DEPARTMENT OF MANAGEMENT

School of management & business studies

JAMIA HAMDARD

Open Book Semester End Examination May 2020

BBA [IV-SEM]

Subject Name: Goods and Service Tax MM: 75

Subject Code: BBA-E-02 Time: 05 Hour
Name : Harsh Malhotra class
: BBA 4th Semester 2nd year
Section : A
Enrolment : 2018-334-049

Q1: (a) What was the need to bring GST in India? What are the taxes which have been subsumed
in GST?

(b) How much actual GST the trader will paid under GST Regime? Explain with example. (If the
rate of GST is 18%.)

ANSWER :

(a) There are various taxes that must be paid at each stage and differently collected by the state
and the central government, and the rates differ from one state to another. If we talk about
GST, it will unify the whole nation and the taxes will be divided between the central and
state government, which will make it easier to provide services and goods across the
country, as no further state taxes will be imposed.

Why is GST needed in India?

The imposition of various taxes on goods and services can result in high costs and an
inefficient tax structure that may be subject to information on income and shirking. The
need for GST in the Indian tax system will add value at each stage and determine rates at
both the state and central levels. The introduction of GST will increase the efficiency of
taxation, improve economic growth and bring the whole nation into a national market.

What happens in the current scenario? Our current tax system is very complex and very
confusing, there is the possibility of corruption, which leads to distrust of the government,
there are hidden taxes for exports, while no tax applicable to the import of goods / services
from one state to another.
 Just to overcome these problems, Rajya Sabha has introduced the GST bill, which will bring
transparency to taxation and that consumers will be able to know the amount of taxes they
are paying to the government for the sale / purchase / production.

following are some of the points that can easily explain the need for GST: -

The tax structure will be simple: - At the moment, there are a huge number of taxes that
consumers have to pay, with GST it will be a single tax to pay, which is much easier to
understand. For businesses, accounting complexities will reduce and translate into less
paperwork, resulting in savings in time and money. GST will increase economic GDP by 2%
-2.5%.

Tax revenues will increase: a simple tax structure will bring more taxpayers and in return
they will be revenue for the government.

Competitive prices: what will GST do? Well, it will eliminate all other indirect tax fees, which
will actually mean reducing the amount of tax paid by end users (consumers). As in
economics, the lower the prices, the greater the demand for that product, will result in
greater consumption of goods, which will benefit companies.

Increase exports: if the Indian market is competitive in prices, then more and more foreign
operators will try to enter the market, which will result in a greater number of exporters and
advantages in the Indian market. Although the tax rate has not been finalized, but yes, GST is
very necessary in countries where it lacks transparency and a complex tax system.

There is a question in everyone's mind …… ”Do we have to pay taxes at different rates and at
different levels? Is there no solution to this? Yes, the solution is the implementation of GST.
GST will eliminate the cascading effect of various taxes that are charged on the sale /
production / purchase and so on. Products reach customers at a very high rate compared to
production, so with GST there will be only one tax and will reduce the burden to be paid.

GST is commonly described as indirect, global and far-reaching consumption tax. The Dual
GST that would be implemented in India will suffer many consumer taxes. The goal is to
remove the multiplicity of tax withdrawals, thus reducing complexity and removing the
effect of Tax Cascading. The aim is to summarize all those taxes that are currently levied on
the sale of goods or on the provision of services by the central or state government. Taking
on a large number of taxes and other withdrawals will allow for the free movement of a
larger pool of tax credits at both central and state levels.

CENTRAL TAXES TO BE SUBSUMED IN GST

The following central taxes should be included in the tax on goods and services to begin with:

• Central excise duty (CENVAT)

 • Additional duties for excise duties

• Excise duty collected under the 1955 Act on Medicines and Toiletries

• Service tax

• Additional customs duty, commonly known as countervailing duty (CVD) STATE

FEES TO BE

STATE TAXES TO BE SUBSUMED IN GST

The following state taxes and duties would, to begin with, fall under the GST:

• VAT / sales tax Show tax (unless collected by local authorities)

• Luxury taxes Lottery, betting and gambling taxes Sales and surcharges insofar as
they refer to the supply of goods and services

• Octroi and registration fee

• Purchase tax

TREATMENT OF SPECIFIC GOODS

The central government presented the 122nd Constitution Amendment Bill, 2014 ("Bill") on the
introduction of the Goods and Services Tax ("TSG") in front of the lower house of Parliament on
December 19, 2014. Upon analysis of the bill, the bill contains the following treatment for specific
goods:

TAX ON ALCOHOLIC LIQUEUR FOR HUMAN CONSUMPTION

According to the amendment to the Constitution proposed by the Constitution

(122nd amendment) Bill, 2014, the supply of alcoholic liquor for human
consumption has been excluded from the definition of tax on goods and services.
The new clause 12A has been included in article 366 which defines the tax on goods
and services as follows:

"Tax on goods and services" means any tax on the supply of goods or services or
both, except for taxes on the supply of alcoholic liquor for human consumption.

Thus, the supply of alcoholic liquor for human consumption will be outside the GST.
Alcohol products intended for human consumption would continue to be taxed
exclusively by states. Since the bill specifically excludes alcoholic products from the
scope of GST, bringing it into GST at a future date would require another
constitutional amendment. The CST on interstate alcohol sales would also continue.
It therefore appears that the authorization of states to tax alcoholic products is likely
to remain unaltered in the near future

GST have charge many various things on this bases on the good and services bases.
 (b) According question I need to explain a GST with the help trader examples in which the
government charged 18%@GST. So many examples available. I took one example to explain

Amaan is a supplier in Punjab , who sold goods to Manoj in Punjab 10,0000. The GST rate is 18%
which incorporates CGST rate of 9% and SGST rate of 9%. In this kind of case, the issuer Rs. Whose
18000 Rs. 9000 will visit the Central Government and Rs. 9000 will go to Punjab (state) government.

So as in this example the Amaan sold goods to Manoj of Rs. 100000 at a GST rate of 18% which
incorporates CGST rate of 9% and SGST rate of 9% so in such a case dealer collects 1800 rs. In which
9000 Rs. Will go to the central government and 9000 Rs. Will go to the State Government so
basically actual GST the trader will paid under GST Regime.

Q2: (a) Mr. Hariom is a supplier of goods located in Delhi. In April 2020, he has imported
consultancy services for Development of IT software from U.S.A for a stipulated
consideration of $80,000. Will the import of consultancy services be treated as supply?
Give your explanation in this direction.

(c) How Centre & State Government used CGST, SGST and IGST to collect indirect taxes?
Explain with example.

ANSWER :

(a) Yes, this import of consultancy services will be treated as a supply because according to
section 2 (11) of the IGST law(Intergraded Goods and services Tax)
• The supplier should be located outside of India
• The place of procurement should be in India
• The recipient of that particular thing should also be in India

All these things are getting according to our demand where Mr. Hariom is the person who is
importing the services to Delhi, Delhi is located in India and the place from which he is
purchasing the services is outside India. This condition also meets in our question. The recipient
of that particular thing should also be in India. All conditions comply with Section 2 (11) of the
IGST law

All the conditions specified for importing a service would be met. Consequently, taxes must be
paid under it. And if trade in services occurs, that too will be provided

(b) There are 4 types of TSO, i.e. the integrated tax on goods and services (IGST), the tax on
state goods and services (SGST), the central tax on goods and services (CGST) and the tax on
goods and services of the territory of the Union (UTGST). The tax rate for each of them is
different.

The new indirect taxation regime under the Goods and Services Tax (GST), which was
introduced on July 1, 2017, has experienced considerable confusion as to how the new tax
 system will affect businesses and the payment of taxes. The goods and services tax (GST)
absorbed a series of local taxes collected on goods and / or services

Taxes that have been replaced by the GST

The implementation of the goods and services tax (GST) has replaced a series of taxes both in the
state and in the center. The withdrawals that have been replaced are listed below:
 List of state taxes:
 Value added tax (VAT) or VAT
 Octroi
 Entertainment fee
 Tax on lottery or betting or gambling
 Purchase tax
 Luxury tax
 List of central taxes:
 Service tax
 Additional excise duty
 Central excise duty and so on
Types of GST
According to the recently implemented tax system, there are 4 different types of GST:
 Integrated tax on goods and services (IGST)
 State tax on goods and services (SGST)
 Central Tax on Goods and Services (CGST)
 Tax on goods and services in the territory of the Union (UTGST)
In addition, the government has set different tax rates for each, which will be applicable to the
payment of taxes for goods and / or services rendered.

1. Integrated goods and services tax or IGST

The integrated tax on goods and services or IGST is a tax under the GST regime which is applied
on the interstate supply (between 2 states) of goods and / or services, as well as on imports and
exports. IGST is regulated by the IGST law. Under IGST, the body responsible for collecting taxes is
the central government. After the collection of taxes, it is further divided between the respective
states by the central government. For example, if a West Bengal trader sold goods to a customer
in Karnataka worth Rs.5000, then IGST will be applicable since the transaction is an interstate
transaction. If the GST rate charged on the goods is 18%, the merchant will charge Rs.5,900 for
the goods. The collected IGST is Rs.900, which will go to the central government.

2. State tax on goods and services or SGST

The state tax on goods and services or SGST is a tax within the meaning of the GST regime
applicable to intrastate transactions (within the same state). In case of intrastate supply of goods
and / or services, both the state GST and the central GST are collected. However, the GST or SGST
status is levied by the status on goods and / or services purchased or sold within the status. It is
regulated by the SGST law. Revenue obtained through SGST is required only by the respective
state government. For example, if a West Bengal trader sold goods to a West Bengal customer
valued at Rs.5000, the applicable GST on the transaction will be partly CGST and partly SGST. If
 the charged GST rate is 18%, it will be divided equally into the form of 9% CGST and 9% SGST. The
total amount to be paid by the professional, in this case, will be Rs.5,900. Revenue earned by GST
under SGST, or Rs.450, will go to the West Bengal state government in the form of SGST.

3. Central tax on goods and services or CGST

Just like the GST state, the central tax on CGST goods and services is a tax within the meaning of
the GST regime applicable to intrastate transactions (within the same state). The CGST is
governed by the CGST Act. Revenue obtained from CGST is collected by the central government.
As mentioned in the previous example, if a West Bengal trader sold goods to a West Bengal
customer valued at Rs.5000, the applicable GST on the transaction will be partly CGST and partly
SGST. If the charged GST rate is 18%, it will be divided equally into the form of 9% CGST and 9%
SGST. The total amount to be paid by the professional, in this case, will be Rs.5,900. Revenue
earned by GST under the leadership of CGST, i.e. Rs.450, will go to the central government in the
form of CGST.

4. Union territory Goods and services Tax or UTGST

The Union Territorial Goods and Services Tax or UTGST is the counterpart of the State Goods and
Services Tax (SGST) which is levied on the supply of goods and / or services in the Union
Territories (UT) of India. UTGST is applicable to the supply of goods and / or services in the
Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra and Nagar Haveli and
Lakshadweep. UTGST is regulated by the UTGST law. Revenue obtained from UTGST is collected
by the government of the Union territory. UTGST is a replacement for SGST in the territories of
the Union. Therefore, the UTGST will be collected in addition to the CGST in the territories of the
Union

Q3: (a) Who is empowered to grant exemption from GST and how can it be exercised?

(b) Mr. Ramu is selling hampers consisting of canned foods, sweets, chocolates, cakes and dry
fruits on Diwali and other festivals. What is the kind of supply? Explain with reason.

ANSWER : (a) The central government or the state government are authorized to grant
exemptions from the GST.

Exempt supplies include the following three types of supplies:

 Taxable supplies with "NIL" rate * (0% tax);

 Supplies that are totally or partially exempted from CGST or IGST, by means of a
notification modifying Section 11 of the CGST Law or Section 6 of the IGST Law;
 Non-taxable supplies as defined in Section 2 (78) - supplies that are not taxable under the
law (e.g. alcoholic liquor for human consumption.
Taxes are not to be paid on these supplies. The incoming tax credit attributable to exempt
supplies will not be available for use / compensation.
 * Zero-rated supplies such as exports would not be treated as taxable supplies with the "NIL" tax
rate;

Central or state governments are authorized to grant exemptions from GST. The conditions are:

 The exemption should be in the public interest

 By way of release of the notification
 Must be recommended by the TSO Council
 The absolute exemption or conditional exemption can be for all services and / or services
of any specified description.
 Exemption under a special order (non-notification) can be granted in exceptional
circumstances.
 The registered person who provides the services and / or services does not have the right
to collect a tax higher than the effective rate, where the supply enjoys an absolute
exemption.
 
How it is exercised:

Section 11: Power to Grant Tax Exemption

Sub-section (1)
The Government may, if it deems it necessary or appropriate to clarify the scope or applicability
of a notification made pursuant to paragraph 1 or a decision taken pursuant to paragraph 2, may
include a statement in that notification or, if necessary, by notification in any one year, the
notification referred to in paragraph 1 or the order referred to in paragraph 2 and such
declaration will take effect as if it had always been part of the first of such notification or order.

Sub-section (2)
If the government is convinced that this is in the public interest, it may, on special advice from
the Council, be exempted from paying taxes on goods or services, or both, in exceptional
circumstances, in each order, in that order. taxes are applied.
Sub-section (3)
The Government may, if it deems it necessary or appropriate to clarify the scope or applicability
of a notification made pursuant to paragraph 1 or a decision taken pursuant to paragraph 2, may
include an explanation in this notification or, if appropriate, order by notice to the address at any
time within one year of the notification referred to in paragraph 1 or from the order referred to
in paragraph 2 and this declaration will be effective as if it had always been part of the first of
such notification or order, as appropriate

(b) The Ramu case above the question is that he selling goods on festival time. So its mixed supply
now the Mixed supply means two or more individual supplies of goods or services made together for
a single price. Since they have a single price, they are taxed as one - at the rate of the item that
collects the highest tax. So while the festival pastry package may contain sugar sweets taxed at 18
percent and chocolates taxed at 28 percent, together the combined package would be taxed at 28
percent, the highest rate.
Q4: (a) What is the supply of services in case of supply of vouchers? Explain with example.

(b) Who is entitled to take input tax credit? For what purpose can this input tax credit be used?

ANSWER : (A) A voucher was defined as an instrument in the CGST Act if there is an obligation to
accept this in return or in part Consideration for a delivery of goods or services, or both, and where
the goods or services to be delivered or both or the identity of their Potential suppliers are specified
either on the instrument itself or in related documentation, including terms of use of such an
instrument. Vouchers are usually used for transactions in the Indian economy. A shopkeeper can
issue vouchers for a specific offer, d. H. Offer that is identifiable at the time of issue Voucher. In
commercial language, these are referred to as a single purpose Vouchers.

For example, vouchers for cookers or T.V or for spa or haircut. A voucher can also be a general
purpose Voucher that can be used for multiple purposes. For example, a Rs. 13000 / - Vouchers
issued by the Shoppers Stop Store can be used for Purchase a product or service from a Shoppers
Stop store. The time The offer is for single-use vouchers and Case of an all-purpose voucher.

Time of delivery in the case of a single-use voucher, d. H. In the case where The delivery is
recognizable at the time the voucher is issued Issue of the voucher. In all other cases the delivery of
vouchers The time of delivery is the date the voucher is redeemed.

(B) The entitled to take input tax credit

 Each registered person shall, subject to the conditions and restrictions that may be
prescribed and in the manner specified in section 49, have the right to take into
consideration the input tax charged on any supply of goods or services or both used by
him or intended to be used in the course or in the promotion of his business and this
amount must be credited to that person's electronic credit register.
 Notwithstanding the contents of this section, no registered person will be entitled to any
input tax credit in respect of any supply of goods or services or both to him unless, ––

(a) is in possession of a tax invoice or debit note issued by a supplier registered

under this law or any other tax payment documents that may be required;

(b) received goods or services or both.

(c) subject to the provisions of section 41, the tax charged in relation to this
supply was actually paid to the Government, in cash or through the use of the
upstream tax credit admissible for said supply; is

(d) provided the return pursuant to section 39

 Where the registered person has requested the amortization of the tax component of the
cost of capital goods and plant and machinery pursuant to the provisions of the Income Tax
Law, 1961, the upstream tax credit on this is not allowed tax component.
 A registered person is not entitled to take incoming tax credit for any invoice or debit note
for the supply of goods or services or both after the expiry date of the return delivery
pursuant to section 39 for the the month of September following the end of the financial
year to which this invoice or invoice relating to this debit note refers or which provides the
relative annual return, depending on which of the previous two.
Q5: (a) When can the registered person issue credit note or debit note? Explain with example.

(b) Explain the use of ICD and CFS in Custom sea port areas.

(c) What do you mean by Pictorial Chart of Custom duty? Explain in detail.

ANSWER :- (A)

Debit note

In GST is defined under section 34(3) of the CGST act 2017. It is a document that a supplier of goods
or services issues to the recipient where –

1. A tax invoice has been issued for any supply of goods or services or both and:

2.Taxable value or tax charged in the invoice is less than the taxable value or tax payable in respect
of such supply

3.Goods or services supplied are found to be more than the quantity committed under original
invoice

Debit Note Example

ITC Pvt Ltd supplied goods worth Rs. 50,000 units @ Rs. 10 per unit to M/s Malhotra Traders on
April 1, 2017.The GST charged on such a supply is 5% which is Rs. 50,000. However, on selling the
goods, ITC Pvt Ltd realizes that the price charged for each unit was Rs 12 and not Rs. 10. As is
evident, the amount charged in the tax invoice was less than the amount of goods delivered. Thus,
ITC Pvt Ltd issued a debit note in favour of M/s Malhotra Ltd.

Such a debit note would notify M/s Malhotra traders that a debit needs to be made in their own
account. In other words, debit note is an intimation to M/s Malhotra Traders that it still owes ITC Pvt
Ltd an amount equal to Rs. 20,000 (Rs. 2 x 10,000) and GST of Rs. 1000 under original invoice.

Credit note –When the amount payable by buyer to seller increases- When the value of invoice
increases due to extra goods being delivered or the goods already delivered have been charged at an
incorrect value a Debit Note is required to be issued. The Debit Note, in this case, is issued by the
seller to the buyer. And the buyer as an acknowledgment to the receipt of Debit Note issues a Credit
Note. The reason behind this – In the seller’s books of account the buyer will have a debit balance.
When a debit note is issued the debit balance of the buyer’s account increases. It means that more
amount is required to be paid by the buyer to the seller to settle his liability. Thus, credit note
increases the liability for the buyer.

Credit Note in GST

The details of credit notes issued in a month should be furnished by suppliers in Form GSTR-1. The
recipient of the supply will receive these details in Form GSTR-2A, post which the recipient has to
accept the details and submit in Form GSTR-2. A point to note here is, that a supplier will be allowed
to reduce his tax liability via a credit note only if the recipient of the supply accepts the credit note
details in Form GSTR-2.

Credit Note Example

ITC Pvt Ltd supplied goods worth Rs. 1,00,000 to M/s Malhotra Traders on April 1,2017. A tax invoice
of an equivalent amount was issued to M/s Malhotra Traders on the same day. M/s Malhotra
traders made payment against the invoice. However, M/s Malhotra later realized that certain goods
were of poor quality and hence decided to return the goods. Goods worth Rs. 20,000 were returned
to ITC Pvt Ltd on April 20, 2017. Since, goods were returned ITC Pvt Ltd needs to raise a credit note
in favour of M/s Malhotra Ltd. Such a credit note would notify M/s Malhotra traders that a credit
needs to be made in their account of an amount equal to the goods returned by them. This
document is a proof that M/s Malhotra Traders should reduce the amount it owes to ITC Pvt Ltd Rs.
20,000 under the terms of original invoice.

(B) ICDs and CFSs

Inland Container Depots (ICDs) and Container Freight Stations (CFSs) are also called dry ports
as they handle all Customs formalities related to import and export of goods at these
locations. In a multi modal transport logistics system, ICDs and CFSs act as hubs in the
logistics chain.
According to Ministry of Commerce (MOC) guidelines, an Inland Container Depot
(ICD)/Container Freight Station (CFS) may be defined as a common user facility with public
authority status equipped with fixed installations and offering services for handling and
temporary storage of import/export laden and empty containers carried under Customs
control and with Customs and other agencies competent to clear goods for home use,
warehousing, temporary admissions, re-export, temporary storage for onward transit and
outright export. Transhipment of cargo can also take place from such stations.

Distinction between ICD and CFS

ICD and CFS offer services for containerisation of break-bulk cargo and vice-versa. Most ICDs
are connected by rail to the respective gateway port, and this is a key difference between
the ICD and CFS. CFSs are typically adjoining or are in close proximity to the mother port and
often do not have rail connectivity.

An ICD is generally located in the interiors (outside the port towns) of the country away from
the gateway ports. CFS, on the other hand, is an off-dock facility located near the servicing
ports which helps in decongesting the port by shifting cargo and Customs related activities
outside the port area. CFSs are largely expected to deal with break-bulk cargo
originating/terminating in the immediate hinterland of a port and may also deal with rail
borne traffic to and from inland locations

(C) Pictorial chart

Share of India (base line)

ICW
HIGH
EEZ SEAS
CZ
ITW

200m
ICW= Indian custom waters

ITW= Indian Territorial Waters

EEZ= Exclusive Economic Zone

1 nautical mile=1.853 kms

ICW= ITW + CZ

CZ=contiguous Zone meant for security of India

Nm= nautical mile