supply non-taxable goods under GST such as alcohol and
goods through an e-commerce portal.
- No ITC to the buyer of goods from the supplier under composition scheme, which will lead
to increase in cost.

d.Pure agent

"Pure agent" means a person who-a.

enters into a contractual agreement with the recipient of supply to act as his pure agent to incur
expenditure or costs in the course of supply of goods or services or both;

b. neither intends to hold nor holds any title to the goods or services or both so procured or supplied
as pure agent of the recipient of supply;

C. does not use for his own interest such goods or services so procured; and

d. receives only the actual amount incurred to procure such goods or services in addition to the
amount received for supply he provides on his own account.