GST Question Bank May 22 by CA Yachna Mutha Bhurat

GST QUESTION BANK
CA-Final
MAY-2022
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By CA Yachana Mutha Bhurat

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Index
Ch. No Chapters
1. GST IN INDIA - AN INTRODUCTION 1.1 – 1.15
2. SUPPLY UNDER GST 2.1 – 2.26
3. LEVY AND COLLECTION OF TAX 3.1 – 3.9
4. REVERSE CHARGE MECHANISM 4.1 - 4.13
5. COMPOSITION SCHEME 5.1 - 5.24
6. TIME OF SUPPLY 6.1 - 6.26
7. VALUE OF SUPPLY 7.1 - 7.58
8. INPUT TAX CREDIT 8.1 - 8.83
9. JOB WORK 9.1 - 9.9
10. REGISTRATION 10.1 - 10.29
11. PLACE OF SUPPLY 11.1 - 11.40
12. IMPORT AND EXPORT UNDER GST 12.1 - 12.9
13. ACCOUNTS AND RECORDS; E-WAY BILL 13.1 – 13.18
14. TAX INVOICE, CREDIT AND DEBIT NOTES 14.1 - 14.10
15. PAYMENT OF TAX 15.1 – 15.39
16. RETURNS UNDER GST 16.1 – 16.18
17. ASSESSMENT AND AUDIT 17.1 - 17.12

18. TDS & TCS 18.1 – 18.6
19. DEMANDS & RECOVERY 19.1 - 19.16
20. LIABILITY TO PAY IN CERTAIN CASES 20.1 - 20.8
21. INSPECTION 21.1 - 21.17
22. OFFENCES & PENALTIES 22.2 - 22.9
23. APPEALS & REVISION 23.1 - 23.23
24. EXEMPTIONS UNDER GST 24.1-24.29
©Author
No part of this book may be reproduced, stored in a retrieval system, or distributed in any form, or
by any means, electronic, mechanical, photocopying, recording, scanning, web or otherwise without
the written permission of the author. Information and contents of this book have been collated
with utmost care, caution and dedication in order to provide a reliable and comprehensive textual
reference for readers. However, any mistake or errors that may have crept in due to any
inadvertence does not impose any legal liability over the author.
1 – GST in India
1. Write a short note on various Lists provided under Seventh Schedule to the Constitution of India.
(ICAI Material)
Ans: It Contains 3 lists which enumerate the matters under which the union and the state government
have the authority to make laws:
Schedule VII
List II (referred to State List III (referred as the

List I (referred as Union
List): concurrent List):
List):
This list enumerates the This list enumerates the
This list enumerates the
matter in respect of which matters in respect of which
matters in respect of which
the legislature of any state both the parliament &
the parliament has an
has an exclusive right to make Legislature of any state have
exclusive right to make law
laws. power to make laws.
2. Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws.
Ans: Input tax Credit (ITC) of CGST and SGST / UTGST is available throughout the supply chain,
Comprehensive Tax Structure: A comprehensive tax structure covering both goods and services
viz. Goods and Services 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 and/or services”.
3. Explain the concept of “Dual GST” (ICAI Material)

Ans: India has adopted a Dual GST model view of the federal structure of the country. Consequently,
Centre and States simultaneously levy GST on taxable supply of goods or services or both which,
takes place within a State or Union Territory. Thus, tax is imposed concurrently by the Centre and
States, i.e. Centre and States simultaneously tax goods and services. Now, the Centre also has
the power to tax intra-State sales & States are also empowered to tax services. GST extends to
whole of India including the State of Jammu and Kashmir.
CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 1

4. List the Central and State levies which have been subsumed in GST in India. (ICAI Material),
(ICAI MTP)
Ans: Following are the taxes subsumed under GST: -
Taxes to be Subsumed under GST
Central Taxes to be subsumed States Taxes to be Subsumed
Central Excise Duty VAT / Sales Tax
Additional Excise Duty Luxury Tax on lottery, Betting and Gambling
Service Tax Octroi and Entry Tax
Additional Custom Duty (Commonly Known
Purchase tax
as Countervailing Duty)
States Surcharges and cesses so far they
Central Sales Tax
relate to supply of goods and services
Central Surcharges so far they relate to
-
supply of goods and services
5. Bring out the salient features of cross utilization of Input Tax Credit (ITC) under the GST law?
(Nov -17 CA Final)
Ans: 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 GST.
• 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.
6. Write a short note on GST Council. (RTP ICAI)

Ans: 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 GST Council shall consist of the following members, namely:—
(a) the Union Finance Minister is the Chairperson;
(b) the Union Minister of State in charge of Revenue or Finance is the Member;
(c) The Minister in charge of Finance or Taxation or any other Minister nominated by
each State Government are the Members.
• The GST Council shall make recommendations to the Union and the States on important
issues like tax rates, exemptions, threshold limits, dispute resolutions etc. The GST council
has decided the threshold exemption, composition threshold, GST rates, GST legislations
including rules and notifications.

Practical Questions:
7. Following Intra State Supply made by following persons:

• Transaction 1 – Taxable Supply of Rs. 10000/- made by Mr. A to Mr. B
• Transaction 2– Taxable Supply of Rs. 12000 (after 20 % value addition) made by Mr.B to Mr.
C
• Calculate total tax paid by various person to respective government and the amount of Input
tax credit availed under respective transaction.
Ans:
• Transaction 1: Intra-State Supply
In case of local supply of goods/ services, the supplier would charge dual GST i.e., CGST and SGST
at specified rates on the supply
Supply of Goods / Services by A to B
Particulars Amount (In Rs.)
Value Charged for Supply of Goods / Services 10000
Add: CGST @ 9% 900
Add: SGST @ 9 % 900
Total Price Charged by A from B for Local supply of Goods / Services 11800
The CGST & SGST charged on B for supply of goods/services will be remitted by A to the appropriate
account of the Central and State Government respectively.
A is the first stage supplier of goods/services and hence, does not have credit of CGST, SGST or
IGST.
Transaction 2: Supply of goods/services by B to C – Value addition @ 20%

B will avail credit of CGST and SGST paid by him on the purchase of goods/ services and will utilise
such credit for being set off against the CGST and SGST payable on the supply of goods/services
made by him to C.
Value Charged for Supply of Goods / Services (Rs. 10000 x 120%) 12000
Add: CGST @ 9 % 1080
Add: SGST @9 % 1080
Total Price Charged by B from C for local supply of Goods / Services 14160
Computation of CGST, SGST payable by B to Government

CGST Payable 1080
Less : Credit of CGST -900

CGST Payable to Central Government 180
SGST Payable 1080
Less: Credit of SGST -900
SGST Payable to State Government 180
Note: Rates of CGST and SGST have been assumed to be 9% each for the sake of simplicity.
Statement of Revenue Earned by Central and State Government
Revenue to Central Revenue to State
Transaction
Government Government
Supply of Goods / Services by A to B 900 900
Supply of Goods / Services by B to C 180 180
Total 1080 1080
8. Following Inter State Supply made by following persons:

• Transaction 1 – Mr. X of “State 1” made taxable supply of Rs. 10000 to Mr. A of “State 1”
chargeable @ 18% (CGST & SGST@9% each).
• Transaction 2 – Mr. A of “State 1” made taxable supply of Rs. 12000 (after value addition of
@ 20% i.e. Rs. 2000) to Mr. B of “State 2” chargeable @ 18% (IGST @18%)
• Transaction 3 – Mr. B of “State 2” made taxable supply of Rs. 14400 (after value addition
of @20% i.e. 2400) to Mr. C of “State2”
Ans: In case of inter-State supply of goods/ services, the supplier would charge IGST at specified rates
on the supply.
• Transaction 1: Supply of Goods / Services by “X” of State 1 to “A” of State 1
Value charged for Supply of Goods / Services 10000

Add: CGST @9% 900
Add: SGST @9% 900
Total Price Charged by X for Intra State Supply 11800
• Transaction 2: Supply of Goods / Services by “A” of State 1 to “B” of State 2 – Value

Addition @ 20%
Add: IGST @ 18 % 2160

Total Price Charged by A from B for Inter State Supply 14160

Computation of IGST Payable to Government by “A”
IGST Payable 2160

Less: CGST Payable -900
Less: SGST Payable -900
IGST Payable to Central Government 360
The IGST charged on B of State 2 for supply of goods/services will be remitted by A of State 1 to
the appropriate account of the Central Government. State 1 (Exporting State) will transfer SGST
credit of Rs. 900 utilised in the payment of IGST to the Central Government.
• Transaction 3: Supply of goods/services by B of “State 2” to C of “State 2” –

Value addition @ 20%
B will avail credit of IGST paid by him on the purchase of goods/services and will utilise such credit
for being set off against the CGST and SGST payable on the local supply of goods/services made by
him to C.
Add: CGST @9% 1296
Add: SGST @9% 1296
Total Price Charged by B from C for Local supply of Goods / Services 16992
Computation of CGST, SGST Payable to Government by “B”.

CGST Payable 1296
Less: Credit of IGST -1296
CGST Payable to Government 0
SGST Payable 1296
Less: Credit of IGST (Rs. 2160 - Rs. 1296) -864
SGST Payable to Government 432
Central Government will transfer IGST credit of Rs.864 utilised in the payment of SGST to State 2
(Importing State).

(As per the new rule alternatively IGST can also be used first for payment of SGST instead of
CGST)
Statement of Revenue earned by Central and State Government.
Revenue to Revenue to Revenue to

Transaction Central State 1 State 2
Government Government Government
Supply of goods / Services by X to A 900 900
Supply of goods/ Services by A to B 360
Transfer by State 1 to Centre 900 -900
Supply of goods / Services by B to C 432
Transfer by Centre to State 2 -864 864
Total 1296 0 1296
9. The following are details of purchases and sales etc., effected in 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. 318600 (including GST @ 18%)
depreciation @ 15% is charged.
4) Other direct and indirect expenses Rs. 44570
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.
Ans: Computation of Total Sales Value:
Amount
Sr No Particulars
(In Rs.)
1 Purchase fabric material from local dealer (Rs.47040 x 100/112 (WN) 42000
2 Purchase of textile material from local dealer (94500 x 100/105) (WN) 90000
3 Depreciation expenses (3,18,600 x 18/118) x 15% 40500
4 Other direct & Indirect expenses 44570
5 Total cost of goods manufactured 217070
6 Cost of goods sold ( 80% of goods produced were sold) 173656
7 Add : Profit margin @ 10% 17366
8 Total Sales Value 191022

Note 1: 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% (Being
17192 17192
CGST 9% and SGST 9%) (i.e, 191,022 * 18%) (A)
Less : Eligible input tax credit in respect of purchase of :-
Fabric material (42000 x 12%) 2520 2520
Textile material (90000 X 5%) 2250 2250
Capital goods (270000 X 18%) 24300 24300
Total Input Tax Credit (B) 29070 29070
Total Credit Available after Utilisation towards Output Tax Liability and
11878 11878
to be carried forward. (B-A)
Note: Output tax payable shall be NIL because ITC amount is in excess of Output Tax
Payable and balance ITC shall be carried forward to next month.
Multiple Choice Questions: (MCQs)
Q 1. GST Stands for:

A. Good and Simple Tax
B. Geographical Sales Tax
C. Geographical Service Tax
D. Goods and Services Tax
Ans: d: Goods and Services Tax
Q 2. In India GST became effective from

A. 30 June 2017
B. 8 August 2017
C. 1 July 2017
D. 1 October 2017
Ans: c; 1 July 2017

Q 3. GST is a based consumption tax.
A. Origin
B. Destination
C. Supply
D. Both (b) and (c) are correct.
Ans: b; Destination
Q 4. Which of the following tax is not subsumed in GST?

A. Value Added Tax@5% (VAT)
B. Basic Customs Duty (BCD)
C. Additional Customs Duty, commonly known as Countervailing Duty (CVD)
D. Special Additional Duty of Customs – 4% (SAD)
Ans: b: Basic Customs Duty (BCD)
Q 5. For the purpose of GST, which constitution amendment was passed?

A. Constitution (101st Amendment) Act, 2016
B. Constitution (151st Amendment) Act, 2016
C. Constitution (99th Amendment) Act, 2016
D. Constitution (111th Amendment) Act, 2016
Ans: a; Constitution (101st Amendment) Act, 2016
Q 6. Every person registered under GST shall be issued a unique number called as:
A. GSTAN (Based on TAN)
B. GSTIN (Based on PAN)
C. GSPIN (Based on PAN)
D. GSTPIN (Unique Identification Pin)
Ans: b; GSTIN (Based on PAN)
Q 7. Newly Article empowering president to constitute of GST Council?

A. 279A
B. 366

C. 269A
D. 246A
Ans: a: 279A
Q 8. Who shall be the Chairman of the GST Council?

A. A Union Finance Minister.
B. President of India.
C. Prime Minister of India.
D. d Chief Justice of India.
Ans: a; Union Finance Minister
Q 9. Which Article of the Indian Constitution defines the GST?

A. Article 289
B. Article 366(12A)
C. Article 279A
D. Article 246A
Ans: b; Article 366(12A)
Q 10. Shall be levied on the inter – State Supply.

A. IGST
B. CGST & SGST
C. Service Tax
D. CST
Ans: a; IGST
Q 11. GST is payable in the

A. State where the goods or services or both are finally consumed.
B. State where the goods or services or both are procured.
C. State where the goods are manufactured
D. All of the above

Ans: a; State where the goods or services or both are finally consumed.
Q 12. Which Article of the Indian Constitution empowers the Government of India to levy IGST in
case of inter– State supply?
A. Article 246A
B. Article 279
C. Article 269A(1)
D. Article 366(26A)
Ans: c; Article 269A (1)
Q 13. Tobacco products shall be subject to which of the following taxes?

A. Excise duty
B. GST
C. Excise Duty plus GST
D. VAT
Ans: c; Excise Duty plus GST
Q 14. Alchohal liquor for human consumption shall be subject to which of the following taxes?
A. State Excise duty
B. GST
C. State Excise duty and Vat
D. VAT
Ans: c; Excise Duty plus Vat
Q 15. When was GST implemented in State of Jammu & Kashmir?

A. 8th July 2017
B. 1st July 2017
C. 1st June 2017
D. 30th June 2017
Ans : a; 8th July 2017

Q 16. Which website is used for filing GST returns?
A. www.gst.gov.in
B. www.google.com
C. www.cbic.gov.in
D. www.indirecttax.gov.in
Ans: a; www.gst.gov.in
Q 17. What is the meaning of the cascading effect?

A. Dual taxation
B. Double Taxation
C. Tax on personal income
D. Charging tax on tax
Ans: d; Charging tax on tax
Q 18. Which of the following are special category states?

A. Assam, Manipur, Meghalaya
B. Assam, Mizoram, Punjab, Nagaland
C. Assam, J&K, Daman & Diu, Meghalaya
D. Chhattisgarh, Meghalaya, Manipur
Ans: a; Assam, Manipur, Meghalaya
Q 19. Definition of “services” is given in

A. Article 279
B. Article 366(26A)
C. Article 246A
D. Article 270
Ans: b; Article 366(26A)
Q 20. HSN stands for

A. Harmony system number
B. Harmonised system nomenclature

C. Harmonised systematic number
D. High-level system network
Ans: b; Harmonised system nomenclature
Q 21. While computing compensation to states, tax revenue of this tax/ these taxes is
excluded
A. petroleum crude, diesel, petrol, ATF and natural gas
B. Alcohol for human consumption
C. entertainment tax collected by local authorities
D. All of the above
Ans: d; All of the above
Q 22. The first committee to design GST model was headed by-
A. Dr Manmohan Singh
B. Atal BIhari Vajpayee
C. Dr Chidambaram
D. Vijay Kelkar
Ans: C; Dr Chidambaram
Q 23. GST Laws are implemented on the recommendation of

A. Central Government
B. Respective State Government
C. GST Council
D. Finance Minister
Ans: c; GST Council
Q 24. President of India did gave assent to the Central GST Law?
A. 12th April 2017
B. 12th May 2017
C. 1st July 2017
D. 5th April 2017

Ans: d: 12th April 2017
Q 25. In which section is Common portal referred to?

A. Sec 7 of CGST Act, 2017
B. Sec 20 of CGST Act, 2017
C. Sec 9 of CGST Act, 2017
D. Sec 146 of CGST Act, 2017
Ans: d: Sec 146 of CGST Act, 2017.
Q 26. Which country has first adopted GST

A. France
B. Canada
C. Malaysia
D. Singapore
Ans: a France
Q 27. India has adopted which model of GST?

A. Dual model
B. Single model
C. Bagchi Poddar model
D. None of the above
Ans: a Dual Model
Q 28. Which taxes are not subsmed in GST

A. Customs duty
B. Stamp duty
C. Excise on Liquior
D. All of the above
Ans: d all of the above

Q 29. Credit of CGST cannot be utilized against payment of
A. CGST
B. SGST
C. IGST
Ans: SGST
ADDITIONAL QUESTION FOR PRACTICE
1. Discuss the leviability of GST or otherwise on the following:

(a) Alcoholic liquor for human consumption
(b) Petroleum crude, diesel, petrol, ATF and natural gas
(c) Tobacco
(d) Opium, Indian hemp and other narcotic drugs and narcotics
Ans: (a) Alcoholic liquor for human consumption: is outside the realm of GST. The
manufacture/production of alcoholic liquor continues to be subjected to State excise duty and
inter-State/intra-State sale of the same is subject to CST/VAT respectively.
(b) Petroleum crude, diesel, petrol, ATF and natural gas: As regards petroleum crude, diesel,
petrol, ATF and natural gas are concerned, they are not presently leviable to GST. GST will
be levied on these products from a date to be notified on the recommendations of the GST
Council.
Till such date, central excise duty continues to be levied on manufacture/production of
petroleum crude, diesel, petrol, ATF and natural gas and inter-State/intra-State sale of the
same is subject to CST/ VAT respectively.
(c) Tobacco: Tobacco is within the purview of GST, i.e. GST is leviable on tobacco. However,
Union Government has also retained the power to levy excise duties on tobacco and tobacco
products manufactured in India. Resultantly, tobacco is subject to GST as well as central
excise duty.
(d) Opium, Indian hemp and other narcotic drugs and narcotics: Opium, Indian hemp and
other narcotic drugs and narcotics are within the purview of GST, i.e. GST is leviable on
them. However, State Governments have also retained the power to levy excise duties on
such products manufactured in India. Resultantly, Opium, Indian hemp and other narcotic
drugs and narcotics are subject to GST as well as State excise duties.

2. Under Goods and Services Tax (GST), only value addition is taxed and burden of tax is to be borne
by the final consumer. Examine the statement.
Ans: The statement is correct. Goods and Services Tax is a destination-based tax on consumption of
goods and services. It is levied at all stages right from manufacture up to final consumption with
credit of taxes paid at previous stages available as setoff. Resultantly, only value addition is taxed
and burden of tax is to be borne by the final consumer.

2 –Supply
Exercise Questions & Answers:
Q 1. What is the taxable event under GST? (ICAI Material)

Ans: Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be
levied on intra-State supplies. IGST will be levied on inter-State supplies.
Q 2. What is the tax treatment of composite supply and mixed supply under GST? (ICAI Material)
Ans: Composite supply shall be treated as 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.
Q 3. Supply of all goods and/or services is taxable under GST. Discuss the validity of the statement.
(ICAI Material)
Ans: The statement is incorrect. Supplies of all goods and services are taxable except alcoholic liquor
for human consumption. Supply of petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel shall be taxable with effect from a future
date. This date would be notified by the Government on the recommendations of the GST Council.
Q 4. Whether transfer of title and/or possession is necessary for a transaction to constitute supply of
goods? (ICAI Material)
Ans: Title as well as possession both have to be transferred for a transaction to be considered as a
supply of goods. In case title is not transferred, the transaction would be treated as supply of
service in terms of Schedule II(1)(b) of the CGST Act. In some cases, possession may be
transferred immediately but title may be transferred at a future date like in case of sale on
approval basis or hire purchase arrangement. Such transactions will also be termed as supply of
goods.
Q 5. Examine whether the following activities would amount to supply under section 7 of the CGST
Act: (ICAI Material)
(a) Damodar 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.
Ans: 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.
CA Yachana Mutha Bhurat 2. 1

(b) Sulekha 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
Ans: Legal Provision:
• 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].
Discussion & Conclusion:
In view of the same, factory and depot of Sulekha Manufacturers are establishments of two
distinct persons. Therefore, supply of goods from Delhi factory of Sulekha Manufacturers to
Mumbai Depot without consideration, but in course/furtherance of business, is supply under
section 7 of the CGST Act.
(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.
Ans: Legal Provision: As per Schedule I of CGST Act, inter alia, stipulates 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. 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.
Discussion of the case: 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.
Conclusion: Consequently, services provided by Raman’s brother to him would not treated as supply
under Section 7 of CGST Act read with schedule II.
(d) Would your answer be different if in the above case, Raman has taken advice in respect of his
business unit in Chennai?

Ans: 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 as although the same are provided in course or furtherance of business, such
services have not been received from a related person.be treated as supply under section 7 of the
CGST Act read with Schedule I.
Q 6. State whether the following supplies would be treated as supply of goods or supply of services as
per Schedule II of the CGST Act: (ICAI Material)
(a) Renting of immovable property
Ans: Supply of services
(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.
Ans: Supply of goods
(c) Transfer of right in goods without transfer of title in goods.

Ans: Supply of services
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a future
date.
Ans: Supply of goods
Q 7. Determine whether the following supplies amount to composite supplies: (ICAI Material)
(a) A hotel provides 4 days-3 night’s 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.
Ans: 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’.
Q 8. Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of
services? Give reason. (ICAI Material)
Ans: Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title,
albeit at a future date as per Schedule II

Q 9. State the necessary elements for a supply to be chargeable to GST. (ICAI Material)
Ans: The following elements are required to be satisfied for a supply to be chargeable to GST, i.e.-
a) the activity involves supply of goods or services or both;
b) the supply is for a consideration unless otherwise specifically provided for;
c) the supply is made in the course or furtherance of business;
d) the supply is a taxable supply and
e) The supply is made by a taxable person.
Q 10. Modest Ltd., registered in Delhi dealing in supply of electronic items transferred some of its stock
to its unit located in Haryana (inter-state transfer). Whether such self-supplies are taxable under
GST? (ICAI Material)
Ans: Legal Provision: The definition of supply given u/s 7 of CGST Act, 2017 is an inclusive one. It does
not specify that supply is to be made by one person to another. So, self-supplies are to be treated
as supply in terms of section 7 of CGST Act. Further, section 25(5) provides that 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.
Clause (2) of Schedule I of CGST Act, 2017 inter alia provides that supply of goods between
distinct persons as specified in section 25 made in the course or furtherance of business is to
treated as supply even if made without consideration.
Discussion of the case: Inter-state self-supplies such as stock transfers, branch transfers or
consignment sales shall be taxable under IGST even though such transactions may not involve
payment of consideration. Every supplier is liable to register under the GST law in the State or Union
territory from where he makes a taxable supply of goods or services or both in terms of Section 22
of the CGST Act. However, intra-state self- supplies are not taxable subject to not opting for
registration as business vertical.
Conclusion: Yes, transfer of stock made by Modest Ltd. are taxable under GST.
Q 11. Examine whether the following activities would amount to supply under section 7 of the CGST Act?
I. Hitkari Charitable Trust, a trust engaged in providing medical relief free of cost, donates books
& Stationary to children living in slum area.
Ans: Section 7 of the CGST Act, 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 books and stationery to children living in slum area would not amount to
supply under section 7 of the CGST Act.
II. Karishma Manufacturers have a factory in Jaipur & a Depot in Delhi. Both these establishments are
registered in respective states. Finished goods are sent from the factory to the depot without
consideration so that the same can be sold.

Ans: Schedule I of CGST Act, provides 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. According to section 25(5) of the CGST Act
2017, 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 for the purposes of this Act. In view of the same, factory and
depot are establishments of two distinct persons. Therefore, supply of goods from Factory to depot
without consideration, but in the course of furtherance of business, is supply under section 7 of the
CGST Act.
Q 12. Agrawal Carriers is a Goods Transport Agency (GTA) engaged in transportation of goods by road.
As per the general business practice, Agrawal Carriers also provides intermediary and ancillary
services like loading/unloading, packing/unpacking, transhipment and temporary warehousing, in
relation to transportation of goods by road. –
VB With reference to the provisions of GST law, analyse whether such services are to be treated
as part of the GTA service, being a composite supply, or as separate supplies
Ans: Legal Provision: Composite supply means a supply made by a taxable person to a recipient
consisting of two or more taxable supplies of goods or services or both, or any combination
thereof, which 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].
Discussion of the case: The GTA provides various intermediary and ancillary services, such as,
loading/unloading, packing / unpacking, transhipment and temporary warehousing, which are
provided in the course of transport of goods by road. These services are not provided as independent
services but as ancillary to the principal service, namely, transportation of goods by road. The
invoice issued by the GTA for providing the said service includes the value of intermediary and
ancillary services.
Conclusion: In view of this, if any intermediary and ancillary service is provided in relation to
transportation of goods by road, and charges, if any, for such services are included in the invoice
issued by the GTA, such service would form part of the GTA service, being a composite supply,
and would not be treated as a separate supply. However, if such incidental services are provided
as separate services and charged separately, whether in the same invoice or separate invoices,
they shall be treated as separate supplies.

Multiple Choice Questions
Q 1. The definition of goods under section 2(52) of the CGST Act does not include-
A. Money and securities
B. Growing crops
C. Actionable claims
D. Grass
Ans: a; Money and Securities
Q 2. The definition of Money as per Section 2(72) of CGST Act includes:

A. Cheque / promissory Notes
B. Foreign currency
C. Indian Legal tender
D. All of the above
Q 3. The definition of Person as per Section 2(84) of CGST Act includes:

A. Individual
B. LLP
C. HUF
D. All of the above
Ans; d: All of the above
Q 4. The definition of Works Contract as per Section 2(119) of CGST Act Includes:
A. Construction, fabrication, completion, erection, installation, etc. of immovable property
B. Construction, fabrication, completion, erection, installation, etc. of movable property
C. Both (a) and (b)
Ans: a; Construction, fabrication, completion, erection, installation, etc. of immovable property.
Q 5. is excluded from the definition of goods as well as services

A. Only Money
B. Only Securities
C. Securities and Money

D. None of the Above
Ans: c; Securities and Money.
Q 6. The definition of Agent as per Section 2(5) means:

A. A person who arranges or facilitates the supply of goods or services or both, but does
not include a person who supplies such goods or services or both on his own account
B. A person who carries on the business of supply or receipt of goods or services or both
on behalf of another
C. Both (a) or (b)
Ans: b; A person who carries on the business of supply or receipt of goods or services or
both on behalf of another.
Q 7. Under which Schedule, Activities to be treated as Supply even if the same is made without
consideration.
A. Schedule IV
B. Schedule III
C. Schedule II
D. Schedule I
Ans: D; Schedule I
Q 8. Under which Schedule, The activities / transactions which shall be treated neither as a
supply of goods or services
A. Schedule IV
B. Schedule III
C. Schedule II
D. Schedule I
Ans: Schedule III
Q 9. Which of the following activity to be treated as Supply under Schedule I even if made
without consideration
A. Permanent transfer or disposal of business asset where ITC has been availed.
B. agent to principal of vice -versa, if agent supplies / receives goods on behalf of
principal

C. supply of goods and/or services between related person, except gift upto Rs. 50,000
to employees
D. All of the above
Q 10. Import of services for a consideration is treated as Supply?

A. Transaction in the course or furtherance of business
B. whether or not in the course or furtherance of business
C. Not a Supply
D. none of the above
Ans: b: whether or not in the course or furtherance of business.
Q 11. Which of the following taxes leviable on imports?

A. Excise Duty
B. Service Tax
C. CGST & SGST
D. IGST
Ans: D; IGST
Q 12. Gift up to value of Rs.50,000 in a year to an employee & Gifts in value in excess of
Rs. 50,000
A. shall not be treated as “Supply”, shall be taxable as ‘Supply’
B. shall be taxable as ‘Supply’, shall not be treated as “Supply”
C. Both activity not covered under supply
Ans; a: shall not be treated as “Supply”, shall be taxable as ‘Supply’
Q 13. Which of the followings Activities which are neither supply of goods nor supply of
services:
A. Services by any court or tribunal
B. Services related to funeral, burial, Crematorium or mortuary including transportation of
the deceased
C. Services by employee to employer in relation to his employment.
D. All of the above

Ans: d: All of the above
Q 14. Composite supply is taxable at which tax rate?

A. Tax rate as applicable on principal supply
B. Tax rate applicable on supply attracting the highest rate of tax
C. Tax @ 28%
D. Tax rate as applicable on respective supply
Ans: a; Tax rate as applicable on principal supply
Q 15. Mixed supply is taxable at which tax rate?

A. Tax rate applicable on supply attracting the lowest rate of tax
B. 12%
C. Tax rate applicable on supply attracting the highest rate of tax
Ans: C; Tax rate applicable on supply attracting the highest rate of tax
Q 16. Which factor helps in determining composite supply & Mixed supply
A. Whether the two supply are naturally bundled
B. No of items
C. Both of the above
Ans: a, Whether the two supply are naturally bundled
Q 17. What does Composite Supply means under GST?

A. Comprises of two or more taxable supplies of goods or services or both
B. Are naturally bundled and supplied in conjunction with each other
C. in the ordinary course of business and one of which is principal supply
D. All of the above
Q 18. A job worker performed certain dyeing operations on fabrics. Whether this is to be treated
as Supply of Goods or Supply of Services?
A. Supply of Goods
B. Supply of Services

C. Both a & b
Ans: b; Supply of Services
Q 19. Whether Renting of immovable property to be treated as Supply of Goods or Supply of

Services?
A. Supply of Goods
B. Supply of Services
C. Both a & b
Ans: b; Supply of Services
Q 20. Which of the following is a mixed supply?

A. Goods are packed and transported with insurance
B. Supplier of machinery providing erection and commissioning services
C. Goods transport agency arranging for loading and unloading facility
Ans: d ; None of the above
Q 21. XYZ industries has a unit in Nagpur and a branch office in Raipur. Nagpur Unit transfers
stock to Raipur unit without consideration. Whether the same will be treated as supply or
not?
A. Yes
B. No
C. May be
Ans: a; Yes
Q 22. Supplier of Goods or Services means

A. shall mean the person supplying the said goods or services or both
B. and shall include an agent acting as such on behalf of such supplier
C. in relation to the goods or services or both supplied
D. all of the above

Q 23. Reliance ltd. Donated old furniture to charitable organisation and have also claimed the
ITC at the time of purchase of the same, whether the same will amount to supply and
liable to GST or not?
A. Yes
B. No
C. Maybe
Ans; a: Yes
Q 24. Any gift made by an employer to an employee shall be considered as supply. What is
the limit prescribed for the same?
A. More than 50,000
B. Less than or equal to 50,000
C. Less than 75000
D. More than 75000
Ans: a; More than 50,000.
Q 25. Transfer of rights in goods to be treated as Supply of Goods or Supply of Services?

A. Supply of goods
B. Supply of services
C. Either of two at the option of authority
Ans; b: Supply of Services
Q 26. “Temporary transfer or permitting use or enjoyment of any intellectual property right”
whether to be treated as “Supply of Goods” or “Supply of Services”?
A. Supply of goods
B. Supply of services
C. Either of two at the option of authority
Ans; b: Supply of Services

Q 27. Which of the following are naturally bundled?
A. A packet of Chocolate, Sweets & Cake
B. Supply of Lodging facility along with food in Hotel
C. Both a & b
D. Only b
Ans: d; Only b
Q1. Sahab sales, an AC dealer in Janakpuri, Delhi, needs 4 AC for his newly constructed house in
Safdarjung Enclave. Therefore he transfers 4 ACs [on which ITC has been claimed by it] from its
stock. For the said purpose. Examine whether the said activity amounts to supply u/s 7 of CGST
Act, 2017.
Further, a Janakpuri resident, Rahul, approached Sahab sales. He sold an AC to Sahab sales for Rs.
5000. Rahul had bought the said AC six months before for his residence. Does sale of the AC by
Aakash to sahib sales amounts to supply u/s 7 of CGST Act, 2017?
Ans: Section 7 of CGST Act, 2017 stipulates that in order to qualify as supply;
• the activity involves supply of goods or services or both;
• the supply is for a consideration unless otherwise specifically provided for;
• the supply is 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 asset
where ITC has been availed on such assets, i.e. said activity be treated as supply even if made
without consideration. In view of said provision permanent transfer of air conditioner by Sahab
sales from its stock for personal use at its residence, though without consideration, would
amount to supply.
However, sale of AC by Rahul to Sahab sales will not qualify as supply u/s 7 of CGST Act,
2017 as although it is made for a consideration, but it is not in the course or furtherance of
business.
Q2. Manan is an Electronic Commerce Operator in Delhi. His father who is settled in London is a well
known Lawyer. Manan has taken legal consultancy from him free of cost with regard to his family
dispute. Would your answer be different if in the above case, Manan has taken advise in respect of
his business unit in delhi? Examine whether the activitie would amount to supply under section 7
of the CGST Act?
Ans: Schedule I of the CGST Act 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 Manan has received legal consultancy from his
father free of cost in a personal matter & not in the course of furtherance of business. Hence
services provided by Manan's father to him would not be treated as supply under section 7 of the
CGST Act. In the above case, if Manan has taken advice with regard to his business unit, services
provided by Manan's father to him would be treated as supply under section 7 of the CGST Act as
the same are provided in the course of furtherance of business though received from a related
person.
Q3. “Diligent Force” a professional training institute gets its training material of “Aptitute
Quotient” printed from “Durga printing House” a printing press. The content of the material
is provided by the Diligent Force who owns the usage rights of the same while the physical
inputs including paper used for printing belong to the Durga Printing House.
Ascertain whether supply of training material by the Durga Printing House constitutes supply of
goods or supply of services.
Ans: Circular No. 11/11/2017 GST dated 20.10.2017 has clarified that supply of books printed with
contents supplied by the recipient of such printed goods, is composite supply and the question,
whether such supplies constitute supply of goods or services would be determined on the basis of
what constitutes the principal supply. Principal supply has been defined in section 2(90) of the
CGST Act as supply of goods or services which constitutes the predominant element of a
composite supply and to which any other supply forming part of that composite supply is ancillary.
In the case of printing of books where content is supplied by the publisher or the person who
owns the usage rights to the intangible inputs while the physical inputs including paper used
for printing belong to the printer, supply of printing [of the content supplied by the recipient of
supply] is the principal supply and therefore, such supplies would constitute supply of service.
Thus, in view of the above-mentioned provisions, the supply of training material by the Durga
Printing House would constitute supply of services.
Q4. M/s. Jolly Electronics (P) Ltd., is an authorized dealer of M/s. GG Micro Ltd., located and
registered in Lucknow, Uttar Pradesh. It has sold following items to Mr. Alla Rakha (a consumer):
Product Amount (Rs.)
Refrigerator (500 litres) taxable @ 18% 40,000/-
Stabilizer for refrigerator taxable @ 12% 5,000/-
LED television (42 inches) taxable @ 12% 30,000/-
Split air conditioner (2 Tons) taxable @ 28% 35,000/-
Stabilizer for air conditioner taxable @12%. 5,000/-
Total value 1,15,000/-

M/s. Jolly Electronics (P) Ltd. has given a single invoice, indicating price of each item separately
to Mr. Alla Rakha. Mr. Alla Rakha, has given a single cheque of Rs. 1,00,000/- for all the items as
a composite discounted price. State the type of supply and the tax rate applicable on the same.
(a) Composite supply; Highest tax rate applicable to split air conditioner, i.e. 28%
(b) Mixed supply; Highest tax rate applicable to split air conditioner, i.e. 28%
(c) Supply other than composite and mixed supply; Highest tax rate applicable to split air
conditioner i.e. 28%
(d) Supply other than composite and mixed supply; respective tax rate applicable to each item
Ans : Supply other than composite and mixed supply; respective tax rate applicable to each item
Q5. Mr. Zombi, 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 said activity of supply of goods by Mr. Zombi to customer in US is taxable under GST.
If yes, determine the place of supply of the same.
Ans: Schedule III to the CGST Act specifies transactions/ activities which shall be neither treated as
supply of goods nor supply of services. One of such activity/transaction is 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. Thus, it seeks to exclude from the tax net such transactions which
involve movement of goods, caused by a registered person, from one non-taxable territory to
another non-taxable territory. Therefore, in view of the above-mentioned provisions, the said
activity is not a supply. Hence, it is not leviable to GST since “supply” is the taxable event for
chargeability of GST. Therefore, since the transaction is not leviable to GST, the question of
place of supply does not arise in the given case.
Q6. Satyamev Printers is a printing house registered under GST. It receives an order for printing 5000
copies of a book on yoga and meditation authored by a well-known yoga guru. The content of the
book is to be provided by the yoga guru to Satyamev Printers. It is agreed that Satyamev Printers
will use its own paper to print the said books. You are required to determine the rate of GST
applicable on supply of printed books by Satyamev Printers assuming that rate of GST applicable
on printing services is 18% whereas the rate of GST applicable on supply of paper used in printing
the books is 12%.
Ans: Section 2(30) provides that a composite supply means a supply made by a taxable person to a
recipient consisting of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with each other in
the ordinary course of business, one of which is a principal supply.
Circular No. 11/11/2017 GST dated 20.10.2017 has clarified that supply of books, pamphlets,
brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name,
address or other contents supplied by the recipient of such printed goods, are composite supplies.

Further, section 8(a) stipulates that a composite supply comprising two or more supplies, one of
which is a principal supply, is treated as a supply of such principal supply. Hence, one needs to
ascertain what constitutes the principal supply in this supply. As per section 2(90), principal
supply is the supply of goods or services which constitutes the predominant element of a
composite supply and to which any other supply forming part of that composite supply is ancillary.
The above circular further clarifies that in the composite supply of printing of books, pamphlets,
brochures, annual reports, and the like, where only content is supplied by the publisher or the
person who owns the usage rights to the intangible inputs while the physical inputs including
paper used for printing belong to the printer, supply of printing [of the content supplied by the
recipient of supply] is the principal supply and therefore such supplies would constitute supply of
service.
Accordingly, in the given case, the supply of printed books by Satyamev Printers is a composite
supply wherein the principal supply is supply of printing services. Thus, the rate of GST applicable
thereon is the rate applicable on supply of printing services, i.e. 18%.
Q.7 Answer the following questions:

(a) Sudama Associates, a registered supplier, disposes the computers owned by the business
without consideration and it has not claimed input tax credit on such computers.
Examine whether the disposal of computers by Sudama Associates qualifies as deemed supply
under Schedule I of the CGST Act.
(b) Prithvi Enterprises appoints Champak to procure certain goods from the market. Champak
identifies various suppliers who can provide the goods as desired by Prithvi Enterprises, and
asks a supplier – Satya Manufacturers to send the goods and issue the invoice directly to
Prithvi Enterprises.
You are required to determine whether Champak can be considered as an agent of Prithvi
Enterprises in terms of Schedule I of the CGST Act.
Ans: (a) As per section 7(1)(c) read with Schedule I of the CGST Act, permanent transfer or disposal
of business assets is treated as supply even though the same is made without consideration.
However, this provision would apply only if input tax credit has been availed on such assets.
Therefore, the disposal of computers by Sudama Associates is not a supply as the input tax
credit has not been availed on the same.
(b) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods by an agent to
his principal where the agent undertakes to receive such goods on behalf of the principal
qualifies as supply even if the same is made without consideration. Further, Circular No.
57/31/2018 GST dated 04.09.2018 clarifies that principal-agent relationship falls within the
ambit of the Schedule I only where the goods being procured by the agent on behalf of the
principal are invoiced in the name of the agent. In that case, further provision of the said

goods by the agent to the principal without consideration, would be covered in Schedule I
and thus would qualify as supply.
In the given case, Champak is only acting as the procurement agent, and has in no way
involved himself in the supply or receipt of the goods. The invoice is being issued in the
name of Prithvi Enterprises and not Champak. Hence, Champak is not an agent of Prithvi
Enterprises for the supply of goods in terms of Schedule I of the CGST Act.
Q.8 Ajatasatru Industries enters into a contract with an actor – Chandragupta - to act as a brand
ambassador of products manufactured by Ajatasatru Industries. The duration of the contract is 5
years and the contract fee payable to Chandragupta for being a brand ambassador is ` 50 lakh per
annum. As per the terms of the contract, in case the contract is terminated by Chandragupta
before the end of the contract period, Chandragupta will have to repay to Ajatasatru Industries,
50% of the contract fee received by him till the time of termination of contract.
At the end of 3rd year, Chandragupta terminates the contract with Ajatasatru Industries. He has
received the contract fee for 3 years at the time of termination of contract.
You are required to determine whether the given transaction(s) qualifies(y) as supply(ies).
Ans: As per section 7(1)(a), supply includes all forms 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. In the
given case, Chandragupta has agreed to provide his services as a brand ambassador of the products
manufactured by Ajatasatru Industries at an agreed annual consideration. Thus, his services fall
within the purview of the term “supply” under GST where the consideration charged for such
supply is ` 50 lakh per annum.
Further, section 7(1A) provides that when certain activities or transactions constitute a supply in
accordance with the provisions of section 7(1), they shall be treated either as a supply of goods or
supply of services as referred to in Schedule II of the CGST Act. Tolerating non-performance of a
contract is an activity or transaction which is treated as a supply of service as per Schedule II and
the person is deemed to have received the consideration in the form of fines or penalty and is,
accordingly, required to pay tax on such amount.
In the given case, since Ajatasatru Industries is tolerating the act of Chandragupta of terminating
the contract before the expiry of its contract period, 50% of contract fee for 3 years amounting
to 75 lakh is being received by it as a penalty for the same. The act of tolerating the non-
performance of a contract by Chandragupta by Ajatasatru Industries is a supply of service where
the consideration charged for such supply is 75 lakh [50% of (50 Lakh × 3 years)].

Q.9 Vikramaditya is a salaried employee and is planning to invest in stocks. He has opened a trading
account with Vaydaa Brokers. During the month, Vikramaditya undertook future contracts (without
a physical delivery option, but are cash settled on the expiry of the contract date), amounting to `
35,00,000. Vikramaditya needs your advice whether such future contracts undertaken by him
amount to supply and are liable to GST.
Ans: For a transaction to fall within the purview of supply, it must be a supply of either goods or
services or both. The definitions of the terms “goods” and “services” specifically exclude
“securities” from their purview. Further, ‘derivatives’ are included in the definition of ‘securities’.
As ‘derivatives’ fall in the definition of securities, they are neither goods nor services and hence,
are not liable to GST.
Future contracts are in the nature of financial derivatives, the price of which is dependent on the
value of underlying stocks or index of stocks or certain approved currencies and the settlement
happens normally by way of net settlement with no actual delivery.
Since future contracts are in the nature of derivatives, these qualify as ‘securities’ and thus, are
not subject to GST.
In view of the above discussion, it can be inferred that since the future contracts undertaken by
Vikramaditya are in the nature of derivatives, these qualify as ‘securities’ and do not qualify as
supply and thus, are not subject to GST.
Q.10 Nandeeshwar Manufacturers sends certain category of yarn for processing to the job worker. The
job worker undertakes the processing work on the yarn as per the requirement of Nandeeshwar
Manufacturers. During the process, the job worker uses his own material also. The processed yarn
is sold by Nandeeshwar Manufacturers directly from the job worker premises. Balance quantity of
yarn and waste material is sent back by the job worker to Nandeeshwar Manufacturers. The job
worker is of the opinion that he is using his own material also in the processing and hence the
supply to Nandeeshwar Manufacturers is in the nature of supply of goods as well as services. Do
you agree with the opinion of job worker?
Ans: No, the opinion of the job worker is not fully correct. Section 7(1A) provides that when certain
activities or transactions constitute a supply in accordance with the provisions of section 7(1),
they shall be treated either as a supply of goods or supply of services as referred to in Schedule II
of the CGST Act. Any processing activity carried on any other person’s goods is treated as supply
of service in terms of Schedule II. The job worker, in addition to the goods received from the
principal, can use his own goods for providing the services of job work. These goods are not supply
per se, but being used in the processing activity carried out by it.
Thus, the activity undertaken by the job worker, in the given case, squarely falls within the
purview of Schedule II and shall be considered as supply of service by the job worker to
Nandeeshwar Manufacturers.

Q.11 Mokshabhumi Industries has its manufacturing unit in the State of Maharashtra. It stores the
finished goods manufactured by it at a depot located in the State of Gujarat. The depot is owned
by Punyabhumi Ltd. – a related person of Mokshabhumi Industries. Punyabhumi Ltd. has not
charged any consideration from Mokshabhumi Industries for usage of depot for storage purpose.
Whether the storage of goods permitted by Punyabhumi Ltd. to Mokshabhumi Industries qualifies
as supply under GST?
Ans: As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods or services or both
between related persons without consideration when made in the course or furtherance of business
qualifies as supply. Thus, the storage services provided by Punyabhumi Ltd. to Mokshabhumi
Industries in course or furtherance of business qualifies as supply under GST even though no
consideration has been charged for the same.
Q.12 Mohandas International entered into a transaction for import of goods from a vendor located in
Italy. Due to financial issues, Mohandas International was not in a situation to clear the goods
upon payment of import duty. Mohandas International sold the goods to Radhakrishnan Export
House by endorsement of title to the goods, while the goods were in high seas. The agreement
further provided that Mohandas International shall purchase back the goods in future from
Radhakrishnan Export House. Discuss the taxability of transaction(s) involved, under the GST law.
Ans: As per Schedule III of the CGST Act, high seas sale transactions i.e. supply of goods by the
consignee to any other person, by endorsement of documents of title to the goods, after the goods
have been dispatched from the port of origin located outside India but before clearance for home
consumption shall not be considered as supply under GST. Thus, the sale of goods by Mohandas
International to Radhakrishnan Export House in high seas shall not be liable to GST.
Further, the import duty including IGST shall be payable by Radhakrishnan Export House at the
time of clearance of goods at port of import. In case the goods are sold back by Radhakrishnan
Export House to Mohandas International at a subsequent point of time, the same shall be treated
as normal domestic sale transaction and GST shall be applicable on the same subject to other
conditions prescribed under GST Law.
Q.13 (a) Rudraksh Kapoor, owner of Rudraksh Publishing House, Ghaziabad, U.P., donated some
money to a Divyaprakash Charitable Trust in the memory of his late father. The Divyaprakash
Charitable Trust constructed a room in the school run by it from such donation and wrote
“Donated by Rudraksh Kapoor in the memory of his father” on the door of the room so
constructed. Examine whether the money donated by Rudraksh Kapoor is leviable to GST.

(b) In the above question, if the Divyaprakash Charitable Trust had written on the door of the
room constructed in the school run by it from the money donated by Rudraksh Kapoor
“Donated by Rudraksh Publishing House, Ghaziabad, U.P.”, would the given
transaction/activity qualifies as supply.
Ans: Circular No. 116/35/2019 GST dated 11.10.2019 has clarified that in case of donations received by a
charitable institution, when the name of the donor is displayed in recipient institution’s premises,
in such a manner, which can be said to be an expression of gratitude and public recognition of
donor’s act of philanthropy and is not aimed at giving publicity to the donor in such manner that
it would be an advertising or promotion of his business, then it can be said that there is no supply
of service for a consideration (in the form of donation). Donations received by the charitable
organisations are treated as consideration only if there exists, quid pro quo, i.e., there is an
obligation on part of recipient of the donation or gift to do anything (supply a service).
Thus, GST is not leviable where all the following three conditions are satisfied namely:
• Gift or donation is made to a charitable organization
• Payment has the character of gift or donation
• Purpose is philanthropic (i.e., it leads to no commercial gain) and not advertisement.
(a) In the backdrop of the above discussion, since in the given case, the way the name of
Rudraksh Kapoor is displayed on the door of the room constructed in the school run by
Divyaprakash Charitable Trust, it is only an expression of gratitude and public recognition of
Rudraksh’s act of philanthropy and is not aimed at advertising or promoting his business.
There is no reference/mention of his publishing house which otherwise would have got
advertised.
Thus, the money donated by Rudraksh Kapoor is not a leviable to GST.
(b) In the given case, since the name of Rudraksh Publishing House has been displayed on the
door of the room constructed in the school run by Divyaprakash Charitable Trust, it might
be aimed at advertising or promoting his business. There is a direct mention of his
publishing house which is being advertised. In such a case, it is a supply of service by
Divyaprakash Charitable Trust for a consideration received in the form of donation.
Q.14 Consider the following statements and determine in each case whether they will be considered as
supply or not as per section 7
a. Aniket Sharma has recently purchased Maruti Wagon-R from ocean motors. After few months he
went for regular servicing of the car. Servicing department of the company carried out some labor
services and also changed some spare parts of the car such as A.C filters, wipers, etc. GST rate

applicable on labor services is 5% and on supply of spare parts in 18%. Accountant of Ocean
motors at the time of issuing invoice to Aniket charged 5% GST on the taxable value considering
such transaction as composite supply. Although value of both the goods and services were shown
separately in the invoice. You as a statutory auditor of the company determine whether
treatment done by accountant is correct or not? (4 Marks)
Ans a There are several parameters to determine whether a particular transaction is a composite supply
or mixed supply such as 􀃖 The Perception of the customer or the service recipient – If large
number of service recipients accept such service to be provided as package, then such package
would be considered as naturally bundled in the ordinary course of the business 􀃖 Majority of
the service providers in a particular area of business provide similar type of services 􀃖
Nature of service is that its provided in the natural course of the business such as hotel
services includes housekeeping, stay and food But in case of servicing of cars involving supply
of both goods (spare parts) & services (labour) where value of goods and services are shown
separately. CBIC has clarified that the goods and services would be liable to tax at the rates as
applicable to such goods and services separately
b. Spark ltd is engaged in the business of development of artificial intelligence technologies. For this
purpose, they have purchased various super computers but ITC have not been claimed on these
items. Due to unforeseen conditions they have to shut the business and permanently transferred
the assets to a US based company Tesla Inc. for a consideration of $1 Lakh. Payment is received
in foreign convertible exchange.
Ans b As, per schedule I Para I permanent transfer of assets without consideration on which ITC have
been claimed is considered as supply but in the said case although Spark ltd has transferred
assets permanently and also ITC is not claimed on such assets but they have received
consideration on such transaction. Therefore, it will be considered as supply.
c. Mr. Deepak is engaged in supply of IT services all over in India. He has availed consultancy services
for the purpose of his business from an Israel based company but not made any payment to such
company as his wife Mrs. Sucheta holds 26% shares in that company.
Ans c This case will not be covered under Schedule I para 4 of CGST act because as per the definition of
related person Mr. Deepak and Israel based company will only be considered as related if Mrs.
Sucheta (wife of Mr. Deepak) controls the foreign company and for that she must have hold at-

least more than 50% shares of the company. Therefore, this transaction will not amount to supply
although its for the purpose of business.
d. Mr. Raj belongs to Haryana is an agent of M/s Delta Pvt ltd which belongs to Delhi. For the ease
of doing business Mr. Raj undertakes to supply the furniture to the wholesalers of Haryana on
behalf of M/s Delta Pvt ltd. In the month of Jan 2021 M/s Delta has supplied furniture to Mr. Raj
worth ₹10000 without consideration. Mr. Raj has further supplied such goods to the respective
wholesalers in the market at the same price at which he has received the goods issuing the invoice
in the name of M/s Delta Pvt ltd. Mr. Raj and M/s Delta both are having separate GSTIN in their
respective states/UT.
Ans d as per Schedule I Para 3 Principal – agent relationship falls within the said clause only when
agent issues invoice in his own name other conditions remaining the same which is a crucial point
to determine the applicability of this clause. Therefore, in the said case since the invoice is issued
by Mr. Raj in the name of M/s Delta Pvt ltd hence the transaction between Mr. Raj & M/s Delta
Pvt ltd doesn’t amount to supply.
Q.15 Mr. Aishwarya Jain a qualified chartered accountant is working as an employee in a multinational
company XYZ ltd in Mumbai. Office hours of working for all the employees are 10:00 am to 7:00
PM except for Mr. Aishwarya it is up-to 9:00 PM. XYZ ltd pays ₹2 lakh/ month to Mr. Aishwarya
and deducts TDS u/s 194J as per income tax act, 1961 as per the terms of conditions of contract.
In the financial year 2019-20 Mr. Aishwarya has received ₹21.6 lakhs (Net of TDS). SGST officer
of particular jurisdiction issued notice to Mr. Aishwarya on the basis of 26AS that he is liable to
charge GST on the services provided by him to XYZ ltd. Aishwarya contented that there is an
employer-employee relationship between him and XYZ ltd and its covered under Para 1 of Schedule
3 i.e., Negative list. Determine whether contention of CGST officer is correct or of Mr. Aishwarya
in the said case?
Ans Though its clearly mentioned in the Para 1 of Schedule 3 that the services by an employee in the
course of employment is covered under negative list and GST is not chargeable on the same. But
one must critically evaluate the conditions of employment to determine the employer-employee
relationship. In the present case although Mr. Aishwarya is providing services to XYZ ltd as an
employee but as per the terms and conditions of the employment contract XYZ ltd is deducting
the TDS u/s 194J as per income tax act, 1961 which is of professional services and for the nature
of services to be in employment TDS must be deducted u/s 192 as per income tax act, 1961 which
is there for salaried person.

Hence Mr. Aishwarya is liable for GST registration and charging the same from XYZ ltd because
the services provided by him are not in the nature of employment rather it is professional service
on which GST @18% is leviable. Therefore, contention of SGST officer is correct in the present
case.
Q.16 Mr. Rahul Dev a qualified chartered accountant is working as an indirect tax manager in Infosys
ltd on a package of ₹10 lakhs p.a. Also, apart from providing services to the company relating to
indirect taxation he is also carrying out motivational sessions of his subordinates and other
employees of the company in the company premises itself so that they can work with more
efficiency in the company. But as per the contract with the company he is charging separate
consideration for the sessions from the audience. In the financial year 2019-20 amount received by
Mr. Rahul dev from motivational sessions is ₹ 12 lakhs. Determine whether services provided as
motivational speaker would be considered as supply or not? Would your answer will be same if
Infosys ltd has paid consideration for motivational session?
Ans: Services provided by Mr. Rahul dev as Indirect tax manager is in the course of employment hence
it would not be considered as supply as per para 1 schedule 1. But services provided as motivational
speaker would be considered separately and it will be considered in the course or furtherance of
business as separate consideration is charged by Mr. Rahul dev. But in the second case if Infosys
ltd has paid consideration for motivational session then it would instead of allowing him to collect
separately from audience then it would be considered as part of employment only. (Disclaimer –
This is just conclusion written here, students have to explain the provisions of Definition of supply,
Schedule 1 Para 1 and also about services in the course or furtherance of business in order to get
full marks)
Q.17 Mr. James Stewart is a registered person under GST in the State of Maharashtra who sells
footwear to his customers locally within the same State. He has been appointed as an agent by
Toto Shoes Ltd., a company registered under GST in the State of Karnataka. During a financial
year, Toto Shoes Ltd., sends taxable goods worth ` 5.00 crore from its Bengaluru store to Mr.
James Stewart who sells such goods for ` 5.00 crore by raising invoices using the GSTIN of Toto
Shoes Ltd. Mr. James Stewart receives a commission of ` 60.00 lakh from Toto Shoes (P) Ltd.,
during the said financial year.
Compute the value of supply of Toto Shoes (P) Ltd. and Mr. James Stewart for the financial year
assuming that amounts given above are exclusive of GST, wherever applicable.

(a) Toto Shoes (P) Ltd.: Nil and James Stewart: ` 5.6 crore
(b) Toto Shoes (P) Ltd.: ` 5 crore and James Stewart: ` 5.6 crore
(c) Toto Shoes (P) Ltd.: ` 5 crore and James Stewart:` 60 lakh
(d) Toto Shoes (P) Ltd.: ` 5.6 crore and James Stewart: Nil
Ans: (c) Toto Shoes (P) Ltd.: ` 5 crore and James Stewart:` 60 lakh
Q.18 Which of the following transactions does not qualify as supply under GST law?
(a) Disposal of car without consideration and where the supplier hasnot claimed input tax credit on
such car.
(b) When a principal makes supplies to his agent who is also registered under GST and is situated
within the same State and the invoice for further supply is issued by the agent in his name.
(c) When the Head Office makes a supply of services to its own branch outside the State.
(d) When a person imports services without consideration for the purposes of his business from his
elder son living outside India.
Ans: (a) Disposal of car without consideration and where the supplier has not claimed input tax
credit on such car.
Q.19 Korelal Printon (P) Ltd., a registered person under GST in the State of Jammu & Kashmir, is
engaged in the business of offset printing and is providing services to various book publishers. A
publisher situated in the State of Himachal Pradesh, a registered person under GST, sent content
of the books to be printed by Korelal Printon (P) Ltd. in PDF format. The publisher also sent
paper worth ` 4.00 lakh (excluding GST) to the printer, free of cost for the purposes of printing its
books on 10th February. Korelal Printon (P) Ltd. raised an invoice of ` 1.50 lakh (exclusing GST)
against printing of books and returned the printed books through challan to the publisher on 20th
August.
The Proper Officer intercepted the vehicle and claimed that Korelal Printon (P) Ltd. should have
sent the invoice of ` 5.50 lakh, i.e. including the value of free of cost paper supplied by the
publisher. You may suitably advice which one of the following is the correct option-
(a) The value of supply of paper for job work is to be included in the invoice in terms of section 15 of
the CGST Act, 2017.
(b) The goods sent for job work i.e. paper sent for printing is a composite supply

(c) Korelal Printon (P) Ltd. has entered into an agreement of printing books. Therefore, he is liable to
pay tax on the gross value of ` 5.50 lakh.
(d) Korelal Printon (P) Ltd. has entered into an agreement of printing books. Therefore, he is liable to
pay tax on the net value of ` 1.50 lakh.
Ans: (d) Korelal Printon (P) Ltd. has entered into an agreement of printing books. Therefore, he is
liable to pay tax on the net value of ` 1.50 lakh.
Q.20 Which of the following is/are not considered as a supply under the CGST Act, 2017?
(a) Importation of architectural services for ` 1,00,000 for construction of residential property used for
personal purposes from unrelated person.
(b) Importation of architectural services free of cost for construction of office used for business
purposes from related person.
(c) Importation of architectural services free of cost for construction of office used for business
purposes from unrelated person.
(d) Both (a) and (c)
Ans: (c) Importation of architectural services free of cost for construction of office used for
business purposes from unrelated person.
Q.21 Which of the following is not a supply under the CGST Act, 2017?
(a) Goods supplied free of cost by X & Sons to its agent for further supply to customer at ` 5,000.
(b) Importation of accounting services (for business purposes) free of cost from a dependent father
residing in US.
(c) An expensive watch gifted to an employee for ` 50,000.
(d) A machinery disposed off free of cost on which input tax credit has been availed.
Ans: (c) An expensive watch gifted to an employee for `50,000.
Q.22 M/s. Vishu Megamart, a store located and registered under GST in Rajasthan, has come out with
big discount offers at the time of Diwali on various gift items. In order to attract more customers,
it has decided to supply a gift pack containing 5 packets of Jeeraram’s Namkeen (200 gram each)
taxable @ 12%, 1 packet of Roasted Smoked Almonds (100 gram) taxable @ 18%, 1 packet of
Cournville Chocolate (50 mg) taxable @ 28% and 1 bottle of Teal Fresh Juice (1 litre) taxable @

18% in a single basket for a single price of ` 1,000. State the type of supply and the tax rate
applicable on the same.
(a) Composite supply; tax rate of the principal item, i.e. Namkeen @18%
(b) Composite supply; highest tax rate out of all items, i.e. 28% applicable to chocolates
(c) Mixed supply; tax rate of principal item, i.e. Namkeen @18%
(d) Mixed supply; highest tax rate out of all items, i.e. 28% applicable to chocolates
Ans: (d) Mixed supply; highest tax rate out of all items, i.e. 28% applicable to chocolates
Q.23 Nandeeshwar Manufacturers sends certain category of yarn for processing to the job worker. The
job worker undertakes the processing work on the yarn as per the requirement of Nandeeshwar
Manufacturers. During the process, the job worker uses his own material also. The processed yarn
is sold by Nandeeshwar Manufacturers directly from the job worker premises. Balance quantity of
yarn and waste material is sent back by the job worker to Nandeeshwar Manufacturers. The job
worker is of the opinion that he is using his own material also in the processing and hence the
supply to Nandeeshwar Manufacturers is in the nature of supply of goods as well as services. Do
you agree with the opinion of job worker?
Ans: No, the opinion of the job worker is not fully correct. Section 7(1A) of the CGST Act provides that
when certain activities or transactions constitute a supply in accordance with the provisions of
section 7(1) of the CGST Act, they shall be treated either as a supply of goods or supply of
services as referred to in Schedule II of the CGST Act. Any processing activity carried on any
others person treated as supply of service in terms of Schedule II. The job worker, in addition to
the goods received from the principal, can use his own goods for providing the services of job work.
These goods are not supply per se, but being used in the processing activity carried out by it.
Thus, the activity undertaken by the job worker, in the given case, squarely falls within the
purview of Schedule II and shall be considered as supply of service by the job worker to
Nandeeshwar Manufacturers.
Q.24 Pyarelal Singh, registered under GST in Lucknow, Uttar Pradesh, is appointed as a delcredre agent
by Sunnykart Co. (P) Ltd. He sells eye opticals to his customers locally within the same State.
Sunnykart Co. (P) Ltd. is also registered under GST in the State of Uttar Pradesh.
During the current financial year, Sunnykart Co. (P) Ltd. supplied taxable goods worth ` 10 crore
whose open market value is ` 10.05 crore, from its Allahabad unit to Pyarelal Singh. Pyarelal Singh
has further sold these goods for ` 10.10 crore by raising invoices using his own GSTIN. Pyarelal

Singh has received a commission of ` 75 lakh from Sunnykart Co. (P) Ltd. during the year and has
guaranteed the payment of the value of such goods from the customers to Sunnykart Co. (P) Ltd.
Pyarelal Singh has also provided financial assistance in the form of larger credit period to his
customers, on which he has also earned interest of ` 15 lakh. Compute the value of supply of
Sunnykart Co. (P) Ltd. and Pyarelal Singh for the current financial year assuming that both of
them wish to adopt minimum value of supply to the extent possible.
(a) Sunnykart Co. (P) Ltd.: ` 9.09 crore and Pyarelal Singh: ` 11.00 crore
(b) Sunnykart Co. (P) Ltd.: ` 10.05 crore and Pyarelal Singh: ` 10.85 crore
(c) Sunnykart Co. (P) Ltd.: ` 10.15 crore and Pyarelal Singh: ` 10.85 crore
(d) Sunnykart Co. (P) Ltd.: ` 10.15 crore and Pyarelal Singh: ` 75.00 lakh (RTP- Nov21)
Ans: (a)

3 – Levy & Collection of tax
Q 1. What do you mean by Inter State and Intra State Supply?

Ans: Refer relevant para of Section 7 & Section 8 of IGST Act, 2017 of Main book.
Q 2. Are Exports and supplies to SEZ units/Developers out of the ambit of GST?
Ans: No, they are leviable to GST under IGST Act, 2017. However, the tax burden on the same will be
neutralized by granting refunds to persons making such supplies u/s 16 of IGST Act as Zero-rated
supplies subject to such safeguards, conditions and procedures as may be prescribed. As per
section 7 of IGST Act the supplies made to and from SEZ are deemed to be treated as an inter
State Supply.
Q 3. Mention the commodities kept outside the purview of GST?

Ans: Goods and services Tax (GST) is a tax on supply of goods or services or both, except supply of
alcoholic liquor for human consumption. So, alcohol for human consumption is kept out of GST by
way of definition of GST on constitution.
Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas
and aviation turbine fuel have temporarily bene kept out and GST council shall decide the date
from which they shall be included in GST.
Q 4. 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?
Ans: Legal Provision: Government may notify [on the recommendations of the GST Council] specific
categories of services the tax on intra-State supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it. Services by way of providing
accommodation in hotels through electronic commerce operator are a specified service for said purpose.
Discussion & Conclusion: 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.

Q 5. Mr. Y, a resident of Mumbai, submits a cab request to speed cabs for travelling from Mumbai to
Nasik. Speed cabs is a mobile application owned and managed by Speed Technology Ltd. Located
in Mumbai in India. The application facilitates a potential customer to connect with persons
providing cab service under the brand name of speed cabs;
After Mr. Y pays the cab charges using his debit card, he gets details of the driver, Mr Y and
the cabs registration number. With reference to the GST Act, discuss who is liable to pat GST in
this case. Will your answer be different, if speed technologies Ltd. Is located in New York and
does not have the representation in India?
Ans: As per section 9(5) of CGST Act and 5(5) 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 ECO if such services are supplied through it. Services by way of transportation of
passengers by a radio taxi, motorcab, maxicab, and motorcycle is one such services among the
notified category.
In the given case the above liability to pay GST shall be upon the speed technologies ltd located
in India
In 2nd case if speed technologies ltd located in New York i.e. a Non-Taxable territory and also
does not have a representation in India then he shall appoint a person in the taxable territor y
i.e. India for the purpose of paying tax and such person shall be liable to pay tax.
Q 6. Define Taxable Territory & Non-Taxable Territory?

Ans: As per section 2(109), taxable territory means the territory to which the provision of the CGST
applies i.e. whole of territory of India
Whereas a Non-taxable territory has been defined u/s 2(79) of CGST Act as a Non-taxable
territory means the territory which is outside the taxable territory.
Q 7. Differentiate between a taxable supply and Non-taxable supply under GST?

Ans:
Taxable Supply Non-Taxable Supply
As per Section 2(78) of CGST Act, means
As per Section 2(108) of CGST Act,
supply of goods or services or both which is
means supply of goods or services or both
not leviable to GST under this act or under
which is leviable to GST under this act
IGST
Falls under the purview of Supply as per Does not fall under the purview of Supply as
Section 7 of CGST Act per Section 7 of CGST Act
E.g. - Supply of Refrigerator, Air
E.g. - Supply pf Petrol & Diesel.
Conditioner Etc.

Q 1. What are taxes levied on an Intra-State Supply?

A. CGST
B. SGST
C. Both CGST and SGST
D. IGST
Ans: C Both CGST and SGST
Q 2. What is the maximum rate for CGST & SGST tax rate?
A. 40%
B. 20%
C. 28%
D. 56%
Ans: b: 20%
Q 3. Which Section provides for Inter State Supply?

A. Section 7 of IGST Act, 2017
B. Section 8 of IGST Act, 2017
C. Section 9 of CGST Act, 2017
D. Section 5 of IGST Act, 2017
Ans: A: Section 7 of IGST Act, 2017
Q 4. If Location of supplier and place of supply of goods are in two different states, two
different union territories or a state or a union territory. Then it is treated as:
A. Intra State Supply
B. Inter State Supply
C. Export of goods
Ans: B: Inter State Supply

Q 5. Which of the following supply shall be considered as an Inter State Supply as per
Section 7 of IGST Act, 2017?
A. When the supplier is located in India and the place of supply is outside India
B. To or by a Special Economic Zone developer or a Special Economic Zone unit
C. In the taxable territory, not being an intra-State supply and not covered elsewhere
in this section
D. All of the above
Ans: D: All of the above
Q 6. Lucky Ltd has 2 units in India Unit 1 in Mumbai and Unit 2 in Ahmedabad. State
whether 2 units will be considered as an establishment of distinct persons.
A. Both Unit will be considered as an establishment of distinct persons.
B. Both Unit will be considered as a separate entity.
C. Both of above
Ans: A: Both Unit will be considered as an establishment of distinct persons.
Q 7. Which of the goods have been kept outside the ambit of GST?
A. Petroleum Crude
B. High Speed Diesel
C. Motor Spirit
D. All of the above
Q 8. Which of the following services have been notified by government where tax shall be paid
by ECO if such services supplied through it.
A. Services by way of transportation of passengers by a radio- taxi, motor cab, maxi cab and
motor cycle.
B. Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites
or other commercial places meant for residential or lodging purposes,
C. Services by way of house-keeping, such as plumbing, carpentering etc.
D. All of the above

Q 9. Which of the following services have been notified by government where tax shall be paid
by ECO if such services supplied through it.
A. GTA Services
B. Sponsorship Services
C. Legal Services
D. Services by way of transportation of passengers by a radio- taxi, motor cab, maxi cab and
motor cycle.
Ans: D: Services by way of transportation of passengers by a radio- taxi, motor cab,

maxi cab and motor cycle.
Q 10. Comment whether the statement is correct or not: If the ECO is located in taxable territory
then the Person liable to pay Tax is the ECO, If the ECO doesn’t have physical presence
in the taxable territory then Person liable to pay Tax is the person representing ECO.
A. Yes
B. No
D. All of the above
Ans: A: Yes.
Q 11. Examine the type of transaction: Mr Kamal (Supplier) of Mumbai supplied some goods to
Mr Ankit (Recipient) of Pune. Here location of Supplier and Place of Supply are in same
states.
A. Intra State Supply since location of supplier and place of supply are in same states.
B. Inter State Supply since both are in different city
Ans: A: Intra State Supply since location of supplier and place of supply are in same
states.

Q 12. Which section provides GST Liability on E Commerce Operator under CGST Act.
A. Section 9 (3) of CGST Act, 2017
B. Section 9 (4) of CGST Act, 2017
C. Section 9 (5) of CGST Act, 2017
D. Section 5 (5) of IGST Act, 2017
Ans: C: Section 9 (5) of CGST Act, 2017
Q 13. If the ECO is located in taxable territory then the person liable to pay tax is:
A. Supplier of Service
B. Recipient of Service
C. ECO
Ans: C: ECO
Q 14. Imports will be treated as

A. Interstate Supply
B. Intrastate Supply
C. Neither of two
D. Any one depending upon state in which imported
Ans: Interstate supply
Q 15. Reverse Charge is applicable on

A. All Goods
B. All Services
C. Both
D. Notified Goods and services
Ans: d. Notified Goods and services

Q 16. If Mr. A of Mumbai supplies goods to Unit XYZ Ltd in SEZ in Mumbai which tax will be
levied ?
A. IGST
B. CGST and SGST
C. CGST and UTGST
Ans: a IGST
Q 17. Minimum IGST Rate for Goods is

A. 0.05%
B. 0.1%
C. 0.2%
D. 0.01%
Ans: 0.1%
Q 18. Minimum IGST Rate for Services is

A. 5%
B. 3%
C. 0.25%
D. 12%
Ans: 5%
Q 19. 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 as
A. Intra state supplies
B. Interstate supplies
C. Exports
D. Imports
Ans: b interstate supplies

Q 20. Mr. John came to India for 2 months on a visit to India. He stays in Mumbai and
purchases goods from a shop in mumbai, Which tax should be levied the said purchase?
A. CGST
B. SGST
C. Both CGST and SGST
D. IGST
Ans: D: IGST
Q1. Mr. Sanjay of New Delhi made a request for a Motor cab to "Super ride" for travelling from New
Delhi to Gurgaon (Haryana). After Mr. Sanjay pays the cab charges using his debit card, he gets
details of the driver Mr. Jorawar Singh and the cab's registration number.
"Super ride" is a mobile application owned and managed by D.T. Ltd. located in India. The
application "Super ride" facilitates a potential customer to connect with the persons providing cab
service under the brand name of "Super ride".
D.T. Ltd. claims that cab service is provided by Mr. Jorawar Singh and hence, he is liable to pay
GST. With reference to the provisions of IGST Act, 2017, determine who is liable to pay GST in
this case?
Would your answer be different, if D.T. Ltd. is located in New York (USA)? Also briefly state the
statutory provisions involved.
Ans: Section 5 of IGST Act, 2017 provides that tax on inter-State supplies of specified services notified
by Government shall be paid by the electronic commerce operator (ECO) located in taxable
territory if such services are supplied through it. Services by way of transportation of passengers
by a motor cab supplied through ECO is one of the notified service.
Electronic commerce operator means any person who owns, operates or manages digital or
electronic facility or platform for supply of goods or services or both, including digital products
over digital or electronic network.
Since DT Ltd. owns and manages a mobile application to facilitate supply of pas senger
transportation service in motor cabs over a digital network, it is an ECO. Thus, DT Ltd., an ECO
located in India is liable to pay GST in the given case.
However, where an ECO does not have a physical presence in the taxable territory, perso n
representing ECO is liable to pay tax. Further, where ECO has neither the physical presence nor
any representative in the taxable territory, person appointed by the ECO for the purpose of paying
the tax is liable to pay tax.
Accordingly, if D.T. Ltd. is located in New York (USA), any person representing DT Ltd. for any
purpose in India is liable to pay tax.

Further, if D.T. Ltd. also does not have a representative in India, it shall appoint a person in
India for the purpose of paying tax and such person shall be liable to pay tax.
Q.2 Harishchandra of New Delhi makes a request for a motor cab to "Super ride" for travelling from
New Delhi to Gurgaon (Haryana). After Harishchandra pays the cab charges using his debit card,
he gets details of the driver - Jorawar Singh and the cab's registration number.
"Super ride" is a mobile application owned and managed by Perry India Ltd. located in India. The
application "Super ride" facilitates a potential customer to connect with the persons providing cab
service under the brand name of "Super ride".
Perry India Ltd. claims that cab service is provided by Jorawar Singh and hence, he is liable to
pay GST. With reference to the provisions of IGST Act, 2017, determine who is the person li able
to pay GST in this case? (MTP- Nov21)
Ans: Section 5(5) of the IGST Act, 2017 provides that tax on inter-State supplies of specified services
notified by Government shall be paid by the electronic commerce operator (ECO) located in
taxable territory if such services are supplied through it. Services by way of transportation
ofpassengers by a motor cab supplied through ECO is one of the notified service.
Electronic commerce operator (ECO) means any person who owns, operates or manages
digital or electronic facility or platform for supply of goods or services or both [Section 2(45)].
Since Perry India Ltd. owns and manages a mobile application in the name of ‘super ride” to
facilitate supply of passenger transportation service in motor cabs over a digital network, it is an
ECO. Thus, Perry India Ltd., an ECO located in India, is liable to pay GST in the given case.

4 – Reverse Charge Mechanism
Q 1. Who is responsible to pay taxes?

Ans: Generally, the supplier is liable to pay taxes. However, following are certain exceptions;
i. 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) supplies made by
unregistered person, the tax on which shall be paid by the recipient under reverse charges;
and
ii. 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 community operator
if such services are supplied through it.
Q 2. State difference between reverse charge u/s 9(3) and u/s 9(4)?
Ans: Following is the difference between Reverse charge u/s 9(3) and 9(4).
Section 9(3) Section 9(4)
Applicable in case of supply of goods or Applicable in case of specified category of
services or both, notified by the supply of taxable goods or Services of both by
Government on recommendation of council an unregistered supplier to a specified class of
registered person
It Does no matter whether the supplier is It Only where supplier is an unregistered
registered or not person
Example: Tax in respect of Services of Example: Cement is received from an
advocate availed by a business entity is unregistered person, the promoter shall pay
payable on reverse charge basis. Here the tax on supply of such cement on reverse
liability to pay GST shall be upon the charge basis, under section 9(4) of the CGST
Business entity. Act,
Q 3. What is the effect of reverse charge on input tax credit?

Ans: As regards the recipient who pays tax on reverse charge basis, tax so paid would be available as
credit subject to section 17. As regards the supplier whose tax is paid by the recipient, value of such
supply will be treated as ‘exempt supply’ of the Supplier & Supplier is not eligible for ITC u/s 17.
For example: An lawyer has provided legal services to M/s Priya Pvt. Ltd. worth Rs 500000 & GST
@ 18% i.e. Rs 90,000 is levied on this service. The liability to discharge the GST of Rs 90000 shall
be upon M/s Priya Pvt. Ltd. & the credit of tax so paid would be available as credit to M/s Priya
Pvt. Ltd. being the recipient.
For the supplier it shall be treated as an exempt supply & not eligible for ITC u/s 17.

Q 4. In accordance with the provisions of GST Act, Give answers to the following pertaining to Reverse
Charge:
1. Is GST payable for both the components – CGST and SGST (or UTGST)?
2. Is GST on reverse charge basis payable on inter – State supply also?
3. Is reverse charge applicable on supply of goods also or is it only on supply of services?
4. In case supplier eligible to threshold exemption, is reverse charge applicable?
Ans:
1. Yes, GST in India is a dual – tax and the provision of the CGST Act are applicable in
SGST/UTGST Act.
2. 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.
3. Payment of tax on reverse charge is applicable on both goods & services.
4. 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’ & specified
recipient is registered. Thus, even though the supplier is eligible under threshold exemption
reverse charge is applicable. In case of 9 (3) even if the supplier is eligible for threshold
exemption it does not excuse recipient from liability to pay tax u/s 9(3).
Q 5. M/s Sibbal, a firm of lawyers rendered legal advice to Mr. Kapil, an architect, and PQR Ltd
Consultancy agency during October, 20XX. Both Mr. Kapil and PQR Ltd are not entitled threshold
exemption in the said financial year. Who is liable to pay GST in this case? your answer be different
if Mr. Kapil and PQR Ltd. Sought legal advice from Mr. A, a lawyer.
Ans: Legal Provision: As per Notification No. 13/2017 Central tax and Notification No. 10/2017 IGST
Act, In case services supplied by an individual advocate including a senior advocate by way of
legal service, to a business entity. The liability to pay GST shall be upon the recipient.
Discussion and Conclusion: In the given case, as the services are provided by firm of lawyers
M/s Sibbal to PQR ltd and Mr. Kapil a business entity thus the liability to pay GST shall be
upon PQR ltd and Mr. Kapil. The answer will not change even in case where Mr. Kapil and PQR
ltd seek legal advice from individual lawyer.
Q 6. From the following information determine the person liable to pay Goods & Service tax both
supplier and Recipient or located in India-
i. Mr. Ankit is an agent of Life Insurance Co. The insurance company pays commission (excluding
tax) Rs 8 Lakh to him. Mr. Ankit claims that No. GST leviable on services provided by him as
his value of taxable service does not exceed Rs 20 lakhs.
ii. LMN Ltd. availed service of Kamal Goods transport agency for transportation of goods by road
from factory located in New Delhi to its Jaipur depot and paid freight of Rs 200000
iii. AT Jewelers Ltd paid Rs 30 Lakhs for sponsorship of Miss India beauty pageant for sponsorship
services.

iv. Legal services provided by VHB & Co. a partnership firm of New Delhi to Tata Motors Ltd
Mumbai Rs 70,00,000
v. Service provided by a director of a company (not in capacity of employee) to the company:
Rs 10 lakh.
Ans: The provisions applicable are as per section 9(3) of CGST Act and 5(3) of IGST Act, the
Government via notification 13/2017 CT and Notification No. 10/2017 of IGST Act.
i. In this case Life Insurance Company will be liable to pay GST on reverse charge basis.
Hence, GST liability shall be Rs 800000 i.e. on the value of commission Mr. Ankit’s claim
that his turnover does not exceeds Rs. 20 lakhs has no relevance here, because under
reverse charge/threshold limit is not available.
ii. 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 @ 5% without benefit of ITC: Then reverse charge shall
be applicable and GST shall be paid by XYZ Ltd. since it is liable to pay freight for
transportation of goods.
iii. In this case sponsorship services are received by AT Jewelers Ltd. Hence, it will be liable
to pay goods & service tax under reverse charge mechanism.
iv. 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.
v. In case of any service provided by director of company of body corporate to company the
goods & service tax is payable by company or body corporate.
Q 7. Falcon Ltd, Nagpur had appointed a senior advocate Mr. Salve for representation of company’s legal
matter at Mumbai as regarding to representation of the matter there. Determine the GST liability
as who is liable to pay? Would your answer differ if Falcon Pvt Ltd. appoints local advocate Mr.
Sagar if further appoints Mr Salve for representation.
Ans: Legal Provision: As per section 9(3) of CGST Act, In case of service provided by on 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.
Discussion and Conclusion: No, liability to pay tax is on Falcon Pvt Ltd. (Nagpur) even through Mr.
Salve appointed through another advocate Mr. Sagar.
Q 8. Bank of Baroda located in Nagpur appointed Mr. Govind as a recovery agent for collecting outstanding
balance of loan from one of its customer Mr. Govind provided service to Bank of Baroda for which
is charged a fee. Determine the tax implications as per GST Act.
Ans: Legal Provision: As per section 9(3) of CGST Act, read with Notification No. 13/2017 Central tax
(Rate) and Notification No. 10/2017 IGST Act Service supplied by a recovery agent to banking
company in such a case reverse charge shall be applicable. Thus the liability to pay GST shall be
upon the recipient.

Conclusion: In the given case Bank of Baroda shall be liable to pay GST for services provided by
Mr. Govind as a recovery agent.
Q 9. Sudha Murthy a renowned writer and author of book transferred the copyright of his published book
to Film Production ltd for a consideration. Examine the tax implications as per GST Act?
Ans: Legal Provision: 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 an author by way of transfer or
permitting the use of enjoyment of a copyright covered under sec 13(1) (a) of the Copyright Act,
1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company,
producer or the like reverse charge shall be applicable.
Conclusion: Thus in the given case the liability to pay GST shall be upon Film Production ltd as it
is the recipient of service.
Q 10. Tirupati urban cooperative housing society availed the transport services of Verma transports Pvt.
Ltd. for transport of goods by road on a consignment agreement. Determine the tax implication as
per GST.
Ans: Legal Provision: As per section 9(3) of CGST Act read with Notification No. 13/2017 Central tax
(Rate) and Notification No. 10/2017 IGST Act, Supply of Services by a goods transport agency (GTA)
in respect of transportation of goods by road to-
(c)Any co-operative society established by or under any law; The liability to pay GST shall lie upon
the recipient of service as per reverse charge mechanism.
Conclusion: Thus in the given case Tirupati cooperative housing society shall pay the GST. If GTA
has opted to pay GST @ 5% only then reverse charge will be applicable (a) Sharma transport
charged @ 12% (b) claimed ITC (c) Normal charge.
Q 11. 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.
Ans: The advice given by M/s 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. 13/2017-Central Tax
(Rate) have been issued. Similar notifications have been issued under IGST Act also.
Reverse charge also applies to specified supplies received by a specified registered person from
unregistered persons under section 9(4)/5(4) of CGST/IGST Act, 2017.
Q 12. State person liable to pay GST in the following independent cases provided recipient is located
in the taxable territory:
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 registered
business entity.
Ans: a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business
entity located in the taxable territory tax 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 anybody corporate or
partnership firm case. In this 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) As per Sl. No. 5A, services supplied by CG, SG, Union Territory / Local authority by
way of renting of immovable property to a person registered under CGST Act, 2017 then
the recipient of services being a registered person shall be liable to pay taxes under reverse
charge basis. Applying the above provision in given case business entity being a registered
person shall be liable to pay tax.
Multiple Choice Question
Q 1. Mr. A has supplied services to Mr. B which are covered under RCM. Both of them are
located in Maharashtra. Which tax shall be paid?
A. CGST & SGST
B. IGST
C. Central Sales Tax (CST)
D. UTGST & IGST
Ans: a; CGST & SGST
Q 2. Goods transportation agency (GTA) is registered and does not avail the ITC. He provides
GTA services to another registered person. Will this transaction fall under RCM? What
shall be the GST Rate?
A. RCM Applicable, Rate – 5%
B. Forward Charge Applicable, Rate – 12%
C. Forward Charge Applicable, Rate – 18%
D. Supply is exempt
Ans: a; RCM Applicable, Rate – 5%

Q 3. Reverse charge is applicable:
A. Only on intra-State supplies
B. Only on inter-State supplies
C. Both intra-State and inter-State supplies
Ans: c; Both Intra – State and Inter State Supplies
Q 4. Who are the persons liable to pay tax under reverse charge mechanism?
A. Registered Supplier
B. Registered Recipient
C. Unregistered Supplier
D. Unregistered Recipient
Ans: b; Registered Recipient
Q 5. What are the supplies to which the reverse charge mechanism could be applied?
A. Outward supplies of Goods or Services or both
B. Supply which is not liable to GST
C. Exempted Supply of Goods or Services
D. Inward supplies of Goods or Services or both
Ans: d; Inward supplies of Goods or Services or both
Q 6. Input tax credit in case of reverse charge mechanism can be availed by:
A. Recipient of Goods or Services
B. Supplier of the Goods / Services
C. Transporter
D. Both a and b
Ans: a; Recipient of Goods or Services
Q 7. Is ITC available to the supplier, supplying goods / services under Reverse Charge Mechanism
a Yes
b No

c Both a and b
d None of the above
Ans: B: No.
Q 8. Is Reverse Charge mechanism applicable to E – Commerce Operator?

A. Yes
B. No
C. Not Applicable
D. As may be prescribed by authority.
Ans: a; Yes.
Q 9. What is the manner of payment of tax under Reverse charge?

A. Through Electronic credit Ledger
B. Through Electronic cash Ledger
C. Through Electronic liability Ledger
Ans: b; Through Electronic cash Ledger.
Q 10. Can the person avail the input tax credit of the tax paid under RCM?
A. Yes
B. No
C. May be
Ans: A: Yes
Q 11. Mr. Pramod a lawyer provides representational services to Xylo Ltd. having a turnover of
Rs.15 lakhs. Is RCM applicable?
A. Yes
B. No
C. May be

Ans: B: No
Q 12. Central Government gave a piece of land on rent to M/s ABC Pvt. Ltd., registered in Delhi
who shall pay tax? Is RCM applicable?
A. CG – RCM Applicable
B. CG – RCM Not Applicable
C. ABC Ltd. – RCM Applicable
D. ABC Ltd. – RCM not Applicable
Ans: C: ABC Ltd. – RCM Applicable
Q 13. RIL Ltd. appointed Mrs. Neeta Ambani as their independent director and paid him the sitting
fees. Is this supply covered under RCM?
A. Yes, RCM Applicable
B. No
C. Supply of Director is Exempt
Ans: A: Yes, RCM Applicable
Q 14. Comment on the correctness of the sentence – “Person can take the credit of the tax paid
under RCM only when he has paid the tax.”
A. Correct
B. Incorrect
C. Partly Correct
Ans: a; Correct
Q 15. Supply under reverse charge mechanism involves movement of goods/provision of services by:
A. Registered supplier to registered recipient
B. Unregistered supplier to specified registered recipient
C. (a) and (b), both
Ans: c; a & b both

Q 16. Can Input tax credit standing in the Electronic credit ledger be utilized for payment of tax
under Reverse Charge Mechanism?
A. Yes
B. No
C. Not applicable
Ans: B: No.
Q 17. Which of the following services covered under RCM?

A. Services by Director
B. Services by Insurance Agent to Insurance Company
C. GTA Services
D. All of the above
Q 18. Mr A avails a service on which tax amounting to Rs. 40000/- is payable under Reverse
charge basis and he is having Rs. 45000 in his credit ledger. State whether he can utilise
the same for payment of tax under RCM basis?
A. Pay Rs. 40000/- using credit ledger
B. Pay Rs. 40000/- using cash ledger
C. Pay Rs. 20000/- using credit ledger and balance using cash ledger.
D. Any of the above
Ans: B: Pay Rs. 40000/- using cash ledger
Q 19. GTA is under expansion mode and is acquiring lot of trucks for the transportation. It wants
to take the ITC on such capital goods. What rate shall he charge in order to avail the ITC?
A. 18%
B. 12%
C. 5%
D. 28%
Ans: B: 12%

Q 20. Mr. Rahul, a lawyer provides representational services to ABC Pvt Ltd. having a turnover of
Rs. 25 Lakhs. Whether RCM is applicable on such supply?
A. Yes
B. No
C. May be
Ans: A: Yes
Q 21. Bank of India appoints Mr. Abhay as a recovery agent in order to recover the amount paid
to a defaulter Mr. B. who shall pay the tax in this supply?
A. Bank of India (Recipient)
B. Mr Abhay (Supplier)
C. Mr B
D. Supply of such services is exempt
Ans: A: Bank of India (Recipient)
Q 22. Which of the following services are covered under Reverse Charge Mechanism of CGST
Act, 2017?
I. Legal Consultancy
II. Goods Transport Agency
III. Manpower Supply
IV. Rent-a-Cab
A. i & iii
B. i & iv
C. i & ii
D. All the above
Ans: C: I & II
Q 23. In case of GTA services provided to an Individual not registered under GST and not a
business entity, liability to pay GST is on
A. Supplier
B. Recipient
C. Both

D. Exempt
Ans: D: Exempt
Q 24. In case of sponsorship services provided by Mr. A to M/s AB Ltd., liability to pay GST is
on:
A. Mr. A (Supplier)
B. M/s AB Ltd. (Recipient)
C. Both
Ans: B: M/s AB Ltd. (Recipient)
Q 25. In case of renting of land, inside an Industrial estate, by State Government to a registered
manufacturing company, GST is:
A. Exempted
B. Normal Charge Applicable
C. Reverse Charge Applicable
Ans: C: Reverse Charge Applicable
Q 26. Sitting fees received by director of XYZ Ltd., is liable for GST in the hands of the
A. Director
B. XYZ Ltd.
C. Both of above
Ans: B: XYZ Ltd.
Q 27. Reverse charge under section 9(3) of the CGST Act is applicable on:-
A. Only on Notified services
B. Only on Notified Goods
C. Notified goods & Services

Ans: C: Notified goods & Services
Q 28. In case M/s. PQR Ltd., a registered person, has availed rent-a-cab service from M/s ABC
Travels (Proprietor) service then which one of the following is true:
A. Reverse charge is applicable as this is a notified service.
B. Reverse charge is applicable is not applicable.
C. Joint charge is applicable
Ans: B: Reverse charge is applicable is not applicable.
Q 29. Shraddha Sharma, a Playback Singer sings a song for Saregama India Ltd. for consideration
of Rs. 5 Lakh. Who is liable to pay tax on the same.
A. Shraddha Sharma (Supplier of Service)
B. Saregama India Ltd. (Recipient of Service)
C. Service is Exempt from GST
Ans: B: Saregama India Ltd. (Recipient of Service)
Q 30. As per IGST Provisions, Goodluck Ltd. of Mumbai imports some machinery from China
through sea by taking transportation services from COSCO Shipping Co. (a vessel transport
company located outside India) and pays the freight for the same. Who is liable to pay tax
on freight charges.
A. COSCO Shipping Co. (Supplier of Service)
B. Goodluck Ltd. (Recipient of services)
C. Service is exempt
Ans: B: Goodluck Ltd. (Recipient of services)

Q.1 Arpan Singhania is a director in Narayan Limited. The company paid him the sitting fee amounting
to ` 25,000, for the month of January. Further, salary was paid to Arpan Singhania amounting
to ` 1.5 lakh for the month of January on which TDS was also deducted as per applicable
provisions under Income-tax law. Tapasya & Associates, in which Arpan Singhania is a partner,
supplied certain professional services to Narayan Limited in the month of January for an amount
of ` 2 lakh. Discuss the person liable to pay tax in each of the supplies involved in the given
case.
Ans: Sitting fee paid to director – As per reverse charge notification, tax on services supplied by a
director of a company/ body corporate to the said company/ body corporate, located in the taxable
territory, is payable under reverse charge. Hence, in the present case, the sitting fee amounting
to ` 25,000, payable to Arpan Singhania by Narayan Limited, is liable to GST under reverse charge
and thus, recipient of service - Narayan Limited – is liable to pay GST on the same.
Salary paid to director - As per Circular No.140/10/2020 GST dated 10.06.2020, the part of
director’s remuneration which is declared as salary in the books of a company and subjected to
TDS under section 192 of the Income-tax Act, are not taxable being consideration for services
by an employee to the employer in the course of or in relation to his employment in terms of
Schedule III. Therefore, in the given case, the salary received by Arpan Singhania of ` 1.5 lakh is
not liable to GST.
Services provided by Tapasya & Associates – Tapasya & Associates have rendered certain
professional services to Narayan Limited. The fact that Arpan Singhania is a partner in Tapasya
& Associates and a director in Narayan Limited does not have any impact on the taxability of
the professional services supplied by Tapasya & Associates to Narayan Limited. The professional
services provided by Tapasya & Associates to Narayan Limited are liable to GST under forward
charge and thus, supplier - Tapasya & Associates – is liable to pay GST on the same.

5 – Composition Scheme
Exercise Questions & Answers
Q 1. Pepper & Salt Ltd., registered in Madhya Pradesh has the turnover amounting to Rs. 80 lakh in the
FY 2017-18. It wants to avail the benefit of composition scheme in the FY 2018-19. You are required
to advise Pepper and Salt Ltd. regarding the availability of composition scheme in the year 2018-19.
Would your answer be different if Pepper & Salt Ltd. Would be engaged in Arunachal Pradesh?
Ans: Legal Provision: Pepper & Salt Ltd. can avail the benefit of the composition scheme in the year
2018-19 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. 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:-
(a) Either he is not at all engaged in supply of services other than restaurant services or
In case he supplies services other than restaurant services, value of such services does not
exceed 10% of the turnover in a State/Union Territory in the preceding financial year
or 5 lakh, whichever is higher.
(b) It is not engaged in making any supply of goods which are not taxable under the CGST
Act/SGST Act/ UTGST Act.
(c) Pepper & Salt Ltd. do not make any inter-State outward supplies of goods.
(d) It does not supply goods through an electronic commerce operator.
(e) It does not manufacture ice cream, pan masala and tobacco etc.
The limit of aggregate is Rs. 75 lakhs for 8 special category states viz 1. Arunachal Pradesh, 2.
Uttarakhand, 3. Manipur, 4. Meghalaya, 5. Mizoram, 6. Nagaland, 7. Sikkim, 8. Tripura,
Conclusion: If Pepper & Salt Ltd. is registered in Arunachal Pradesh, it can not avail the benefit of
composition in the year 2018-19 as its turnover in the preceding financial year (Rs. 80 lakhs) exceeds
the threshold limit (Rs. 75 lakhs).
Q 2. A person availing composition scheme in Haryana during a financial year crosses the turnover of
Rs. 1.5 crore during the course of the year i.e. he crosses the turnover of Rs. 1.5 crore in December?
Will he be allowed to pay tax under composition scheme for the remainder of the year, i.e. till
31st March?
Ans: No. The option to pay tax under composition scheme lapses from the day on which the
aggregate turnover of the person availing composition scheme during the financial year exceeds
the specified limit (` 1.5 crore). He is required to file an intimation for withdrawal from the
scheme in prescribed form within 7 days from the day on which the threshold limit has been
crossed.

Q 3. Determine whether the supplier in the following cases are eligible for composition levy provided
their turnover in preceding year does not exceed Rs. 1.5 crore:
(i) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods
in neighbouring States.
Ans: As per Section 10(2) of CGST Act, 2017. Since supplier of inter-State outward supplies of
goods is not eligible for composition levy, Sugam Manufacturers is not eligible for
composition levy.
Q 4. Mohan Enterprises has two registered business verticals in Delhi. Its aggregate turnover for the
preceding year for both the business verticals was Rs. 90 lakh. It wishes to pay tax under
composition levy for one of the vertical in the current year while under normal levy for other
vertical. You are required to advice Mohan Enterpises whether he can do so?
Ans: Legal Provision: As per Section 10(2), A registered person with an aggregate turnover in a preceding
financial year up to Rs. 1.5 crore is eligible for composition levy in Delhi. Since the aggregate
turnover of Mohan Enterprises does not exceed Rs. 1.5 crore, it is eligible for composition levy in
the current year.
However as per proviso to section 10(2), 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.
Discussion & Conclusion: Thus, Mohan Enterprises either have to opt for composition levy for both
the verticals or under normal levy for both the verticals.
Q 5. XYZ ltd is a manufacturing company located in Bangalore. During the financial year 2016-17 total
value of supplies including inward supplies taxed under reverse charge basis are 1,04.00,000. The
breakup of supplies is as follows:-
i. Intra state supplies of goods chargeable to Nil rate of GST- Rs.15,00,000
ii. Intra state supplies made under forward charge - Rs.75,00,000
iii. Intra state supplies of goods exempted under section 11 of CGST act Rs.9,00,000
iv. Inward supplies of goods on which tax is payable under RCM - Rs.5,00,000
Explain whether XYZ is eligible to opt for Composition scheme in Financial year 2017-18.
Ans: Legal Provision: As per section 10 (1) of CGST Act, a registered person whose aggregate turnover in
the preceding financial year does not exceed 1.5 crore may opt for payment of tax under composition
scheme
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 or reverse charge basis)

• exempt supplies
• export 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 cases :-

Sr No Particulars Amount (In Rs. )
1 Supplies chargeable to nil rate of GST 1500000
2 Supplies made under forward charge 7500000
3 Supplies of goods under exempted category 900000
Inward supplies of goods on which tax is payable under RCM (to
4 0
be excluded)
Total 9900000
Since, the aggregate turnover does not exceed Rs. 1.5 Crore during the preceding financial year
i.e. 2016-2017, thus XYZ ltd shall be eligible to opt for composition scheme for the financial year
2017-2018.
Q 6. Laksh Ltd. is a manufacturing Company located in Karnataka, has been registered under
composition scheme furnishes the following information for the financial year 2018-19. It requires
you to determine its composition tax liability and total tax liability in financial year 2018-2019
total value of supplies including inward suppliers taxed under reverse charge basis are Rs.
82,00,000. The breaking of suppliers is as follows :-
i) Intra state suppliers of auto spares V units chargeable to 12% GST Rs. 24,00,000
ii) Intra state suppliers of auto spares X units chargeable to 5% GST Rs. 36,00,000
iii) Inward suppliers on which tax payable under RCM (GST Rate 12%) Rs.640,000
iv) Intra state suppliers wholly exempt under section 11 of CGST Act Rs. 15,60,000
Ans: The composite tax liability of Laksh Ltd. shall be as under:
1) Computation of turnover in state and composite tax for financial year 2018 -2019
Amount
Sr No Particulars
(In Rs.)
1 Intra state suppliers of auto spares “Y” units 2400000
2 Intra state suppliers of auto spares “X” units 3600000
Inward suppliers on which tax payable under
3 Nil
RCM (GST Rate 12%)

4 Intra state suppliers wholly exempt under section 11 of CGST Act 1560000
Total Turnover in State 7560000

CGST @ 0.5% 37800
SGST @ 0.5% 37800
Total Composite Tax 75600
2) Tax payable under reverse charge basis:

Sr No Particulars Amount (In Rs. )
Inward supplies on which tax payable under RCM 640000

Rate of GST 12%
Tax payable under RCM 76800
Therefore, total tax payable by Laksh Ltd. is Rs. 1,52,400 i.e., composite tax + tax Payable
under RCM.
Q 7. 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 2017-18 is 70 lakh. He opted for
composition levy in the year 2018-19 and paid tax for the quarter ending June, 2018 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.
Ans: Legal Provision: 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 Rs. 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.
D i s c u s s i o n : In the present 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. Moreover, 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.
Conclusion: Thus, levy of penalty on Mr. Zaid is valid in law in terms of section 10(5). The action
taken by proper officer is valid in law.

Q 8. Bansal and Chandok is a partnership firm of Chartered Accountants in Jaipur (Rajasthan). The
firm specialises in bank audits providing services to banks across India. It has an annual turnover
of Rs. 110 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 firm in preceding
financial year is Rs. 40 lakhs?
Ans: Legal Provision : As per section 10(2A) of the CGST Act, 2017, a registered person, not eligible to
opt to pay tax under 10(1) OR (2) and whose aggregate turnover in the preceding financial year did
not exceed 50 lakh, may opt to pay, in lieu of the tax payable by him under section 9(1), an
amount of tax calculated at such rate as may be prescribed, but not exceeding three percent (CGST
3% and SGST 3%) of the turnover in State or turnover in Union territory,
Discussion: On the Basis of above provisions, a firm of Chartered Accountants, being a supplier
of professional services is eligible to apply for composition scheme u/s 10(2A). However its
turnover in the preceding financial year was 110 lakh , which exceeds the limit prescribed i.e
exceed 50 lacs.
Conclusion:
Therefore composition scheme u/s 10(2A) will not be available to Bansal and Chandak. However if
the turnover of the firm in preceding financial year is 40 lakhs, then the firm can avail the
benefit of scheme u/s 10(2A) and pay tax @6% (CGST+SGST)
Q 9. Ramsewak, a manufacturer has opted for composition scheme in the financial year 2019-2020. His
aggregate turnover in FY 2018-19 is 60 lakh. In FY 2019-2020 upto what value services he can
supply?
Ans: In FY 2019-2020, he can supply services [other than restaurant services] upto a value of not
exceeding:
(a) 10% of 60 lakh, i.e. 6 lakh or
(b) 5 lakh,
whichever is higher.
Thus, he can supply services upto a value of 6 lakh in FY 2019-2020.
Q 10. Mr. Siddhant is a service provider and not a registered person during Financial Year 2019-20. His
Aggregate turnover during the preceding financial year was 10 lakhs. From 1st April 2020 to September
2020, he achieves the aggregate turnover of Rs. 20 Lakhs and is liable for registration under GST
Laws w.e.f. 1st October 2020.From October 2020 to December 2020, he made outward supply of Rs.
30 Lakhs. And, from Jan 2021 to March 2021, he made outward supply of Rs. 15 lakh. Determine
whether he is eligible for composition scheme u/s 10(2A) and what will be tax payable ? Assume
GST rate 18% on services.

Ans: Legal provisions : As per section 10(2A) a registered person, not eligible to opt to pay tax under
10(1) and (2) and whose aggregate turnover in the preceding financial year did not exceed 50 lakh
may opt to pay tax u/s 10(2A).
As per section 10(3) The option availed of by a registered person section (2A) shall lapse with
effect from the day on which his aggregate turnover during a financial year exceeds the limit Sub-
section (2A) (i.e. 50 Lakh)
As per Explanation 1 - For the purposes of computing aggregate turnover of a person for
determining his eligibility to pay tax under this section, the expression "aggregate turnover"shall
include the value of supplies made by such person from the 1st day of April of a financial year up
to the date when he becomes liable for registration under this Act
Explanation 2.- For the purposes of determining the tax payable by a person under this section,
the expression "turnover in State or turnover in Union territory " shall not include the value of
following supplies, namely Supplies from the first day of April of a financial year up to the date
when such person becomes liable for registration under this Act
Discussion and Analysis: Since his Aggregate turnover during the preceding financial year did not
exceed 50 lakh, he is eligible for composition scheme u/s 10(2A) in the current year.
His aggregate turnover of Rs 50. Lakh for recognising uptil when the benefit is available will be
counted from 1st April 2020.
However, tax shall be payable on “turnover in a state or UT” made from the date after which he
is liable for registration i.e from October 2020 to December 2020 (i.e. on Rs. 30 lakhs).
As the limit of Rs. 50 Lakhs under this scheme exhausted till 31st December 2020, hence, from 1st
January 2021 onwards, tax shall be payable under normal provisions of GST as applicable for regular
dealer.
Conclusion : Yes he is eligible for composition scheme u/s 10(2A) till 31st Dec 2020. Tax will be
payable @6%(CGST+SGST) on 30 lakhs (i.e from October 2020 to December 2020), from 1st Jan
2021 tax will be payable under normal provisions i.e on 15 lacs @18% 2,70,000

Q 1. What is the threshold limit of turnover in the preceding financial year for opting to pay tax
under composition scheme for States other than special category States?
A. Rs. 20 lacs
B. Rs. 10 Lacs
C. Rs. 50 Lacs
D. Rs. 1.5 Crore
Ans: d: Rs. 1.5 Crore
Q 2. What is the threshold limit of turnover in the preceding financial year for opting to pay tax
under composition scheme for special category states?
A. Rs. 75 Lacs
B. Rs. 20 Lacs
C. Rs. 50 Lacs
D. Rs. 1 Crore
Ans: a: Rs. 75 Lacs
Q 3. What is the rate applicable under CGST to a registered person being a manufacturer opting
to pay taxes under composition scheme?
A. 2.5%
B. 1%
C. 0.5%
D. No composition for manufacturer
Ans: C: 0.5 %
Q 4. What is the rate applicable under GST to a registered person being a hotelier (providing
restaurant and accommodation services) opting to pay taxes under composition scheme?
A. 1%
B. 0.5%
C. 2.5%
D. 2.5% CGST + 2.5% SGST

Ans: D: 2.5% CGST + 2.5% SGST
Q 5. Mr. Roshan, a trader in Mumbai has opted for composition scheme of taxation under GST.
Determine the rate of total GST payable by him under composition scheme:
A. 0.5% CGST & 0.5% SGST
B. 2.5% CGST & 2.5% UTGST
C. 5% IGST Only
D. 2.5 % UTGST Only
Ans: A: 0.5% CGST & 0.5% SGST
Q 6. A Business Person has 3 Business vertical and opted to register 1 vertical under Composition
scheme and other 2 under normal scheme. State Whether he can do so or not?
A. Yes
B. No
C. Yes, subject to prior approval of the Central Government
D. Yes, subject to prior approval of the concerned State Government
Ans: B: No
Q 7. Which of the following persons can opt for composition scheme?

A. Person making any supply of goods which are not leviable to tax under this Act;
B. Person making any inter-State outward supplies of goods and services (except
restaurant services);
C. Person effecting supply of goods through an e- commerce operator liable to collect tax
at source
D. Person providing restaurant services
Ans: D: Person Providing Restaurant Services
Q 8. Can composition scheme be availed if the registered person effects inter-State supplies?
A. Yes
B. No

Ans: B: No
Q 9. A dealer registered under composition scheme, can he avail the ITC on inward supply?
A. Yes
B. No
Ans: B: No
Q 10. Can a registered person opting for composition scheme collect tax on his outward supplies?
A. Yes
B. No
Ans: B: No
Q 11. Which of the following will be excluded from the computation of ‘aggregate turnover’?
A. Value of taxable supplies
B. Value of exempt Supplies
C. Non-taxable supplies
D. Value of inward supplies on which tax is paid on reverse charge basis
Ans: D: Value of inward supplies on which tax is paid on reverse charge basis
Q 12. If a person registered under composition scheme and turnover crosses the specified limit
during the year, state whether the assessee will continue to pay tax under the composition
scheme during the remaining part of the year?
A. He will cease to remain under the composition scheme from the quarter following the
quarter in which the aggregate turnover exceeds threshold limit
B. He can continue under composition scheme till the end of the financial year
C. He will be liable to pay tax at normal rates of GST on the entire turnover for the financial
year
D. He will cease to remain under the composition scheme with immediate effect

Ans: D: He will cease to remain under the composition scheme with immediate effect
Q 13. Tax rate applicable in hands of Restaurant under composition scheme –

A. 2% (CGST + SGST)
B. 5% (CSGT + SGST)
C. 18% (CGST + SGST)
D. 2.5% (CGST + SGST)
Ans: B: 5% (CSGT + SGST)
Q 14. Which of the following persons are not eligible of composition scheme?
A. The scheme is not available for services sector, except restaurants.
B. Supplier of goods which are not taxable under the CGST Act/SGST Act/UTGST Act is not
eligible to register under this scheme
C. Tax payers making inter - state supplies is not eligible for composition scheme
D. All of the above
Q 15. What is the tax rate applicable on a composite dealer falling under Reverse Charge
Mechanism?
A. Said Supply is Exempt
B. Taxable as applicable to normal taxpayer
C. RCM not applicable in composite supply
Ans: b: Taxable as applicable to normal taxpayer
Q 16. Is RCM applicable on supplies procured by a composition dealer?

A. Yes
B. No
C. May be
Ans: A: Yes

Q 17. In which of the following special category states limit of turnover for composition
scheme will be Rs. 1.5 Crore?
A. Arunachal Pradesh
B. Assam
C. Himachal Pradesh
D. Uttarakhand
Ans: C: Himachal Pradesh
Q 18. A person is engaged in supplying of restaurant services along with that he is also engaged
in supplying of services which is wholly exempt from GST. State whether he is eligible for
composition scheme or not?
A. Yes
B. No
C. Eligible if turnover crosses limit of Rs. 1.5 crore
D. Eligible but prior intimation of commissioner is required
Ans: A: Yes
Q 19. Definition of Aggregate turnover includes

A. 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),
B. exempt supplies, exports of goods or services or both and
C. inter-State supplies
D. All of the above
Q 20. Definition of Exempt Supply includes

A. Supply of goods or services which attract nil rate of tax
B. Which may be wholly exempt from tax
C. And includes non-taxable supply
D. All of the above

Q1. Which of the following persons can opt for the composition scheme?
(1) Registered person whose aggregate turnover in the preceding financial year is Rs. 1.30 crores
(2) A person engaged in business of pan masala, tobacco and manufactured tobacco substitutes.
(3) A person engaged in the business of ice cream, other edible ice, whether or not containing
cocoa.
(4) A person engaged exclusively in providing restaurant service.
(5) A person engaged exclusively in supply of medicines with turnover of Rs. 1.50 crores
(a) 1, 2, 3, 5
(b) 1, 2, 5
(c) 2, 3, 4, 5
(d) 1,4,5
Ans: (d) 1,4,5
Q.2 B & D Company, a partnership firm, in Nagpur, Maharashtra is a wholesaler of a taxable product
‘P’ and an exempt product ‘Q’. The firm supplies these products only in the eastern part of
Maharashtra. All the procurements (both goods and services) of the firm are from the suppliers
registered under regular scheme in the State of Maharashtra. The firm pays tax under composition
scheme.
B & D Company has furnished the following details with respect to its turnover (exclusive of
taxes) and stock (exclusive of taxes):
Particul Turnover for the quarter ended Turnover for the quarter ended
ars 30.06.20XX (`) 30.09.20XX (`)
‘P’ 60,00,000 40,00,000
‘Q’ 19,65,000 28,00,000
Particular Stock as on Stock as on Stock as on

s 30.06.20XX (`) 30.09.20XX (`) 31.10.20XX (`)
‘P’ 25,00,000 10,00,000 3,60,000
‘Q’ 10,00,000 2,00,000 1,20,000

The entire stock of the products ‘P’ and ‘Q’ available with the firm as on 30.09.20XX is
purchased during the said half year except a consignment of product ‘P’ valuing Rs. 3,00,000,
which was purchased in the April month of the preceding finance al year. In the month of
October, 20XX, no purchases were made, and the products were sold with a profit margin of
20% on sales [exclusive of taxes]. The extract of the only bill book maintained by the firm
showed the following details –
Bill No. Date Value of products (exclusive of taxes)

‘P’ (₹) ‘Q’ (₹) Total (₹)
2306 01.10.20XX 1,00,000 3,000 1,03,000
2307 01.10.20XX 31,250 2,000 33,250
2308 02.10.20XX 43,750 15,000 58,750
2309 03.10.20XX 35,000 10,000 45,000
2310 05.10.20XX 1,00,000 - 1,00,000
2311 06.10.20XX 94,000 6,000 1,00,000
2312 06.10.20XX - 17,000 17,000
2313 08.10.20XX 50,000 6,000 56,000
2314 09.10.20XX 60,000 9,000 69,000
2315 …………….. …………….. …………….. ……………..
………. …………….. …………….. …………….. ……………..
The details of services availed by B & D Company is as follows:
S.No. Particulars (₹)
(i) Freight paid to Goods Transport Agency during the period April 20XX – 1,40,000
October 20XX. Assume equal amount of freight is paid each month on
the 10th day of each month. Also, assume that the goods for which the
freight is paid on 10th day of the month are transported between 11th to
20th day of the month.
(ii) Special packing charges paid to a Packing Company, having expertise in 3,00,000
such specialized packing, during the period January 20XX – October 20XX.
The packing charges are paid for the goods which are transported
between 11th to 20th day of the month (as mentioned in point (i)
above). The goods are packed on 10th day and then transported from
11th day onwards. Assume equal amount of packing charges are paid each
month on the 9th day of each month.

All the above amounts are exclusive of taxes, wherever applicable. Compute the net GST liability of
B & D Company for the period April, 20XX to October, 20XX under composition scheme showing
calculations for each quarter separately.
Note: Make suitable assumptions wherever required. Rate of CGST and SGST on service of
transportation of goods by GTA is 2.5% each. Stock is valued at cost price.
Ans: As per section 10(3) of the CGST Act, 2017 read with Notification No. 8/2017 CT dated
27.06.2017 as amended, the option availed of by a registered person to pay tax under composition
scheme shall lapse with effect from the day on which his aggregate turnover during a financial
year exceeds ₹1.5 crore.
As per section 2(6) of the 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 PAN, to be computed on all India basis but excludes CGST,
SGST/UTGST, IGST and GST Compensation Cess.
In the given case, the firm is registered under composition scheme in the State of Maharashtra.
The aggregate turnover of the firm is
Rs. 1,50,05,000 (`₹1,47,65,000 + ₹ 1,03,000 + ₹ 33,250 + ₹58,750 + ₹45,000)]
The inward supplies of goods transportation services in respect of which the firm has to pay tax
under reverse charge have not been included in the aggregate turnover in terms of section 2(6) of
the CGST Act, 2017. The tax is payable under reverse charge on such services as the applicable
rate of tax on such services is given as 5% and not 12%, in which case the GTA would have
been liable to pay tax under forward charge [Notification No. 13/2017 CT (R) dated 28.06.2017
as amended].
Thus, the firm will have to pay tax under regular scheme (Section 9 of the CGST Act, 2017) from
03.10.20XX
Output tax liability of B & D Company under composition scheme
During the period when the firm pays tax under composition scheme, i.e. from 01.04.20XX to
02.10.20XX, tax will be payable on quarterly basis and no ITC will be available [Section 10(4) read
with sub-sections (2) and (7) of section 39 of the CGST Act, 2017].
Further, since the firm is trading in goods, tax will be payable @ ½% [Effective rate - 1% (½%
CGST + ½% SGST)] of the turnover of taxable supplies of goods (i.e. ‘P’) in the State [Section
10(1) read with rule 7 of CGST Rues, 2017].
The tax liability for the quarters ended June, 20XX, September, 20XX and December, 20XX under
composition scheme will be computed as under-

Particulars Quarter ended Quarter ended Quarter ended
30.06.20XX 30.09.20XX 31.12.20XX
(₹) (₹) (₹)
Turnover of ‘P’ (Taxable supplies) 60,00,000 40,00,000 1,75,000 [1,00,000+31,250 +
43,750]
CGST @ 0.5% [A1] 30,000 20,000 875

SGST @ 0.5% [B1] 30,000 20,000 875
Inward supply on which tax is 60,000 60,000 Nil [Paid on 10 th day for
payable under reverse charge [(1,40,000/7) [(1,40,000/7) goods transported
[Service of goods transportation x 3] x 3]
between 11th to 20th day
availed from a GTA @ 5%]
of the month, so the same
will be assessed under
regular scheme]
CGST @ 2.5% [A2] 1,500 1,500 -

SGST @ 2.5% [B2] 1,500 1,500 -
Total CGST [A1 + A2] 31,500 21,500 875
Total SGST [B1 + B2] 31,500 21,500 875
Total CGST liability for the period from 01.04.20XX 48,875 [31,500 + 16,500 + 875]
to 02.10.20XX
Total SGST liability for the period from 01.04.20XX 48,875 [31,500 + 16,500 + 875]
to 02.10.20XX
Q3. Shubhlaxmi Foods is engaged in supplying restaurant service in Maharashtra. In the preceding
financial year, it has a turnover of Rs. 1.20 crores from the restaurant service and Rs. 10 lakh from
the supply of farm labour in said State. Further, it has also earned a bank interest of Rs. 10 lakh
from the fixed deposits.
Shubhlaxmi Foods wishes to opt for composition scheme in the current year. You are required to
advise Shubhlaxmi Foods on the same.
Ans: As per section 10(1) of the CGST Act, 2017, a registered person, whose aggregate turnover in the
preceding financial year did not exceed Rs. 1.50 crores, may opt to pay, in lieu of the tax payable
by him, an amount calculated at the specified rates if, inter alia, he is not engaged in the supply
of services other than restaurant services.
Provided further that a person who opts to pay tax under composition scheme may supply services
(other than Restaurant services), of value not exceeding 10% of turnover in a State or UT in the
preceding financial year or 5 lakhs rupees, whichever is higher

In the given case, the two other services provided by Shubhlaxmi Foods apart from the restaurant
service, viz. the services of supply of farm labour and services by way of extending deposits where
the consideration is represented by way of interest, are exempt from GST vide Notification No.
12/2017 CT (R) dated 28.06.2017.
Further as per Explanation 1 , in computing his aggregate turnover in order to determine the
eligibility of Shubhlaxmi Foods for composition scheme, value of supply of exempt services - bank
interest shall not be taken into account.
Thus, the aggregate turnover of Shubhlaxmi Foods is Rs. 1.30 crores (turnover from restaurant
services and turnover from supply of farm labour).
From the aforesaid discussion, it can be inferred that Shubhlaxmi Foods is eligible for composition
scheme.
Q.4 The supplier opting for composition levy need not maintain certain records as per rule 56(2) and
56(4) of the CGST Rules, 2017. Explain
Ans: As per rule 56(2) and 56(4) of the CGST Rules, 2017, the supplier opting for composition levy
need not maintain the following records:
(i) Accounts of stock in respect of goods received and supplied by him, and such accounts
shall contain particulars of the opening balance, receipt, supply, goods lost, stolen,
destroyed, written off or disposed of by way of gift or free sample and the balance of
stock including raw materials, finished goods, scrap and wastage thereof.
(ii) Account, containing the details of tax payable (including tax payable under reverse
charge), tax collected and paid, input tax, input tax credit claimed, together with a
register of tax invoice, credit notes, debit notes, delivery challan issued or received during
any tax period. (MAY 19 QP NEW)
Q5. Examine whether the suppliers are eligible for composition scheme in the following independent
cases. Is there any other option available for concessional tax payment with any of these suppliers,
wherever composition scheme cannot be availed?
(a) M/s. Devlok, a registered dealer, is dealing in intra-State trading of electronic appliances in
Jaipur (Rajasthan). It has turnover of ₹130 lakh in the preceding financial year. In the current
financial year, it has also started providing repairing services of electronic appliances.
(b) M/s. Narayan & Sons, a registered dealer, is running a “Khana Khazana” Restaurant near City
Palace in Jaipur. It has turnover of ₹140 lakh in the preceding financial year. In the current
financial year, it has also started dealing in intra-State trading of beverages in Jaipur
(Rajasthan).
(c) M/s. Indra & Bro, a registered dealer, is providing restaurant services in Uttarakhand. It has
turnover of ₹70 lakh in the preceding financial year. It has started providing intra-State

interior designing services in the current financial year and discontinued rendering restaurant
services.
(d) M/s. Him Naresh, a registered dealer, is exclusively providing intra-State architect services in
Uttarakhand. It has turnover of ` 40 lakh in the preceding financial year.
Ans: As per section 10(1) of the CGST Act, 2017, the following registered persons, whose aggregate turnover
in the preceding financial year did not exceed ` 1.5 crore, may opt to pay tax under composition levy:
(a) Manufacturer,
(b) Persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule
II (restaurant services), and
(c) Any other supplier eligible for composition levy.
Thus, essentially, the composition scheme can be availed in respect of goods and only one service
namely, restaurant service. However, the scheme permits supply of other marginal services for a
specified value along with the supply of goods and restaurant service, as the case may be. Such
marginal services can be supplied for a value up to 10% of the turnover in the preceding year or ₹5
lakh, whichever is higher.
Further, the registered person should not be engaged in making any inter-State outward supplies of
goods.
Furthermore, an option of availing of 10(2A) a registered person whose aggregate turnover in the
preceding financial year is upto` 50 lakh and who is not eligible to pay tax under composition scheme
U/S 10(1). Said person can pay tax @ 3% [Effective rate 6% (CGST+ SGST/UTGST)] on first
supplies of goods and/or services up to an aggregate turnover of ` 50 lakh made on/after 1st April in
any financial year (FY), subject to specified conditions. One of such condition is that the registered
person should not be engaged in making any inter-state outward taxable supplies.
In view of the above-mentioned provisions, the answer to the given independent cases is as
under:-
(a) The turnover limit for composition scheme in case of Jaipur (Rajasthan) is ₹1.5 crore. Thus,
M/s. Devlok can opt for composition scheme as its aggregate turnover is less than ₹1.5 crore
and he is making intra-State supplies. Further, since the registered person opting for
composition scheme can also supply services (other than restaurant services) for a value up
to 10% of the turnover in the preceding year or ₹5 lakh, whichever is higher. Thus, M/s. Devlok
can supply repair services up to a value of ₹13 lakh [10% of ₹130 lakh]in the current financial
year.
(b) In the given case:-
(i) the turnover in the preceding year is less than the eligible turnover limit, i.e. ₹1.5 crore.
(ii) the supplier is engaged in providing restaurant service which is an eligible supply under
composition scheme.
(iii) the supplier wants to engage in trading of goods which is also an eligible supply under
composition scheme.

Thus, M/s. Narayan & Sons is eligible for composition scheme.
(c) The turnover limit for composition scheme in case of Uttarakhand is 75 lakh. Further, a
registered person who is exclusively engaged in supplying services other than restaurant services
are not eligible for composition scheme. Thus, M/s. Indra& Bro cannot opt for composition
scheme u/s 10(1) . Composition scheme u/s 10(2A) is available in case of a registered person
whose aggregate turnover in the preceding financial year does not exceed 50 lakh and who is
not eligible u/s 10(1). It has turnover of ` 70 lakh in the preceding financial year.
Thus, in view of the above-mentioned provisions, M/s. Indra& Bro cannot avail the benefit of
concessional tax payment as its aggregate turnover in the preceding financial year is more
than ₹50 lakh.
(d) An service provider can opt for the composition scheme u/s 10(1) only if he is engaged in
supply of restaurant services. The composition scheme permits supply of marginal services for
a specified value, but only when the same are supplied along with goods and/ or restaurant
service.
Since M/s. Him Naresh is exclusively engaged in supply of services other than restaurant
services, it is not eligible for composition scheme u/s 10(1) even though its turnover in the
preceding year is less than ` 75 lakh, the eligible turnover limit for Uttarakhand.
However, since M/s. Him Naresh is not eligible to opt for composition scheme, its aggregate
turnover in the preceding financial year does not exceed ` 50 lakh and it is exclusively engaged
in supply of intra-State services other than restaurant services, M/s. Him Naresh is entitled
to avail benefit composition scheme u//s 10(2A).
Q7. Mr. Prem is running a restaurant in New Delhi. In the preceding financial year, it has turnover of ₹
120 lakh from the services. In the current financial year, apart from restaurant service, he also wants
to provide food delivery services to other restaurants. He estimated the turnover of such services
upto Rs. 5 lakh. restaurant
Mr. Prem wishes to opt for composition scheme in the current financial year. You are required to
advise him for same. Further, also advise the documents to be issued by him for billing the restaurant
services as well as food delivery services in case he opts for composition scheme.
Ans: Legal Provisions : As per section 10(1) of the CGST Act, 2017 read with Notification No.14/2019 CT
dated 07.03.2019, a registered person, whose aggregate turnover in the preceding financial year did
not exceed ₹1.5 crore, may opt to pay, in lieu of the tax payable by him, an amount calculated at
the specified rates if, inter alia, he is not engaged in the supply of services other than restaurant
services.
However, the scheme permits supply of other marginal services for a specified value along with the
supply of goods and restaurant service, as the case may be.
Such marginal services can be supplied for a value up to

10% of the turnover in the preceding year or ` 5 lakh, whichever is higher.
Discussion and Conclusion: In the present case, since the turnover of Mr. Prem is ₹120 lakh in preceding
financial year, he is eligible for composition scheme in the current financial year. Further, in the current
financial year, he can also supply services other than restaurant services for a value upto ₹12 lakh (10%
of ₹120 lakh) or ₹ 5 lakh, whichever is higher. Thus, till the time his turnover from food delivery
services does not exceed ₹12 lakh, he is eligible for the scheme.
In terms of section 31(3)(c) of the CGST Act, 2017, Mr. Prem is required to issue Bill of Supply in
both the cases i.e. while providing restaurant services and food delivery services. He shall also mention
the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of
supply issued by him.
Q8. M/s. Ranveer Industries, registered in Himachal Pradesh, is engaged in making inter-State supplies
of readymade garments. The aggregate turnover of M/s. Ranveer Industries in the preceding financial
year is ` 90 lakh. It has opted for composition levy in the current financial year and paid tax for the
July-Sep quarter of current year under composition levy.
The proper officer has levied penalty for wrongly availing the scheme on M/s. Ranveer Industries in
addition to the tax payable by it.
Examine the validity of the action taken by proper officer.
Ans: Legal Provisions : As per section 10 of the CGST Act, 2017, a registered person, whose aggregate
turnover in the preceding financial year did not exceed ₹1.5 crore in a State/UT [` 75 lakh in case of
Special Category States except Assam, Himachal Pradesh and Jammu and Kashmir], may opt for
composition scheme.
However, he shall not be eligible to opt for composition scheme if, inter alia, he is engaged in making
any inter-State outward supplies of goods.
Discussion and Conclusion : In the given case, since M/s Ranveer Industries is engaged in making inter-
State supplies of readymade garments, it is not eligible to opt for composition scheme in current year
irrespective of its turnover in the preceding FY.
Further, if the proper officer has reasons to believe that a taxable person has paid tax under composition
scheme despite not being eligible, such person shall, in addition to any tax payable, be liable to a
penalty. Thus, the action taken by the proper officer of levying the penalty for wrongly availing the
composition scheme is valid in law.

Q9. (i) Examine whether the suppliers are eligible for composition levy under section 10 of the CGST
Act, 2017 in the following independent cases in the beginning of the current financial year.
(a) Technology Enterprises, registered in Jalandhar, Punjab, is engaged in manufacturing
computer systems. Its aggregate turnover in the preceding financial year is ₹ 125 lakh.
Technology Enterprises supplies the computer systems manufactured by it within the
State of Punjab only. With a view to expand its business operations, it will also start
providing the repairing services of computer systems in the current financial year.
(b) M/s. Siddharth & Sons, registered in Delhi, owns a restaurant ‘Tasty Foods’ with a
turnover of ` 112 lakh in the preceding financial year. In view of the growing customer
demand, it will also start intra-State trading of beverages in Delhi.
(c) Sitaram Associates, registered in Sikkim, is engaged in running a food chain ‘Veg
Kitchen’ in the State. It has a turnover of ₹73 lakh in the preceding financial year.
In the current financial year, it decides to shut down the food chain owing to huge
losses being incurred in the said business. Instead, it will start providing intra-State
architect services.
(d) Deepti Services Ltd., registered in Uttarakhand, is exclusively providing hair styling
services. It has turnover of ` 34 lakh in the preceding financial year.
Will your answer be different, if Deepti Services Ltd. also start supplying beauty
products along with providing hair styling services in the current financial year?
(ii) Varun & Arun Associates started a partnership firm of architects in Bhopal (Madhya Pradesh)
on 01.04.2020. The firm provides architecture services, in Madhya Pradesh. It provided the
following details of its turnover:
April - June ₹20 lakh
July - Sept ₹30 lakh
Oct - Dec ₹20 lakh
The firm has obtained the registration under section 22 of the CGST Act, 2017 and pays tax
under composition scheme. Determine the tax liability of Varun & Arun Associates for the
quarters: Apr-Jun, Jul-Sept and Oct-Dec.
(e) Note: The rates of tax on architectural services are CGST- 9% and SGST-9%
Ans: (i) As per section 10(1) of the CGST Act, 2017, the following registered persons,
whose aggregate turnover in the preceding financial year did not exceed ₹1.5 crore,
may opt to pay tax under composition levy:
(i) Manufacturer,
(ii) Persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule
II (restaurant services), and
(iii) Any other supplier eligible for composition levy.
The composition scheme under sub-sections (1) and (2) of section 10 can essentially be availed

in respect of goods and only one service namely, restaurant service. However, the scheme permits
supply of other marginal services for a specified value along with the supply of goods and restaurant
service, as the case may be. Such marginal services can be supplied for a value up to 10% of the
turnover in the preceding year or ` 5 lakh, whichever is higher. Further, the registered person
should not be engaged in making any inter-State outward supplies of goods.
Furthermore, newly inserted section 10(2A) of the CGST Act, 2017 provides an option to a
registered person, who is not eligible to pay tax under section 10(1) and
10(2), of paying tax @ 6% (CGST-3% and SGST/UTGST-3%) provided his aggregate turnover
in the preceding financial year is upto ` 50 lakh. Said person can pay tax @ 6% of the turnover
in State or turnover in Union territory up to an aggregate turnover of ` 50 lakh, subject to specified
conditions. One of such condition is that the registered person should not be engaged in making
any inter - State outward supplies of goods or services.
In view of the above-mentioned provisions, the answer to the given independent cases is as
under:-
(a) The turnover limit for being eligible for composition scheme under under sub- sections (1)
and (2) of section 10 of the CGST Act, 2017 for Jalandhar (Punjab) is ₹1.5 crore in the
preceding financial year. Thus, Technology Enterprises can opt for said composition scheme
as its aggregate turnover is less than ₹1.5 crore in the preceding financial year and it is
making intra-State supplies. Further, since the registered person opting for composition
scheme can also supply services (other than restaurant services) for a value up to 10% of
the turnover in the preceding year or ₹ 5 lakh, whichever is higher. Thus, Technology
Enterprises can supply repair services up to a value of ₹12.5 lakh [10% of `125 lakh] in the
current financial year.
(b) In the given case:-
(i) the turnover in the preceding year is less than the eligible turnover limit under composition
scheme under sub-sections (1) and (2) of section 10 of the CGST Act, 2017 for Delhi, i.e.
₹1.5 crore.
(ii) the supplier is engaged in providing restaurant service which is an eligible supply under said
composition scheme.
(iii) the supplier wants to engage in trading of goods which is also an eligible supply under said
composition scheme.
Thus, M/s. Siddharth & Sons is eligible for composition scheme under sub- sections (1) and
(2) of section 10 of the CGST Act, 2017.
(c) The turnover limit for being eligible for composition scheme under sub-sections (1) and (2)
of section 10 of the CGST Act, 2017 for Sikkim is ₹75 lakh in the preceding financial year.
However, a registered person who is exclusively engaged in supplying services other than
restaurant services are not eligible for said composition scheme. Thus, Sitaram Associates
cannot opt for composition scheme under sub-sections (1) & (2) of section 10.

However, the benefit of composition scheme under section 10(2A) of the CGST Act, 2017
is available in case of a registered person who is not eligible to pay tax under sub-sections
(1) and (2) of section 10 provided its aggregate turnover in the preceding financial year does
not exceed ` 50 lakh.
Thus, in view of the above-mentioned provisions, Sitaram Associates cannot avail the benefit
of composition scheme under section 10(2A) also as its aggregate turnover in the preceding
financial year is more than ` 50 lakh.
(d) A service provider can opt for the composition scheme under sub-sections (1) and (2) of
section 10 of the CGST Act, 2017 only if he is engaged in supply of restaurant services. Said
scheme permits supply of marginal services for a specified value, but only when the same
are supplied along with goods and/ or restaurant service.
Since Deepti Services Ltd.is exclusively engaged in supply of services other than restaurant
services, it is not eligible for composition scheme sub-sections
(1) and (2) of section 10 even though its turnover in the preceding year is less than ₹75
lakh, the eligible turnover limit for Uttarakhand.
However, since Deepti Services Ltd. is not eligible to opt for composition scheme under sub-
sections (1) and (2) of section 10 and its aggregate turnover in the preceding financial
year does not exceed ` 50 lakh, Deepti Services Ltd.is entitled to avail benefit of composition
scheme under section 10(2A) of the CGST Act, 2017 in the current financial year.
Further, the answer will remain the same even if Deepti Services Ltd. also start supplying
beauty products alongwith providing hair styling services in the current financial year since
it fulfils the conditions laid down for availing the benefit of composition scheme under
section 10(2A) of the CGST Act. It can avail the benefit of composition scheme under
section 10(2A) till the time its aggregate turnover in the current year doesn’t exceed ` 50
lakh.
(ii) The composition scheme under sub-sections (1) and (2) of section 10 of the CGST Act,
2017 is available in case of goods and restaurant service. Further, marginal services upto
specified limit can be provided along with the supply of goods or restaurant service, as the
case may be. Since, in the given case, Varun & Arun Associates is supplying services other
than restaurant services, it is not eligible to pay tax under sub-sections (1) and (2) of
section 10. However, section 10(2A) of the CGST Act, 2017 provides an option to a registered
person, who is not eligible to pay tax under sub-sections (1) and (2) of section 10, of paying
tax @ 6% (CGST-3% and SGST/UTGST-3%) provided his aggregate turnover in the
preceding financial year is upto ` 50 lakh. Said person can pay tax @ 6% of the turnover in
State or turnover in Union territory up to an aggregate turnover of ` 50 lakh, subject to
specified conditions.
In the given case, Varun & Arun Associates has started the supply of services in the current
financial year. Therefore, its aggregate turnover in the preceding financial year is Nil.
Consequently, it is eligible to avail the benefit of composition scheme under section 10(2A)

of the CGST Act in the current financial year. It becomes eligible for the registration
when its aggregate turnover exceeds ₹20 lakh. While registering under GST, it has to opt
for composition scheme under section 10(2A). For determining its turnover of the State for
payment of tax under composition scheme for services, turnover of April-June quarter [₹20
lakh] shall be excluded as the value of supplies from the first day of April of a financial
year up to the date when such person becomes liable for registration under this Act are
to be excluded for this purpose.
On next ₹30 lakh [turnover of July-Sept quarter], it shall pay tax @ 6% [3% CGST and
3% SGST], i.e. CGST ₹90,000 and SGST ₹90,000.
By the end of July-Sept quarter, its aggregate turnover reaches 50 lakh*.
Consequently, its option to avail composition scheme under section 10(2A) shall lapse by
the end of July-Sept quarter and thereafter, it is required to pay tax at the normal rate.
Thus, the tax payable for Oct-Dec quarter is 20 lakh × 9%, i.e. CGST
- 1,80,000 and SGST - 1,80,000.
*Note - While computing aggregate turnover for determining Varun & Arun Associates’
eligibility to pay tax under composition scheme, value of supplies from the first day of April
of a financial year up to the date when such person becomes liable for registration under
this Act (i.e. turnover of April-June quarter), are included
Q.10 Which of the following persons can opt for the composition scheme under sub-sections (1) and
(2) of section 10 of the CGST Act, 2017?
1 Registered person whose aggregate turnover in the preceding financial year did not exceed `
75 lakh.
2 Registered person whose aggregate turnover in the preceding financial year did not exceed `
1.5 crore.
3 A person engaged in manufacture of pan masala, tobacco and manufactured tobacco substitutes.
4 A person engaged in the manufacture of ice cream, other edible ice, whether or not containing
cocoa.
5 A person engaged exclusively in providing restaurant service.
6 A person engaged exclusively in supply of medicines.
(a) 1, 2, 3, 5
(b) 1, 2, 5, 6
(c) 2, 3, 4, 5
(d) 3, 4, 5, 6
Ans: (b) 1, 2, 5, 6

Q.11 M/s Heeralal and Sons, registered in Karnataka, has opted to avail the benefit of composition
scheme under sub-sections (1) and (2) of section 10 of the CGST Act. It has furnished the
following details for the quarter ended on 30th June.
S. No. Items Rs
(i) Taxable turnover of goods within the State 15,00,000
(ii) Exempted turnover of goods within the State 17,00,000
Total Turnover 32,00,000
Using the above information, calculate tax to be paid by the firm for quarter ended on 30 th June
in following independent situations:
(i) M/s Heeralal and Sons is a manufacturer
(ii) M/s Heeralal and Sons is a trader (MTP- Oct21)
Ans: Computation of amount payable under composition scheme
(i) If M/s Heeralal and Sons is a manufacturer:
Tax is to be paid @ 1% (½% CGST+ ½% SGST) of the turnover in the State as under:
1% of ` 32,00,000 [` 15,00,000 + 17,00,000]
= ` 32,000 [CGST = ` 16,000 and SGST = ` 16,000]
(ii) If M/s Heeralal and Sons is a trader:
Tax is to be paid @ 1% (½% CGST + ½%SGST) of the turnover of taxable supplies of goods
and services in the State as under:
= 1% of ` 15,00,000
= ` 15,000 [CGST = ` 7,500 and SGST = ` 7,500]

6 – Time of Supply
Q 1. The time of liability to pay GST is independent of the time of supply of goods/ services. Discuss the
correctness of the statement?
Ans: 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 Section13 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.
Q 2. Explain the meaning of continuous supply service and date of issue of invoice? also, determine time
of supply for continuous supply service.
Ans: Continuous supply of services in terms of section 2(33) of the CGST Act, 2017 means 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 be notification specify
issue of invoice: In terms of provision of section 31(5)–
(a) Where the due date of payment is ascertainable from the contract, the invoice shall be
issued on or before the due date of payment
(b) Where the due date for 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.
(c) Where the payment is linked to the completion of an event, the notice shall be issued on
or before the date of completion of that event.
Determination of Time of Supply: The time of supply will be determine as per Sec 13(2) in
following manner:
Case Time of Supply

The date of issue of invoice by the
If the invoice is issued within the
supplier or the date of receipt of payment
period prescribed under sec 31
whichever is earlier.
The date of provision of service or the date of
If the invoice is not issued within the
receipt of payment whichever is
period prescribed under sec 31
earlier
If a case where the provisions of The date on which the recipient shows the
cause (a) or (b) do not apply receipt of services in his books of account

Q 3. Determine the time of supply in the following cases assuming that GST is payable under reverse
charge:
Date of Date of issue of
Sr
receipt of Date of payment by recipient of goods invoice by
No
goods supplier of goods
1 01 July 2018 10 August 2018 29 June 2018

2 01 July 2018 25 June 2018 29 June 2018
Part payment made on June 30 and balance amount
3 01 July 2018 29 June 2018
paid on July 20
Payment is entered in the books of account on June

4 05 July 2018 01 June 2018
28 and debited in recipient’s bank account on June 30
Payment is entered in the books of account on June

5 01 July 2018 29 June 2018
30 and debited in recipient’s bank account on June 26
01 August
6 10 August 2018 29 June 2018
2018
Ans: Determination of time of Supply as per the relevant provision of CGST Act.
Date
immediately
Date of Date of payment Date of Time of
following 30
Sr No receipt of by recipient of issue of invoice by supply of
days from
goods goods supplier of goods goods
date of
invoice
1 01 July 2018 10-08-2018 29-06-2018 30-07-2018 01 July 2018
2 01 July 2018 25-06-2018 29-06-2018 30-07-2018 25-06-2018
June 30 for
Part payment made
part payment
on June 30 and
3 01 July 2018 29-06-2018 30-07-2018 made and July
balance amount
1 for balance
paid on July 20
amount
Payment is entered June 28 (i.e.,

in the books of when payment
account on June 28 is entered in
4 05-07-2018 01-06-2018 02-07-2018
and debited in the books of
recipient’s bank account of the
account on June 30 recipient)

Payment is entered
June 26 (i.e.,
in the books of
when payment
account on June 30
5 01 July 2018 29-06-2018 30-07-2018 is debited in
and debited in
the recipient’s
recipient’s bank
bank account)
account on June 26
July 30 (i.e.,
31st day from
6 01-08-2018 10-08-2018 29-06-2018 30-07-2018
issuance of
invoice)
Q 4. Determine the time of supply in the following cases assuming that GST is payable under reverse
charge:
Date of issue of invoice

Sr No Date of payment by recipient for supply of services
by supplier of services
1 10 August 2018 29 June 2018

2 10 August 2018 01 June 2018
Part payment made on June 30 and balance amount paid on

3 29 June 2018
September 1
Payment is entered in the books of account on June 28 and

4 01 June 2018
debited in recipient’s bank account on July 3
Payment is entered in the books of account on June 30 and

5 29 June 2018
debited in recipient’s bank account on June 26
Ans: Determination of Time of Supply as per the relevant provision of CGST Act, 2017.
Time of
Date of payment by Date of Date immediately
supply of goods
Sr No recipient for supply issue of invoice by following 60 days
[Earlier of (1)
of services supplier of services from invoice
& (3)]
1 10-08-2018 29-06-2018 29-08-2018 10-08-2018
2 10-08-2018 01-06-2018 01-08-2018 01-08-2018

Part payment made on June 30 for part
June 30 and balance payment and
3 29-06-2018 29-08-2018
amount paid on August 29 for
September 1 balance amount.
Payment is entered in
June 28 (i.e.
the books of account
when payment
on June 28 and
4 01-06-2018 01-08-2018 is entered in the
debited in recipient’s
books of account
bank account on July
of the recipient)
3
Payment is entered in
June 26 (i.e.
the books of account
when payment
on June 30 and
5 29-06-2018 29-08-2018 is debited in the
debited in recipient’s
recipient’s bank
bank account on June
account)
26
Q 5. 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. What is the time
of supply of the transporter’s service?
Note: Transporter’s service is taxed on reverse charge basis.
Ans: Legal Provision: Time of supply of service taxable under reverse charge is the earlier of the
following two dates in terms of section 13(3):
a) Date of payment
b) 61st day from the date of issue of invoice
Discussion & Conclusion: 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)]
Q 6. 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?

Ans: Legal Provision: 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):
(a) Date of provision of service
(b) Date of receipt of payment
Discussion and Conclusion: The payment was received on 5th January and the service was
provided on 23rd April. Therefore, the date of payment, i.e., 5th January is the time of supply of
the service in this case
Q 7. Investigation shows that 150 cartons of ceramic capacitors were despatched on 2nd August but
no invoice was made and the cartons were not entered in the accounts. There was no evidence
of receipt of payment. What is the time of supply of 150 cartons for the purpose of payment of
tax?
Ans: Legal Provision: 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.
Discussion: In this case since the invoice has not been issued, the time of supply will be the last
date on which the invoice is required to be issued.
Conclusion: The invoice for supply of goods must be issued on or before the despatch of goods
i.e., on 2nd August. Therefore, time of supply of the goods will be 2nd August, the date when the
invoice should have been issued.
Q 8. An order is placed on Ram & Co. on 18th August for supply of a consignment of customised shoes.
Ram & Co. gets the consignment ready and informs the customer and issues the invoice on 2nd
December. The customer collects the consignment from the premises of Ram & Co. on 7th
December and electronically transfers the payment on the same date, which is entered in the
accounts on the next day, 8th December. What is the time of supply of the shoes for the purpose
of payment of tax?
Ans: Legal Provision: 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.
Discussion and Conclusion: In this case, the invoice is issued before the removal of the goods and
is thus, within the time limit prescribed under section 31. Therefore, time of supply is the date of

issue of invoice, which is 2nd December.
Q 9. 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?
Ans: 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.
Q 10. A firm of advocates lawyers issues invoice for services to ABC Ltd. on 17 th 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.
Identify the time of supply of the legal services.
Note: Legal services are taxable on reverse charge basis.
Ans: Legal Provision: Time of supply of services that are taxable under reverse charge is earliest of
the following two dates in terms of section 13(3):
c) Date of payment [3rd November]
d) 61st day from the date of issue of invoice [19th April]
Discussion and Conclusion: The date of payment comes subsequent to the 61st day from the
issue of invoice by the supplier of service. Therefore, the 61 st day from supplier’s invoice has
to be taken as the time of supply. This fixes 19 th April as the time of supply.
Q 11. 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?
Ans: Legal Provision: 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)]. Discussion
and Conclusion: 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., 5 th September, will be
the time of supply.

Q 12. An online portal, Best Info, raises invoice for database access on 21 st February on Roy & Bansal
Ltd. The payment is made by Roy & Bansal Ltd. by a demand draft sent on 25th February,
which is received and entered in the accounts of Best Info on 28th February. Best Info
encashes the demand draft and thereafter, gives access to the database to Roy & Bansal Ltd
March. In the meanwhile, the rate of tax is changed from 1st March 2017. What is
rd
from 3
the time of supply of the service of database access by Best Info?
Ans: As issuance of invoice and receipt of payment (entry of the payment in Best Info’s accounts)
occurred before the change in rate of tax, the time of supply of service by the online portal is
earlier of the date of issuance of invoice (21 st February) or date of receipt of payment (28 th
February) i.e., 21st February. This would be so even though the service commences after the
change in rate of tax [Section 14(b)(ii)].
Q 13. Mr. P supplied goods for the value of Rs. 10,000 to its customer Miss Prem on 01.01.2018 on the
condition that payment for the same will be made within a week. However, Miss Prem made payment
for the said goods on 02.02.2018 and thus paid interest amounting to Rs. 500. What is the time of
supply with regard to addition in the value by way of interest in lieu of delayed payment of
consideration?
Ans: Legal Provision: As per section 12(6) of CGST Act, 2017, the time of supply with regard to an
addition in value on account of interest, late fee or penalty or delayed payment of consideration shall
be the date on which the supplier received such additional consideration. Discussion and Conclusion:
Thus, time of supply in respect of interest would be the date on which the supplier has received
such additional consideration, i.e. 02.02.2018. Further, Mr. P is required to make payment of tax on
or before 20th of March, 2018.
Q 14. 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.
Ans: Legal Provision: 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.
Discussion and Conclusion: 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.

Q 15. 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 Payments of Rs. 2 lakhs made in each month
5, October 6
Statement of accounts issued by supplier, with invoice for the
October 03
quarter July – September
Differential payment of Rs. 56,000 received by supplier for the

October 17
quarter July – September as per statement of accounts
Ans: Legal Provision: As per Notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding
specified in section 12(2)(a) i.e., date of issue of invoice or the last date on which invoice ought
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.
Discussion and Conclusion: Thus, time of supply will be August 5, September 5 and October 6
respectively for goods valued at ₹2 lakh each. Time of supply for goods valued at ` 56,000 will be
October 3, the date of issuance of invoice.
Q 16. Determine the time of supply from the given information.

Supplier invoices goods taxable on reverse charge basis to Bridge & Co.
May-04
(30 days from the date of issuance of invoice elapse on June 3)
May-12 Bridge & Co receives the goods
May-30 Bridge & Co makes the payment
Ans: Legal Provision: The time of supply, being the earliest of the three stipulated dates namely,
• receipt of goods,
• date of payment and
• date immediately following 30 days of issuance of invoice [Section 12(3)]. (Here, date of
invoice is relevant only for calculating thirty days from that date.)
Conclusion: Here, May 12 will be time of supply

Supplier invoices goods taxable on reverse charge basis to Pillar & Co.
May 4
(30 days from the date of issuance of invoice elapse on June 3)
June 12 Pillar & Co receives the goods, which were held up in transit
July 3 Payment made for the goods
Ans: 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, receipt of goods, date of payment and date
immediately following 30 days of issuance of invoice [Section 12(3)].

Booking of convention hall, sum agreed Rs 15000, advance of
6th May
Rs. 3000 received
15th September Function held in convention hall
27th October Invoice issued for Rs. 15000, indicating balance of Rs. 12000 payable
3rd November Balance payment of Rs. 12000 received

Ans: As per section 31(2) 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 Rs. 12,000 is 15th September which is the date of provision of service.
Q 19. Pillai Pvt. Ltd. of Chennai is in business of providing taxable goods. It received an order from Raghu
Pvt. Ltd. to deliver the goods (which involved movement of goods) at their office located in Mumbai.
Following are the details provided.
Determine the Time of Supply in the following cases:
Sr Date of Removal Date of Invoice Date when goods made Date of recipient of
No. available to recipient Payment
1 2/11/2018 3/11/2018 4/11/2018 15/12/2018
2 3/10/2018 1/10/2018 4/10/2018 25/11/2018
3 4/11/2018 4/11/2018 6/11/2018 10/10/2018

Ans: Legal Provision: 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 the invoice shall be issued before or at
the time of removal of goods for supply 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.
Sr No Date of Removal Date of Invoice Time of supply

1 02/11/2018 03/11/2018 02/11/2018
2 03/10/2018 01/10/2018 01/10/2018
3 04/11/2018 04/11/2018 04/11/2018
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 in case of supply goods TOS is not on
invoice received & the above provision is applicable to all registered persons.
Q 20. Fortune Ltd has purchased for its employees 100 vouchers dated 14/12/2017 worth ₹ 2000 each from
ABC Ltd, a footwear manufacturing company for specific footwear. The vouchers were issued by ABC
15/12/2017. The vouchers can be encashed at retail outlets of ABC Ltd. The employees of XYZ Ltd.
encashed the same on 01/01/2018, Determine the time of supply for the same.
Ans: Legal Provision: In terms of Section 12(4) of the CGST Act, 2017, time of supply of vouchers shall
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
Q 21. Ms Vidhi purchased a gift voucher from shoppers stop (a departmental store) Rs. 2500 on 30/10/2017
and gifted it to her friend on occasion of her birthday on 04/12/2017 friend encashed the same on
01/01/2018. Determine the supply

Ans: Legal Provision: In terms of Section 12(4) of the CGST Act, 2017, time of supply of voucher shall
be 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 purchase any product.
Conclusion: hence, time of supply is 1/1/2018
Q 22. Mr. A a registered supplier supplied certain goods to Mr. B 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 ₹ 2000. Mr. B 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. A raised a debit note for the penalty amount. There being dispute on this, the
matter was in arbitration which was finally resolved with Mr. B agreeing to pay half of the penalty
amount. The amount was paid by12/12/2018 Determine the time of supply.
Ans: Legal Provision: The above case falls within the purview of Section 12(6) of CGST Act. The 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. i.e. Date of Receipt of Payment.
Discussion: As per the above stated Section time of supply to the extent it relates to an addition
value of supply by way of interest, late fee or penalty for delayed payment 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.
Q 23. Excel 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
same dispute about the condition of the devices on return. The payments made in December.
What is the method to fix the time of supply of the service?
Ans: The time of supply of services, it the invoice is not issued in time is the date of payment the
date of provision of service, whichever is earlier [Section 13(2) (b)]. In this case service is
provided on 5th September but not invoiced within the prescribed time. Therefore, the date of
provision of service, i.e. 5th September, will be the time or supply.

Q 24. Determine whether the following services amount to continuous supply of following case:
XYZ & Co., a firm of interior decorators, enters in to a contract with Mr. X 01.08.2018 for doing up
the interiors of his newly constructed home for consideration of ₹ 60 lakh. As per the terms of the
contract, XYZ & Co. will complete work by 31.01.2019 and consideration will be paid in six equal
installments on the, of each month covered during the period of contract.
Ans: Legal Provision: As per sec 2(33) of CGST Act, “Continuous supply of services” supply of services
which is provided, or agreed to be provided, continuously or on basis, under a contract, for a period
exceeding three months with periodic obligations and includes supply of such services as the
Government may, subject conditions, as it may, by notification, specify.
Conclusion: Since in the given case, service is provided for a period of six months obligation of
periodic payment, the same will amount to continuous supply of services.
Q 25. Mr. X took telecommunication service from Idea Cellular Ltd. For the month of January, 2019 amount
was ₹ 5,000. He made a payment of ₹ 5,500 with an instruction to excess payment against next
month’s bill, and hence the same was adjusted by 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.
Ans: legal Provision: As per the Section 13(2) where the supplier of taxable service receives an amounts
to one thousand rupees in excess of the amount indicated in the tax invoice, the of supply to the
extent of such excess amount shall, at the option of the said shall be the date of issue of invoice
in respect of such excess amount. Excess amount above case is ₹ 500.
Conclusion: Hence, time of supply is 5/3/2018
Q 1. Which of the section governs the provisions regarding determining time of supply of
goods?
A. Section 12 of CGST Act, 2017
B. Section 7 of CGST Act, 2017
D. Section 13 of CGST Act, 2017
Ans: A; Section 12 of CGST Act, 2017

Q 2. Which of the section governs the provisions regarding determining time of supply of
Services?
A. Section 12 of CGST Act, 2017
B. Section 7 of CGST Act, 2017
D. Section 13 of CGST Act, 2017
Ans: D; Section 13 of CGST Act, 2017
Q 3. As section 12, what is the date of receipt of payment?

A. Date on which payment is entered in the books of account
B. Date on which payment is credited to the bank account
C. Either of (a) or (b)
D. Earlier of (a) or (b)
Ans: D; Earlier of (a) or (b)
Q 4. As per Section 13, supplier of taxable Services receives an amount up to 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.
A. 1000
B. 100
C. 500
D. 5000
Ans: A; 1000
Q 5. As per section 12, Time of supply of goods in case of reverse charge mechanism will be
earlier of following –
A. Date of receipt of goods
B. Date on which the payment is made
C. Date immediately following 30 days from the date of issue of invoice by the supplier
D. Earlier of (a) or (b) or (c)
Ans: D; Earlier of (a) or (b) or (c)

Q 6. Where the goods being sent or taken on approval for sale or return are removed before
the supply takes place, the invoice shall be issued
A. Before or at the date of supply
B. 6 months from the date of removal
C. Earlier of (a) or (b)
D. Later of (a) or (b)
Ans: C; Earlier of (a) or (b)
Q 7. The 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.
A. on which the supplier receives such addition in value. i.e. Date of Receipt of Payment.
B. Date of invoice in relation to such payment
C. Earlier of (a) or (b)
D. Neither of (a) or (b)
Ans: A; on which the supplier receives such addition in value. i.e. Date of Receipt of
Payment.
Q 8. 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 with payment obligations.
A. 1 year, annual
B. 3 months, periodic
C. 6 months, half yearly
D. 1 year, periodic
Ans: B; 3 months, periodic
Q 9. In case of supply by associated enterprises, where the supplier of service is located outside
India, the time of supply shall be the
A. date of entry in the books of account of the recipient of supply or
B. the date of payment,
C. earlier of (a) or (b)
D. Later of (a) or (b)

Ans: C; earlier of (a) or (b)
Q 10. Mr. Harish has received the payment, but has not deposited the cheque in the bank account,
what is the date of receipt of payment?
A. Date of receipt of payment
B. Date of credit in the bank account
C. Date on which payment is entered in the books of account of the supplier
D. Earlier of (b) or (c)
Ans: D; Earlier of (b) or (c)
Q 11. As per Section 14, Determine the amount of GST in case of supply of service of Rs.10,00,000
on 04.09.2018 and invoice has also been issued on the same date. The date of payment is
30.8.2018. the CGST rate has been increased from 5% to 12% w.e.f. 1.9.2018.
A. Rate – 5 %, GST – Rs. 50000
B. Rate – 12%, GST – Rs. 120000
C. Rate – 5%, GST – Rs. 120000
D. Rate – 12%, GST – Rs. 50000
Ans: B; Rate – 12%, GST – Rs. 120000
Q 12. GST Council, has issued Notification No. to specify that a registered person
(excluding composition supplier) should 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.
A. Notification no. 10/2017 – CT dated 15.11.2017
B. Notification no. 66/2017 – CT dated 15.11.2017
C. Notification no. 70/2017 – CT dated 15.11.2017
Ans: B; Notification no. 66/2017 – CT dated 15.11.2017

Q 13. As per section 14, In which of the following situations, ‘Old rate’ shall be applicable?
A. When the supply of goods and receipt of payment has been done after the change in rate
of tax but issue of invoice is before the change in rate of tax.
B. When the goods have been supplied before the change in rate of tax but issue of invoice
and receipt of payment is after the change in rate of tax.
C. When the goods have been supplied after the change in rate of tax but issue of invoice and
receipt of payment is before the change in rate of tax.
D. When the supply of goods and issue of invoice has been done after the change in rate of tax
but receipt of payment is before the change in rate of tax.
Ans: C; When the goods have been supplied after the change in rate of tax but issue of
invoice and receipt of payment is before the change in rate of tax.
Q 14. Mr. A entered into a contract with Mr. C and agreed to make the payment by 30 th
September, 2018. If the payment is not made in time, then he shall pay late fees Rs.100 /
day. No payment of late fees has been made so far. What shall be the time of supply in
respect of the late fees due on Mr. A?
A. 30th September, 2018
B. 31st October, 2018
C. TOS has not arisen since payment of late fees has not been made
D. None of the above.
Ans: C; TOS has not arisen since payment of late fees has not been made
Q 15. What is time of supply of goods, in case of forward charge?

A. Date of issue of invoice
B. Due date of issue of invoice
C. Date of receipt of consideration by the supplier
D. Earlier of (a) & (b)
Ans: D; Earlier of (a) & (b)
Q 16. Mr Roshan made some purchase of shoes from Metro shoes worth Rs. 5000/- and got a
free voucher worth Rs. 1500/- which is redeemable at any outlet of metro shoes. Here what
will be time of supply of voucher issued?
A. Date of issue of voucher
B. Date of redemption of voucher

C. Earlier of (a) & (b)
D. Later of (a) & (b)
Ans: A; Date of issue of voucher
Q 17. What is the time of supply of service if the invoice is issued within 30 days from the
date of provision of service?
A. Date of issue of invoice
B. Date on which the supplier receives payment
C. Date of provision of service
D. Earlier of (a) & (b)
Ans: D; Earlier of (a) & (b)
Q 18. What is the time of supply of service in case of reverse charge mechanism?
A. Date of payment
B. Date immediately following 60 days from the date of issue of invoice
C. Date of invoice
D. Earlier of (a) or (b)
Ans: D; Earlier of (a) or (b)
Q 19. Value of services rendered is Rs. 1,00,000/. Date of issue of invoice is 5th October 2018.
Advance Received is Rs. 25,000/- on 20th September 2018. Balance amount received on
7th October 2018. What is the time of supply for Rs. 1,00,000/-
A. 5th October 2018 for Rs. 1,00,000/-
B. 20th September 2018 for Rs. 1,00,000/-
C. 20th September 2018- Rs.25,000/- and 5th October 2018 for Rs. 75,000/
D. 20th September 2018- Rs. 25,000/- and 7th October 2018 for Rs. 75,000/-
Ans: C; 20th September 2018- Rs.25,000/- and 5th October 2018 for Rs. 75,000/-

Q 20. There was increase in tax rate from 20% to 24% w.e.f.1.09.2018. Which of the following
rate is applicable when services are provided after change in rate of tax in September 2018,
but invoice issued and payment received, both in August, 2018:
A. 20% as it is lower of the two
B. 24% as it is higher of the two
C. 20% as invoice and payment were received prior to rate change
D. 24% as the supply was completed after rate change
Ans: C; 20% as invoice and payment were received prior to rate change
Q 21. There was increase in tax rate from 20% to 24% w.e.f.1.9.2018. Which of the following rate
is applicable if the supplier has not opted for composition levy say Sita Manufacturers, Delhi
supplies goods to Aakash Electronics, Dehradun. Further, Goods were removed from its
factory in Delhi on 31.08.2018; invoice is issued on 31.08.2018 and payment is received on
4.09.2018.
A. 20% as it is lower of the two
B. 24% as it is higher of the two
C. 20% as date of invoice and dispatch of goods from factory, has happened before
change of rate
D. 24% as both, payment and completion of supply, has happened after change of rate
Ans: C; 20% as date of invoice and dispatch of goods from factory, has happened before
change of rate
Q 22. The time limit for issue of tax invoice in case of continuous supply of goods:
A. At the time of issue of statement of account where successive accounts are involved
B. At the time of receipt of payment, if payments are received prior to issue of accounts
C. On a monthly basis
D. As and when demanded by the recipient.
Ans: A; At the time of issue of statement of account where successive accounts are involved

Q1. M/s. Wanderlust Travels (P) Ltd. purchased a bus chassis from M/s. Krishi Motors Ltd. for a
consideration of ₹90.00 lakh on 01.10.20XX. M/s. Wanderlust Travels (P) Ltd. sent the bus chassis
for body building to M/s. Bhagwant Fabricators and paid in advance the total consideration of ₹
25.00 lakh on 15.10.20XX. M/s. Bhagwant Fabricators, after completing the bus body, informed M/s.
Wanderlust Travels (P) Ltd. for carrying out the inspection of the work done on 05.11.20XX. M/s.
Wanderlust Travels (P) Ltd. visited the work shop of M/s. Bhagwant Fabricators on 08.11.20XX and
confirmed that the bus body was in accordance with the terms of the contract.
The last date for issuing the invoice by M/s. Bhagwant Fabricators is :-
A. 15.10.20XX
B. 08.11.20XX
C. 08.12.20XX
D. 05.12.20XX
Ans: 08.12.20XX
Q2 Banke Bihari (Pedewala), is a famous sweets maufacturer, located and registered in Mathura, Uttar
Pradesh. He received an order for 200 Kg. of sweets on 2nd May, 2019 from M/s. Ghoomghoom
Travels (P) Ltd., located and registered in same locality of Mathura for a total consideration of Rs.
1,00,000/-. All 200 Kg. sweets were delivered to M/s. Ghoomghoom Travels (P) Ltd. on 5th May,
2019, but without invoice, as accountant of Mr. Banke Bihari was on leave on that day. However,
the invoice was raised for the same on 6th May, 2019, when the accountant joined the office after
leave. Payment in full was made on 7th May, 2019.
Determine the time of supply of goods in this case.
A. 2nd May, 2019

B. 5th May, 2019
C. 6th May, 2019
D. 7th May, 2019
Ans: 5th May, 2019

Q3. I buy a set of modular furniture from a retail store. Invoice is issued to me and I make the payment.
The furniture is to be delivered to me later in the week when a technician is available to assemble
and install it. The next day the rate of tax applicable to modular furniture is revised upward, and
the store sends me a supplementary invoice with the delivery note accompanying the furniture to
collect the differential amount of tax.
Ans: No, the store is not correct in issuing supplementary invoice with revised rate of tax. The revised
rate of tax is not applicable to the transaction, as the issuance of invoice as well as receipt of
payment occurred before the supply. Therefore, in terms of section 14(b)(ii), the time of supply is
earlier of the two events namely, issuance of invoice or receipt of payment, both of which are before
the change in rate of tax, and thus, the old rate of tax remains applicable.
Q4 Chiku Traders is a registered supplier of plastic goods. On 10th April, 20XX, Chiku Traders received
an order from Neelu Traders for supply of a consignment of plastic goods. Chiku Traders gets the
consignment ready by 15th April, 20XX. The invoice for the consignment was issued the next day,
16th April, 20XX. Neelu Traders collects the consignment from the godown of Chiku Traders on 25th
April, 20XX and hands over the cheque towards payment on the same date. The said payment is
entered in the books of accounts of Chiku Traders on 26th April, 20XX and amount is credited in
their bank account on 27th April, 20XX.
Determine the time of supply of the plastic goods supplied by Chiku Traders to Neelu Traders as per
the provisions of CGST Act, 2017.
Ans: In terms of section 12(2) of the CGST Act, the time of supply of goods is the earlier of the date of
issue of invoice/last date on which the invoice is required to be issued or date of receipt of payment.
However, Notification No. 66/2017 CT dated 15.11.2017 specifies that a registered person (excluding
specified in section 12(2)(a) of the 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.
As per section 31(1), the invoice in case of supply of goods needs to be issued either before or at
the time of removal/delivery of goods.
In this case, the invoice is issued before the removal of the goods and is thus, within the time limit
prescribed under section 31(1). Therefore, time of supply is the date of issue of invoice, which is
16th April, 20XX.

Q5. Mr. Mahendra Sharma, an interior decorator registered at Ahmedabad (Gujarat), provided service to
one of his clients XYZ Company Ltd., registered at Pune (Maharashtra). The provision of service
was completed on 10-08-20XX and payment received was entered in the books of Mr. Mahendra
Sharma on 11-08-20XX. With effect from 16/08/20XX, applicable GST rate was increased from 5%
to 12%. However, payment for the service received was credited in his bank account on 17/08/20XX
and invoice for the same was raised on 23-08-20XX.
Mr. Mahendra Sharma claimed that he is liable to pay IGST @ 5%. But the department took the
view that he is liable to pay IGST @12%.
Examine the correctness of Mr. Mahendra Sharma's contention and determine the time of supply and
applicable rate of tax as per the statutory provisions.
Would your answer undergo any change in the above case if the payment was credited to the bank
account on 14-08-20XX instead of 17-08-20XX?
Note: You may assume that all days are working days.
Ans: As per section 14 of the CGST Act, 2017, in case of change in rate of tax, date of receipt of payment
is earlier of:
(i) date of entering payment in the books of account of the supplier (11.08.20XX)
or
(ii) date on which the payment is credited to his bank account (17.08.20XX).
However, if the payment is credited in the bank account after 4 working days from the date of
change in the rate of tax, the date of receipt of payment will be the date of credit in the bank
account.
In the given case, since the payment has been credited in the bank within 4 working days from the
date of change in the rate of tax, the date of receipt of payment will be 11.08.20XX [i.e., earlier of
11.08.20XX or 17.08.20XX].
Section 14 further provides that where goods and/or services have been supplied before the change
in rate of tax (10.08.20XX) and the payment has been received before the change in rate of tax
(11.08.20XX), but the invoice for the same is issued after the change in rate of tax (23.08.20XX),
the time of supply shall be the date of receipt of payment.
Therefore, in the given case, the time of supply will be 11.08.20XX and the applicable rate of tax will
be rate prevalent at the time of supply, i.e. IGST @ 5%.
Therefore, the contention of Mahendra Sharma is correct.
Further, if the date on which the payment is credited to bank account of supplier is 14.08.20XX, the
date of receipt of payment will continue to be 11.08.20XX [i.e., earlier of 11.08.20XX or 14.08.20XX]
since the payment is credited in the bank account before change in rate of tax. Consequently, with
other things remaining the same, the time of supply and the applicable rate of tax will remain the
same.

Q6. Kothari Ltd., Mumbai, holds 51% of shares of Wilson Inc., a USA based company. Wilson Inc.
provides business auxiliary services to Kothari Ltd. From the following details, determine the time
of supply of service provided by Wilson Inc:
Agreed consideration US $1,00,000
Date on which services are provided by Wilson Inc. 16th June
Date on which invoice is issued by Wilson Inc. 19th August
Date of debit in the books of account of Kothari Ltd. 30th September
Date on which payment is made by Kothari Ltd. 23rd December
Ans: Since Kothari Ltd. holds 51% shares of Wilson Inc., Kothari Ltd. and Wilson Inc. are ‘associated
enterprises’ as per section 92A of the Income-tax Act, 1961. As per second proviso to section
13(3), in case of supply by associated enterprises, where the supplier of service is located outside
India, the time of supply is the earlier of the following two dates:
Date of entry in the books of account of the recipient of supply 30th September
[which is Kothari Ltd. in the present case]
OR
Date of payment [by Kothari Ltd. in the present case] 23rd December
Thus, time of supply is 30th September.
Q.7 Basis the following information, determine the time of supply:
S. No. Event Date

(1) Commencement of provision of service 05th June
(2) Completion of service 10th October
(3) Invoice issued 20th October
(4) Payment received by cheque and entered in the books 15th October
(5) Amount credited in Bank account 18th October
(6) Rate changed from 12% to 18% 16th October
Note: Assume that all the days covered in the above case are working days.
Ans: The explanation to section 14 lays down that the date of receipt of payment is 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. However, the date of receipt of payment is
the date of credit in the bank account if such credit in the bank account is after 4 working days
from the date of change in the rate of tax.

In the given case, the payment has been credited in the bank account within 4 working days from
the date of change in the rate of tax. Therefore, the date of receipt of payment is 15th October
being the date of entry in the books of account of the supplier which is earlier than the date of
credit of the payment in the bank account (18th October).
As per section 14(a)(iii), in case of change in rate of tax, if the service is supplied before the
change in rate of tax and the invoice is issued after the change in rate of tax but the payment is
received before such change in rate of tax, the time of supply is the date of receipt of payment.
Therefore, applying the provisions of section 14(a)(iii) to the given case, the time of supply is 15th
October.
Q.8 M/s KLM Ltd., a publishing and printing house registered in Maharashtra, is engaged in supply
of books, letter cards, envelopes, guides and reference materials. The following information is
provided by the company:
Event Printing of books Printing of

envelopes
Date of entering into printing contract 16th March 20th March
Date of receipt of advance 20th March 25th March
Date of completion of printing 10th April 5th April
Date of issue of invoice 15th May 10th April
Date of removal of books and letter heads to buyer 13th May 7th April
Date of receipt of balance payment 31st May 30th April
In respect of printing of books, content was supplied by the author. For printing of envelopes, the
design and logo were supplied by the buyer.
Determine the time of suppl(ies) for the purpose of payment of tax.
Ans: As per Circular No. 11/11/2017 GST dated 20.10.2017, in case of printing of books where only
content is supplied by the person who owns the usage rights to the intangible inputs while the
physical inputs including paper used for printing belong to the printer, supply of printing [of the
content supplied by the recipient of supply] is the principal supply and therefore, such supplies
would constitute supply of service. In case of supply of printed envelopes by the printer using its
physical inputs including paper to print the design, logo etc. supplied by the recipient of goods,
predominant supply is supply of goods and the supply of printing of the content [supplied by the
recipient of supply] is ancillary to the principal supply of goods and therefore, such supplies would
constitute supply of goods.
Accordingly, the time of supply of books and envelopes will be governed by sections 12 and 13
respectively.

In terms of section 12(2), the time of supply of goods is the earlier of, the date of issue of
invoice/last date on which the invoice is required to be issued or date of receipt of payment.
specified in section 12(2)(a), i.e. date of issue of invoice or the last date on which invoice ought
As per section 31(1), invoice for supply of goods should be issued before or at the time of removal
of goods for supply to the recipient, where supply involves movement of goods. Therefore, in the
given case, the last date by which invoice ought to have been issued is 7th April. Thus, the time
of supply of envelopes for the purpose of payment of tax is 7th April.
As per section 13, the time of supply of services is the earlier of the dates arrived at by methods
(A) and (B), as follows:
(A) Date of invoice or date of receipt of payment (to the extent the invoice or payment covers
the supply of services), whichever is earlier, if the invoice is issued within the time prescribed
under section 31;
(B) Date of provision of service or date of receipt of payment (to the extent the payment covers
the supply of services), whichever is earlier, if the invoice is not issued within the time prescribed
under section 31.
Since in the given case, invoice for the services is not issued within 30 days, the time of supply for
the advance received is the date of receipt of payment, i.e. 20th March being earlier than the date
of provision of service. However, the time of supply for the balance payment is the date of provision
of service, i.e. 10th April being earlier than the date of receipt of balance payment.
Q.9 Andes Pvt. Ltd., a registered supplier, manufactures product ‘A’ and ‘B’. While ‘A’ is taxable under
forward charge, ‘B’ is taxable under reverse charge. The following details are provided in relation to
two individual supplies of products ‘A’ and ‘B’ made by the company:
S. No. Date Event

(i) 10th February Payment of ` 1,00,000 made by buyer for supply of ‘A’ to be
delivered in the month of March
(ii) 13th February Receipt of ` 1,00,000 [as mentioned in point (i) above]
(iii) 17th February Payment of ` 2,00,000 made by buyer for supply of ‘B’ to be
delivered in the month of March
(iv) 20th February Receipt of ` 2,00,000 [as mentioned in point (iii) above]
(v) 5th March Product ‘A’ manufactured and removed
(vi) 6th March Receipt of product ‘A’ [as mentioned in point (v) above] by the
buyer
(vii) 10th March Product ‘B’ manufactured and removed

(viii) 23rd March Receipt of product ‘B’ [as mentioned in point (vii) above] by
the buyer
(ix) 4th March Invoice for ` 2,00,000 issued for supply of ‘A’
(x) 11th March Invoice for ` 4,00,000 issued for supply of ‘B’
(xi) 25th March Payment made by the buyer of ‘A’
(xii) 31st March Payment [as mentioned in point (xi) above] received
(xiii) 1st April Payment made by the buyer of ‘B’
(xiv) 4th April Payment [as mentioned in point (xiii) above] received
Determine the time of suppl(ies) of goods for the purpose of payment of tax.
Ans: In terms of section 12(2), the time of supply of goods is the earlier of, the date of issue of
specified in section 12(2)(a), i.e. date of issue of invoice or the last date on which invoice ought
Also, it is important to note that the relief of not paying GST at the time of receipt of advance is
available only in case of supply of goods, the tax on which is payable under forward charge. In
case of reverse charge, GST is payable at the time of payment, if payment is recorded/made before
receipt of goods (advance payment) [Section 12(3)].
Therefore, time of supply of product ‘A’, which is taxable under forward charge, is 4th March
being the date of issue of invoice. However, time of supply of product ‘B’, which is taxable under
reverse charge, is 17th February to the extent of ` 2,00,000 paid as advance being the earliest of the
three stipulated dates namely, date of receipt of goods (23rd March), date of payment (17th
February) and date immediately following 30 days of issuance of invoice (11th April). For balance `
2,00,000, the time of supply of product ‘B’ is 23rd March being the earliest of the three stipulated
dates namely, date of receipt of goods (23rd March), date of payment (1st April) and date
immediately following 30 days of issuance of invoice (11th April).
Q.10 Radhika Travels (P) Ltd. purchased a bus chassis from Jyoti Motors Ltd. for a consideration of `
80.00 lakh on 1st August. Radhika Travels (P) Ltd. sent the bus chassis for body building to M/s.
Hanumant Fabricators and paid in advance the total consideration of ` 25.00 lakh on
10th August. M/s. Hanumant Fabricators, after completing the bus body, informed Radhika Travels
(P) Ltd., for inspection of the work done on 1st September. Radhika Travels (P) Ltd. visited the
workshop of M/s. Hanumant Fabricators on 7th September and confirmed that the
bus body was in accordance with the terms of the contract. Hanumant Fabricators raised an invoice
of ` 25.00 lakh on 15th September and supplied chassis along with the bus body so constructed,
along with the

invoice on 16th September. State the time of supply in this case for supply made by M/s Hanumant
Fabricators, out of the choices given below-
(a) 10th August
(b) 7th September
(c) 15th September
(d) 16th September
Ans: (a) 10th August
Q.11 Dhruv & Co. sends certain textile products for dyeing to Bhanushali Manufacturers on
job work basis on 16th August. On 18th August, Dhruv & Co. credited 100% of the job work charges
to the bank account of Bhanushali Manufacturers in advance and recorded it in its books of accounts
on the same date. Bhanushali Manufacturers issues the invoice for the same in first week of
September.
Assuming that inputs are received back by Dhruv & Co. after job work in the month of October (i.e.
within time limit prescribed under section 143 of the CGST Act, 2017), determine the time of supply
for such job work done by Bhanushali Manufacturers. (RTP-Nov21)
Ans: As per Schedule II of the CGST Act, 2017, the activity by way of any treatment or process which
is applied to another person's goods is a supply of services. Hence, job work is squarely covered within
the purview of supply of services. Accordingly, the time of supply shall be determined as per section
13 of the CGST Act, 2017. As per section 13, time of supply of services where invoice has been issued
within 30 days of provision of services is:
(a) date of issuance of invoice, or
(b) date of recording the payment in the books of accounts of the supplier, or
(c) date on which payment is credited in the bank account of the supplier, whichever is earlier.
In the present case, the service charges for job work are paid as advance at the time of sending
inputs to job worker. Hence the time of supply of job work services shall
be triggered at the time of payment of advance by Dhruv & Co., i.e. 18th August.

7 – Value of Supply
Q 1. In accordance with the provisions of GST Act, Give answer for the following pertaining to supply:
1. Are the valuation provisions similar for both Inter – state and intra – state supplies?
2. Will the valuation rules provided in Section 15 apply to IGST payable on import of goods?
3. Will the Customs Valuation apply to IGST payable on import of services?
Ans: Answer to above questions are mentioned below:
1) As per sec 9 of CGST Act, levy is on into state supply where value shall be determined as per
sec 15 of CGST act. Also, as per sec 5 of IGST Act, levy is on interstate supply of goods or
services where value shall be determined as per sec 15 of CGST Act. Hence, Valuation provisions
are similar for interstate & interstate supply.
2) As per proviso to sec 5(1) IGST is payable on imported goods, where value shall determined as
per the provisions of Customs Act, Hence provision of sec 15 is not applicable for calculation
IGST on imported goods.
3) No, Value of import services shall be determined as per the provisions of sec 15 CGST Act read
with Rules.
Q 2. 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, ceases, fees and charges levied under a law other than the GST law, if
charged separately by the suppliers;
(b) Any amount that the supplier is liable to pay in relation to such supply but which has been
incurred by 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.
Q 3. In certain cases, the selling price of the final product is less since subsidy is received from
Government. Are subsidies received from Government required to be included in the transaction
value?

Ans: As per the definition of Consideration, any subsidy received from the government shall not be treated
as a part of consideration for supply of goods or services.
Also, as per sec 15(2)(e), Subsidies received by the supplier, from Central / State Governments are
not required to be included in the transaction value of supplies affected by him, even if the subsidies
are directly linked to the supplies made by him.
Hence, Subsidy received from Government is not to be added in the transaction value.
Q 4. In accordance with GST Act, Give answer to the following pertaining to value of supply:
1. Are transport charges for supply, paid by the supplier required to be included in the transaction
value?
2. Will GST be applicable on any interest charged for payment after the credit period?
Ans:
1) As per Section 15(2)( c ) All the expenses incurred by the supplier, in relation to the supply,
- are required to be included, also expenses related to anything done by supplier to be added
in value in the transaction value to the extent they are charged for.
Even if the contract is for delivery of goods ex – factory, and the supplier incurs the cost of
transportation on behalf of the recipient for delivery of goods to the recipient, the cost should
be included in the transaction value if the supplier charged the recipient for the same.
2) As per section 15(2)(d) Interest, penalty or late fee charged from the customer would also
be liable to GST. As per provision of Sec 13(6) of Time of supply the GST liability on such
values can be paid only on receiving such additional amounts.
Q 5. Mr. Lokesh has conducted a market survey for Mr. Vishal. However, Mr. Lokesh has not charged any
fee for such services as Mr. Vishal 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 agrees to
be made for consideration in the course of business then it is liable to GST.
Thus free supply of goods or service not liable to GST unless it is covered in Schedule I. In the given
case Mr. Lokesh & Mr. Vishal both are best friends & not related party here not covered in Schedule
I.
Hence, no GST is payable on free supply of service by Mr. Lokesh
Q 6. Asha Traders dealing in supply of garments and details mentioned below:

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 Rs 9,000, determine the
Transaction Value of supply as per section 15 of CGST Act.
Ans: Computation of value of supply as per section 15 of CGST Act
Particulars Amount
Value of taxable of supply of garments 45000
Subsidy received from trust (As per Section 15(2)(e) since the
subsidy is not received from CG or SG so it will be included in value of
supply) 12000
Subsidy received from government of India (As per section 15{2)(e)
of CGST ACT, 2017 such subsidy amount shall not be included) 0
Value of taxable of supply 57000
Q 7. M/s. Sam Pvt. Ltd. supplied tool parts to ABC Pvt. Ltd. for a consideration of Rs. 2,50,000 exclusive
of taxes. ABC Pvt. Ltd. also gave some material to M/s. Sam Pvt. Ltd. as consideration for such
supply whose value was Rs. 50,000 exclusive of Taxes M/s. Sam has supplied the same goods to
another person at a price of Rs. 3,25,000 inclusive of GST @ 18% Determine the value of supply.
i) What would your answer be if price of Rs. 3,25,000 is not available at the time of supply of
goods to ABC Pvt. Ltd.
ii) What would your answer be in above case if open market value of supply is also not available
but at the time of supply of goods by M/s. Sam. Identical goods have been supplied at value
of Rs. 3.17,000 excluding taxes.
Ans: Legal Provision: As per Sec. 15 value of Supply shall be transactions value if:
- buyer and seller are not related and
- price is not sole consideration;
As per Rule 27 of CGST Rules, 2017 where the supply of goods or services is for a consideration
not wholly in money, the value of the supply shall:
a) be the open market value of such supply
b) if the open market value is not available, be the sum total of consideration in money and
any such further amount in money as is equivalent to the consideration not in money and if
such further amount is known at the time of supply.
c) If the value of supply is not determinable under clause (a) or clause (b) be the value if
supply of goods or services or both of like kind and quality.
Determination of value of taxable supply for the given cases:

In case where open market value is available then it shall be taken as value of supply this shall be
determined as under:

Particulars Amount
Price charged from another recipient 325000
Less: GST included in the above price

(Rs. 325000 x 18/118) 49576
Open market value of supply of goods 275424
Thus, the value of supply shall be Rs. 275,424
I. If open market value is not available, the value of taxable supply shall be determined as under:
Particulars Amount
Consideration in money 250000
Value of Non-monetary consideration –Value of goods Known at
time of supply 50000
Value of taxable supply 300000
II. If open market value is not available as well as value of equivalent consideration is not available
then value of supply shall be value of like kind and quality i.e., Rs. 3,17,000
Q 8. Determine the value of supply and the GST liability, to be collected and paid by the owner, with
the following particulars:
Particulars Amount
Rent of 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 on advance 600000
Municipal taxes paid by the owner 300000
Rent and maintenance charges are exclusive of GST.
GST rates applicable on renting of business premises is as follows:
CGST 9%
SGST 9%
Provide suitable explanations where required.
Ans: Computation of Value of Taxable Supply
Particulars Amount
Rent of the commercial building 1800000
Maintenance charges collected by the local society from the owner

and reimbursed by the tenant [ Note-1] 250000
Refundable advance [Note-2] Nil

Municipal taxes paid by the owner [Note-3] Nil
Value of Supply 2050000
CGST @ 9% 184500
SGST @ 9% 184500
Notes:-
i. Being reimbursed by the tenant, such charges ultimately form part of the rent paid by the
tenant to the owner and thus, will form part of the value.
ii. Being refundable, the advance is in the nature of security deposit which does not constitute
consideration in terms of section 2(31) of the CGST Act, 2017 and thus, is not includible in
the value.
iii. Being an expenditure incurred by the supplier, the same is not includible in the value,
assuming that such taxes are not charged to the recipient.
Q 9. Cool Trade Links Pvt. Ltd. is a registered manufacturer of premium ceiling fans. It sells its fans
exclusively through distributors appointed across the country. The maximum retail price (MRP)
printed on the package of a fan is Rs. 10,000. The company sells the ceiling fans to distributors
at Rs. 7,000 per fan (exclusive of applicable taxes). The applicable rate of GST on ceiling fans is
18%. The stock is dispatched to the distributors on quarterly basis - stock for a quarter being
dispatched in the second week of the month preceding the relevant quarter. However, additional
stock is dispatched at any point of the year if the company receives a requisition to that effect
from any of its distributors. The company charges Rs. 1,000 per fan from distributors towards packing
expenses. The company has a policy to offer a discount of 10% (per fan) on fans supplied to the
distributors for a quarter, if the distributors sell 500 fans in the preceding quarter. The discount
is offered on the price at which the fans are sold to the distributors (excluding all charges and
taxes). The company appoints Gupta Sales as a distributor on 1st April and dispatches 750 fans
on 8th April as stock for the quarter April-June. Gupta Sales places a purchase order of 1,000 fans
with the company for the quarter July-September. The order is dispatched by the company on
10th June and the same is received by the distributor on 18th June. The distributor makes the
payment for the fans on 26th June and avails applicable input tax credit. The distributor reports
sales of 700 fans for the quarter April-June and 850 fans for the quarter July-September.
Examine the scenario with reference to section 15 of the CGST Act, 2017 and compute the taxable
value of fans supplied by Cool Trade Links Pvt. Ltd. to Gupta Sales for the quarter July-September.
Note: The supplier and the recipient of supply are not related and price is the sole consideration
for the supply. Make suitable assumptions, wherever necessary.
Ans: Legal Provision: Section 15(3)(a) of the CGST Act allows discounts to be deducted from the value
of taxable supply if the same is given before or at the time of the supply and if such discount
has been duly recorded in the invoice issued in respect of such supply. In other words, pre-supply

discounts recorded in invoices are allowed as deduction. Further, post supply discounts are also
allowed as deduction from the value of supply under section 15(3)(b) of the CGST Act 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.
Discussion & Conclusion: In the given case, Gupta Sales is entitled for 10% discount on fans
supplied by Cool Trade Links Pvt. Ltd. for the quarter July-September as it has sold more
than 500 fans in the preceding quarter April-June. However, since the entire stock for the
quarter July-September has already been despatched by Cool Trade Links Pvt. Ltd. in the
month of June, the discounts on the fans supplied to Gupta Sales for the quarter July-
September will be a post-supply discount.
Such post-supply discount will be allowed as a deduction from the value of supply since the
discount policy was known before the time of such supply and the discount can be specifically
linked to relevant invoices (invoices pertaining to fans supplied to Gupta Sales for the quarter
July- September) provided Gupta Sales reverses the input tax credit attributable to the
discount on the basis of document issued by Cool Trade Links Pvt. Ltd.
The value of supply will thus, be computed as under:
Price at which the fans are supplied to Prakash Sales [Note 1] 7000
Add: Packing expenses [Note 2] 1000

Less: Discount [Note 3] -700
Value of taxable supply of one unit of fan 7300
Value of taxable supply of fans for the quarter July-
73,00,000
September [Rs. 7,300 x 1,000]
Notes:
(1) The value of a supply is the transaction value, which is the price actually paid or payable for
the said supply, in terms of section 15(1) of the CGST Act.
(2) The value of supply includes incidental expenses like packing charges in terms of section
15(2)(c) of the CGST Act.
(3) Since all the conditions specified in section 15(3)(b) of the CGST Act have been fulfilled,
the post-supply discount will be allowed as deduction from the value of supply presuming
that Gupta Sales has reversed the input tax credit attributable to such discount on the basis
of document issued by Cool Trade Links Pvt. Ltd. The input tax credit to be reversed will
work out to be Rs. 1.26 lakh [1,000 x (7,000 x 10%) x 18%].

Q 10. Samriddhi Advertisers conceptualised and designed the advertising campaign for a new product
launched by New Moon Pvt Ltd. for a consideration of Rs. 5,00,000. Samriddhi Advertisers owed Rs.
20,000 to one of its vendors in relation to the advertising service provided by it to New Moon Pvt
Ltd. Such liability of Samriddhi 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.
Assume the rate of GST to be 18%. Determine the value of taxable supply made by Samriddhi
Advertisers.
Ans: Computation of Value of Taxable Supply
Particulars Amount
Service charges 500000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi Advertisers

[Liability of the supplier being discharged by the recipient, is includible in
the value in terms of section 15(2)(b)] 20000
Interest for delay in payment of consideration [Includible in the value in

terms of section 15(2)(d) – Refer note below] (rounded off) 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). Such interest has been assumed to be inclusive of GST and the value computed by
making back calculations [Interest /100 + tax rate) x 100].
Q 11. 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. AKJ 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 fess should not form part of the consideration for the sale as it is a separate activity. Is his
argument correct in the light of section 15?
Ans: Legal Provision: Section 15(2) mandates the addition of certain elements to transaction value to
arrive at taxable value. Clause (c) of section 15(2) 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.
Discussion & Conclusion: Since AKJ Foods Pvt. Ltd. does the testing before the delivery of goods,
the charges therefor will be included in the taxable value. Therefore, AKJ Foods Pvt. Ltd.’s argument
is not correct. The testing fee should be added to the price to arrive at taxable value of the
consignment.

Q 12. A philanthropic association makes a substantial donation each year to a reputed private management
institution to subsidise the education of low-income group students who have gained admission there.
The fee for these individuals is reduced thereby, coming to Rs. 3 lakh a year compared to Rs. 5 lakh
a year for other students. What would be the taxable value of the service of coaching and instruction
provided by the institution?
Ans: Legal Provision: As per section 15(2)(e), the value of a supply includes subsidies directly linked
to the price, excluding State Government and Central Government subsidies. In this case, the
subsidy is not from the Government but is from a philanthropic association.
Conclusion: Therefore, the subsidy is to be added back to the price to arrive at the taxable value,
which comes to Rs. 5 lakh a year.
Q 13. Mezda 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. Mezda 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: This is a supply that is valued as per transaction value under section 15(1) as the price is the sole
consideration for the supply and the supply is made to unrelated person. The concept of transaction
value has been expanded to include certain elements like interest which are actually payable. Once
waived, the interest is not payable and is therefore, not to be added to transaction value.
Q 14. Easy Coupons Ltd. sells coupons that are redeemable against specified luxury food products at retail
outlets. Each coupon has a face value of Rs. 900 but is redeemable for supplies worth Rs. 1000. What
is the value of supply of such coupon under GST laws?
Ans: In terms of rule 32(6) of the CGST Rules relating to valuation, the value of a coupon is the money
value of the goods redeemable against it. Therefore, though the coupon is sold for Rs.900, its value
is Rs.1000.
Q 15. The supplies of commodity ‘y’ to the market are channelled through a State Marketing Corporation
which conducts an auction each day to arrive at the price. Gupta and Co. supplies commodity ‘y’
through the State Marketing Corporation. How will this supply of ‘y’ by Gupta and Co. be valued for
paying tax?
Ans: Legal Provision: The State Marketing Corporation is an ‘agent’ in the meaning of the expression
as defined in section 2(5), which includes an auctioneer. Therefore, the value of supply of ‘y’ will
be determined in terms of rule 29 of CGST Rules relating to valuation.
There is no open market for the first supply of commodity ‘y’, as it is compulsorily supplied to the
State Marketing Corporation. However, Gupta & Co. has the option of valuing the supply of ‘y’ at

90% of price of goods of like kind and quality sold by the State Marketing Corporation to its
unrelated customers.
If the value cannot be determined by this method, it needs to be determined on the basis of the
cost plus 10% mark up as per rule 30 or on the basis of Best Judgement Method as per rule 31,
in that order.
Q 16. A pharmaceutical company supplies a drug intermediate to its own unit in another State for conversion
into formulations. The product is exclusive to this company, and there is no market sale in India of
this drug intermediate. Goods of like kind and quality are also not available. How will the value of the
supply of this drug intermediate be determined under GST laws?
Ans: Since the supply is made to a distinct person, the same will be valued in accordance with rule 28
of CGST Rules relating to valuation.
There is no open market value of the drug intermediate as also there are no like goods. Therefore,
value of supply of such drug intermediate will be determined in terms of clause (c) of rule 28 i.e.,
by using rule 30. Thus, the value of supply of such drug intermediate will be 110% of its cost of
production or manufacture.
However, if the recipient unit is eligible for full ITC, the value declared in the invoice will be deemed
to be the open market value of the drug intermediate and thus, the invoice value will be the value
of taxable supply.
Q 17. Siddhi Ltd. exported some goods to Samson Inc. of USA. It received US $ 9,000 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.
c What would be the value of supply if US $ 9,000 are converted into UK £ 4,500. RBI
reference rate at that time for US $ is ` 63 per US dollar and for UK £ is ` 101 per UK
Pound.
Ans:
a Rule 32 of CGST Rules, 2017 inter alia provides that for a currency, when exchanged from,
or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or
the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate
for that currency at that time, multiplied by the total units of currency. Hence, in the given
case, value of taxable service would be as follows:-
(RBI reference rate for $ – Selling rate for $) × Total units of US $
=Rs. (62-61) × 9,000
=Rs. 9,000

b If the RBI reference rate for a currency is not available, the value shall be 1% of the gross
amount of Indian Rupees provided or received, by the person changing the money.
Hence, in the given case, value of taxable service would be as follows: -
1% of Rs. (61 × 9,000)
=Rs. 5,490.
c Here neither of currencies exchanged are in INR. Hence value supply shall be % of lesser of 2
amounts the person changing money would have received by converting them to INR on that
day at reference rate of RBI
Value 1 = $ 9000 x Rs. 63 / $ = Rs. 567000
Value 2 = £ 4,500 x Rs. 101 / £ = Rs. 454500
Hence value of supply shall be 1 % of lower of above i.e. Rs. 4545 (1% of Rs. 454500)
Q 18. A manufacturer of machinery supplied a special machine to LM Furnishers. Following details are
provided in relation to amounts charged:
Sr No Particulars Amount
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
Charges mentioned in (ii) to (v) are not included in (i) above. Other information furnished is
1. Cash discount @ 2% on price of machinery has been allowed to the customer at the time
of supply and also recorded in invoice.
2. GST rate – 18%.
Calculate value of supply of the special machine.
Ans: Computation of value of special machine
Particulars Amount
Price of machinery 600000
Add: Transit insurance [Note 1] 11000
Packing charges [Note 2] 9000
Extra design charges [Note 3] 20000
Freight [Note 1] 12000
Total 652000
Less: 2% cash discount on price of machinery [` 6,00,000 x 2%] [Note 4] -12000
Value of Taxable Supply 640000

Notes:
i. The given supply is a composite supply involving supply of goods (special machine) 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. Thus, tax rate applicable
to the goods (special machine) has been considered
ii. All incidental expenses including packing charged by the supplier to the recipient of a
supply are includible in the value of supply in terms of section 15(2)(c) of CGST Act,
2017.
iii. 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 is includible in the value of supply in terms of
section 15(2)(c) of CGST Act, 2017. Thus, extra designing charges are to be included in
the value of supply.
iv. Cash discount was given at the time of supply and also recorded in invoice, so the same is
not to be included while computing value of supply in terms of section 15(3)(a) of CGST
Act, 2017.
Q 19. MNO is manufacturer of tobacco products, during the manufacturing process certain incidental
expenses have been incurred by MNO ltd which amounts to a total of Rs 75,000, purchase value of
tobacco is Rs 1,75,000 also is subject to levy of excise duty charged of Rs 37,500 and GST is to be
levied @ 28%. Compute the transaction value.
Ans: Computation of transaction value as per section 15 of CGST Act,
Particulars Amount
Purchase value of tobacco 1,75,500
Adincidental expenses (As per Section 15(2) any incidental expenses are to be 75,000
included in value of supply)
Excise duty (Note) 37,500
Transaction value 2,87,500
GST @28% 80,500
Note: 1.As per section 15(2) (a) of CGST Act 2017, any taxes, duties, cases, fees and charges levied under
a law other that the GST law, if charged separately by the supplied should be included in the
transaction value. Thus excise duty levied upon such goods shall be included.

Q 20. Mr. Shubham located in Nagpur purchases 1000 Parker ink pens worth Rs 500000 from SK enterprises
wholesalers located in Pune. Mr. Shubham’s wife is an employee is SK Enterprises. The price of each
Parker pen in the open market is Rs. 400/ Per unit. 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: Legal Provision: 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
Discussion & Conclusion: In given case, Mr. Shubham’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. 500000 & delivery
charges of Rs 4,000 to be included i.e. Rs 5,04,000.
Note: Delivery charges incidental expenses as per sec 15(2)(c) to be added to transaction value.
Q 21. An assessee sold certain goods to ABC Ltd. for Rs 30,000 (excluding GST and other taxes) on
15.10.2017. The buyer, ABC Ltd. is a related person as defined under GST Act. It did not sell the
goods, but used it as intermediary product. The cost of production of the said goods determined as
per CAS – 4 was Rs 14,000. Determine the value of supply in the given case.
Ans: Legal Provision: The given case falls under the ambit related person it seems to be stock transfer
of goods where supply of goods is been used as an intermediary in manufacture of product.
The transaction value shall not be accepted whereas value shall be computed as per Rule 28 of CGST
Rules, which is specific for supply to related person.
Discussion & Conclusion: Thus, the value of supply shall be the open market value or like kind &
quality if available but in the given case it’s not given and also value of goods of like kind & quality
not available and so we shall apply Rule 30 of CGST Rules i.e. value of supply = 14,000*110% = Rs
15,400.
If the buyer eligible for ITC then declared value is treated as open market value.
Q 22. M/s Mayur Ltd, Delhi is an authorized money changer registered under FEMA, 1999 has entered the
following transaction of supply of money changing:
1. 500 transactions of conversion of Dollar into Indian Rupees of Rs 30000 per transaction
2. 600 transactions of conversion of Dollar into Indian Rupees of Rs 1,20,000 per transaction
3. 800 transactions of conversion of Indian Rupees in Dollar of Rs 5,00,000 per transaction
4. 300 transactions of conversion of Dollar into Euro of Rs 100 lakhs per transaction

Compute the value of taxable supply and GST payable where M/s Mayur Ltd opted for option under
Rule 32(2) (b) of CGST Rules. GST rate applicable is 18%
Ans
Particulars Rs
1. Conversion of Dollar into INR (up to Rs 1,00,000) 1,50,000
(Rs 30,000 X 1%) = Rs 300
Hence higher amount of Rs 300 to be considered Rs 300 x 500
2. Conversion of Dollar into INR (up to Rs 10,00,000) 6,60,000
Rs 1,000 + (Rs 20000)*o.5%
Rs 1100 x 600 transactions
3. Conversion of INR into Dollar (up to Rs 10,00,000) 24,00,000
Rs 1,000 + (Rs 4,00,000)*o.5%
Rs 3,000 x 800transactions
4. Conversion of Dollar into Euro (exceeding Rs 10,00,000) 43,50,000
Rs 5,500 + (Rs. 9000000) x 0.1%
Rs 14500 x 300 transactions [subject to a maximum of Rs 60,000]
Q 23. Mr. Jai a 2nd hand car dealer purchases from Mr. Veeru and further sells the very same car to Mr.
Gabbar after painting and renovation. The purchase price is Rs 300000 whereas the sale price is Rs
3,50,000 Mr. Jai has not taken input tax credit paid on purchase of such goods. Determine the value
of supply as per GST.
What would be your answer if ITC was taken on such goods?
Ans: Legal Provision: As per Rule 32(5) of CGST Rules, where a taxable supply is provided by a person
dealing in buying and selling of second hand goods i.e., used goods as such or after such mines
processing which does not change the nature of the goods and where no input tax credit has been
availed on the purchase of such goods.
Discussion & Conclusion: Thus, the value of supply shall be the difference between the selling price
and the purchase price i.e. Rs 50,000 (Rs 3,50,000 - Rs 3,00,000) as per GST Act.
If in case ITC was taken on such goods then the answer will be different as in that case the supplier
would not be eligible to opt of marginal scheme and the GST shall be charged on the entire sales
value i.e. on Rs 3,50,000/-
Q 24. Mr. Ramu has taken a loan on 01-01-2018 from SREI Finance corp ltd. worth of Rs 5,00,000 and he
purchased a i10 Car. He has defaulted in paying the loan amount and subsequently the lending
company repossessed the i10 car from Mr. Ramu on 01.06.2018. The said goods were sold by the
SREI Finance corp on 01-02-2020. Determine the value of supply for levy of GST?

Ans: Legal Provision: As per proviso to Rule 32(5) of CGST rules, the purchase value of goods repossessed
from a defaulting barrower, who is not registered, for the purpose of recovery of a loan or debt shall
be deemed to be the purchase price of such goods by the defaulting barrower reduced by 5% for
every quarter or part thereof, between the date of purchase and the date of disposal by the
person making such repossession.
Discussion & Conclusion: Thus, in the given case purchase value for lending company will be Rs
275000 (Rs 5,00,000 – 5% per quarter i.e. January 2018 to February 2020 = 9 quarter).
Q 25. 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 pro perty, situated all
over India. The company has its Head Office at Bangalore, Kamataka 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) fr om where it is
further sent to client locations for repairs.
• Work out the GST liability [CGST & SGST or I GST, 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.
Sr. No. Particulars Amount

Truck sent to own location in Tamil Nadu
A (i) Value of items contained in the truck – Rs. 3,00,000
(ii) Value of truck- Rs. 25,00,000
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. 2,85,000
B
(ii) Value of stand-alone machine - Rs. 4,00.000
(iii) Value of truck-Rs. 20,00,000 (Billing for repairs to be done afterwards
depending upon the actual items used)

Truck sent to a client location in Karnataka for carrying out repairs
(i) Value of items contained in the truck - Rs. 1,06,000
C
(ii) Value of truck-Rs. 20,00,000 (Billing for repairs to be done afterwards
depending upon the actual items used)
Invoices raised for repair work carried out in Tamil Nadu [including the
D 7000000
invoice for repair work done in 'B'] -
Invoices raised for repair work carried out in Karnataka [including the
E 1200000
invoice for 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
CGST - 6% SGST - 6% IGST - 6%
Container truck Stand-alone machines
CGST - 2.5% SGST - 2.5% IGST - 2.5%
Works contract for repairs and maintenance of immovable property
You are required to make suitable assumptions, wherever necessary
Ans: Computation of GST Liability of power Engineering Pvt. Ltd, Bangalore for the month of
November 20XX
Sr No Particulars Notes Amount
Items sent in container truck to own location in Tamil nadu –
Note 1 36000
A IGST @12%
Container truck sent to own location in Tamil nadu Note 2 -
Standalone machine sent in container truck to client location in
Note 3 -
Tamil nadu , for carrying out repairs
B Container truck sent to client location in Tamil nadu Note 3 -
Items sent in container truck to client location in Tamil nadu,
Note 4 -
for carrying out repairs
Container truck sent to client location in Karnataka Note 3 -
C Items sent in container truck to client location in Karnataka, for
Note 4 -
carrying out repairs
Invoices raised for repair work carried out in Tamil Nadu: IGST 1260000
D Note 5 & 6
@18%
Invoices raised for repair work carried out in Karnataka: CGST 9%
E Note 5 & 7 2160000
+SGST 9%
Total GST Liability 2196000

Working Notes:
i. Movement of goods without any considerations to a distinct person as specified in section
25 (4) of the CGST Act, 2017 is deemed to be a supply in terms of schedule I of the said
Act. the purchase value is taken as taxable value, being the open market valu e in terms of
rule 28 (a) of the CGST rules 2017. (However, if the regional office is eligible to take full
input tax credit, any value may be declared in the tax invoice and that will be taken to be
the open market value in terms of the second provision to the same rules).
In the given case,
• The location of the supplier is in Bangalore (Karnataka ) and
• The place of supply of items at which the movement of goods terminates for
delivery to the recipient i.e. Tamil nadu in terms of section 10(1) (a) of the IGST Act, 2017.
Therefore the given supply of items is an inter –state supply as the location of the supplier and
the place of supply are in two different states [section 7(1) (a) of IGST Act, 2017] thus the
supply is leviable to IGST in terms of section 5(1) of the IGST Act, 2017. Since the activity is a
supply, a tax invoice is to be issued by power engineering pvt. ltd in terms of section 31(1) (a)
of the CGST act, 2017 for sending the items to its own location in Tamil nadu.
ii. As per section 25(4) of the CGST Act, 2017 a person who has been obtained 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 ,can be treated as ‘distinct person’.
Schedule I to the CGST Act, 2017 specifies situations where activities are to be treated as
supply even if made without consideration. Supply of goods and/or services between ‘distinct
persons’ as specified in section 25 of the CGST Act, 2017 , when made in the course or
furtherance of business is one such activity included in schedule I under para 2. However,
in view of the GST councils recommendations it has been clarified that the inter-state
movement of various modes of conveyances between “distinct persons” as specified including
trucks carrying goods or passengers or both for repairs and maintenance may be treated
neither as a supply of goods nor supply of services and therefore will not be leviable to
IGST applicable CGST/SGST/IGST, however shall be leviable on repairs and maintenance done
for such conveyance [circular no.1/1/2017/GST dated 07.07.2017] 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.
iii. Supply of goods without consideration is deemed to be a supply inter alia when the goods
are supplied to a distinct persons. however in this case stand-alone machine and container
truck are move to client location and not between distinct persons, hence the same will
fall outside the scope of definition of supply and will not be leviable to GST Here again a
delivery challan is to be issued in terms of rule 55(1) © of CGST rules 2017 for sending
the stand alone machines and container truck to client location.

iv. As per section 2(119) of the CGST Act, 2017, “works contract” means a contract for, inter
alia, repair, maintenance of any immovable property wherein transfer of property in goods
(whether as goods or in some other form) is involved in the execution of such contract.
In this case, the supplier provides maintenance and repair services for power plants that are
in the nature of immovable property and uses consumables and parts, wherever necessary,
for the repair. Hence, the contract is the contract is that of a works contract.
Further, as per section 2 (30) of the CGST Act,2017, a works contract is a ‘ composite
supply’ as it consists of taxable supplies of both goods and services which are naturally
bundled and supplied in conjunction with each other. The composite supply of works contract
is treated as supply of service in terms of para 6 ( a ) of Schedule II to t he CGST Act,
2017 The items used in relation to the repair and maintenance work could be consumables
or could be identifiable items/parts. In either case, the transfer of prop0erty in goods is
incidental to composite supply of works contract service. Thus, the value of the items
actually used in the repairs will be included in the invoice raised for the service and will be
charges to tax at that point of time.
Here again, a delivery challan is to be issued in terms of rule 55(1) (c) of CGST Rules,
2017 for sending the items for carrying out the repairs.
v. The activity is a composite supply of works contract, which is treated as supply of service.
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.
Since the activity is a supply of service, a tax invoice is to be issued by Power Engineering
Pvt. Ltd. In terms of section 31 (2) of the CGST Act, 2017.
vi. In the given case.
• The location of the supplier is in Bangalore (Karnataka) ; and
• The place of supply of works contract services relating to the power plant (immovable
property) is the location at which the immovable property is located i.e., Tamil Nadu
in terms of section 12(3)(a) of the IGST Act, 2017
Therefore, the given supply is an inter- State supply as the location of the supplier and the
place of supply are in two [different State Section 7(1) (a) of IGST Act, 2017] Thus, the
supply will be leviable to IGST in terms of section 5 (1) of the IGST Act, 2017.
vii. In the given case, the location of the supplier and the place of supply of works contract
services are within the same State. Therefore, the given supply is an intra-State supply in
terms of section 8(1) of IGST Act, 2017 and thus, chargeable to CGST and SGST.
Q 26. ABC Ltd. Noida (Uttar Pradesh) is a supplier of machinery used for making bottle caps. The supply
of machinery is effected 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. 42,00,000. 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:
A. associated handling and loading charges of Rs. 10,000
B. 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. 300,000
• 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
A. the discount given; and
B. 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 Rs. 200,000 from its holding
company DEF Ltd.
ABC Ltd. has supplied a machinery to D. Pvt. Ltd. on August 1, 20XX at a price of Rs.
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 31st October, 20XX.
Assume the rates of taxes to be as under:
Electric Motor Making Machine

Service of transportation of Goods
CGST - 2.5 % SGST - 2.5% IGST - 2.5%
Other Supply involved in the above supply
CGST - 9 % SGST - 9 % IGST - 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.
Ans: Computation of GST Liability of Sudhir Works:
Particulars Amount
Price of machine [Note 1] 4000000
Handling and loading charges [Note 2] 10000
Installation and commissioning charges [Note 2] 100000
Transportation cost [Note 3] Nil
Additional warranty cost [Note 4] 300000
Grant from Randhir Engineering Ltd. [Note 5] 200000
Total price of the machine 4610000
Less: 2% cash discount on price of machinery = Rs. 40,00,000 × 2% [Note 6] -80000
Taxable value of supply 4530000
Tax liability for the month of August, 20XX [Note 10]
IGST @ 12% [Note 7 and Note 8] 543600
Tax liability for the month of November, 20XX [Note 10]
Interest collected @ 3% on Rs. 44,10,000 [Note 9] 132300
Add: Cash discount recovered [Note 9] 80000
Cum-tax value of interest and cash discount 212300
IGST = (Rs. 2123000 / 112) x 12% 22746
Total IGST payable on the machinery 566346
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 when the supplier and the recipient of
the supply are not related and the price is the sole consideration for the supply. It is assumed
that Sudhir Works Ltd. and Durga Pvt. Ltd are not related and the price is the sole consideration
for the supply.
2. All incidental expenses charged by the supplier to the recipient of a supply are includible i n
the value of supply in terms of section 15(2)(c) of CGST Act, 2017. 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 is includible in the value of supply in terms of section 15(2)(c) of CGST
Act, 2017.
3. Transportation cost has not been included in the value of supply of the machinery as it is a
separate service contract between the customer and the third-party service provider. The
customer pays the freight directly to the service provider.

The supplier (Sudhir Works Ltd.), in this case, merely arranges for the transport and does not
provide the transport service on its own account. Tax will be separately levied on the supply
of service of transportation of goods under reverse charge.
4. Warranty cost is includible in the value of the supply since transaction value includes all
elements of the price excluding those that can be specifically excluded as per section 15 of
the CGST Act.
5. Subsidies directly linked to the price excluding subsidies provided by the Central Government
and State Governments are includible in the value of supply in terms of section 15(2)(e) of
the CGST Act, 2017.
6. Cash discount was deducted by Sudhir Works Ltd. upfront at the time of supply on September
1, 20XX and hence, the same is excluded from the value of supply as it did not form part of
the transaction value.
7. In the given case-
• the location of the supplier is in Gurgaon (Haryana); and
• the place of supply of machinery is the place of installation of the machinery
i.e., New Delhi in terms of section 10(1)(d) of the IGST Act, 2017.
Therefore, the given supply is an inter-State supply as the location of the supplier and the
place of supply are in two different States [Section 7(1)(a) of IGST Act, 2017]. Thus, the
supply will be leviable to IGST in terms of section 5(1) of the IGST Act, 2017.
8. The given supply is a composite supply involving supply of goods (machinery) and services
(handling and loading and installation and commissioning) 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. Thus, tax rate applicable to
the goods (machinery) has been considered.
9. Interest for the delayed payment of any consideration for any supply is includible in the value
of supply in terms of section 15(2)(d) of the CGST Act, 2017. Further, discount recovered will
also be includible in the value of supply as now the transaction value i.e., the price actually
paid for the machinery is devoid of any discount.
The cash discount not allowed and interest have to be considered as cum tax value and tax
payable thereon has to be computed by making back calculations in terms of rule 35 of CGST
Rules, 2017.
10. It has been assumed that the invoice for the supply has been issued on 1 st August 2018, the
date on which the supply is made. Thus, the time of supply of goods is 1st August 2018 in
terms of Section 12(1)(a) of the CGST Act, 2018.
As per Section 12(6) of CGST Act, 2017, the time of supply in case of addition in value by
way of interest, late fees, penalty etc. for delayed payment of consideration for goods is the
date on which the supplier receives such addition in value.

Q.1 As per section 15(1), transaction value of supply shall be -

A. which is the price actually paid or payable for the said supply of goods or services or both
B. where the supplier and the recipient of the supply are not related and
C. The price is the sole consideration for the supply
D. All of the above
Ans: D: All of the above.
Q.2 The rate of exchange for determination of value of taxable goods shall be the applicable
rate of exchange as
A. Notified by Board u/s 14 of Customs Act, 1962
B. Rate as per GAAP
C. Rate as prescribed by GST Council
D. Prevailing Rate as per RBI
Ans: A: Notified by Board u/s 14 of Customs Act, 1962
Q.3 Consideration excludes:

A. Payment in money or otherwise for supply
B. Monetary value of an act or forbearance
C. Subsidy by the Central and State Government
D. All of the above.
Ans: C: Subsidy by the Central and State Government
Q.4 As per Section 15(2)(a), value of supply shall exclude:

A. Any taxes, duties, cesses, fees etc
B. CGST, SGST, UTGST
C. Compensation Cess
D. Both (b) and (c)
Ans: d: Both (b) and (c)

Q.5 What are the deductions allowed in transaction value?
A. Discounts specified in the invoice
B. Any payment made by customer on behalf of supplier
C. Packing charges
D. All of the above
Ans: a: Discounts specified in the invoice
Q.6 What are the conditions to be satisfied for excluding any expenditure incurred by a supplier
as a pure agent of the recipient of supply under valuation?
A. The supplier acts as a pure agent of the recipient of the supply, when he makes the payment
to the third party on authorization by such recipient.
B. The payment made by the pure agent on behalf of the recipient of supply has been
separately indicated in the invoice issued by the pure agent to the recipient of service
C. The supplies procured by the pure agent from the third party as a pure agent of the
recipient of supply are in addition to the services he supplies on his own account
D. All of the above
Q.7 Incidental expenses, including commission and packing, charged by the supplier to the
recipient of a supply and 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 should be :
A. Included in the value
B. Excluded from the value
C. As may be prescribed by GST Council
Ans: A: Included in the value
Q.8 The value of supply should include

A. Any non-GST taxes, duties, cesses, fees charged by supplier separately
B. Interest, late fee or penalty for delayed payment of any consideration for any supply of
goods or services
C. Subsidies directly linked to the price except subsidies provided by the Central and State

Government
D. All of the above
Q.9 When can the transaction value be rejected for computation of value of supply
A. When the buyer and seller are related and price is not the sole consideration
B. When the buyer and seller are related or price is not the sole consideration
C. It can never be rejected
D. When the goods are sold at very low margins
Ans: B: When the buyer and seller are related or price is not the sole consideration
Q.10 What deductions are allowed from the transaction value

A. Discounts offered to customers, subject to conditions
B. Packing Charges, subject to conditions
C. Amount paid by customer on behalf of the supplier, subject to conditions
Ans: A: Discounts offered to customers, subject to conditions
Q.11 Rule 30 of the CGST Rules inter alia provides value of supply of goods or services or both
based on cost shall be ……………% of cost of production or manufacture or the cost of
acquisition of such goods or the cost of provision of such services
A. 100
B. 10
C. 90
D. 110
Ans: D: 110
Q.12 As per Rule 31 of the CGST Rules, residual method for determination of value of supply of
goods or services or both will apply when:
A. Value of supply cannot be determined under Rules 27 to 30
B. Value of supply determined is more than the open market value of goods

C. Value of supply determined is more than the Value of supply of like kind and quality
D. All of the above
Ans: A: Value of supply cannot be determined under Rules 27 to 30
Q.13 In terms of Rule 32(7) of the CGST Rules, the value of taxable services provided by such
class of service providers as may be notified by the Government, on the recommendations
of the Council, as referred to in paragraph 2 of Schedule I of the CGST Act between
distinct persons as referred to in section 25, where ITC is available, shall be deemed to be
A. Nil
B. Value as may be prescribed by GST council
C. 110% of value of Invoice
Ans: A: Nil
Q.14 Mr. Santa located in Nashik purchases 10,000 Hero ink pens worth Rs.4,00,000 from Lekhana
Wholesalers located in Mumbai. Mr. Santa’s wife is an employee in Lekhana Wholesalers.
The price of each Hero pen in the open market is Rs.52. The supplier additionally charges
Rs.5,000 for delivering the goods to the recipient’s place of business. The value of such
supply will be:
A. Rs. 5,20,000
B. Rs. 5,25,000
C. Rs. 4,00,000
D. Rs. 4,05,000
Ans: D: Rs. 405000.
Q.15 What will be the value of supply if Shashank supply Sony television set for Rs. 85000 along
with the exchange of an old TV and if the price of the Sony television set without exchange
is Rs. 1,00,000, the open market value of the Sony television set is:
A. Rs. 85000
B. Rs. 100000
C. Rs. 185000

Ans: B: Rs. 100000
Q.16 Mr. X makes a supply of 30 shoes to Mr. Y. Here both are related persons. Mr. Y as such
intends to further supply such shoes to his customers for Rs. 3,000. Open market value of
such shoes is Rs.3,000. In such case, what shall be the value of supply per shoes?
A. Rs. 3300
B. Rs. 3000
C. Rs. 2700
D. (b) or (c) at the option of supplier
Ans: D: (b) or (c) at the option of supplier
Q.17 Salim is selling a product to Salman for Rs. 40,000. Open market value of the product is
Rs.72,000. Both of them are related parties. Further, Salman is eligible to claim the ITC on
the product. What shall be the value of supply in this case?
A. Rs. 40,000
B. Rs. 72,000
C. Rs. 36000
D. Rs. 44,000
Ans: A: Rs. 40,000
Q.18 Mr. A sells the goods to Mr. B for Rs.20,000 on 1st April, 2018 and allows him a credit
period on 15 days post that penalty of Rs.10 per day shall be levied on the same for delayed
payment. Mr. B makes a payment of Rs.20,150 on 30th April, 2018. What shall be the value
on which tax shall be levied?
A. Rs. 20,000
B. Rs. 20,150
C. (a) or (b) whichever is lower
Ans: B: Rs. 20150.

Q.19 ABC consultancy firm is engaged to register a company for XYZ Ltd. Other than professional
fees ABC consultancy also recovers fees paid to ROC on behalf of the XYZ Ltd. Determine
Value of Supply?
A. Professional Fees
B. ROC fees paid on behalf of XYZ Ltd.
C. Both (a) and (b)
Ans: A: Professional Fees
Q.20 ABC Enterprises sold a bike for Rs .40,000 to XYZ Enterprises. Open market price of the
bike is Rs.80,000. Both firms are registered under the same PAN. Determine the value of
supply keeping in mind the fact that XYZ enterprises cannot take the credit of the same.
A. Rs. 40000
B. Rs. 80000
C. Rs. 36000
D. Rs. 88000
Ans: B: Rs. 80000
Q.21 M Ltd. sold a product for Rs.34,000 to Mr. N. Open market value of such supply is Rs.
60,000. Mr. N is selling the same like kind of product to his consumer for Rs.60,000. Mr. N
holds 30% share in M Ltd. Determine the value of supply for the purpose of levy of GST.
A. Rs.34000
B. Rs. 60000
C. Rs. 54000
D. Either (b) or (c), depending on the option of Mr. M
Ans: D: Either (b) or (c), depending on the option of Mr. M
Q.22 Mr. Arihant is selling a product for Rs. 11800/- (inclusive of tax)and applicable rate of
CGST and SGST is 9 % each. Determine the value of supply.
A. Rs. 11800
B. Rs. 10000
C. Rs. 10826
D. Rs. 13924

Ans: B: Rs. 10000
Q.23 Mr. Yash is an Air Travel agent. He collected INR 50,000 (Basic fare for domestic booking)
and INR 1,00,000 (Basic fare for International Booking). What shall be the value of supply
under this case?
A. Rs. 2,500
B. Rs.10,000
C. Rs.12,500
D. Lower of (a), (b) and (c)
Ans: C: Rs. 12500
Q.24 What are the conditions prescribed for deduction of discount from the value of taxable
supply, when made after supply?
A. Discount allowed is linked to the relevant invoices
B. Reversal of Proportionate ITC by the recipient of supply
C. The discount is given as per agreement entered into at or before such supply
D. All of the above
Q.25 Mr. Sharad purchased certain goods worth INR 20,000 from ABC Ltd. As a matter of
security, Mr. Sharad made a request to the supplier to provide for an additional packaging
on the given item for safe transportation which cost around INR 1500. The supplier charged
value of the additional packaging separately after the supply was made. What is the final
value of such supply made?
A. Rs. 20000
B. Rs. 21500
C. Lower of (a) & (b)
Ans: b: 21500

Q.26 XYZ Pvt. Ltd. gives discount of 30% on the list price to its distributors as per its contract.
As per invoice raised on the items supplied per carton, the list price on the same amounts
to INR 10000. What shall be the taxable value of such supply, given that the discount is
allowed at the time of supply and shown in invoice?
A. Rs. 7000
B. Rs. 13000
C. Rs. 8000
D. Rs. 4200
Ans: A: Rs. 7000.
Q.27 What shall be the value of supply in case of Life Insurance Business services?
A. The gross premium charged from a policy holder reduced by the amount allocated for
investment, or savings on behalf of the policy holder
B. In case of single premium annuity policies, 10% of single premium charged from the policy
holder
C. 25% of the premium charged from the policy holder in the first year and 12.5% of the
premium charged from the policy holder in subsequent years
D. Either of the above options
Ans: D: Either of the above options depending upon the type of policy
Q.28 When are the provisions of Valuation Rules applicable?

A. Price is not the sole consideration
B. Parties are related
C. Supplies are notified
D. All of the above
Q.29 ABC Private Ltd. being a registered person under GST purchased 2000 USD from XYZ at
the rate of INR 70 per USD. RBI reference rate as on the date was INR 70.50. What shall
be the value of such supply?
A. Rs. 1000
B. Rs. 2000
C. Rs. 500

D. Rs. 140000
Ans: A: Rs. 1000
Q.30 ABC Pvt. Ltd. being a registered person under GST sold 2000 USD to XYZ at the rate of INR
70 per USD. RBI reference rate is not available. What shall be the value of such supply?
A. Rs. 140000
B. Rs. 1400
C. Rs. 500
D. Rs. 1000
Ans: B: Rs. 1400
Q1. Fury Ltd. has received an order for supply of services amounting to $ 5,00,000/- from a US
based client. Fury Ltd. is unable to supply the entire services from India and asks Neik Inc.,
Mexico (who is not an establishment of Fury Ltd.) to supply a part of the services, i.e. 40% of
the total contract value to the US client. Fury Ltd. raised the invoice for entire value of $
5,00,000 but the US client paid $ 3,00,000 to Fury Ltd. and $ 2,00,000 directly to Neik Inc.,
Mexico which is approved by a special order of RBI. Fury Ltd. also paid IGST@ 18% on the
services imported from Neik Inc. Mexico. Assuming all the conditions of section 2(6) of the IGST
Act, 2017are fulfilled, determine the value of export of services:
A. $ 3,00,000
B. $ 5,00,000
C. $ 3,90,000
D. $ 5,90,000
Ans: (b) $ 5,00,000

Q2. Allfit Laboratories Ltd. is a registered supplier of bulk drugs in Delhi paying tax under
regular scheme. It manufactures bulk drugs and supplies the same in the domestic and overseas
market. The bulk drugs are supplied within Delhi and in the overseas market directly from the
company’s warehouse located in South Delhi. For supplies in other States of India, the company
has appointed consignment agents in each such State. However, supplies in Gurgaon (Haryana)
and Noida (U.P.) are effected directly from South Delhi warehouse. The drugs are supplied to
the consignment agents from the South Delhi warehouse.
Allfit Laboratories Ltd. also provides drug development services to drug manufacturers located in
India, including testing of their new drugs in its laboratory located in Delhi.
The company has furnished the following information for the month of January, 20XX:
Particulars ₹
Advance received towards drug development services to be provided to Orochem 5,00,000
Ltd., a drug manufacturer, located in Delhi [Drug development services have been
provided in February, 20XX and invoice is issued on 28.02.20XX]
Advance received for bulk drugs to be supplied to Novick Pharmaceuticals, a 6,00,000
wholesale dealer of drugs in Gurgaon, Haryana [Invoice for the goods is issued at
the time of delivery of the drugs in March, 20XX]
Supply of bulk drugs to wholesale dealers of drugs in Delhi 60,00,000
Bulk drugs supplied to Anchor Pharmaceuticals Inc., USA under bond 90,00,000
[Consideration received in convertible foreign exchange]
Drug development services provided to Unipharma Ltd., a drug manufacturer, 6,00,000
located in Delhi
You are required to determine the GST liability [CGST & SGST or IGST, as the case may be] of
Allfit Laboratories Ltd. for the month of January, 20XX with the help of the following
additional information furnished by it for the said period:
1. Consignments of bulk drugs were sent to Cardinal Pharma Pvt. Ltd. and Rochester Medicos
– agents of Allfit Laboratories Ltd. in Punjab and Haryana respectively. Cardinal Pharma
Pvt. Ltd. and Rochester Medicos supplied these drugs under their invoices to the Medical
Stores located in their respective States for ₹60,00,000 and ₹50,00,000 respectively.
2. Bulk drugs have been supplied to Ronn Medicos - a wholesale dealer of bulk drugs in Gurgaon,
Haryana for consideration of ₹15,00,000. Allfit Laboratories Ltd. owns 72% shares of
Ronn Medicos Pvt. Ltd. Open market value of the bulk drugs supplied to Ronn Medicos Pvt.
Ltd. is ₹30,00,000. Further, Ronn Medicos Pvt. Ltd. is not eligible for full input tax credit.
Note:
(i) All the given amounts are exclusive of GST, wherever applicable.
(ii) Assume the rates of GST to be as under:

Goods/services supplied CGST SGST IGST
Bulk drugs 2.5% 2.5% 5%
Drug development services 9% 9% 18%
You are required to make suitable assumptions, wherever necessary.
Ans: Computation of GST Liability of Allfit Laboratories Ltd. for the month of January, 20XX
Particulars CGST (`) SGST (`) IGST (`)
Advance received for drug development 45,000 45,000
services supplied to Orochem Ltd., a [5,00,000 × 9%] [5,00,000 × 9%]
drug manufacturer, located in Delhi
[Note - 1]
Advance received for bulk drugs to Nil
be supplied to Novick Pharmaceuticals, a
wholesale
dealer of drugs in Gurgaon, Haryana
[Note - 2]
Supply of bulk drugs to wholesale dealers 1,50,000 1,50,000

of drugs in Delhi[Note - 3] [60,00,000 × 2.5%] [60,00,000 ×2.5%]
Bulk drugs supplied to Anchor Nil

Pharmaceuticals Inc., USA
[Note - 4]
Supply of drug development services to 54,000 54,000
Unipharma Ltd., a drug manufacturer, [6,00,000 × 9%] [6,00,000× 9%]
located in Delhi [Note - 5]
Supply of bulk drugs to 4,95,000
consignment agents – Cardinal Pharma [99,00,000

Pvt. Ltd. and Rochester Medicos of ×5%]
Punjab and Haryana [Note - 6]
Supply of bulk drugs to Ronn Medicos of 1,50,000
Gurgaon, Haryana [Note - 7]
[30,00,000 ×
5%]
Total GST liability 2,49,000 2,49,000 6,45,000

Notes:
1. Being an intra-State supply of services, supply of drug development services to Orochem Ltd.
of Delhi is subject to CGST and SGST @ 9% each. Further, in terms of section 13(2) of
the CGST Act, the time of supply of services is the earlier of the date of invoice or date
of receipt of payment, if the invoice is issued within 30 days of the supply of service. In
the given case, invoice is issued within 30 days of the supply of service. Therefore, time of
supply of services will be date of receipt of advance and hence, GST is payable on the advance
received in January, 20XX.
2. Being an inter-State supply of goods, supply of bulk drugs to Novick Pharmaceuticals of
Gurgaon, Haryana is subject to IGST @ 5%. Further, in terms of section 12(2) of the
CGST Act, the time of supply of goods is the earlier of the date of issue of invoice/last
date on which the invoice is required to be issued or date of receipt of payment.
However, Notification No. 66/2017 CT dated 15.11.2017 specifies that time of supply of
goods for the purpose of payment of tax is the date of issue of invoice/last date of issue of
invoice. Thus, GST is not payable at the time of receipt of advance against supply of goods.
The time of supply of the advance received for bulk drugs to be supplied to Novick
Pharmaeuticals is the time of issue of invoice, which is in March, 20XX. Thus, said advance
will be taxed in March, 20XX and not in January, 20XX.
3. Being an intra-State supply of goods, supply of bulk drugs to wholesale dealers of drugs in
Delhi is subject to CGST and SGST @ 2.5 % each.
4. Section 2(5) of the IGST Act defines export of goods as taking goods out of India to a
place outside India. In view of the said definition, supply of the bulk drugs to Anchor
Pharamaceuticals Inc. of USA under bond is export of goods.
Export of goods is a zero-rated supply [Section 16(1) of the IGST Act]. A zero-rated supply
under bond is made without payment of integrated tax [Section 16(3)(a) of IGST Act].
5. Being an intra-State supply of services, supply of drug development services to Unipharma Ltd.
of Delhi is subject to CGST and SGST @ 9% each.
6. Value of supply of goods made through an agent is determined as per rule 29 of the CGST
Rules. Accordingly, the value of supply of goods between the principal and his agent is
the open market value of the goods being supplied, or at the option of the supplier, is
90% of the price charged for the supply of goods of like kind and quality by the recipient
to his unrelated customer, where the goods are intended for further supply by the said recipient.
In the given case, since open market value is not available, value of bulk drugs supplied to
consignment agents - Cardinal Pharma Pvt. Ltd. and Rochester Medicos
– will be ` 99,00,000 [90% of (` 60,00,000 + ` 50,00,000)]. Further, being an inter- State
supply of goods, supply of bulk drugs to the consignment agents is subject to IGST @ 5%.

7. If any person directly or indirectly controls another person, such persons are deemed as
related persons. [Clause (a)(v) of explanation to section 15 of the CGST Act]. In the
given case, since Allfit Laboratories Ltd. owns 72% shares of Ronn Medicos, both are
related persons.
Value of supply of goods between related persons (other than through an agent) is determined
as per rule 28 of the CGST Rules. Accordingly, the value of supply of goods between related
persons is the open market value of such goods and not the invoice value. Furthermore, since
Ronn Medicos is not eligible for full input tax credit, value declared in the invoice
cannot be deemed to be the open market value of the goods. Thus, open market value of
the bulk drugs supplied to Ronn Medicos,
i.e. ₹30,00,000 is the value of supply of such goods. Further, being an inter-State supply of
goods, supply of bulk drugs to Ronn Medicos is subject to IGST @ 5%.
Q3 Prada Forex Private Limited, registered in Delhi, is a money changer. It has undertaken the
following purchase and sale of foreign currency:
(i) 1,000 US $ are purchased from Nandi Enterprises at the rate of ` 68 per US $. RBI reference
rate for US $ on that day is ` 68.60.
(ii) 2,000 US $ are sold to Menavati at the rate of ` 67.50 per US$. RBI reference rate for US
$ for that day is not available.
Determine the value of supply in each of the above cases in terms of:
(A) rule 32(2)(a) of the CGST Rules, 2017 rule 32(2)(b) of the CGST Rules, 2017.
Ans: Rule 32(2) of the CGST Rules, 2017 prescribes the provisions for determining the value of
supply of services in relation to the purchase or sale of foreign currency, including money changing.
(A) Determination of value under rule 32(2)(a) of the CGST Rules, 2017
(i) Rule 32(2)(a) of the CGST Rules, 2017 provides that the value of supply of services for a
currency, when exchanged from, or to, Indian Rupees, shall be equal to the difference in the
buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI)
reference rate for that currency at that time, multiplied by the total units of currency. Thus,
value of supply is:
= (RBI reference for US $ - Buying rate of US $) × Total number of units of US $ bought
= (` 68.6 - ₹68) × 1,000
= ₹600
(ii) First proviso to rule 32(2)(a) of the CGST Act, 2017 lays down that when the RBI
reference rate for a currency is not available, the value shall be 1% of the gross amount of
Indian Rupees provided or received by the person changing the money. Thus, value of supply
is:
= 1% of the gross amount of Indian Rupees received
= 1% of (₹67.50 × 2,000)

= ₹1,350
(B) Determination of value under rule 32(2)(b) of the CGST Rules, 2017
Rule 32(2)(b) provides that value in relation to the supply of foreign currency, including money
changing shall be deemed to be –
S.No. Currency exchanged Value of supply
1. Upto ₹ 1,00,000 1% of the gross amount of currency exchanged

OR
₹250 whichever is higher
2. Exceeding ₹ 1,00,000 and upto ₹1,000 + 0.50% of the (gross amount of

₹ 10,00,000 currency exchanged - ₹1,00,000)
3. Exceeding ₹10,00,000 ₹5,500 + 0.1% of the (gross amount of
currency exchanged - ₹10,00,000) OR
₹60,000 whichever is lower
Thus, the value of supply in the given cases would be computed as under:
(i) Gross amount of currency exchanged = ₹ 68 × 1,000 = ₹68,000. Since the gross amount of
currency exchanged is less than ` 1,00,000, value of supply is 1% of the gross amount of
currency exchanged [1% of ` 68,000] or ` 250, whichever is higher.
= ₹680
(ii) Gross amount of currency exchanged = ₹ 67.50 × 2,000 = ₹1,35,000. Since the gross amount
of currency exchanged exceeds ₹1,00,000 but is less than ₹10,00,000, value of supply is ₹1,000
+ 0.50% of (` 1,35,000 - ₹1,00,000).
= ₹ 1,175
Q4 M/s. Aircool Ltd., a supplier of air conditioners, is registered in the State of Maharashtra. It has
a policy to gift an air conditioner to its employees [residing in Gujarat] at the end of financial year
in terms of the employment contract. The company installs such air conditioners at the residence
of the employees.
During the month of March, 20XX, the company installed 150 air conditioners at the residence of
these employees. The total open market value of such air conditioners is Rs. 52.50 lakh (excluding
GST). The tax rate on such air conditioners is 28% (14% CGST, 14% SGST and 28% IGST).
Compute the GST liability of M/s. Aircool Ltd., if any.
(a) 7,35,000 - CGST, 7,35,000- SGST

(b) 14,70,000 - IGST
(c) Nil
(d) None of the above

Ans: Nil
Q5 Mr. James Bond is a registered person under GST in the State of Maharashtra who sells footwear to
his customers locally within the same State. He has been appointed as an agent by M/s. Toto Shoes
Ltd., a company registered under GST in the State of Karnataka. During a financial year, M/s. Toto
Shoes Ltd., sends taxable goods worth Rs. 5.00 crore from its Bengaluru store to Mr. James Bond
who sells such goods for Rs. 5.00 crore by raising invoices using the GSTIN of M/s. Toto Shoes Ltd.
Mr. James Bond receives a commission of Rs. 60.00 lakh from M/s. Toto Shoes (P) Ltd., during the
said financial year. Compute the value of supply of Toto Shoes (P) Ltd. and Mr. James Bond for
the financial year.
A. M/s. Toto Shoes (P) Ltd.: Nil and James Bond: ` 5.6 crore
B. M/s. Toto Shoes (P) Ltd.: ` 5 crore and James Bond: ` 5.6 crore
C. M/s. Toto Shoes (P) Ltd.: ` 5 crore and James Bond: ` 60 lakh
Ans: M/s. Toto Shoes (P) Ltd.: ` 5 crore and James Bond: ` 60 lakh
Q.6 Rolex Forex Private Limited, registered in Delhi, is a money changer. It has undertaken the
following purchase and sale of foreign currency:
(i) 1,000 US $ are purchased from Rajesh Enterprises at the rate of ` 68 per US $. RBI
reference rate for US $ on that day is ` 68.60.
(ii) 2,000 US $ are sold to Sriniti at the rate of ` 67.50 per US$. RBI reference rate for US $
for that day is not available.
Determine the value of supply in each of the above cases in terms of:
(A) rule 32(2)(a) of the CGST Rules, 2017
(B) rule 32(2)(b) of the CGST Rules, 2017.
Ans: Rule 32(2) of the CGST Rules, 2017 prescribes the provisions for determining the value of supply
of services in relation to the purchase or sale of foreign currency, including money changing.
(A) Determination of value under rule 32(2)(a) of the CGST Rules, 2017
(i) Rule 32(2)(a) of the CGST Act, 2017 provides that the value of supply of services for a
currency, when exchanged from, or to, Indian Rupees, shall be equal to the difference in the
buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI)
reference rate for that currency at that time, multiplied by the total units of currency. Thus,
value of supply is:
= (RBI reference for US $ - Buying rate of US $) × Total number of units of US $ bought
= (₹68.6 - ₹68) × 1,000
= ₹600

(ii) First proviso to rule 32(2)(a) of the CGST Act, 2017 lays down that when the RBI
reference rate for a currency is not available, the value shall be 1% of the gross amount of
Indian Rupees provided or received by the person changing the money. Thus, value of
supply is:
= 1% of the gross amount of Indian Rupees received
= 1% of (` 67.50 × 2,000)
= ₹1,350
(B) Determination of value under rule 32(2)(b) of the CGST Rules, 2017
Third proviso to rule 32(2)(a) stipulates that a person supplying the services in relation to
the purchase or sale of foreign currency, including money changing may exercise the option
to ascertain the value in terms of rule 32(2)(b) for a financial year and such option shall
not be withdrawn during the remaining part of that financial year.
Rule 32(2)(b) provides that value in relation to the supply of foreign currency, including
money changing shall be deemed to be –
S. No. Currency exchanged Value of supply
1. Upto ₹1,00,000 1% of the gross amount of currency exchanged
OR
₹250 whichever is higher
2. Exceeding ₹1,00,000 and upto ₹1,000 + 0.50% of the (gross amount of

₹10,00,000 currency exchanged - ₹1,00,000)
3. Exceeding ` 10,00,000 ₹5,500 + 0.1% of the (gross amount of
currency exchanged - ₹ 10,00,000)
OR
₹60,000 whichever is lower
Thus, the value of supply in the given cases would be computed as under:
(i) Gross amount of currency exchanged = ₹68 × 1,000 = ₹ 68,000. Since the gross amount of
currency exchanged is less than ₹1,00,000, value of supply is 1% of the gross amount of
currency exchanged [1% of ₹68,000] or ₹250, whichever is higher.
= ₹680
(ii) Gross amount of currency exchanged = ₹67.50 × 2,000 = ₹1,35,000. Since the gross amount
of currency exchanged exceeds ₹1,00,000, but less than
₹10,00,000, value of supply is ₹1,000 + 0.50% of (`₹1,35,000 - ₹1,00,000).
= ₹ 1,175

Q7. Determine taxable value of supply under the GST law with respect to each of the following
independent services provided by the registered persons:
(1) Fees charged from office staff for in-house personality development course conducted by
M.V. College - ₹ 10,000.
(2) Bus fees collected from students by M.V. College - ₹2,500 per month.
(3) Housekeeping service provided by M/s. Clean well to Himavarsha Montessori school, a
play school - ₹ 25,000 per month.
(4) Info link supplied ''Tracing Alphabets", an online educational journal, to students of UKG class
of Sydney Montessori School - ₹2,000
Ans: (1) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided by an
educational institution to its students, faculty and staff are exempt from GST. Educational
Institution has been defined to mean, inter alia, an institution providing services by way of
education as a part of a curriculum for obtaining a qualification recognised by any law for
the time being in force.
Assuming that M. V. College provides education as a part of a curriculum for obtaining a
qualification recognised by a law, the services provided by it to its staff by way of
conducting personality development course would be exempt from GST.
(2) As assumed above that M. V. College provides education as a part of a curriculum for
obtaining a qualification recognised by a law, the transport services provided by it to its
students would be exempt from GST.
(3) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an educational
institution, by way of, inter alia, house-keeping services performed in such educational
institution are exempt from GST. However, such an exemption is available only when the
said services are provided to a pre-school education and a higher secondary school or
equivalent.
Therefore, house-keeping services provided to Himavarsha Montessori Play School would be
exempt from GST on the presumption that housekeeping services have been performed in
such play school itself.
institution by way of supply of online educational journals or periodicals is exempt from GST.
However, such an exemption is available only when the said services are provided to an
educational institution providing education as a part of a curriculum for obtaining a
qualification recognised by any law for the time being in force.
Therefore, supply of online journal to students of UKG class of Sydney Montessori School will
not be exempt from GST. Hence, the taxable value in this case will be ₹2,000.

Q.8 Zindagi Life Insurance Company Limited (ZLICL) has collected premium from subscribers and it
intimates the amount allocated for investment to subscribers at the time of collection of premium.
During the month of September 2018, it has collected the following receipts:
SI. No. Particulars Amount
1. Premium for only risk cover 25,00,000
2. Premium from new sub 40,00,000
3. Renewal Premium 80,00,000
4. Single premium on an 1,00,00,000
All amounts are exclusive of tax. You are required to compute the value of supply by ZLICL in
accordance with GST laws.
Ans: As per rule 32(4) of the CGST Rules, 2017, the value of supply of services in relation to life
insurance business, when the amount allocated for investment/savings on behalf of the policy
holder is not intimated to the policy holder at the time of supply of service, is-
(i) in case of single premium annuity policies, 10% of single premium charged from the policy
holder;
(ii) in all other cases, 25% of the premium charged from the policy holder in the first year and
12.5% of the premium charged from the policy holder in subsequent years;
(iii) in case the entire premium paid by the policy holder is only towards the risk cover in life
insurance, the premium so paid.
Therefore, in the given case, the value of the services provided by ZLICL will be computed as
under:
Computation of value of supply for ZLICL for the month of September 2018
Particulars Amount
(₹)
Premium for only risk cover 25,00,000
Premium from new subscribers 25% of ₹40,00,000 10,00,000
Renewal Premium 12.5% of ` 80,00,000 10,00,000
Single premium on annuity policy 10% of ` 1,00,00,000 10,00,000
Total value of supply 55,00,000
Note: The words in the first sentence of the question “……it intimates….” may be read as
“…….does not intimate…..”. (MAY 19 QP NEW)

Q.9 Dev Enterprises is the supplier of water coolers. Dev Enterprises supplied water coolers to Vimal
Traders for consideration of ` 2,95,000 (inclusive of GST @ 18%). Vimal Traders also gave some
materials to Dev Enterprises as consideration for such supply whose value was ` 10,000 (exclusive
of GST).
Dev Enterprises has supplied the same goods to another person at price of ` 2,97,360 (inclusive of
GST @ 18%).
You are required to:
(1) Determine the value of goods supplied by Dev Enterprises to Vimal Traders as per the
provisions of the CGST Act, 2017.
(2) What would your answer be if price of ₹2,97,360 is not available at the time of supply of
goods to Vimal Traders? Explain briefly.
Ans: (1) In the given case, price is not the sole consideration for the supply. Apart from monetary
consideration, the buyer has given some material to the supplier as consideration for such
supply. Hence, the value of the supply cannot be determined on the basis of the
transaction value in terms of section 15(1) of the CGST Act, 2017.
Here, the value will be determined with the help of rule 27 of the CGST Rules, 2017
(Valuation Rules) which specifies that where the consideration for a supply is not wholly in
money, the value will be the open market value.
Open market value of a supply means the full value in money, excluding the applicable GST,
where the supplier and the recipient of the supply are not related and the price is the sole
consideration, to obtain such supply at the same time when the supply being valued is made.
Therefore, in the given case, the open market value of the goods supplied is ₹2,52,000
(2,97,360 x 100/118) and is therefore, the value of such goods.
(2) Rule 27 further provides that if open market value of the supply is not known, the value of
the supply will be the consideration in money plus the money equivalent to the non-
monetary consideration, if such amount is known at the time of supply.
Therefore, the value in the given case will be (₹2,95,000x 100/118) + ₹10,000, which is`
₹2,60,000.
Q.10 Mr. X, a money changer, has exchanged US $ 10,000 to Indian rupees @ Rs. 64 per US $. Mr. X
wants to value the supply in accordance with rule 32(2)(b) of CGST Rules.
Determine the value of supply made by Mr. X.
Ans: As per rule 32(2)(b) of CGST Rules, the value in relation to the supply of foreign currency,
including money changing, is deemed to be-
(i) 1% of the gross amount of currency exchanged for an amount up to Rs. 1,00,000, subject to
a minimum amount of Rs. 250;
(ii) Rs. 1,000 and 0.5% of the gross amount of currency exchanged for an amount exceeding Rs.
1,00,000 and up to Rs. 10,00,000.

Therefore, the value of supply, made by Mr. X, under rule 32(2)(b) of CGST Rules is computed as
under:
Particulars Rs. Rs.
Value of currency exchanged in Indian rupees [Rs. 64 x US $ 10,000] 6,40,000
Upto Rs. 1,00,000 1,000
For Rs. 5,40,000 [0.50% x Rs. 5,40,000] 2,700
Value of supply 3,700
Q.11 Rolly Polly Manufacturers Ltd., registered in Mumbai (Maharashtra), is a manufacturer of

footwear. It imports a footwear making machine from USA.Rolly Polly Manufacturers Ltd. enters
into a contract with Rudra Logistics, a licensed customs broker with its office at Ahmedabad
(Gujarat), to meet all the legal formalities in getting the said machine cleared from the customs
station.
Apart from this, Rolly Polly Manufacturers Ltd. authorises Rudra Logistics to incur, on its behalf,
the expenses in relation to clearance of the imported machine from the customs station and
bringing the same to the warehouse of Rolly Polly Manufacturers Ltd. which shall be reimbursed
by Rolly Polly Manufacturers Ltd. to Rudra Logistics on the actual basis in addition to agency
charges.
Rudra Logistics raised an invoice in July, 20XX as follows:
S.No. Particulars Amount (₹)
(i) Agency charges 5,00,000
(ii) Unloading of machine at Kandla port, Gujarat 50,000
(iii) Charges for transport of machine from Kandla port, Gujarat to 25,000
its Rudra Logistics’ godown in Ahmedabad, Gujarat
(iv) Charges for transport of machine from Rudra Logistics’ 28,000
Ahmedabad godown to the warehouse of Rolly Polly Export
Import House in Mumbai, Maharashtra
(v) Prepared and submitted of Bill of Entry and paid customs duty 5,00,000
(vi) Dock dues paid 50,000
(vii) Port charges paid 50,000
(viii) Hotel expenses 45,000
(ix) Travelling expenses 50,000
(x) Telephone expenses 2,000

Compute the value of supply made by Rudra Logistics with the help of given information. Would
your answer be different if Rudra Logistics has charged Rs. 13,00,000 as a lump sum consideration
for getting the imported machine cleared from the customs station and bringing the same to the
warehouse of Rolly Polly Manufacturers Ltd.?
Ans: As per explanation to rule 33 of the CGST Rules, 2017, a “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.
The supplier needs to fulfil all the above conditions in order to qualify as a pure agent.
In the given case, Rudra Logistics has entered into a contractual agreement with recipient of
supply, Rolly Polly Manufacturers Ltd., to incur, on behalf of such recipient, the expenses
mentioned in S.No. (ii) to (vii) incurred in relation to clearance of the imported machine
from the customs station and bringing the same to the warehouse of the recipient. Further,
Rudra Logistics does not hold any title to said services and does not them use for his own
interest.
Lastly, Rudra Logistics receives only the actual amount incurred to procure such services in
addition to agency charges. Thus, Rudra Logistics qualifies as a pure agent.
Further, rule 33 of the CGST Rules, 2017 stipulates that notwithstanding anything contained
in the provisions of Chapter IV – Determination of Value of supply, the expenditure or costs
incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the
value of supply, if all the following conditions are satisfied, namely-
(I) the supplier acts as a pure agent of the recipient of the supply, when he makes the
payment to the third party on authorisation by such recipient;
(II) the payment made by the pure agent on behalf of the recipient of supply has been
separately indicated in the invoice issued by the pure agent to the recipient of service;
and
(III) the supplies procured by the pure agent from the third party as a pure agent of the
recipient of supply are in addition to the services he supplies on his own account.
Since conditions (I) to (III) mentioned above are satisfied in the given case, expenses
(ii) to (vii) incurred by Rudra Logistics as a pure agent of Rolly Polly Manufacturers
Ltd. shall be excluded from the value of supply.

Accordingly, value of supply made by Rudra Logistics is as follows:
Particulars Amount (₹)
Agency charges 5,00,000
Add: Unloading of machine at Kandla port, Gujarat Nil
Add: Charges for transport of machine from Kandla port, Gujarat to its Nil
Rudra Logistics’ godown in Ahmedabad, Gujarat
Add: Charges for transport of machine from Rudra Logistics’ Nil
Ahmedabad godown to the warehouse of Rolly Polly Export Import
House in Mumbai, Maharashtra
Add: Customs duty Nil
Add: Dock charges Nil
Add: Port charges Nil
Add: Hotel expenses 45,000
Add: Travelling expenses 50,000
Add: Telephone expenses 2,000
Value of supply 5,97,000
Yes, our answer would be different. If lump sum amount of Rs. 13,00,000 is paid then the value of
supply shall be Rs. 13,00,000 and tax shall be charged on value of supply since individual cost are
not given.
Q.12 Kaya Trade Links Pvt. Ltd. is a registered manufacturer of premium ceiling fans. It sells its fans
exclusively through distributors appointed across the country. The maximum retail price (MRP)
printed on the package of a fan is ₹10,000. The company sells the ceiling fans to distributors at
₹ 7,000 per fan (exclusive of applicable taxes). The applicable rate of GST on ceiling fans is 18%.
The stock is dispatched to the distributors on quarterly basis - stock for a quarter being
dispatched in the second week of the month preceding the relevant quarter. However, additional
stock is dispatched at any point of the year if the company receives a requisition to that effect
from any of its distributors. The company charges ₹ 1,000 per fan from distributors towards
packing expenses.
The company has a policy to offer a discount of 10% (per fan)on fans supplied to the distributors
for a quarter, if the distributors sell 500 fans in the preceding quarter. The discount is offered on
the price at which the fans are sold to the distributors (excluding all charges and taxes).
The company appoints Prakash Sales as a distributor on 1stApril and dispatches 750 fans on 8th
April as stock for the quarter April-June. Prakash Sales places a purchase order of 1,000 fans with
the company for the quarter July-September. The order is dispatched by the company on 10th
June and the same is received by the distributor on 18th June. The distributor makes the payment
for the fans on 26th June and avails applicable input tax credit. The distributor reports sales of
700 fans for the quarter April-June and 850 fans for the quarter July-September.

Examine the scenario with reference to section 15 of the CGST Act, 2017 and compute the taxable
value of fans supplied by Kaya Trade Links Pvt. Ltd. to Prakash Sales during the quarter July-
September.
Note: Make suitable assumptions, wherever necessary.
Ans: Section 15(3)(a) of the CGST Act allows discounts to be deducted from the value of taxable
supply if the same is given before or at the time of the supply and if such discount has been duly
recorded in the invoice issued in respect of such supply. In other words, pre-supply discounts
recorded in invoices are allowed as deduction.
Further, post supply discounts are also allowed as deduction from the value of supply under section
15(3)(b) of the CGST Act 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
In the given case, Prakash Sales is entitled for 10% discount on fans supplied by Kaya Trade
Links Pvt. Ltd. for the quarter July-September as it has sold more than 500 fans in the
preceding quarter April-June. However, since the entire stock for the quarter July-September
has already been despatched by Kaya Trade Links Pvt. Ltd. in the month of June, the
discounts on the fans supplied to Prakash Sales for the quarter July-September will be a
post-supply discount.
discount policy was known before the time of such supply and the discount can be
specifically linked to relevant invoices (invoices pertaining to fans supplied to Prakash Sales
for the quarter July-September) provided Prakash Sales reverses the input tax credit
attributable to the discount on the basis of document issued by Kaya Trade Links Pvt. Ltd.
The value of supply will thus, be computed as under:
Price at which the fans are supplied to Prakash Sales [Note 1] 7,000
Add: Packing expenses [Note 2] 1,000
Less: Discount [Note 3] (700)
Value of taxable supply of one unit of fan 7,300
Value of taxable supply of fans for the quarter July-September 73,00,000
[₹7,300 x 1,000]
Notes:
(1) The value of a supply is the transaction value, which is the price actually paid or payable for
the said supply, in terms of section 15(1) of the CGST Act presuming that the supplier and
the recipient of supply are not related and price is the sole consideration for the supply.

the post-supply discount will be allowed as deduction from the value of supply presuming
that Prakash Sales has reversed the input tax credit attributable to such discount on the
basis of document issued by Kaya Trade Links Pvt. Ltd. The input tax credit to be reversed
will work out to be `1.26 lakh [1,000 x (7,000 x 10%) x 18%].
Q.13 M/s Jonty India Ltd. a manufacturer of heavy machines registered at Jaipur (Rajasthan) supplied
one machine to M/s. Dhanuka Ltd. of Udaipur (Rajasthan) on 05-02-20XX under an invoice of the
same date. Using the information given below, compute the value of the machine and the GST
payable (CGST & SGST or IGST as the case may be) in cash for the month of February, 20XX by
M/s Jonty India Ltd. with appropriate working notes.
Assume Rate of CGST, SGST and IGST on the machine to be 9%, 9% and 18% respectively.
Sl. No. Particulars Amount
(i) The Basic price of the machine (exclusive of taxes and discount). 28,50,000
(ii) Trade discount is allowed at 3% on the basic price and is shown in the 85,500
invoice.
(iii) Secondary packing (in iron sheets) charges for safe transportation of the 30,000
machine on the request of buyer.
(iv) Design and engineering charges of the machine 90,000
(v) Tax levied by Municipal Authority on the sale of the machine. 25,000
(vi) Subsidy received by the supplier from the State Government to encourage 80,000
manufacture of the machine.
(vii) Pre-delivery inspection charges paid to an independent agency in terms of 22,000
the agreement for supply. The amount was paid by M/s. Dhanuka Ltd.
(viii) Interest amount paid by M/s. Dhanuka Ltd. for delay in payment for the 12,000
machine.
Inward Supplies
(i) IGST paid on food items for consumption by employees working in the 8,000
factory.
(ii) SGST and CGST (` 15,000 each) paid on Electrical transformer used in the 30,000
manufacturing process.
Note:
(i) M/s Jonty India Ltd. has no input tax credit balance at the beginning of February, 20XX. All the
other conditions necessary for availing the eligible input tax credit have been fulfilled.
(ii) There are no other transactions of supplies during the month of February, 20XX.
(iii) M/s Jonty India Ltd. and M/s. Dhanuka Ltd. are not related persons.

Ans: Computation of value of machine sold by M/s. Jonty India Ltd.
Particulars ₹
Basic price of machine 28,50,000
Add: Secondary packing [Note 1(i)] 30,000
Design and engineering charges [Note 1(ii)] 90,000
Tax levied by Municipal Authority [Note 1(iii)] 25,000
Pre-delivery inspection charges paid by M/s. Dhanuka Ltd. [Note 1(iv)] 22,000
Interest for delay in payment [` 12,000 x 100/118] [Note 1(v)] – (rounded off) 10,169
Less: 3% Trade discount on basic price of machinery = ₹ 28,50,000 × 3% (85,500)
[Note 2]
Taxable value of supply 29,41,669
Computation of net GST payable (in cash) by M/s. Jonty India Ltd. for the month of
February, 20XX
Particulars CGST @ 9% SGST @ 9%
(₹) (₹)
Tax on value of ` 29,41,669 (rounded off) [Note 4] 2,64,750 2,64,750
Less: Input tax credit [ITC] of tax paid on electrical 15,000 15,000
transformer used in the manufacturing process [Note 3]
Net GST payable 2,49,750 2,49,750
Notes:
(1) As per section 15(2) of the CGST Act, 2017-
(i) All incidental expenses, including packing, charged by the supplier to the recipient of a
supply are includible in the value of supply.
(ii) 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 is includible in the value of supply.
(iii) Any taxes levied under any law for the time being in force other than
CGST/SGST/UTGST/IGST, if charged separately by the supplier are includible in the
value of supply.
(iv) Any amount that the supplier is liable to pay in relation to such 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 and/or services is includible in the value of supply.
(v) Interest for the delayed payment of any consideration for any supply is includible in
the value of supply. Further, it is assumed that such interest is inclusive of tax and
that the same has been received by M/s. Jonty India Ltd. in the month of February
itself. Therefore, the time of supply of such interest will be in February, 20XX and the
same will be considered while paying the tax liability of that month.
(vi) Subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments are includible in the value of supply. Since in the

given case, subsidy is received from State Government, the same has not been
included in the value of supply presuming it to be directly linked to the price.*
(2) Trade discount has been shown in the invoice and hence, the same is excluded from the
value of supply in terms of section 15(3)(a) of the CGST Act, 2017.
(3) 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 supply1 [Section 17(5)(b)(i)]. Further, since transformers are used in the course or
furtherance of business, ITC thereon is available in terms of section 16(1).
(4) In the given case-
• the location of the supplier is in Jaipur (Rajasthan); and
• the place of supply of machinery is the location of the machinery at the time at which the
movement of the same terminates for delivery to the recipient i.e., Udaipur (Rajasthan) vide
section 10(1)(a) of IGST Act, 2017.
Therefore, as per section 8(1) of IGST Act, 2017, the given supply is an intra-State supply as the
location of the supplier and the place of supply are in the same State. Thus, the supply will
be leviable to CGST and SGST from State Government has not been reduced from the basic
price of the machine while arriving at the taxable value of supply.
However, it is also possible to assume that the subsidy has yet not been adjusted in the basic
price and that the price which will be charged from the customer is ₹27,70,000
(₹28,50,000 – ₹80,000) i.e., after excluding subsidy. In that case, the value of supply will
be ₹28,61,669.
Q.14 Dev Enterprises is the supplier of water coolers. Dev Enterprises supplied water coolers to Vimal
Traders for consideration of ` 2,95,000 (inclusive of GST @ 18%). Vimal Traders also gave some
materials to Dev Enterprises as consideration for such supply whose value was ₹10,000 (exclusive
of GST).
Dev Enterprises has supplied the same goods to another person at price of ₹2,97,360 (inclusive of
GST@18%).
You are required to:
(1) Determine the value of goods supplied by Dev Enterprises to Vimal Traders as per the
provisions of the CGST Act, 2017.
(2) What would your answer be if price of ₹2,97,360 is not available at the time of supply of
goods to Vimal Traders? Explain briefly.
Ans: (1) In the given case, price is not the sole consideration for the supply. Apart from monetary
consideration, the buyer has given some material to the supplier as consideration for such
supply. Hence, the value of the supply cannot be determined on the basis of the transaction
value in terms of section 15(1) of the CGST Act, 2017.

Here, the value will be determined with the help of rule 27 of the CGST Rules, 2017
(Valuation Rules) which specifies that where the consideration for a supply is not wholly in
money, the value will be the open market value.
Open market value of a supply means the full value in money, excluding the applicable GST,
where the supplier and the recipient of the supply are not related and the price is the sole
consideration, to obtain such supply at the same time when the supply being valued is made.
Therefore, in the given case, the open market value of the goods supplied is ₹ 2,52,000
(₹2,97,360 x 100/118) and is therefore, the value of such goods.
(2) Rule 27 further provides that if open market value of the supply is not known, the value of
the supply will be the consideration in money plus the money equivalent to the non-
monetary consideration, if such amount is known at the time of supply.
Therefore, the value in the given case will be (₹2,95,000 x 100/118) + ₹10,000, which is ₹
2,60,000.
Q.15 Zindagi Life Insurance Company Limited (ZLICL) has collected premium from subscribers and it
does not intimate the amount allocated for investment to subscribers at the time of collection of
premium. During the month of September 20XX, it has collected the following receipts:
SI. No. Particulars Amount
1. Premium for only risk cover 25,00,000
2. Premium from new sub 40,00,000
3. Renewal Premium 80,00,000
4. Single premium on annuity 1,00,00,000
All amounts are exclusive of tax. You are required to compute the value of supply by ZLICL in
accordance with GST laws.
Ans: As per rule 32(4) of the CGST Rules, 2017, the value of supply of services in relation to life
insurance business, when the amount allocated for investment/ savings on behalf of the policy
holder is not intimated to the policy holder at the time of supply of service, is-
(i) in case of single premium annuity policies,10% of single premium charged from the policy
holder;
(ii) in all other cases, 25% of the premium charged from the policy holder in the first year and
12.5% of the premium charged from the policy holder in subsequent years;
(iii) in case the entire premium paid by the policy holder is only towards the risk cover in life
insurance, the premium so paid.
Therefore, in the given case, the value of the services provided by ZLICL will be computed as
under:

Computation of value of supply for ZLICL for the month of September 20XX
Particulars Amount
Premium for only risk cover 25,00,000
Premium from new subscribers 25% of ` 40,00,000 10,00,000
Renewal Premium 12.5% of ` 80,00,000 10,00,000
Single premium on annuity policy10% of ` 1,00,00,000 10,00,000
Total value of supply 55,00,000
Q.16 Binaca Electronics Ltd. (hereinafter referred to as BEL) is engaged in manufacturing televisions. It
is registered in the State of Haryana. It has appointed distributors across the country who sell
the televisions manufactured by it. The maximum retail price (MRP) printed on the package of a
television is ₹12,000. The applicable rate of GST on televisions is 18%. BEL dispatches the stock
of televisions to its distributors ordered by them on a quarterly basis.
In order to promote its sales, the Sales Head of BEL has formulated a sales promotion scheme.
Under this scheme, BEL offers a discount of 10% (per television) on televisions supplied to the
distributors, if the distributors sell 500 televisions in a quarter. The discount is offered on the
price at which the televisions are sold to the distributors (excluding all charges and taxes).
It appoints Shah Electronics (an unrelated party as per GST Law) as its distributor in Haryana on
1st April and dispatches 750 televisions on 8th April as stock for the quarter April-June. BEL has
sold the televisions to distributor - Shah Electronics at ₹8,400 per television (exclusive of
applicable taxes). Shah Electronics has requested BEL for a special packing of the televisions
delivered to it for which BEL has charged ₹1,200 per television.
Shah Electronics places a purchase order of 1,000 televisions with BEL for the quarter July-
September. The distributor reports sales of 700 televisions for the quarter April -June and 850
televisions for the quarter July-September. The discount policy offered by BEL as explained
above is also available to Shah Electronics as per the distributorship agreement.
While Shah Electronics reverses the input tax credit availed for the quarter July-September, it has
failed to reverse the input tax credit availed for the quarter April-June.
Examine the scenario with reference to section 15 of the CGST Act, 2017 and compute the
taxable value of televisions supplied by BEL to Shah Electronics during the quarters April-June and
July-September assuming the rate of tax applicable on the televisions as 18%.
Ans: Section 15(3)(a) of the CGST Act, 2017 allows discounts to be deducted from the value of
taxable supply if the same is given before or at the time of the supply and if such discount has
been duly recorded in the invoice issued in respect of such supply. In other words, pre-supply
discounts recorded in invoices are allowed as deduction.
Further, post supply discounts are also allowed as deduction from the value of supply under
section 15(3)(b) of the CGST Act 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
In the given case, Shah Electronics is entitled for 10% discount on televisions supplied by
BEL for the quarters April-June as well as July-September as it has sold more than 500
televisions in each of these quarters. However, since the sales targets are achieved after the
entire stock for the respective quarters of April-June and July-September has been dispatched,
the discounts on the televisions supplied to Shah Electronics for the quarters of April-June and
July-September is a post-supply discount.
discount policy was known before the time of such supply and the discount can be specifically
linked to relevant invoices (invoices pertaining to televisions supplied to Shah Electronics for the
quarters of April-June and July-September) provided Shah Electronics reverses the input tax
credit attributable to the discount on the basis of document issued by BEL.
The value of supply for the quarters of April-June and July-September will thus, be computed as
under:
Computation of value of supply for the quarter - April-June
Particulars Amount(₹)
Price at which the televisions are supplied to Shah Electronics 8,400

[Note 1]
Less: Discount [Note 3] Nil
Value of taxable supply of one unit of television 9,600
Value of taxable supply of televisions for the quarter April- 72,00,000
June [` 9,600 x 750]
Notes:
(1) The value of a supply is the transaction value, which is the price actually paid or payable
for the said supply, in terms of section 15(1) of the CGST Act, 2017 presuming that the
supplier and the recipient of supply are not related and price is the sole consideration for
the supply as the supplier and recipient are not related parties.
(3) Since Shah Electronics has not reversed the input tax credit attributable to such discount
on the basis of document issued by BEL, the conditions specified in section 15(3)(b)
of the CGST Act have not been fulfilled. Thus, the post-supply discount will not be allowed
as deduction from the value of supply.

Computation of value of supply for quarter - July-September
Price at which the televisions are supplied to Shah Electronics 8,400

[Note 1]
Less: Discount [Note 3] (840)
Value of taxable supply of one unit of television 8,760
Value of taxable supply of televisions for the quarter July- 87,60,000
September [` 8,760 x 1,000]
Notes:
(1) The value of a supply is the transaction value, which is the price actually paid or payable
for the said supply, in terms of section 15(1) of the CGST Act presuming that the
supplier and the recipient of supply are not related and price is the sole consideration for
the supply as the supplier and recipient are not related parties.
the post-supply discount will be allowed as deduction from the value of supply. The input
tax credit to be reversed will work out to be `1,51,200 [1,000 x (8,400 x 10%) x
18%].
Q.17 How should the supply made by a component manufacturer be valued, when he uses moulds and
dies owned by the original equipment manufacturer sent free of cost to him? Explain.
Ans: Circular No. 47/21/2018 GST dated 08.06.2018 has clarified that while calculating the value of the
supply made by the component manufacturer using moulds and dies owned by Original Equipment
Manufacturers (OEM) sent free of cost (FOC) to him, the value of such moulds and dies shall
not be added to the value of supply made by him because the cost of moulds/dies was not to be
incurred by the component manufacturer and thus, does not merit inclusion in the value of supply
in terms of section 15(2)(b).
However, if the contract between OEM and component manufacturer was for supply of components
made by using the moulds/dies belonging to the component manufacturer, but the same have been
supplied by the OEM to the component manufacturer on FOC basis, the amortised cost of such
moulds/dies shall be added to the value of the components.

Q.18 Rajesh & Co., a partnership firm, provides financial and management consultancy to a group of
companies for an annual retainership fee of ` 15 lakh. Further, the firm is provided with a car
(along with a driver) for its exclusive use throughout the year. The fuel cost is also borne by the
Group. Rajesh & Co. pays GST on the amount of ` 15 lakh.
Is the value for the service provided by Rajesh & Co. correct under GST law? If not, please
elaborate.
Ans: Rajesh & Co. gets a car along with driver (including the fuel) for the whole year, which is an
additional non-monetary consideration for its services. The monetary value of such additional
consideration must be added to the retainer fee (` 15 lakh) in order to arrive at the value of the
taxable service provided by Rajesh & Co, as per rule 27 relating to valuation.
Q.19 Rustagi & Co. manufactures customized products at its unit situated in Madhya Pradesh. Cost of
production for Rustagi & Co. for 1000 products is ` 20,00,000. These products require further
processing before sale, and for this purpose products are transferred from its Madhya Pradesh unit
to its another unit in Himanchal Pradesh. The value declared on the invoice for such transfer is
the cost of production of such products.
The Himanchal Pradesh 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.
Thereafter, the Himanchal Pradesh unit sells these processed products to wholesalers. There are no
other factories in the neighbouring area which are engaged in the same business as that of
Himanchal Pradesh unit.
1,000 units of the products of same kind and quality are supplied to Himanchal Pradesh unit, at
the time when goods are sent by Madhya Pradesh unit, by another manufacturer located in
Himanchal Pradesh. The ex-factory price of such goods is ` 19,00,000. The Himanchal Pradesh unit
of Rustagi & Co. is eligible for full ITC.
Determine the value of 1000 products supplied by Rustagi & Co. to its Himanchal Pradesh unit.
Ans: As per section 25(4), 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. Therefore, units of Rustagi & Co. in Madhya Pradesh and Himanchal Pradesh are distinct
persons under GST.
As per rule 28, the value of the supply of goods between distinct persons, other than where the
supply is made through an agent, shall –
(a) be the open market value of such supply;
(b) if open market value is not available, be the value of supply of goods of like kind and quality;
(c) if value cannot be determined under the above methods, be cost of the supply plus 10% mark-
up or be determined by other reasonable means, in that sequence.

Rule 28 also provides 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
price charged for the supply of goods of like kind and quality by the recipient to his customer not
being a related person.
Further, rule 28 provides 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 the goods or services.
In the given case, the option of valuing the goods @ 90% of the price charged by the recipient to
his unrelated customer is not available as the goods are not further supplied ‘as such’ but only
after processing at Himachal Pradesh unit. However, since the Himanchal Pradesh unit is eligible
for full ITC, the value declared by the Madhya Pradesh unit in the invoice for transfer of such
products, i.e. ` 20,00,000 shall be deemed to be the open market value of the products.
Thus, the value of 1000 products supplied by Rustagi & Co. to its Himanchal Pradesh unit in terms
of rule 28 is the open market value of such products which is ` 20,00,000.
Q.20 Palliwal Associates, a firm of Chartered Accountants registered under GST, located in Jaipur,
Rajasthan is providing professional consultancy services to its various clients.
It has taken consultancy services for its business from another establishment of its firm in UK.
However, it has not paid any consideration for the same.
Such services would have been taxable @ 18% (CGST @ 9%, SGST @ 9% and IGST @ 18%),
had the same been received in India. Further,
Palliwal Associates would have paid ` 4.00 lakh, had it not received the said services from its UK
establishment.
Determine the GST liability of Palliwal Associates.
(a) IGST - ` 72,000
(b) CGST - ` 36,000 & SGST - ` 36,000, since place of supply is in India
(c) Nil, since no foreign exchange was paid.
(d) Nil, since such services are exempt.
Ans: (a) IGST - ` 72,000
Q.21 M/s. Kala & Associates, dealing in sale/ purchase of used or secondhand cars, is registered under
GST. During the current financial year, it effected following intra-State transactions:
Particulars Purchase Price Sale Price

Car 1 ` 5,00,000 ` 7,50,000
Car 2 ` 3,00,000 ` 2,75,000
Car 3 ` 6,00,000 ` 6,50,000
Car 4 ` 8,00,000 ` 9,50,000

M/s. Kala & Associates purchased Car 1, Car 2 and Car 3 from unregistered persons and Car 4
from registered person who charged GST of ` 1,30,000 and accordingly M/s. Kala & Associates had
availed the input credit of the same.
M/s. Kala & Associates is not conversant with GST provisions. Hence, it has approached you for
determining his GST liability. Assume that the applicable rate of tax is 18% and the amounts
given above are exclusive of GST.
(a) ` 95,000
(b) ` 1,08,000
(c) ` 1,30,500
(d) Exempt Supply, No GST
Ans: (a) ` 95,000
Q.22 Mr. Allauddin, a stationery retailer, located and registered under GST in Allahabad, has received
order for supply of goods worth ` 2,00,000 on 12th November from another local registered dealer,
Mr. Jallauddin.
Goods were properly supplied with invoice of ` 2,00,000 on 14th November. Mr. Allauddin, incurred
the following expenses before the goods were delivered to Mr. Jallauddin:
Packing charges - ` 3,000
Freight & Cartage - ` 2,500
Handling Charges - ` 1,500
Mr. Jallauddin made full payment (including the additional amounts charged by Mr. Allauddin) on
delivery of the goods for which he was allowed instant cash discount of ` 2,000.
The applicable rates of tax on the goods supplied are: IGST @ 18%,
CGST @ 9% and SGST @ 9% and the amounts given above are exclusive of GST.
Mr. Allauddin, paid CGST ` 18,000 and SGST 18,000. As a tax consultant, what will be your advice
relating to further tax liability of Mr. Allauddin-
(a) CGST - ` 630 and SGST - ` 630
(b) CGST - ` 450 and SGST - ` 450
(c) CGST - ` 18,630 and SGST - ` 18,630
(d) CGST - ` 18,450 and SGST - ` 18,450
Ans: (a) CGST -` 630 and SGST -`630
Q.23 M/s Gopi Narayan & Company is a partnership firm of advocates, registered under GST in
Mumbai, Maharashtra. In the month of April, the firm has supplied services amounting to ` 15 lakh.
The following information is provided in relation to the some of the services provided:
S. No Particulars Value of service
1. Herbal Power (P) Ltd. (Registered in Telangana in the preceding 50,000
financial year under section 22 of the CGST Act, 2017)
Provided consultation for preparation of an affidavit in relation to

construction of a hotel building in the State of Maharashtra.
2. Veranta India (P) Ltd. (Registered in Gujarat in the preceding 200,000
financial year under section 22 of the CGST Act, 2017) Filed a
suit in the Gujarat High Court on behalf of the company.
3. Ms. Saloni (Registered under GST as a salon service provider in
Maharashtra in the preceding financial year under section 22 of
the CGST Act, 2017)
Service amounting to ` 1 lakh was provided in the month of
February for which invoice was issued on 15th February. However,
payment is made by the client on 5th April. The firm has
charged ` 10,000 as penalty for delayed payment of consideration.
Said penalty is also paid by the client on 5th April. Apart from
this, the firm had paid ` 20,000 as attestation charges on behalf
of the client which were reimbursed by the client in the month
of February itself.
Note: The turnover of M/s Gopi Narayan & Company in the previous financial year was ` 50 lakh. The
firm is engaged solely in providing legal services and it does not import/export any services from/to
outside India.
Based on the facts of the case scenario given above, choose the most appropriate answer to Q.
Nos. 1.1 to 1.4 as follows:-
1.1. Whether the service provided to Veranta India (P) Ltd. is exempt under GST? If not, whether
tax is payable under reverse charge?
(a) Yes, all services provided by an advocate firm are exempt from GST.
(b) No, since service is provided to a business entity that is registered under GST in the
preceding financial year under section 22 of the CGST Act, 2017. However, tax shall be pay
able by M/s Gopi Narayan & Company under forward charge.
(c) Yes, any service provided by an advocate firm to a business entity is exempt under GST.
(d) No, since service is provided to a business entity that is registered under GST in the
preceding financial year under section 22 of the CGST Act, 2017. Further, tax shall be
payable by Veranta India (P) Ltd. under reverse charge.
1.2. What shall be the time of supply for supplies made to Ms. Saloni in respect of original
amount ` 1 lakh and penalty amount of ` 10,000?
(a) For whole amount of ` 1,10,000: 15th February
(b) For ` 1 lakh: 15th February and for ` 10,000: 5th April
(c) For whole amount of ` 1,10,000: 5th April
(d) For ` 1 lakh: 15th April and for ` 10,000: 5th April

1.3. What shall be the value of supply provided to Ms. Saloni in terms of section 15 of the CGST
Act,
2017?
(a) ` 110,000
(b) ` 100,000
(c) `130,000
(d) ` 120,000
1.4. Which of the following statements is/are correct in law?

(i) M/s Gopi Narayan & Company is eligible to opt for composition levy under sub-sections (1)
and (2) of section 10 of the CGST Act, 2017.
(ii) M/s Gopi Narayan & Company is not eligible to opt for composition levy under sub-sections
(1) and (2) of section 10 of the CGST Act, 2017.
(iii) M/s Gopi Narayan & Company is eligible to opt for composition levy under sub-section (2A)
of section 10 of the CGST Act, 2017.
(iv) M/s Gopi Narayan & Company is not eligible to opt for composition levy under sub-section
(2A) of section 10 of the CGST Act, 2017.
(a) (i)
(b) (i) and (iv)
(c) (ii) and (iv)
(d) (ii) and (iii)
Ans: 1.1 (d) No, since service is provided to a business entity that is registered under GST in the
preceding financial year under section 22 of the CGST Act, 2017. Further, tax shall be
payable by Veranta India (P) Ltd. under reverse charge.
1.2 (c) For whole amount of ` 1,10,000: 5th April
1.3 (a) ` 110,000
1.4 (c) (ii) and (iv)
Q.24 Mr. Ashok, proprietor of M/s Office-Linc Enterprises, is engaged in trading of office stationery
items in its stationery store located at Salt Lake City, Kolkata. The said store is taken on lease
from Kolkata Municipal Corporation (KMC). During the financial year 2019-20, the turnover of M/s
Office-Linc Enterprises was `􀀃14 lakh. Mr. Ashok supplies goods within the State of West Bengal
only, but purchases stationery items mostly from Delhi & Mumbai. He owns a duplex house in New
Town, Kolkata. He stays on the ground floor & has let out the first floor to an employee of IDICI
Bank, Delhi for residential purposes. The rent for the same is paid by IDICI Bank to Mr. Ashok. He
applied for GST registration on voluntary basis on 2nd April, 2020 and the registration was granted
to him on 9th April, 2020.
The details of his stock position is as under:

Particulars 2nd April, 2020 8th April, 2020
Office stationery items purchased from ` 1 lakh ` 1 lakh
a registered dealer
Books, periodicals, journals, newspaper, maps etc. ` 0.20 lakh ` 0.30 lakh
The details of transactions carried out by Mr. Ashok during the financial year 2020-21 is
furnished hereunder:
Particulars 1st April, 2020 to 9th April, 2020 to
8th April, 2020 31st March, 2021
(` in lakh) (` in lakh)
Sale of office stationery items (Intra-State supply to3 84
registered person)
Sale of office stationery items (Intra-State supply to2 14
unregistered person)
Legal fee paid to advocate 0.10
Purchase of stationery items (Intra-State supply 3 74
received from registered person)
Purchase of furniture for use in own office (from 1
an unregistered dealer of Kolkata)
Purchase of stationery items from a registered 1 18
dealer of Delhi
Lease rent of the stationery store paid to Kolkata 1.20
Municipal Corporation (KMC)
Transportation charges paid to M/s Gati Transporters,0.10 1.50
a GTA (tax is not payable @ 12%)
Interest paid on borrowings from BBI Bank 0.20 1.80
Accrued interest on Fixed deposit with BBI Bank 0.16
Rent received from IDICI Bank for its employee 2.40
Mr. Ashok went to Mumbai, Maharashtra for a business meeting in February, 2020 and stayed
in Hotel Blue Pines for a week. Hotel charged ` 1,00,000 (taxable value) for the stay.
All the amounts given above are exclusive of GST, wherever applicable, unless otherwise
provided. Assume that there is no other outward or inward supply transaction apart from aforesaid
transactions in the financial year 2020-21.
GST is applicable on all inward and outward supplies, except on services of transportation of
goods, at the following rates:
I. Intra-State supply - 6% CGST and 6% SGST
II. Inter-State supply - 12% IGST

Nos. 1 to 5 below:-
1. The value of outward supply which shall be subject to GST for the financial year 2020-21
is _______.
(a) ` 98 lakh
(b) ` 100 lakh
(c) ` 102.40 lakh
(d) ` 108 lakh
2. Which of the following statements is correct in terms of the facts of the case scenario given
above?
(a) Mr. Ashok cannot opt to pay tax in the financial year 2021-22 under composition scheme
under section 10(1) and 10(2) of the CGST Act, 2017.
(b) Mr. Ashok is entitled to take the ITC of inputs held in stock on 1st April, 2020.
(c) Mr. Ashok shall be liable to pay GST under reverse charge under section 9(4) of the CGST
Act during the financial year 2020-21 in respect of purchases made from unregistered persons.
(d) Mr. Ashok is entitled to take the ITC of inputs held in stock on 8th April, 2020.
3. The value of supply on which Mr. Ashok is liable to pay GST under reverse charge for the
financial year 2020-21 is _______________.
(a) ` 1,60,000
(b) ` 2,80,000
(c) ` 1,30,000
(d) ` 2,70,000
4. Which of the following inward supply is not subject to payment of tax under reverse charge
mechanism?
(i) Shop rent paid to KMC
(ii) Legal fee paid to advocate
(iii) Purchase of stationery items from unregistered person
(iv) Transportation charges paid to M/s Gati Enterprises
(a) (i) and (ii)
(b) (iii)
(c) (ii) and (iii)
(d) (i) and (iii)
5. Whether input tax credit is available on the GST paid by Mr. Ashok on the taxable value of `
1,00,000 charged by Hotel Blue Pines located in Mumbai, Maharashtra, for his stay? If yes, please
specify the amount of input tax credit available.

(a) Yes, ` 3,000 - CGST and ` 3,000 - SGST
(b) Yes, ` 12,000 - IGST
(c) Yes, ` 6,000 - CGST and ` 6,000 - SGST
(d) No input tax credit is available.
Ans: 1. (a)
2. (d)
3. (d)
4. (c)
5. (d)

8 – Input tax Credit
1. What is input tax?

Ans: 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.
2. What are the conditions necessary for obtaining ITC?

Ans: 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.
3. One of the conditions to claim credit is that receiver is possession of tax invoice or debit note or
any other taxpaying documents. What are the taxpaying documents on which Input Tax Credit is
available?
Ans: The taxpaying documents have been prescribed under Rule 36 of the CGST Rules.
The ITC shall be availed by a registered person [including the Input Service Distributor (ISD)] on
the basis of any of the following documents:
➢ An invoice issued by supplier of goods or services or both;
➢ An invoice raised by the recipient in case of inward supplies on account of reverse charge
mechanism supplies, subject to payment of tax;
➢ A debit note issued by a supplier of goods or services or both;
➢ A bill of entry or any similar document prescribed under the Customs Act, 1962 or Rules made
there under for the assessment of integrated tax on imports;
➢ An Input Service Distributor (ISD) Invoice or ISD Credit Note or any other document issued
by an Input Service Distributor for distribution of credit.

4. Can a person take ITC without payment of consideration for the supply along with tax to the
supplier?
Ans: 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 and Schedule 1 cases.
5. What is the time limit for taking ITC and reasons therefor?
Ans: Refer point (vi) “Time limit for availing ITC: Due date of filing return for the month of September
of succeeding financial year or date of filing of annual return, whichever is earlier” under Heading
No. 3 “Eligibility and Conditions for Taking Input Tax Credit [Section 16]”.
6. What is the ITC entitlement of a newly registered person?

Ans: A person applying for registration can take input tax credit of :
✓ Inputs held in stock and
✓ Inputs contained in semi- finished or
✓ Finished goods held in stock
on the day immediately preceding the date of grant of registration. If the person was liable to take
registration and he has applied for registration within thirty days from the date on which he
became liable to registration, then ITC of inputs held in stock and inputs contained in semi-
finished or finished goods held in stock on the day immediately preceding the date on which he
became liable to pay tax can be taken.
7. What is the tax implication of supply of capital goods by a registered person who had taken ITC
on such capital goods?
Ans: In case of supply of capital goods or plant and machinery on which 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.

8. 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.
Ans: Under section 17(5)(aa) 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.
9. 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?
Ans: 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.
10. 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.
Ans: Under section 16(2) of the IGST 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.
11. 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. 4 crore
and Rs. 1 crore respectively, the ITC on thread and lining material procured in July is Rs.5000 and
Rs. 15000 respectively. Calculate the eligible ITC on thread and lining material.
Ans: 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 42 of the CGST Rules, 2017.

Credit attributable to exempt supplies = Common credit x (Exempt turnover/ Total turnover)
Common credit = Rs.15000 + Rs.5000 = Rs. 20000
Exempt turnover = Rs. 1 Crore
Total turnover = Rs. 5 Crore [Rs. 1 Crore + Rs. 5 Crore]
Credit attributable to exempt supplies = (Rs. 1 Cr / Rs. 5 Cr) x Rs. 20000 = Rs. 4000
Ineligible credit of Rs.4000 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.
12. 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?
Ans: 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 5%
per quarter or part thereof from the date of invoice.
13. Mr. A, a registered person entered into a contract with Mr. B an Architect for design of a project
model for his office. As on 10/06/2018, Mr. A paid an advance amount of Rs. 85,000 toward such
supply of service to Mr. B. However, the balance amount pertaining to the given contract was paid
on completion of service i.e. on 15/09/2018.
Determine whether in the given case Mr. A avail ITC against advance payment made by him.
Ans: Legal Provision: As per sec 16 of CGST Act, A registered person shall be entitled to the credit of
input tax if:
1. He is possession of a tax invoice issued by a supplies registered under this act.
2. He has received goods or services or both
Discussion: In the case, the contract is for supply of service for which Mr. A has pad an advance
amount on 10/06/2018 but the service has not been completed yet. Thus, he shall not be entitled
for ITC against the advance payment made by him.
14. 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?
Ans: 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 of otherwise, before or during movement of goods.

15. Viraj located in Pune is the supplier of raw material & Mr. Sane a trader located in Goa is registered
taxable person. Mr. Viraj supplied raw material to Mr. Sane. During the movement of the goods from
Pune to Goa, Mr. Sane directed Mr. Viraj to supply the raw material to his agent Mr. Ravi, located
in Hubli (Karnataka). Accordingly, Mr. Viraj delivered raw material to Mr. Ravi. Who shall be termed
as a recipient as per provisions of CGST Act?
Ans: Legal Provision:-As per explanation to sec 16(2)(b) of the CGST Act provides for deemed receipt
of goods where the goods are delivered by the supplier to the recipient of any other person on the
direction of the recipient, whether acting as agent of otherwise, before or during movement of goods.
Conclusion:-As per the above stated provision, it shall be deemed that Mr. Sane has received the
goods from Mr. Viraj when he has delivered the goods to Mr. Ravi an agent of Mr. Sane. Thus
recipient shall be Mr. Sane.
16. M/s Asha Trading Co. purchased certain goods from Venus traders, Mumbai who agreed to deliver
the goods as per the contract the supply of goods was in following instalments:-
Date of receipt of supply Instalment Value of goods
01.09.18 1st Rs. 15000
01.10.18 2nd Rs. 35000
01.11.18 Last Rs. 42000
Total Rs. 92000
The above goods are subject to CGST and SGST @ 6% each. Invoice of Rs. 92,000 was issued along
with supply of first lot of goods. Explain in accordance with the provisions of CGST Act, whether
M/s Asha Trading Co. is eligible to take input tax credit on proportionate basis.
Ans: No, M/s Asha Trading Co, is not eligible to take credit on proportionate basis, as per proviso to
section 16(2) where the goods against an invoice are received in lots of instalments, the registered
person shall be entitled to take credit upon receipt of the last lot or instalment. Therefore in the
given case M/s Asha shall be eligible to claim ITC only upon receipt of last instalment i.e. as on
1.11.2018.
17. Lemon Pvt. Ltd purchased machinery as on 20.07.2018 for its unit in Gujarat , worth ₹ 1250000 &
GST @ 12% was levied i.e. ₹ 1,50,000 thus total cost of machinery including taxes was ₹ 14,00,000.
The machinery was put to use as on 26.07.2018. In the given case if Lemon Pvt. Ltd has capitalized
the value of machinery including its tax component of ₹ 150000. Determine whether Lemon Pvt.
Ltd shall be eligible to claim the input tax credit paid on purchase of Machinery?
Ans: As per section 16(3) of GST Act, if registered person has claimed depreciation on the tax component
of cost of capital goods then ITC on such tax component not allowed. The GST paid on purchases

of machinery i.e. 150000 has also been capitalize it is deemed that depreciation must be claimed by
Lemon Pvt. Ltd and hence not eligible to claim input tax credit on such tax component.
18. 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 :- (ICAI)
S. No. Inward supplies GST Amount Remarks
1. Input ‘A’ 1,00,000 One invoice on which GST payable
was ₹ 10,000 is missing
2. Input ‘B’ 50,000 Inputs are to be received in two
installments. First installment has
been received in October, 2018.
3. Capital goods 1,20,000 XYZ Ltd. has capitalized the capital
goods at full invoice value inclusive
of GST as it will avail depreciation
on the full invoice value.
4. Input services 2,25,000 One invoice dated 20.01.2018 on
which GST payable was ₹ 50,000
has been received in October, 2018.
Notes:
1. All the conditions necessary for availing the ITC have been fulfilled.
2. ABC Co. Ltd. is not eligible for any threshold exemption.
3. The annual return for the financial year 2017 – 2018 was filed on 15th September, 2018.
Ans: Computation ITC available with XYZ Ltd. for the month of October, 2018
S. No. Inward supplies GST

1. Inputs ‘A’ 90,000
[ITC cannot be taken on missing invoice. The registered person should
have the invoice in its possession to claim ITC – Section 16(2) (a)]
(1,00,000 – 10,000)
2. Inputs ‘B’ Nil
[When inputs are received in installments. ITC can be availed only on
receipt of last installment – First proviso to section 16(2)]
3. Capital goods Nil
[Input tax paid on capital goods cannot be availed as ITC, if depreciation
has been claimed on such tax component – Section 16(3)]
4. Input services 1,75,000
[As per section (4), ITC on an invoice cannot be availed after the due
date of furnishing of the return for the month of Sept. following the

end of financial year to which such invoice pertains the date of filling
annual return, whichever is earlier. Since the annual return for the FY
2017- 2018 has been filed on 15th September, 2018 (prior to due date
of filing the return for Sept. 2018 i.e. 20th October, 2018), ITC on the
invoice pertaining to FY 2017 – 2018 cannot be availed after 15th
September, 2018. [Note – Rs.2,25,000 – Rs.50,000 i.e. invoice receives
in Oct 2018]
Total 2,65,000
19. Whether input tax paid on Motor vehicle which is used for courier agency, outdoor catering, pandal
and shamiana and tour operator is eligible?
Ans: The restriction of input tax credit on motor vehicles provided under section 17(5) (a) is on such
motor vehicles except when they are used for further supply of vehicles, transportation of passengers.
Importing training or for transportation of goods only.
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.
20. 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.
Ans: Yes, Section 17(5)(b) of the CGST Act provides that tax paid w.r.t 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.
21. A consignment of 5000 KGS of inputs was received. The GST @ 5% paid as per invoice was Rs.
5000. While the inputs were in transit, 500 KGS were destroyed and it was found that these were
not usable. State eligibility of inputs tax credit as per GST Act ?
Ans: Legal Provision:- As per section 2(59) of CGST act 2017, “input” means any goods other than
capital goods used or intended to be used by a supplier in the course or furtherance of business.
As per section 16(2) (b) a registered person shall be entitled to claim the credit of any input tax
in respect of any supply of goods provided he has received the goods.
As per section 17(5) of CGST act 2017 input tax credit shall not be available in respect of the
following supplies & as per clause (h) of section 17(5), goods lost, stolen, destroyed, written off or
disposed of by way of gift or free samples credit is not available.

Discussion:- As per above provisions of CGST act 2017, in the given case as inputs lost in transit
and not yet received by the recipient and thus does not satisfies the criteria to avail ITC so no
credit shall be available for 500 KGS of inputs destroyed in transit.
Conclusion:- Hence in the above case, input tax credit is not available to the extent of 500 KGS of
inputs destroyed in transit as not yet received by the recipient. But the manufacturer shall be
eligible to take input tax credit of remaining inputs 4500 KGS i.e. Rs. 4500/- on receipt of such
inputs.
22. Determine the eligibility of input tax credit for the following cases as per sec 17(5) of GST Act:-
➢ 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?
➢ RIL ltd conducted its 25th Annual General Meeting at its head office in Mumbai and availed
services of Shree Caterers for the occasion. Shree caterers charged ₹ 450000 plus GST @ 18%
for supply of outdoor catering services. Determine whether RIL ltd can avail input tax credit
of GST paid on outdoor catering service.
➢ Pawan Ltd is a registered person engaged passenger transport services. It purchased two motor
vehicles for ₹ 2500000 plus GST @ 28% for its business as on 10.10.2017. Determine whether
Pawan Ltd can avail the benefit of input tax credit of the GST paid by it on motor vehicles
Ans: Computation of GST payable by Mr. X on outward supplies
➢ No. ITC on motor vehicles can be availed only if the taxable person is in the business of
transport of passenger or goods or is providing the services of importing training on motor
vehicles.
➢ As per section 17(5) (b), input tax credit shall not be available in respect of supply of outdoor
catering service. Thus, RIL ltd is not entitled to avail input tax credit of GST paid on outdoor
catering services availed form Shree caterers.
➢ As per section 17(5) (a), input tax credit shall not be available in respect of motor vehicles
but as per exception given input tax credit shall be available if it is used for making taxable
supplies as in the given case RIL ltd is engaged in transportation of passengers it will be
entitled to tale credit of GST amounting to ₹ 7,00,000 i.e. {2500000*28%}
23. Ceramity Ltd. has following units:

A: Factory in Hassan, Karnataka; closed from 2017-18 onwards, no turnover.
B: Factory in Tumkur, Karnataka; turnover of Rs. 27 crores in 2017-18;
C: Service centre in Hyderabad, Telangana; turnover of Rs. 1 crore in 2017-18;
D: Service centre in Chennai, Tamil Nadu; turnover of Rs. 2 crores in 2017-18; Ceramity Ltd.’s
corporate office functions as ISD.

It has to distribute ITC of Rs. 9 lakh for December, 2018. Of this, an invoice involving tax of Rs.
3 lakh pertains to technical consultancy for Tumkur unit.
What should be the distribution of the credit?
Ans: As per rule 39(d) of CGST Rules relating to ITC, -
• Rs.3 lakh is attributable to Tumkur unit, and will be transferred to Tumkur unit only.
• Of the remaining Rs.6 lakh, Hassan unit will not be entitled to any credit as ITC is distributed
to only those recipients which supply goods and /or services.
• Rs.6 lakh have to be distributed among Tumkur unit and the service centres in Hyderabad
and Chennai in proportion of their turnover in the previous FY, that is, in 2017-18.
• Tumkur unit will get (27 crore / 30 crore) x 6 lakh = Rs.5.4 lakh
• Hyderabad service centre will get (1 crore /30 crore) x 6 lakh = Rs.20,000; and
• Chennai service centre will get (2 crore /30 crore) x 6 Lakh = Rs. 40,000.
24. 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 Rs. 2,00,000, Rs. 10,00,000 and Rs. 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,ineligible credit, amount of common credit attributable towards
exempted supplies, if any, for the month of April, 20XX.
Particulars GST Amount
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 ‘C’ purchased on 01.04.20XX for being used in manufacturing all
96000
the three products – X, Y and Z
Machine ‘D’ purchased on April 1, 2 years before 01.04.20XX for being
exclusively used in manufacturing product Z. From 01.04.20XX, such 192000
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
exclusively used in manufacturing products X and Y. From 01.04.20XX, 288000
such machine will also be used for manufacturing product Z.

Ans: Computation of Oberoi Industries for the month of April 2020
Amount to be
Common Ineligible
Particulars credited to E
credit credit
CrL
Machine ‘A’
[Since exclusively used for non-business purposes, ITC is not 19200
available under rule 43(1)(a) of CGST Rules, 2017]
Machine ‘B’
[For ITC purposes, taxable supplies include zero- rated supplies
38400
under rule 43(1)(b) of CGST Rules, 2017. Hence, full ITC is
available]
Machine ‘C’
[Commonly used for taxable and exempt supplies 96000 96000
– Rule 43(1)(c) of the CGST Rules, 2017]
Machine ‘D’
Owing to change in use from exclusively exempt to both taxable
and exempt,
ITC to be credited to electronic credit = 192000 192000 76800 192000
Ineligible credit for the period during exempt supplies should be
added to output tax liability @ 5% per quarter or part thereof
= (₹ 1,92,000 × 5% × 8 quarters)
Machine ‘E’
Owing to change in use from exclusively taxable to both
288000
taxable and exempt, ITC Claimed shall be added to arrive at
the aggregate value of Tc
Total common credit(Tc) 576000 96000 326400
Common credit for the tax period (in the given case, a
month) under rule 43(1)(e) of CGST Rules, 2017 9600
Tm for April 20XX= Rs. 576000÷ 60
Common credit attributable to exempt supplies in April, 20XX
under rule 43(1)(g) of the CGST Rules, 2017
Te = (Turnover of exempt supplies/Total turnover) × Common
credit 2720
= (12,00,000/24,00,000) × Rs. 9600
[Such credit, along with the applicable interest, shall be added
to the output tax liability of Oberoi Industries]
Amount to be credited to the electronic credit ledger of Oberoi
326400
Industries for the month of April, 20XX

Note : Clause (g) provides the formula for determining ‘Te’, i.e. amount of common credit
attributable to exempt supplies, as Te = (E/F) x Tr. The term ‘Tr’ which is used in the said
formula was defined in clause (f). Omission of clause (f) has thus, rendered the formula
given in clause (g) otiose as now the term (‘Tr’) which is used in the formula is nowhere
defined in the rule
Assumption : We assume Tr= Tm to calculate common credit attributable to exempt supplies.
25. 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:
Details of Outward Supply
Inter State Supply of Goods 300000
Intra State Supply of Goods 800000
Details of Inward Supply
Inter State Purchase of Goods 50000
Intra State Purchase of Goods 300000
Mr. X has following ITCs with him at the beginning of the tax period:
Particulars Amount
CGST 30000
SGST 30000
IGST 70000
Notes:
i. Rate of CGST, SGST and IGST 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.
Ans: Computation of GST payable by Mr. X on outward supplies
Sr No Particulars Amount Amount

Intra-State supply of goods
1 CGST @ 9% on Rs. 8,00,000 72000
SGST @ 9% on Rs. 8,00,000 72000 144000
Inter-State supply of goods
2 IGST @ 18% on Rs. 3,00,000 54000
Total GST Payable 198000

Computation of Total ITC
Particulars CGST @ 9% SGST @ 9% IGST @ 18%

Opening ITC 30000 30000 70000
Add: ITC on Intra-State purchases of goods
27000 27000 0
valuing Rs.3,00,000
Add: ITC on Inter-State purchases of goods
0 0 9000
valuing Rs.50,000
Total ITC 57000 57000 79000
Computation of GST payable from cash ledger
Particulars CGST @ 9% SGST @ 9% IGST @ 18%
GST payable 72000 72000 54000
(15000)- IGST (10000)- IGST (54000)- IGST

Less: ITC
(57000)- CGST (57000)- SGST
Net GST Payable Nil 5000 Nil
Note: Credit of IGST shall be available against IGST, CGST and SGST in any sequence.
It has been assumed that Rs.15000 Rs.IGST, Rs.10000 IGST has been used for the payment of CGST
and SGST respectively.
Alternatively total Credit of IGST Rs.25000 can be used either for CGST or SGST.
26. Determine the amount of input tax credit available to Priya Manufacturing Co. Ltd. in respect of
following items procured by them in the month of November, 2018:
Sr. No Description of goods ITC Amount

1 Food & Beverages procured for traders meeting program 15,000
2 Inputs used for pipeline structure layout outside factory 1,00,000
3 Goods destroyed in transit 15,000
4 Goods used for provision of services during warranty period 15000
5 Inputs used for testing & quality control check 25000
6 Inputs used in trial runs 35000

Ans: Computation of Input tax credit available to Priya Manufacturing Co. Ltd:-
SI. No Description of goods ITC Amount
1 Food & Beverages procured for traders meeting program [WN – 1] Nil
2 Inputs used for construction of pipeline structure layout outside Nil
factory [WN – 2]
3 Goods destroyed in transit [WN – 3] Nil
4 Goods used for provision of services during warranty period {Used in 15000
course of business, thus ITC will be available}
5 Inputs used for testing & quality control check {Used in course of 25000
business, thus ITC will be available}
6 Inputs used in trail runs 35000
Total Input Tax credit available 75000
Notes:-
1) As per section 17(5) clause (1) No input tax credit shall be available in case of supply of food
and beverages except where an 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 an element of a taxable composite or mixed supply;
2) As per section 17(5) (d), goods or services or both received by taxable person for construction
of an immovable property (other than plant or machinery) on his own account including when
such goods of services or both are used in the course or furtherance of business & as per
explanation provided for plant and machinery which excludes pipelines laid outside the factory,
thus no input tax credit respect of inputs used for such construction.
3) As per section 17(5) (h) of CGST act input tax credit pertaining to goods destroyed in transit
shall not available.
27. ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following items
during the month of July.
Sr No Items GST Paid
Electrical Transformer to be used in the

1 520000
manufacturing process
2 Trucks used for the transport of raw material 100000
3 Raw material 200000
Confectionery items for consumption of

4 25000
employees working in the 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
Ans: Computation of ITC Available with ABC Co. Ltd for the month of July
Sr No Items GST Paid
Electrical transformers [Being goods used in the course or furtherance
1 520000
of business, ITC thereon is available in terms of section 16(1)]
Trucks used for the transport of raw material [Though ITC on motor
vehicles has been specifically disallowed under section 17(5)(a), ITC
2 100000
on motor vehicles used for transportation of goods is allowed under
section 17(5)(a)(ii)]
Raw material [Being goods used in the course or furtherance of
3 200000
business, ITC thereon is available in terms of section 16(1)]
Confectionery items for consumption of employees working in the
factory. [ITC on food or beverages is specifically disallowed unless the
4 same is used for making outward taxable supply of the same category Nil
or as an element of the taxable composite or mixed supply-Section
17(5)(b)]
Total ITC 820000
28. Raghu veer ltd a registered manufacturer engaged in taxable supply of electric goods has made
purchases of the following goods during the month of September, 2017. The value of such goods has
been capitalized in the books of accounts of Raghuveer ltd. Determine the amount of input tax credit
available to Raghuveer Ltd.
SI. No Goods description Input Tax (₹)
1 Pollution control equipment used inside the factory 1,85,000
2 Moulds and dies used for manufacture in factory 34,000
3 Machinery purchased on which depreciation has been 2,45,000
claimed for full value including input tax thereon
4 Capital Goods used as parts purchased from a composition 25,000
dealer
Ans: Computation of input tax credit available to Raghu Veer ltd:
SI. No Particulars ₹
1 Pollution control equipment used inside the factory [WN.1] 1,85,000
2 Moulds and dies used for manufacture in factory [WN.1] 34,000

3 Machinery purchased on which depreciation has been Nil
claimed for full value including input tax thereon [WN.2]
4 Capital Goods used as parts purchased from a composition Ni
dealer [WN.3]
Total input tax credit available 2,19,000
Notes:
1. As per section 2(19) of CGST Act, ”Capital goods” means 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 of furtherance of business. Thus,
i. Pollution control equipment
ii. Moulds and dies
Which are used or intended to be used in the course of furtherance of business are eligible for
ITC as capital goods.
2. As per section 16(3) of CGST Act, No input tax credit shall be available where the registered
person has claimed depreciation 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 shall not be allowed.
3. As per section 17(5) (e), No input tax credit shall be available in respect of goods or services
or both on which tax has been paid under section 10 i.e. composition tax.
29. 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 excavator;
➢ 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 - ₹ 18,00,000
➢ Service charges for supply of manpower for operation of the excavator - ₹ 20,000
➢ Service charges for soil testing and seismic evaluation at three sites – 2,50,000

The GST paid during the said month on services received by M/s XYZ is as follows:
➢ Annual maintenance for excavators - ₹ 1,00,000
➢ Health insurance for excavator operators - ₹ 11,000
➢ Scientific and technical consultancy for soil testing and seismic evaluation - ₹ 1,00,000
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 excavators – 12%

Supply of manpower services and soil – testing and seismic evaluation services – 18%
Note:- Opening balance of input tax credit of GST is nil
Ans: Computation of Net GST Liability to be paid
Particulars GST payable
Gross GST liability [WN – 1] 2,63,400

Less : Input tax credit [WN – 2] 2,00,000
Net GST liability 63,400
W.N. – 1: Computation of net GST payable by M/s XYZ
Particulars Computation GST Payable
1. Hiring charges for excavators 18,00,000 * 12% 2,16,000
2. Services charges for supply of 20,000 * 12% 2,400
Manpower for operation of excavators [Note 1]
3. Service charges for soil testing and seismic 2,50,000 * 18% 45,000
evaluation [Refer Note 2]
Gross GST liability 2,63,400
Notes:-
1) As per section 8(a) of the CGST Act, 2017, the composite supply is treated as the supply of
the principal supply. Therefore, the supply of manpower for operation of the excavators will
also be taxed at the rate applicable for hiring out of the excavator (principal supply), which
is 12%.
Since the excavators are invariable hired out along with operators and excavator operators are
supplied only when the excavator is hired out, it is a case of composite supply under section
2(30) of the CGST Act, 2017 wherein the principal supply is the hiring out of the excavator.
2) Soil testing and seismic evaluation services being independent of the hiring out of excavator
will be taxed at the rate applicable to them, which is 8%.
W.N. – 2: Computation of input tax credit available for set off
Particulars ITC available
Annual maintenance services for excavators [Refer Note 1] 1,00,000
Health insurance for excavator operators [ Refer Note 2] -
Scientific and technical consultancy [Refer Note 1] 1,00,000
Total input tax credit available 2,00,000

Notes:-
1) As per section 17(5) (d) of the CGST Act, 2017 credit on goods and / or services received by
a taxable person for construction of an immovable property on his own account is blocked.
Here, though the excavators are used for building project, the same are not used by M/s XYZ
on its own account for construction of immovable property; instead they are used for outward
taxable supply of hiring out of mac
Therefore, the annual maintenance Service for the excavators are not to be covered in section
17 of the CGST Act, 2017 and the credit thereon will be available. The same applies for
scientific & technical consultancy for construction projects because in this case also the service
is used for providing the outward taxable supply of soil testing and seismic evaluation service
and not for construction of immovable property.
2) As per section 17(5) (b) of the CGST Act, 2017 allows input tax credit on health insurance
only when:
(a) The Government notifies the services as obligatory for an employer to provide to its
employees under any law for the time being in force; or
(b) The said service is used for making an outward taxable supply of the same category of
service or as part of a taxable composite or mixed supply.
In the given case the health insurance service does not fall under any of the given
categories, thus the credit will not be allowed.
30. LTD Ltd is engaged in supplying goods to its customer within the state and it’s not liable for
registration under section 22 of CGST Act, 2017. From 20.01.2018 onwards, it started interstate
supply of taxable good for this purpose it applied for registration on 28.01.2018 and same has been
granted to him. The liability of CGST, SGST and IGST for the month of January, 2018 is ₹ 32,000,
32000 and ₹ 45,000 respectively and LTD Pvt. Ltd has to make e – payment of tax on due date
i.e. on 20.02.2018. LTD Pvt. Ltd has provided the following details of stock of input held on 19.01.2018
and taxes paid thereon:-
A. Inputs received on 12.12.2017 lying in stock 4,500 4,500
B. Inputs received on 16.01.2018 lying in semi – finished 5,600 5,600
stock
C. Inputs received on 26.11.2017 lying in finished stock 8,500 8,500
Determine the amount of input tax credit eligible for ABC Pvt. Ltd.
Ans: Legal Provision: As per section 18(1) (a) of CGST Act, a person who has applied for registration
under this Act within thirty days from the date on which he becomes liable to registration and has
been granted such a person who has applied for registration under this Act within thirty days from
the date on which he becomes liable to registration i.e. 19.01.2018.

A registered person shall not be entitled to take input tax credit under sub – section (1) in respect
of any supply of goods or services or both to him after the expiry of one year from the date of issue
of tax invoice relating to such supply.
Particulars CGST @ 9% SGST@ 9%
A. Inputs received on 12.12.2017 lying in stock 4500 4500
B. Inputs received on 16.01.2018 lying is semi – finished stock 5600 5600
C. Inputs received on 26.11.2017 lying in finished stock 8500 8500
Total eligible input tax credit 18,600 18,600
31. Reema Electronics paying tax under composition scheme has crossed the threshold and becomes
liable to pay tax under regular scheme on 04.02.2018. Can it avail input tax credit and if so calculate
the amount of ITC available? The details of Input tax credit available with Reema Electronics as
on 03.02.2018 is as follows:
Inputs lying in stock as on date (Invoice dated 14.01.2018) 6400 6400
Inputs lying semi – finished goods in stock as on date (Invoice dated 5600 5600
24.11.2017)
Capital goods procured on 20.10.2017 invoice dated 22.10.2017 12,000 12,000
Ans: Legal Provision: As per section 18 of CGST Act, where any registered person ceases to pay tax under
section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs
contained in semi – finished or finished goods held in stock and on capital goods on the day
immediately preceding the date from which he becomes liable to pay tax under section 9.
Discussion & Conclusion: Therefore, in given case Reema Electronics shall be entitled from
04.02.2018 to avail credit available as on 03.02.2018.
As per Rule 40 of CGST Rules, 2017, the capital goods credit is to be claimed after reducing the tax
paid as on such capital goods by 5% point per quarter of a year or part thereof from the date of
invoice.
Particulars Input tax Eligible
{GST+SGST} credit
Inputs lying in stock as on date (Invoice dated 14.01.2018) 12,800 12,800
Inputs lying in semi – finished goods in stock as on date 11,200 11,200
(Invoice dated 24.11.2017)
Total Input tax credit available 24,000 24,000

Input tax credit available to Reema Electronics in respect of capital goods:
Particulars Amount
Date of invoice of Capital Goods 22.10.2017
Date from which Reema Electronics are liable to pay tax under section9 04.02.2018
No of quarters from date invoice 2
CGST and SGST paid on capital goods procured on 21.10.2017 24,000
ITC to be reduced by Rs. 24000*5%*2 quarters 2,400
Credit (CGST and SGST) as available on capital goods 21,600
32. Aman Pvt. Ltd a registered person supplying taxable goods in Jaipur has opted to pay tax on
composition scheme under section 10 with effect from 01.12.2018. It provides the following information
relating to balance of input tax credit lying as on 31.11.2018:
1. Inputs lying in stock as such valued at Rs. 76,000 (includes CGST & SGST @ 18%)
2. Input tax on capital goods purchased on 01.05.2018 is Rs. 88,000
3. Balance in Electronic credit ledger is Rs. 1,55,000
Determine whether VRL Pvt. Ltd is eligible for input tax credit lying on 01.12.2018.
Ans: Legal Provision: As per section 18(4), where any registered person who has availed of input tax
credit opts to pay tax under section 10 or, where the goods or services or both supplied by him
become wholly exempt, he shall pay an amount, by way of debit in the electronic credit ledger or
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 and on capital goods, reduced by
such percentage points as may be prescribed, on the day immediately preceding the date of exercising
of such option or, as the case may be, the date of such exemption:
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his
electronic credit ledger shall lapse.
Payments Amount (₹)
Inputs lying in stock (76,000*18/118) 11593
Input tax on capital goods used for 11 months, taking 77,733
residual life as 5 years (88,000*53/60) i.e. 53 months
being remaining residual life of capital good)
Amount to be paid by VRL Pvt. Ltd (CGST + SGST) 89326
Working Note:- As per Rule 44(3) of CGST Rules, where the tax invoices related to inputs lying in
stock are not available, the registered person shall estimate the amount under Rule 44(1) based on
the prevailing market price of goods on the date of opting for composition scheme.
The aforesaid amount can be paid by utilizing the balance in Electronic credit ledger. The balance in
Electronic credit ledger = 155000 – 89326 = Rs. 65674 shall lapse.

33. XYZ Pvt. Ltd. is a registered manufacturer of auto parts in Kolkata, West Bengal. The company has
a manufacturing facility registered under Factories Act, 1948 in Kolkata. It procures its inputs
indigenously from both registered and unregistered suppliers located within as well as outside West
Bengal as also imports some raw material from China.
The company reports the following details for the month of November, 20XX:
Payments Rs.(in Lakhs) Receipts Rs.(in Lakhs)

Ram material 3.5 Sales 15
Consumables 1.25
Transportation charges for bringing the raw 0.70
Material to factory
Salary paid to employees on rolls 5.0
Premium paid on life insurance policies 1.60
taken for specified employees
Audit fee 0.50
Telephone expenses 0.30
Bank charges 0.10
All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the applicable
taxes have also been paid by the company.
Further, following additional details are furnished by the company in respect of the payments and
receipts reported by it:
1. Raw material amounting to ₹ 0.80 lakh is procured from Bihar and ₹ 1.5 lakh is imported
from China. Basic customs duty of 0.15 lakh, education cesses of 0.0045 lakh and integrated
tax of ₹ 0.2978 lakh are paid on the imported raw material. Remaining raw material is procured
from supplier located in West Bengal.
Out of such raw material, raw material worth ₹ 0.30 lakh is procured from unregistered
suppliers; the remaining raw material is procured from registered suppliers.
Further, raw material worth ₹ 0.05 lakh purchased from registered supplier located in West
Bengal has been destroyed due to seepage problem in the factory and thus, could not be used
in the manufacturing process.
2. Consumables are procured from registered supplier located in Kolkata and include diesel worth
₹ 0.25 lakh for running the generator in the factory.
3. Transportation charges comprise of ₹ 0060 lakh paid to Goods Transport Agency (GTA) in
Kolkata and ₹ 0.10 lakh paid to horse pulled carts. GST applicable on the services of GTA is
5%.
4. Life insurance policies for specified employees have been taken by the company to fulfill a
statutory obligation in this regard. The Government has notified such life insurance service

under section 17(5) (b) (iii) (A). The life insurance service provider is registered in West
Bengal.
5. Audit fee is paid to M/s Goyal & Co., a firm of chartered Accountants registered in West
Bengal, for the statutory audit of the preceding financial year.
6. Telephone expenses pertain to bills for landline phone installed at the factory and mobile
phones given to employees for official use. The telecom service provider is registered West
Bengal.
7. Bank charges are towards company’s current account maintained with a Private Sector Bank
registered in West Bengal.
8. The breakup of sales is as under:
Sales in West Bengal - ₹ 7 lakh
Sales in States other than West Bengal - ₹ 3 lakh
Export under bond - ₹ 5 lakh
The balance of input tax credit with the company as on 1.11.20XX is:
CGST - ₹ 0.15 lakh
SGST - ₹ 0.08 lakh
IGST - ₹ 0.10 lakh
Compute eligible input tax credit and net GST payable [CGST, SGST or IGST, as the case may
be] by XYZ Pvt. Ltd. for the month of November 20XX.
Note :-
1. CGST, SGST & IGST rates to be 9%, 9% and 18% respectively, wherever applicable.
2. The necessary conditions for availing input tax credit have been complied with by XYZ Pvt.
Ltd., wherever applicable. You are required to make suitable assumption, wherever necessary.
Ans: Computation of Net GST Liability to be paid

W.N. 1: Computation of input tax credit available with XYZ Pvt. Ltd. in the month of November
20XX
SI. No Particulars Eligible input tax credit
CGSTRs. SGST Rs. IGST Rs. TotalRs.
1. Raw material
Raw material purchased from Bihar [refer Note 14,400 14,400
1(i)]
Raw material imported from China [refer Note 29,781 29,781
1(ii)]
Raw material purchased from unregistered Nil Nil Nil
suppliers within West Bengal [refer Note 1(iii)]
Raw material Destroyed due to seepage Nil Nil Nil

[refer Note 1(iii)]
Remaining raw material purchased from West 7,650 7,650 15,300

Bengal [Refer Note 1(i)]
Total 7,650 7,650 44,181 59,481
2. Consumables [Refer Note 2] 9,000 9,000 18,000
3. Transported charges for bringing the raw 1,500 1,500 3,000
material to factory [refer Note 3]
4. Salary paid to employees on rolls [Refer Note Nil Nil Nil Nil
4]
5. Premium paid on life insurance policies taken 14,400 14,400 28,800
for specified employees [Refer Note 5]
6. Audit Fee [refer Note 6] 4,500 4,500 9,000
7. Telephone expenses [Refer Note * 6] 2,700 2,700 5,400
8. Bank charges [Refer Note 6] 900 900 1,800
40,650 40,650 44,181 1,25,481
Computation of net GST payable
Particulars CGST Rs. SGST Rs. IGST Rs. Total

Rs.
On Intra – State sales in West Bengal 63,000 63,000 1,26,000
On inter – state other than West Bengal 54,000 54,000
On exports under bond [Note 7] Nil Nil Nil Nil
On inward supply of GTA services under reverse 1,500 1,500 3,000
charge [Note 3]
Total output tax liability 64,500 65,500 54,000 1,83,000
Less: Cash paid towards tax payable under reverse 1,500 1,500 3,000
charge [Note 10]
Less: input tax credit [Note 8]
Opening balance of input tax credit on 01.11.20XX (15,000) (8,000) (10,000) (33,000)
Input tax credit availing during the month (44,181)
Balance IGST 181 (IGST)
Input tax credit availing during the month (40,650) (40,650) (1,25,481)
Net GST payable 7,169 14,350 Nil 21,519

Notes:
1. (i) Credit of input tax (CGST & SGST / IGST) Paid on raw materials used in the course or
furtherance of business is available in terms of section 16(1) of the CGST Act.
(ii) IGST paid on imported goods qualifies as input tax in terms of section 2(62) (a) of the CGST
Act. Therefore, credit of IGST paid on imported raw materials used in the course or furtherance
of business is available in terms of section 16(1) of the CGST Act.
(iii) Input tax credit is not available on destroyed inputs in terms of section 17(5) (h) of the
CGST Act.
2. Consumables, being inputs used in the course or furtherance of business, input tax credit is
available on the same in terms of section 16(1) of the CGST Act. However, levy of CGST on
diesel has been deferred till such date as may be notified by the Government on
recommendations of the GST council [section 9(2) of the CGST Act]. Hence, there being no
levy of GST on diesel, there cannot be any input tax credit of the same.
3. In respect of intra – state road transportation of goods undertaken by a GTA, who has not
paid GST @ 6%, for any person registered under the GST law, CGST is payable under reverse
charge by the recipient of service. The person who pays or is liable to pay freight for the
transportation of goods is treated as the person who receives the service [Notification No.
13/2017 CT (R) dated 28.06.2018]. Thus, V – Supply Pvt. Ltd will pay GST under reverse
charge on transportation service received form GTA.
Further, tax payable under section 9(3) of the CGST/SGST Act qualifies as input tax in terms
of clauses (b) and (d) of section 2(62) of the CGST Act. Thus, input tax paid under reverse
charge on GTA service will be available as input tax credit in terms of section 16(1) of the
CGST Act as the said service is used in course or furtherance of business.
Furthermore, Intra – State services by way of transportation of goods by road except the
services of a GTA and a courier agency are exempt from CGST vide Notification No. 12/2017
CT (R)dated 28.06.2017. Therefore, since no GST is paid on such services, there cannot be
any input tax credit on such services.
4. Services by employees to employer in the course of or in relation to his employment is not a
supply in terms of section 7 read with para 1 of Schedule 111 to the GST Act. Therefore, since
no GST is paid on horse pulled cart services, there cannot be any input tax credit on such
services.
5. Input tax credit on supply of life insurance service in not blocked if the Government has made
it obligatory for an employer to provide such service to its employees [section 17(5) (b) of
the CGST Act]. Therefore, GST paid on premium for life insurance policies will be available as
input tax credit in terms of section 16(1) of the CGST Act as the said service is used in the
course of furtherance of business.
6. Audit fee, telephone expenses and bank charges are all services used in the course or
furtherance of business and thus, credit of input tax paid on such service will be available in
terms of section 16(1) of the CGST Act.

7. Export of goods is a zero rated supply in terms of section 16(1) (a) of the IGST Act. A zero
rated supply under bond is made without payment of integrated tax [section 16(3) (a) of the
IGST Act].
8. Since export of goods is a zero rated supply, there will be no apportionment of input tax credit
and full credit will be available [section 16 of the IGST Act read with section 17(2) of the
CGST Act].
9. As per section 49(5) of the CGST Act, input tax credit of –
a. IGST is utilized towards payment of first for IGST,and then for CGST and SGST in any order.
b. CGST is utilized towards payment of CGST and IGST in that order.
c. SGST is utilized towards payment of SGST and IGST in that order.
10. Section 49(4) of the CGST Act lays down that 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 in terms of section 2(82) of the CGST Act. Therefore, tax payable
under reverse charge cannot be set off against the input tax credit and thus, will have to be
paid in cash.
11. CGST and SGST are Chargeable on intra – state inward and outward supplies and IGST is
chargeable on inter – state inward and outward supplies.
34. XYZ Ltd is a manufacturer of washing machine. It has made various civil constructions in a factory.
Following purchases are made for construction during the month of July 2017.
Inward Supply GST Paid (In Rs.)

Cement & steel purchased for factory building 80000
Cement & bricks are purchased for construction of storage tank 50000
Cement & steel purchased to build support structure of machinery 40000
Can XYZ ltd take input tax credit of above purchases against GST payable on outward supply of
washing machine?
Ans: Legal Provision:- As per section 2(59) of CGST act 2017, “input” means any goods other than
capital goods used or intended to be used by a supplier in the course or furtherance of business.
As per section 17(5) (d), input tax credit not available in respect of 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.
The expression “plant and machinery” means apparatus, equipment, and machinery fixed to each 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-

1. Land, building or any other civil structure;
2. Telecommunication towers; and
3. Pipelines laid outside the factory premises.
Discussion:- In the given case XYZ ltd is a manufacturer of washing machine, as supply of washing
machine is his business on which GST is charged. Any inputs used in process of manufacture of
washing machine shall be eligible for inputs tax credit.
As per the meaning assigned to “plant & machinery” in the case mentioned above inputs used to
build support structure for machinery qualifies for the expression.
Conclusion:- On basis of above analysis, hence to conclude
Inputs used for Eligible or Not
Construction of factory building No
Construction of storage tank No
Build support structure of
machinery Yes
35. ‘All-in-One Store’ is a chain of departmental store having presence in almost all metro cities
across India. Both exempted as well as taxable goods are sold in such Stores. The Stores operate
in rented properties. All-in-One Stores pay GST under regular scheme.
In Mumbai, the Store operates in a rented complex, a part of which is used by the owner of the
Store for personal residential purpose.
All-in-One Store, Mumbai furnishes following details for the month of October, 20XX:
(i) Aggregate value of various items sold in the Store:
Taxable items – Rs. 42,00,000
Items exempted vide a notification – ₹ Rs. 12,00,000
Items not leviable to GST – ₹ Rs. 3,00,000
(ii) Mumbai Store transfers to another All-in-One Store located in Goa certain taxable items for
the purpose of distributing the same as free samples. The value declared in the invoice for
such items is Rs. 5,00,000. Such items are sold in the Mumbai Store at Rs. 8,00,000.
(iii) Aggregate value of various items procured for being sold in the Store:
Taxable items – Rs. 55,00,000
Items exempted vide a notification – Rs. 15,00,000
Items not leviable to GST – ₹Rs. 5,00,000
(iv) Freight paid to goods transport agency (GTA) for inward transportation of taxable items –
Rs. 1,00,000
(v) Freight paid to GTA for inward transportation of exempted items – Rs. 80,000
(vi) Freight paid to GTA for inward transportation of non-taxable items – Rs. 20,000
(vii) Monthly rent payable for the complex – Rs. 5,50,000 (one third of total space available
is used for personal residential purpose).

(viii) Activity of packing the items and putting the label of the Store along with the sale price
has been outsourced. Amount paid for packing of all the items – Rs. 2,50,000
(ix) Salary paid to the regular staff at the Store – Rs. 2,00,000
(x) GST paid on inputs used for personal purpose – Rs. 5,000
(xi) GST paid on renting of motor vehicle availed for business purpose – Rs. 4,000.
(xii) GST paid on items given as free samples – Rs. 4,000
Given the above available facts, you are required to compute the following:
A. Input tax credit (ITC) credited to the Electronic Credit Ledger
B. Common Credit
C. ITC attributable towards exempt supplies out of common credit
D. Eligible ITC out of common credit
E. Net GST liability for the month of October, 20XX Note:
(1) Wherever applicable, GST under reverse charge is payable @ 5% by All-in-One Stores. Rate
of GST in all other cases is 18%.
(2) All the sales and purchases made by the Store are within Maharashtra. All the purchases
are made from registered suppliers. All the other expenses incurred are also within the State.
(3) Wherever applicable, the amounts given are exclusive of taxes.
(4) All the necessary conditions for availing the ITC have been complied with.
Ans:
A. Computation of ITC credited to Electronic Credit Ledger
As per rule 42 of the CGST Rules, 2017, the ITC in respect of inputs or input services being
partly used for the purposes of business and partly for other purposes, or partly used for effecting
taxable supplies and partly for effecting exempt supplies, shall be attributed to the purposes of
business or for effecting taxable supplies.
ITC credited to the electronic credit ledger of registered person [‘C1’] is calculated as under-
C1 = T - (T1+T2+T3)
T = Total input tax involved on inputs and input services in a tax
period.
T1 = Input tax attributable to inputs and input services intended to
be used exclusively for non-business purposes
T2 = Input tax attributable to inputs and input services intended to
be used exclusively for effecting exempt supplies
T3 = Input tax in respect of inputs and input services on which credit
is blocked under section 17(5) of the CGST Act, 2017
Computation of total input tax involved [T]

Particulars Amount
GST paid on taxable items [₹ 55,00,000 x 18%] 990000
Items exempted vide a notification [Since exempted, no GST] 0
Items not leviable to tax [Since non-taxable, no GST ] 0
GST paid under reverse charge on freight paid to GTA for inward
transportation of taxable items - [₹ 1,00,000 x 5%] 5000
transportation of exempted items - [₹ 80,000 x 5%] 4000
transportation of non-taxable items - [₹ 20,000 x 5%] 1000
GST paid on monthly rent - [₹ 5,50,000 x 18%] 99000
GST paid on packing charges [₹ 2,50,000 x 18%] 45000

Salary paid to staff at the Store [Services by an employee to the
employer in the course of or in relation to his employment is not a
supply in terms of para 1 of the Schedule III to CGST Act, 2017 and
hence, no GST is payable thereon]. 0
GST paid on inputs used for personal purpose 5000
GST paid on rent a cab services availed for business purpose 4000
GST paid on items given as free samples 4000
Total input tax involved in a tax period (October, 20XX) [T] 1157000
Computation of T1, T2, T3

Particulars Amount
GST paid on monthly rent attributable to personal purposes [1/3 of Rs.
33000
99,000]
GST paid on inputs used for personal purpose 5000
Input tax exclusively attributable to non-business purposes [T1] 38000
transportation of exempted items. [As per section 2(47) of the CGST
Act, 2017, exempt supply means, inter alia, supply which may be wholly
4000
exempt from tax by way of a notification issued under section 11. Hence,
input service of inward transportation of exempt items is exclusively used
for effecting exempt supplies.]

transportation of non-taxable items. [Exempt supply includes non-taxable
supply in terms of section 2(47) of the CGST Act, 2017. Hence, input 1000
service of inward transportation of non-taxable items is exclusively used
for effecting exempt supplies.]
Input tax exclusively attributable to exempt supplies [T2] 5000
GST paid on renting of motor vehicle services availed for business
purpose
4000
[ITC on renting is blocked under section 17(5)(b) of the CGST Act, 2017
as the same is not used by All-in-One Store for the purpose specified]
GST paid on items given as free samples [ITC on goods inter alia,
disposed of by way of free samples is blocked under section 17(5)(h) 4000
of the CGST Act, 2017].
Input tax for which credit is blocked under section 17(5) of the CGST
8000
Act, 2017 [T3] **
**Since GST paid on inputs used for personal purposes has been considered while computing T1, the
same has not been considered again in computing T3.
ITC credited to the electronic credit ledger
C1 = T - (T1+T2+T3)
= Rs. 1157000 – (Rs. 38,000 + Rs. 5,000 + Rs. 8,000)
= Rs. 1106000
B. Computation of Common Credit
C2 = C1 - T 4
Where, C2 = Common Credit
T4 = Input tax credit attributable to inputs and input services intended to be used exclusively for
effecting taxable supplies
Computation of T4,
Particulars Amount
GST paid on taxable items 990000
GST paid under reverse charge on freight paid
to GTA for inward transportation of taxable 5000
items
Input tax exclusively attributable to taxable
995000
supplies [T4]
Common Credit C2 = C1 - T4
= Rs. 1106000 – Rs. 995000
= Rs. 111000

C. Computation of ITC attributable towards exempt supplies out of common credit
ITC attributable towards exempt supplies is denoted as ‘D1’ and calculated as -
D1 = (E ÷ F) x C2
where,
‘E’ is the aggregate value of exempt supplies during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax period Aggregate value
of exempt supplies during October, 20XX
= Rs. 1500000 (Rs. 1200000 + Rs. 300000)
Total turnover in the State during the tax period
= Rs. 65,00,000 (Rs. 42,00,000 + Rs. 12,00,000 + Rs. 3,00,000 + Rs. 8,00,000)
Note: Transfer of items to Store located in Goa is inter-State supply in terms of section 7 of the
IGST Act, 2017 and hence includible in the total turnover. Such supply is to be valued as per rule
28 of the CGST Rules, 2017. However, the value declared in the invoice cannot be adopted as the
value since the recipient Store at Goa is not entitled for full credit. Therefore, open market value
of such goods, which is the value of such goods sold in Mumbai Store, is taken as the value
of items transferred to Goa Store.
D1 = (1500000 ÷ 6500000) x 111000
= Rs. 25,615 (rounded off)
D. Computation of Eligible ITC out of common credit
Eligible ITC attributed for effecting taxable supplies is denoted as ‘C3’, where, - C3 = C2 - D1
= ₹ 1,11,000 - ₹ 25,615
= Rs. 85,385
E. Computation of Net GST liability for the month of October, 20XX

Particulars Amount
GST liability under forward charge
Taxable items sold in the store [₹ 42,00,000 x 18%] 756000
Taxable items transferred to Goa Store [₹ 8,00,000 x 18%] 144000
Ineligible ITC [ITC out of common credit, attributable to exempt supplies] 25615
Total output tax liability under forward charge 925615
Less: ITC credited to the electronic ledger -1106000
ITC carried forward to the next month -180385
Net GST payable [A] Nil
GST liability under reverse charge
Freight paid to GTA for inward transportation of taxable items- [₹ 1,00,000 x 5%] 5000
Freight paid to GTA for inward transportation of exempted items-[₹ 80,000 x5%] 4000
Freight paid to GTA for inward transportation of non-taxable items-[₹ 20,000 x 5%] 1000
Total output tax liability under reverse charge [B] 10000

Net GST liability [A] + [B]
As per section 49(4) of the CGST Act, 2017 amount available in the electronic credit
ledger may be used for making payment towards output tax. However, tax payable
10000
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.
Q 1. Input tax credit is available only when the purchase made is used in
A. The course or furtherance of business
B. Other than business expenses
C. Both (a) and (b)
D. Depends upon criteria
Ans: A: The course or furtherance of business
Q 1. Input tax Credit is available on all supplies which are used or intended to be used in the
course or furtherance of business. Input tax credit will be available under which of the
following situations?
A. GST paid on motor vehicle used in the course and furtherance of business.
B. GST paid on club membership fees.
C. GST paid on goods or services or both used for personnel consumption.
D. IGST @18% paid on inputs purchased from a vendor in Bangalore where the supplier is
registered in Rajasthan.
Ans: D: IGST @18% paid on inputs purchased from a vendor in Bangalore where the supplier
is registered in Rajasthan.
Q 2. In case supplier has deposited the taxes but the receiver has not received the documents, is receiver
entitled to avail credit?
A. Yes, it will be auto populated in recipient monthly returns
B. No as one of the conditions of 16(2) is not fulfilled
C. Yes, if the receiver can prove later that documents are received subsequently
Ans: B: No as one of the conditions of 16(2) is not fulfilled

Q 3. Whether depreciation on tax component of capital goods and Plant and Machinery and input tax credit
is Permissible?
A. Yes
B. May be
C. Input tax credit is eligible if depreciation on tax component is not availed
Ans: C: Input tax credit is eligible if depreciation on tax component is not availed
Q 4. Can Banking Company or Financial Institution withdraw the option of availing actual credit or
50% credit anytime in the financial year?
A. Yes
B. No
C. Yes, with permission of Authorized officer
Ans: B: No
Q 5. Where a supplier of goods or services pays tax under sections 74,129 and 130 (fraud, willful
misstatement etc.), then receiver of goods can avail its credit:
A. Yes
B. No
C. Yes, with permission of Authorized officer
D. Yes, after receipt of invoice for goods or services
Ans: B: No
Q 6. In case of Voluntary registration input tax credit can be availed

A. On stocks held on the day immediately preceding the date from which he becomes liable to pay tax
under the provisions of this Act
B. On stocks held on the day immediately preceding the date of grant of registration under the provisions
of this Act.
C. On stocks held on the day immediately preceding the date of application of registration under
the provisions of this Act.

Ans: B: On stocks held on the day immediately preceding the date of grant of registration under the
provisions of this Act.
Q 7. In case of ISD whether distributor and recipient should have same PAN
A. Yes
B. No
C. Yes, if in same state and different in other state
Ans: A: Yes
Q 8. Can the credit distributed by an ISD exceed the amount available for distribution?
A. Yes
B. No
C. May Be
Ans: B: No
Q 9. Whether credit on capital goods can be taken immediately on receipt of the goods?
A. Yes, If the amount of ITC is up to Rs. 50000
B. Credit is available in 36 Instalments
C. Yes, Full credit is available
D. Credit is available at the time when asset is capitalised in books of accounts
Ans: C: Yes, Full credit is available
Q 10. The tax paying documents in section 16(2) is:

A. Bill of entry, Invoice raised on RCM supplies
B. Challan issued under Rule 55
C. GST Returns for relevant period
D. Any of the above
Ans: A: Bill of entry, Invoice raised on RCM supplies

Q 11. The time limit to pay the value of supply with taxes to the supplier to avail the input tax
credit is
A. 90 Days
B. 30 Days
C. 6 Months
D. 180 Days
Ans: d: 180 Days
Q 12. In case of supply of plant & machinery on which ITC is taken, tax to be paid on is
A. Amount equal to ITC availed less 5% for every quarter or part thereof
B. Tax on transaction value
C. Higher of above two
D. Lower of above two
Ans: C: Higher of above two
Q 13. As per Section 17(5), ITC of works contract services is available if the recipient is availing
such services for further supply of same kind of services
A. Correct
B. In Correct
C. Partly Correct
D. None of above
Ans: A: Correct
Q 14. As per Section 17(5), in respect of Goods / services used for personal consumption then
ITC cannot be availed:
A. Yes
B. No
C. Depends on supplier
D. None of above
Ans: A: Yes

Q 15. As per Section 17(5), ITC on purchase of motor vehicle can be claimed by –
A. further supply of such vehicles or conveyances
B. transportation of passengers
C. imparting training on driving, flying, navigating such vehicles or conveyances
D. All of the above
Q 16. Maximum time limit for availing ITC is

A. The date of filing of annual return
B. Due date of filing return u/s 39 for the month of September
C. Earliest of above two
D. Later of above two.
Ans: C: Earliest of above two
Q 17. ITC can be availed on

A. Possession of prescribed invoice/ debit note
B. Receipt of goods/services
C. Tax on such supply has been paid to government and return being furnished by the supplier
D. Fulfilling all the above conditions
Ans: D: Fulfilling all the above conditions
Q 18. The input tax credit on purchase invoice dated 2nd May 2017 was omitted to be taken.
The accountant realized this mistake on 1st November 2018. Can he now claim the
credit?
A. Yes, Since Annual return is not filed
B. No, Since 20th October’18 is elapsed
C. Yes credit can be taken without limit
Ans: B: No, Since 20th October’18 is elapsed

Q 19. Mr. A, a registered person omitted to take the ITC of the August 2017 month. He has
filed his GST annual return on 30th June, 2018. By when he could have availed the ITC?
A. 30th June, 2018
B. 31st July, 2018
C. 31st December, 2018
D. 20th October, 2018
Ans: A: 30th June, 2018
Q 20. In case of goods received in lots, ITC is availed at the time of :

A. At the time of receipt of 1st Instalment
B. After the receipt of last instalment
C. After 50% goods is received
Ans: B: After the receipt of last instalment
Q 21. Mr. Rohit, a practicing Chartered Accountant purchased 3 laptops each having tax elements
of Rs.40,000 in his firm name two laptops he utilized in his office whereas one laptop he
gifted to his Friend. What is the amount of ineligible ITC?
A. Rs. 20000
B. Rs. 40000
C. Rs. 80000
Ans: B: Rs. 40000
Q 22. Mr. Kapil, an Trader located in Pune, imports some goods from China. Whether he will get
the credit of IGST levied on import of goods ?
A. Yes
B. No
C. Yes, if amount of IGST is more than Rs. 50000
Ans: A: Yes

Q 23. Haldirams Pvt Ltd. Is engaged in Making supply of packed food items. On the occasion of
Diwali co distributed some of the packets to its employees as a gift. State whether ITC on
the same will be allowed or Not ?
A. No, Since the same is ineligible credit as per Section 17(5)
B. Yes, Since the same is eligible credit as per ITC Rules
C. Yes, if the amount of ITC is More than Rs. 5000
Ans: B: No, Since the same is ineligible credit as per Section 17(5)
Q 24. 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. Determine the
amount of input tax credit available with the help of the following information regarding
expenses incurred by it during the course of its business operations:
Particulars GST paid
Cars purchased from the manufacturer for making further supply 20,00,000
of such cars.
[Two of such cars are destroyed in accidents while being used for
test drive by potential customers. GST paid on their
purchase is ₹ 1,00,000]
Works contract services availed for constructing a car shed in its 50,000
premises.
A. Rs. 1900000
B. Rs. 2110000
C. Rs. 1950000
D. Rs. 2050000
Ans: A: 1900000
Q 25. Kamlesh hires a works contractor for repairing his factory building on a lumpsum payment
of Rs. 11,80,000. He debits half of the expenditure in the profit and loss account and the
remaining half in the building account.
A. Rs. 90000
B. Rs. 106200
C. Rs. 212400

D. Nil
Ans: A: 90000
Q 26. In which of the following cases Input tax credit cannot be taken on:
I. A software professional providing technical consultancy buys a motorcycle for use
of his employee.
II. A motor driving school buys a car for being used in imparting motor driving
training.
III. A flying school imports an aircraft for use in its training activity.
IV. A manufacturer buys a small truck for the purpose of transporting its inputs and
finished goods.
A. (iii)
B. (i), (ii), (iii), (iv)
C. (i)
D. (i), (iii)
Ans: C: (i)
Q 27. Mr. X becomes liable to pay tax on 1st August, 2018 and has obtained registration on 15th
August, 2018. Such person is eligible for input tax credit on inputs held in stock as on:
A. 1st August, 2018
B. 31st July, 2018
C. 15th August, 2018
D. He cannot take credit for the past period
Ans: B: 31st July, 2018
Q 28. Eligibility of credit on capital goods in case of change of scheme from Composition scheme
to Regular scheme
A. Eligible during application for Regular scheme
B. Not eligible
C. Yes, immediately before the date from which he becomes liable to pay tax under the Regular
scheme

Ans: C: Yes, immediately before the date from which he becomes liable to pay tax under
the Regular scheme
Q 29. A person is entitled to take credit of input tax as self-assessed in the return and credited to
Electronic credit ledger on
A. Final basis
B. Provisional basis
C. Partly Provisional and partly final basis
Ans: B: Provisional Basis
1. Mr. Rahul Roy, proprietor of M/s. Royal Shoe & Company is running a business of
manufacturing shoes with the brand name of ‘JUNOON’. The manufacturing unit is located in
Delhi and registered under GST. However, due to low profitability in the business, he has decided
to transfer his business to his friend Mr. Dilip Tijori. Mr. Dilip Tijori is already running the business
of manufacturing shoes under a proprietorship firm named M/s Hawai Shoes & Company which is
located in Mumbai and registered under GST.
Mr. Rahul Roy has approached you to help him with the issue of transfer of unutilized input
tax credit in electronic credit ledger of M/s. Royal Shoe & Company to M/s Hawai Shoes & Company.
Advise Mr. Rahul Roy with the correct option in accordance with the provisions of the CGST Act,
2017:
a) M/s. Royal Shoe & Company cannot transfer unutilised input tax credit in its electronic
credit ledger to M/s Hawai Shoes & Company, as the proprietors are different.
b) M/s. Royal Shoe & Company can transfer unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company and it can further be utilized in setting off GST
liability for succeeding period.
c) M/s. Royal Shoe & Company can transfer unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company and it can be further utilized in setting off GST
liability for a period upto the month of September following the year in which ITC was
transferred.
d) M/s. Royal Shoe & Company cannot transfer unutilized input tax credit in its electronic
credit ledger to M/s Hawai Shoes & Company but can claim refund of such unutilized input
tax credit.

Ans: M/s. Royal Shoe & Company can transfer unutilized input tax credit in its electronic credit ledger
to M/s Hawai Shoes & Company and it can further be utilized in setting off GST liability for
succeeding period.
Q2. With reference to the provisions of section 17 of the CGST Act, 2017, examine the availability of
input tax credit under the CGST Act, 2017 in the following independent cases:-
(i) MBF Ltd., an automobile company, has availed works contract service for construction of a
foundation on which a machinery (to be used in the production process) is to be mounted
permanently.
(ii) Shah & Constructions procured cement, paint, iron rods and services of architects and
interior designers for construction of a commercial complex for one of its clients.
(iii) ABC Ltd. availed maintenance & repair services from “Jaggi Motors” for a truck
used for transporting its finished goods.
Ans: (I) Section 17(5)(c) of the CGST Act, 2017 blocks input tax credit 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.
Further, the term “plant and machinery” means apparatus, equipment and machinery fixed
to earth by foundation or structural support that are used for making outward supply of goods
and/or services and includes such foundation or structural support but excludes land, building
or other civil structures, telecommunication towers, and pipelines laid outside the factory
premises.
Thus, in view of the above-mentioned provisions, ITC is available in respect of works
contract service availed by MBF Ltd.as the same is used for construction of plant and
machinery which is not blocked under section 17(5)(c) of the CGST Act, 2017.
(II) Section 17(5)(d) of the CGST Act, 2017 blocks ITC on goods and/or services received by a
taxable person for construction of an immovable property (other than plant and machinery) on
his own account even though such goods and/or services are used in the course or furtherance
of business. Thus, ITC on goods and/or services used in the construction of an immovable
property is blocked only in those cases where the taxable person constructs the immovable
property for his own use even if the immovable property being constructed is used in the
course or furtherance of his business.
In the given case, taxable person has used the goods and services for construction of
immovable property for some other person and not on its own account. Hence, ITC in this
case will be allowed.
(III)As per section 17(5) of the CGST Act, 2017, ITC is allowed on repair and maintenance services
relating to motor vehicles, which are eligible for input tax credit. Further, as per section
17(5)(a) ITC is allowed on motor vehicles which are used for transportation of goods.
Thus, ITC on maintenance & repair services availed from from “Jaggi Motors” for a
truck used for transporting its finished goods is allowed to ABC Ltd.

Q3. XYZ Pvt. Ltd. is a manufacturing company registered under GST in the State of Uttar Pradesh. It
manufactures two taxable products ‘Alpha’ and ‘Beta’ and one exempt product ‘Gama’. On 1st
October 20XX, while product ‘Beta’ got exempted through an exemption notification, exemption
available on ‘Gama’ got withdrawn on the same date. The turnover (exclusive of taxes) of ‘Alpha’,
‘Beta’ and ‘Gama’ in the month of October, 20XX was ₹ 9,00,000, ₹ 10,00,000 and ₹ 6,00,000.
XYZ Pvt. Ltd. has furnished the following details:
Particulars Price (₹) GST (₹)
(a) Machinery ‘U’ purchased on 01.10.20XX for being 2,00,000 36,000

used in manufacturing all the three products
(b) Machinery ‘V’ purchased on 01.10.20XX for being 1,00,000 18,000
used in manufacturing product ‘Alpha’ and ‘Gama’
(c) Machinery ‘W’ purchased on 01.10.20XX for being 3,00,000 54,000
exclusively used in manufacturing product ‘Beta’
(d) Machinery ‘X’ purchased on October 1, three years 5,00,000 90,000
before 01.10.20XX for being exclusively used in
manufacturing product ‘Gama’. From 01.10.20XX,
such machinery will also be used for manufacturing
product ‘Beta’.
(e) Machinery ‘Y’ purchased on October 1, four years 4,00,000 72,000
before 01.10.20XX for being exclusively used in
manufacturing product ‘Beta’. From 01.10.20XX,
such machinery will also be used for manufacturing
product ‘Gama’.
(f) Machinery ‘Z’ purchased on October 1, two years 3,00,000 54,000
before 01.10.20XX for being used in manufacturing
all the three products
(g) Raw Material used for manufacturing ‘Alpha’ 1,50,000 27,000
purchased on 05.10.20XX
(h) Raw Material used for manufacturing ‘Beta’ 2,00,000 36,000
(i) Raw Material used for manufacturing ‘Gama’ 1,00,000 18,000
Compute the following for the month of October, 20XX:

(i) Amount of input tax credit (ITC) credited to Electronic Credit Ledger
(ii) Amount of common credit
(iii) Common credit attributable to exempt supplies
(iv) GST liability of the company payable through Electronic Cash Ledger

Note: Assume that all the procurements made by the company are from States other than Uttar
Pradesh. Similarly, the company sells all its products in States other than Uttar Pradesh. Rate of
IGST is 18%. All the conditions necessary for availing the ITC have been complied with.
Ignore interest, if any and make suitable assumptions wherever required.
ANS:
S. No. Particulars ITC (₹)
(i) Computation of amount of ITC credited to Electronic Credit
Ledger, for the month of October, 20XX
(a) Machinery ‘U’ - ‘A’ [Note 1] 36,000
(b) Machinery ‘V’ [Note 2] 18,000
(c) Machinery ‘W’ [Note 3] -
(d) Machinery ‘X’ - [Note 4] 90,000
(e) Machinery ‘Y’ [Note 5] -
(f) Machinery ‘Z’ [Note 6] -
(g) Raw Material used for manufacturing ‘Alpha’ [Note 7] 27,000
(h) Raw Material used for manufacturing ‘Beta’ [Note 7] -
(i) Raw Material used for manufacturing ‘Gama’ [Note 7] 18,000
ITC credited to Electronic Credit Ledger, for the month of October, 1,89,000
20XX
(ii) Computation of common credit for the month of October, 20XX
(a) Value of ‘A’ for Machinery ‘U’ purchased on 01.10.20XX 36,000

(b) Value of ‘A’ for Machinery ‘X’ purchased 3 years before 01.10.20XX 90,000
and used for effecting both taxable and exempt supplies from
01.10.20XX
(c) Value of ‘A’ for Machinery ‘Y’ purchased 4 years before 01.10.20XX 72,000
and used for effecting both taxable and exempt supplies from
01.10.20XX
Total common credit for the month of October, 20XX – Tc[Note 198,000
8]
(iii) Computation of common credit attributable to exempt supplies,
for the month of October, 20XX
(a) ITC attributable to a month on common capital goods during their 3,300
useful life – Tm [Note 9]
(b) ITC at the beginning of October, 20XX on all common capital goods 4,200
whose useful life remains during the tax period - [Note 10]

(c) Common credit attributable to exempt supplies, for the month 1680
of October 20XX – Te
Turnover of exempt supplies during October 20XX
= Tr х
Total turnover of XYZ Pvt. Ltd. during October 20XX
10,00,000
= 4200 X
25,00,000
(iv) Computation of GST liability of the company for October 20XX
payable through Electronic Cash Ledger
IGST payable on ‘Alpha’ [₹ 9,00,000 x 18%] 1,62,000
IGST payable on ‘Beta’ [Exempt] Nil
IGST payable on ‘Gama’ [₹ 6,00,000 x 18%] 1,08,000
Total IGST payable on outward supply 2,70,000
Add : Ineligible credit of Machine X ( Note 4) 54,000
Common credit attributable to exempt supplies for the month of

October, 20XX [Note 12] 1680
Total output tax liability of October, 20XX 3,25,680
Less: ITC available in the Electronic Credit Ledger 1,89,000
IGST payable from Electronic Cash Ledger 1,36,680
Notes:
(1) ITC in respect of capital goods used commonly for effecting taxable supplies and exempt
supplies denoted as ‘A’ shall be credited to the electronic credit ledger [Rule 43(1)(c) of the
CGST Rules, 2017].
(2) ITC in respect of capital goods used or intended to be used exclusively for effecting supplies
other than exempted supplies but including zero rated supplies shall be credited to the electronic
credit ledger [Rule 43(1)(b) of the CGST Rules, 2017].
(3) ITC in respect of capital goods used or intended to be used exclusively for effecting exempt
supplies shall not be credited to electronic credit ledger [Rule 43(1)(a) of the CGST Rules,
2017].
(4) When capital goods which were initially used only for non-business purpose/exempt supplies
are subsequently used commonly for exempt supplies and/or non-business purposes as
well as taxable and/or zero rated supplies, input tax in respect of the same should be
denoted as ‘A’ and credited in the electronic credit ledger.
The ineligible credit attributable to the period during which such capital goods were used for non-
business purpose/making exempt supplies shall be computed @ 5% per quarter or part thereof and
be denoted as ‘Tie’. Such Tie shall be added to the output tax liability of the tax period in which
credit on such capital goods is claimed.

For Machinery ITC to be credited to electronic credit ledger is 90,000
Ineligible credit = 90,000 × 5% × 12 quarters = 54,000
(5) Machinery ‘Y’ is being used for effecting both taxable and exempt supplies from 01.10.20XX.
Prior to that it was exclusively used for effecting taxable supplies. Therefore, ITC in respect of
such machinery would have already been credited to the electronic credit ledger. When
capital goods which were initially used only for taxable and/or zero rated supplies are
subsequently used commonly for taxable and/or zero rated supplies as well as exempt supplies
and/or non-business purposes, input tax claimed in respect of the same shall be added to
the aggregate value of ‘Tc’.
(6) Machinery ‘Z’ is being used for effecting both taxable and exempt supplies from October 1,
two years prior to 01.10.20XX. Therefore, ITC in respect of such machinery would have already
been credited to the electronic credit ledger.
(7) ITC in respect of inputs used for effecting taxable supplies will be credited in Electronic
Credit Ledger. ITC in respect of inputs used for effecting exempt supplies will not be credited
in the electronic credit ledger [Rule 42 of CGST Rules, 2017].
(8) The aggregate of the amounts of ‘A’ credited to the electronic credit ledger, to be denoted as
‘Tc’, shall be the common credit in respect of capital goods for a tax period [Rule 43(1)(d)
of the CGST Rules, 2017].
(9) ITC attributable to a month on common capital goods during their useful life (Tm) shall be
computed in accordance with rule 43(1)(e) of CGST Rules, 2017as under:
= Tc ÷ 60
= ₹ 198,000 ÷ 60
= ₹ 3,300
(10) Useful life of capital goods used commonly for effecting taxable supplies and exempt supplies
shall be taken as five years from the date of the invoice for such goods [Rule 43(1)(c) of
the CGST Rules, 2017]. Machinery ‘Z’ is used commonly for effecting taxable and exempt
supplies from October 1, two years before 01.10.20XX. Hence, its useful life remains in the
month of October 20XX and therefore,
Tm for machinery ‘Z’ will be computed as under:
₹54,000 ÷ 60 = ₹ 900
Total Tm = Tm for machinery ‘Z’ + Tm for other machineries
900 + 3300 = 4,200
Imp Note : Clause (g) provides the formula for determining ‘Te’, i.e. amount of common credit
attributable to exempt supplies, as Te = (E/F) x Tr. The term ‘Tr’ which is used in the said
formula was defined in clause (f). Omission of clause (f) has thus, rendered the formula
given in clause (g) otiose as now the term (‘Tr’) which is used in the formula is nowhere
defined in the rule
Assumption : We assume Tr= Tm to calculate common credit attributable to exempt supplies.

(11) Common credit attributable to the exempt supplies (Te) along with the applicable interest
(which is to be ignored in this case) 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 [Rule 43(2)(h) of the CGST Rules, 2017].
Q4. Keeping all the facts and figures of Q.12 unchanged, compute the ITC credited to the Electronic
Credit Ledger of the B & D Company, when it exits composition scheme and becomes liable to pay
tax under regular scheme, in accordance with the provisions of section 18(1)(c) of the CGST Act,
2017.
Following additional information is also available:
Particulars relating to capital goods Date of purchase Value GST
owned by the firm (₹) (₹)
Computers 01.02.20XX 2,00,000 36,000
Printers January 1, two years prior 80,000 14,400
to 01.01.20XX
Motor cycle used by the staff for collecting 23.09.20XX 85,000 15,300
payments from the debtors
Furniture & fixtures 12.06.20XX 4,00,000 72,000

Air conditioner used in the office 15.10.20XX 2,00,000 36,000
Exhaust fan used in the godown 10.03.20XX 50,000 9,000
Note: The company has not claimed depreciation on the tax component of any of the capital goods
(mentioned above) under the Income-tax Act, 1961. All the conditions necessary for availing the ITC
have been complied with. Rate of CGST and SGST is 9% each.
ANS: As per section 18(1)(c) of the CGST Act, 2017 read with rule 40 of CGST Rules, 2017, where any
registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax
in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock
and on capital goods on the day immediately preceding the date from which he becomes liable to
pay tax under section 9. However, the credit on capital goods shall be reduced by 5% per quarter
of a year or part thereof from the date of invoice.
Further, ITC on supplies of inputs and capital goods shall not be available after the expiry of one
year from the date of issue of tax invoice [Section 18(2) of the CGST Act, 2017].
In the light of the above-mentioned provisions, the ITC credited to the Electronic Credit Ledger of
the B & D Company on inputs held in stock and capital goods on 02.10.20XX will be computed as
under:

A. ITC on inputs
Stock of taxable inputs as on 30.09.20XX 10,00,000
[Since no tax is paid on exempt purchases, there does not arise any question
of availing ITC on the same. Hence, stock of only taxable inputs are
considered]
Add: Purchases Nil
[No purchases are made in October, 20XX]
Less: Cost of taxable goods sold from 01.10.20XX to 02.10.20XX 1,40,000
[(₹ 1,00,000 + ₹ 31,250 + ₹ 43,750) x 80%]
Stock of taxable inputs as on 02.10.20XX 8,60,000
[Since the bill numbers are in continuation, it can be concluded that no
sales are missing from the extract]
Less: More than one year old stock 3,00,000
Stock of inputs on which ITC can be claimed 5,60,000
ITC of CGST @ 9% [Since all purchases are intra-State and from 50,400
ITC of SGST @ 9% the suppliers registered under regular scheme] 50,400
B. ITC on capital goods
Particulars CGST @ 9% SGST @ 9%
(₹) (₹)
Computers 14,400 14,400
[₹ 36,000 – (5% x 4 quarters)] ÷ 2
Printers[Being more than one year old, no ITC is - -
available]
Motor cycle - -
[Section 17(5)(a) of CGST Act, 2017 allows ITC on
motor vehicles only when the same are used:
(1) for making taxable supply of- (i) further supply
of such vehicles, (ii) transportation of passengers,
(iii) imparting training on driving, flying, navigating
such vehicles and
(2) for transportation of goods.
Since B & D Company is a trader and it does not
use the motor cycle for transportation of goods, ITC
thereon will not be available]
Furniture and Fixtures 30,600 30,600
[₹ 72,000 – (5% x 3 quarters)] ÷ 2

Air conditioner used in the office - -
[Since purchased after 03.10.20XX, full ITC will be
available and will be computed separately]
Exhaust fan used in the godown 3,600 3,600
[₹ 9,000 – (5% x 4 quarters)] ÷ 2
ITC to be claimed on capital goods 48,600 48,600
Total ITC on inputs and capital goods credited to 99,000 99,000
Electronic Credit Ledger on 02.10.20XX [50,400 +48,600] [50,400+48,60]
Q.6 X, a manufacturer of roofing sheets, has total input tax credit of ₹ 1,60,000 as on 30-06-2018. He
provides the following other information pertaining to June 2018:
(1) Input tax on raw materials in June is ₹ 40,000.
(2) Input tax on account of Harvest caterers in connection with his Housewarming is ₹ 10,000.
(3) Input tax on inputs contained in exempt supplies of ₹ 2 lakh in June is ₹ 20,000.
(4) GST paid on cosmetic and plastic surgery of CEO of the company is ₹ 30,000.
(5) Total turnover (interstate, taxable @ 18%) for the month of June 2018 is ₹ 60 lakh.
Compute the ITC available and his output tax liability for the month of June 2018.
ANS: (a) Computation of ITC available and output tax liability of X for June 2018
Particulars Amount
(₹)
Output tax liability for June 2018
GST on taxable turnover for June 2018 10,80,000
[Being inter-State supply, the same is leviable to IGST @ 18% = ₹
60,00,000 × 18%]
Add: Ineligible ITC [Refer working note below] 1,290
[ITC out of common credit, attributable to exempt supplies shall be added
to the output tax liability in terms of rule 42 of the CGST Rules, 2017]
Total output tax liability 10,81,290
Total ITC available as on 30.06.2018 1,60,000

Computation of ineligible ITC to be added to output tax liability
Particulars Amount
(₹)
Input tax on raw materials 40,000

[Being used in the course or furtherance of business, input tax on raw
materials is available as ITC and is credited to the Electronic Credit
Ledger – Section 16(1) of the CGST Act, 2017]
Input tax on catering for housewarming Nil

[ITC on outdoor catering is blocked in terms of section 17(5) of the CGST
Act, 2017 if the same is not used for making an outward supply of outdoor
catering or as an element of a taxable composite/mixed supply. Hence, the
same is not credited to the Electronic Credit Ledger – Rule 42 of the CGST
Rules, 2017]
Input tax on inputs contained in exempt supplies Nil

[Not available as ITC and thus, not credited to the Electronic Credit
Ledger in terms of rule 42 of the CGST Rules, 2017]
Input tax on cosmetic and plastic surgery of CEO of company Nil

[ITC on cosmetic and plastic surgery is blocked in terms of section 17(5)
of the CGST Act, 2017 if the same are not used for making the same
category of outward supply or as an element of a taxable composite/mixed
supply. Hence, the same is not credited to the Electronic Credit Ledger –
Rule 42 of the CGST Rules, 2017]
Total ITC credited to the Electronic Credit Ledger in terms of rule 42 40,000
Common credit [ITC credited to Electronic Credit Ledger (₹ 40,000) – 40,000

ITC attributable to inputs and input services intended to be used
exclusively for effecting taxable supplies (Nil) – Rule 42 of the CGST
Rues, 2017. It has been assumed that input tax on raw materials is
attributable to both taxable and exempt activity]
ITC attributable towards exempt supplies 1,290

[Common Credit x (Aggregate value of exempt supplies during the tax
period / Total turnover during the tax period) – Rule 42 of the CGST
Rules, 2017
= ₹ 40,000 × ₹ 2,00,000/ ₹ 62,00,000 - (rounded off)]
Note: The information provided in the question leaves scope for multiple assumptions. The answer given
above is based on one such assumption. Other assumptions can also be made to answer this
question. (MAY-19 QP NEW)

Q.7 Vansh Shoppe is a registered supplier of both taxable and exempted goods, registered under GST in
the State of Rajasthan. Vansh Shoppe has furnished the following details for the month of April,
2019;
₹
(1) Details of sales:
Sales of taxable goods 50,00,000
Sales of goods not leviable to GST 10,00,000
(2) Details of goods purchased for being sold in the shop:
Taxable goods 45,00,000
Goods not leviable to GST 4,00,000
(3) Details of expenses:
Monthly rent payable for the shop 3,50,000
Telephone expenses paid 50,000
(₹ 30,000 for land line phone installed at the shop and ₹ 20,000 for
mobile phone given to employees for official use)
Audit fees paid to a Chartered Accountant 60,000
(₹ 35,000 for filing of income tax return & the statutory audit
of preceding financial year and ₹ 25,000 for filing of GST return)
Premium paid on health insurance policies taken for specified employees 10,000
of the shop. The Government has not notified such health insurance
service under section 17(5)(b)(iii)(A) CGST Act, 2017
Freight paid to goods transport agency (GTA) for inward transportation 50,000
of non-taxable goods
Freight paid to goods transport agency (GTA) for inward transportation 1,50,000
of taxable goods
GST paid on goods given as free samples 5,000
All the above amounts are exclusive of all kind of taxes, wherever applicable.
All the purchases and sales made by Vansh Shoppe are within Rajasthan. All the purchases are
made from registered suppliers. All the other expenses incurred are also within Rajasthan.
Assume, wherever applicable, for purpose of reverse charge payable by Vansh Shoppe, the CGST, SGST
and IGST rates as 2.5%, 2.5% and 5% respectively. CGST, SGST and IGST rates to be 6%, 6% and
12% respectively in all other cases.
There is no opening balance in the electronic cash ledger or electronic credit ledger.
Assume that all the necessary conditions for availing the ITC have been complied with. Ignore
interest, if any.

You are required to compute the following:
(1) Input Tax Credit (ITC) credited to Electronic Credit Ledger
(2) Common credit
(3) ITC attributable towards exempt supplies out of common credit
(4) Net GST liability for the month of April, 2019
ANS: (1) Computation of ITC credited to Electronic Credit Ledger
ITC of input tax attributable to inputs and input services intended to be used for business purposes
is credited to the electronic credit ledger. Input tax attributable to inputs and input services intended
to be used exclusively for non-business purposes, for effecting exclusively exempt supplies and on
which credit is blocked under section 17(5) of the CGST Act, 2017 is not credited to electronic credit
ledger [Sections 16 and 17 of the CGST Act, 2017].
In the light of the aforementioned provisions, the ITC credited to electronic credit ledger of
Vansh Shoppe is calculated as under:
Particulars Amount CGST @ SGST @
2,70,000
(₹) 6% (₹) 6% (₹)
GST paid on taxable goods 45,00,000 2,70,000 2,70,000
Goods not leviable to GST [Since nontaxable, no 4,00,000 Nil Nil
GST is paid]
GST paid on monthly rent for shop 3,50,000 21,000 21,000
GST paid on telephone expenses 50,000 3,000 3,000
GST paid on audit fees 60,000 3,600 3,600
GST paid on premium of health insurance policies 10,000 Nil Nil
[ITC on life insurance service is blocked if the

Government has not notified such services under 5,000 Nil Nil
section 17(5)(b)(iii)(A) of the CGST Act].
GST paid on goods given as free samples
[ITC on goods disposed of by way of free samples
is blocked under section 17(5) of the CGST Act,
2017]
Particulars Amount CGST @ SGST @
(₹) 2.5% (₹) 2.5% (₹)
Freight paid to GTA for inward transportation of 50,000 Nil Nil
non-taxable goods under reverse charge

[Since definition of exempt supply under section
2(47) of the CGST Act, 2017 specifically includes 1,50,000 3,750 3,750
non-taxable supply, the input service of inward
transportation of non-taxable goods is being
exclusively used for effecting exempt supplies.]
Freight paid to GTA for inward transportation of
taxable goods under reverse charge
ITC credited to the electronic ledger 3,01,350 3,01,350
(2) Computation of common credit

Common Credit = ITC credited to Electronic Credit Ledger – ITC attributable to inputs and input
services intended to be used exclusively for effecting taxable supplies [Section 17 of the CGST Act,
2017 read with rule 42 of the CGST Rules, 2017].
(₹) (₹)
ITC credited to Electronic Credit Ledger 3,01,350 3,01,350
Less: ITC on taxable goods 2,70,000 2,70,000
Less: ITC on freight paid to GTA for inward 3,750 3,750
transportation of taxable goods
Common credit 27,600 27,600
(3) Computation of ITC attributable towards exempt supplies out of common credit
ITC attributable towards exempt supplies = Common credit x (Aggregate value of exempt supplies
during the tax period / Total turnover during the tax period) [Section 17 of the CGST Act, 2017 read
with rule 42 of the CGST Rules, 2017].
Particulars CGST (₹) SGST (₹)
ITC attributable towards exempt supplies 4,600 4,600

[₹ 27,600 x (₹ 10,00,000/₹ 60,00,000)]
(4) Computation of net GST liability for the month of April, 2019
Particulars CGST (₹) SGST (₹)
GST liability under forward charge

Sale of taxable goods [₹ 50,00,000 x 6%] 3,00,000 3,00,000
Add: Ineligible ITC [ITC out of common credit, attributable 4,600 4,600
to exempt supplies]
Total output tax liability under forward charge 3,04,600 3,04,600

Less: ITC credited to the electronic credit ledger 3,01,350 3,01,350
Net GST payable [A] 3,250 3,250
GST liability under reverse charge
Freight paid to GTA for inward transportation of taxable 3,750 3,750
goods
[₹ 1,50,000 x 2.5%]
Freight paid to GTA for inward transportation of 1,250 1,250
nontaxable goods
[₹ 50,000 x 2.5%]
Total output tax liability under reverse charge [B] 5,000 5,000
Net GST liability [A] + [B] 8,250 8,250
Note: Amount available in the electronic credit ledger may be used for making payment towards
output tax [Section 49 of the CGST Act, 2017]. However, tax payable under reverse charge is not
an output tax in terms of definition of output tax provided under 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.
Q.8 Siddhi Ltd. is a registered manufacturer engaged in taxable supply of goods. Siddhi Ltd.
purchased the following goods during the month of January, 2019. The following particulars are
provided:
S. No. Particulars Input tax(₹)
1. Capital goods purchased on which depreciation has been taken 15,000
on full value including input tax thereon
2. Goods purchased from Ravi Traders (Invoice of Ravi Traders is 20,000
received in month of January, 2019, but goods were received in
month of March, 2019)
3. Car purchased for making further supply of such car. Such car 30,000
is destroyed in accident while being used for test drive by
potential customers
4. Goods used for setting up telecommunication towers being 50,000
immovable property
5. Goods purchased from Pooja Ltd. (Full payment is made by 10,000
Siddhi Ltd. to Pooja Ltd. against such supply, but tax has not
been deposited by Pooja Ltd.
6. Truck purchased for delivery of output goods 80,000

Determine the amount of input tax credit (ITC) available by giving necessary explanations for
treatment of various items as per the provisions of the CGST Act, 2017. You may assume that all
the necessary conditions for availing the ITC have been complied with by Siddhi Ltd.
ANS: Computation of ITC available with Siddhi Ltd.
S. No. Particulars Input

tax(₹)

[Since depreciation has been claimed on the tax component of the
value of the capital goods, ITC of such tax cannot be availed in
terms of section 16 of the CGST Act, 2017.]
2. Goods purchased from Ravi Traders Nil

[ITC in respect of goods not received cannot be availed (Section
16 of the CGST Act, 2017). Since the goods have been received
in the month of March 2019, ITC thereon can be availed in March
2019 and not January 2019 even though the invoice for the same
has been received in January 2019]
3. Cars purchased for making further supply Nil

[Though ITC on motor vehicles used for further supply of such
vehicles is not blocked, ITC on goods destroyed for whichever
reason is blocked (Section 17(5) of the CGST Act, 2017).]
4. Goods used for setting telecommunication towers Nil

[ITC on goods used by a taxable person for construction of
immovable property on his own account is blocked even when such
goods are used in the course or furtherance of business (Section
17 of the CGST Act, 2017).]
5. Goods purchased from Pooja Ltd. 10,000

[ITC can be claimed provisionally in January 2019 since all the
conditions necessary for availing the same have been complied
with (Section 16 of the CGST Act, 2017).
However, the claim will get confirmed only when the tax charged
in respect of such supply has been actually paid to the
Government.]
6. Trucks purchased for delivery of output goods 80,000

[ITC on motor vehicles used for transportation of goods is not
blocked (Section 17(5) of the CGST Act, 2017).]
Total ITC available with Siddhi Ltd. 90,000

Note:
The above answer is based on the assumption that the ITC available is to be computed for the
month of January, 2019. However, since the question does not specify the period for which ITC
available is to be computed, the question may also be answered without referring to any particular
period
Q.9 Mr. Rajesh Surana has a proprietorship firm in the name of Surana & Sons in Jaipur. The firm,
registered under GST in the State of Rajasthan, manufactures three taxable products ‘M’, ‘N’ and
‘O’. Tax on ‘N’ is payable under reverse charge.The firm also provides taxable consultancy services.
The firm has provided the following details for the period April 20XX to September 20XX:
Particulars (₹)
Turnover of ‘M’ 14,00,000
Turnover of ‘N’ 6,00,000
Turnover of ‘O’ 10,00,000
Export of ‘M’ with payment of IGST 2,50,000
Export of ‘O’ under letter of undertaking 10,00,000
Consultancy services provided to independent clients located in foreign 20,00,000
countries. In all cases, the consideration has been received in convertible
foreign exchange
Sale of building (excluding stamp duty of Rs. 2.50 lakh, being 2% of value) 1,20,00,000
Interest received on investment in fixed deposits with a bank 4,00,000
Sale of shares (Purchase price Rs. 2,40,00,000/-) 2,50,00,000
Legal services received from an advocate in relation to product ‘M’ 3,50,000
Common inputs and input services used for supply of goods and services 50,00,000
mentioned above [Inputs - Rs. 35,00,000; Input services - Rs.15,00,000]
With the help of the above-mentioned information, compute the net GST liability of Surana &
Sons, payable from Electronic Credit Ledger and/or Electronic Cash Ledger, as the case may be,
for the period April 20XX to September 20XX
Note: Assume that all the domestic transactions of Surana & Sons are intra-State and that rate of
GST on goods and services are 12% and 18% respectively. All the conditions necessary for availing
the ITC have been complied with. Turnover of Surana & Sons was Rs. 85,00,000 in the previous
financial year.

Ans: Computation of net GST liability of Surana & Sons for the period April 20XX to September 20XX
Particulars (Rs.)
GST payable on outward supply [Refer Working Note 1] 3,18,000
GST payable on legal services under reverse charge [Rs. 3,50,000 X 18%] 63,000
[Tax on legal services provided by an advocate to a business entity, is payable
under reverse charge by the business entity in terms of Notification No. 13/2017
CT (R) dated 28.06.2017. Further, such services are not eligible for exemption
provided under Notification No. 12/2017 CT (R) dated 28.06.2017 as the turnover
of the business entity [Surana & Sons] in the preceding financial year exceeds
Rs. 20 lakh.]
Common credit attributable to exempt supplies during the period April 20XX to 4,74,820
September 20XX [Refer Working Note 2]
Total GST liability 8,55,820
Less: Input tax credit (ITC) [Refer Working Note 3] 7,53,000
Less: Tax paid in cash (Rs. 63,000 + Rs. 39,820) 1,02,820
[As per section 49(4) of the CGST Act, 2017 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 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.]
Working Note 1
Computation of GST payable on outward supply
Particulars Value (Rs.) GST (Rs.)
Turnover of ‘M’ [liable to GST @ 12%] 14,00,000 1,68,000
Turnover of ‘N’ [Tax on ‘N’ is payable under 6,00,000 Nil
reverse charge by the recipient of such goods]
Turnover of ‘O’ [liable to GST @ 12%] 10,00,000 1,20,000
Export of ‘M’ with payment of IGST @ 12% 2,50,000 30,000
Export of ‘O’ under letter of undertaking (LUT) 10,00,000 Nil
[Export of goods is a zero rated supply in terms of section
16(1)(a) of the IGST Act, 2017. A zero rated supply can be
supplied without payment of tax under a LUT in terms of
section 16(3)(a) of that Act.]
Consultancy services provided to independent clients located 20,00,000 Nil
in foreign countries.
[The activity is an export of service in terms of section 2(6)
of the IGST Act, 2017 as-
the supplier of service is located in India;

• the recipient of service is located outside India;
• place of supply of service is located outside India (in
terms of section 13(2) of the IGST Act, 2017);
• payment for the service has been received in
convertible foreign exchange or in Indian rupees wherever
permitted by the Reserve Bank of India; and
• supplier of service and recipient of service are not
merely establishments of distinct person.
• [Export of services is a zero rated supply in terms of
section 16(1)(a) of the IGST Act, 2017. A zero rated supply
can be supplied without payment of tax under a LUT in
terms of section 16(3)(a) of that Act.]
It is assumed that export has been made under LUT
Sale of building 1,20,00,000 Nil
[Sale of building is neither a supply of goods nor a supply of
services in terms of para 5 of Schedule III to the CGST Act,
2017 and hence, is not liable to any tax]
Interest received on investment in fixed deposits with a bank 4,00,000 Nil
[Exempt vide Notification No. 12/2017 CT (R) dated
28.06.2017]
Sale of shares 2,50,00,000 Nil
[Shares are neither goods nor services in terms of section
2(52) and 2(102) of the CGST Act, 2017. Hence, sale of
shares is neither a supply of goods nor a supply of services and
hence, is not liable to any tax.]
Total GST payable on outward supply 3,18,000
Working Note 2
Computation of common credit attributable to exempt supplies during the period April 20XX to
September 20XX
Particulars (Rs.)
Common credit on inputs and input services -[Refer Working Note 3 below] 6,90,000
Common credit attributable to exempt supplies (rounded off) 4,74,820
= Common credit on inputs and input services x (Exe mpt turnover during the
period / Total turnover during the period)
= Rs. 6,90,000 x Rs. 1,33,50,000/ Rs. 1,94,00,000
Exempt turnover = Rs. 1,33,50,000 and total turnover = Rs. 1,94,00,000 [Refer
note below]

Note:
As per section 17(3) of the CGST Act, 2017, value of exempt supply includes supplies on which the
recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and,
subject to clause (b) of paragraph 5 of Schedule II, sale of building. As per explanation to Chapter
V of the CGST Rules, 2017, the value of exempt supply in respect of land and building is the value
adopted for paying stamp duty and for security is 1% of the sale value of such security.
Further, as per explanation to rule 42 of the CGST Rules, 2017, the aggregate value of exempt
supplies inter alia excludes the value of services by way of accepting deposits, extending loans or
advances in so far as the consideration is represented by way of interest or discount, except in
case of a banking company or a financial institution including a non-banking financial company,
engaged in supplying services by way of accepting deposits, extending loans or advances.
Therefore, value of exempt supply in the given case will be the sum of value of output supply on
which tax is payable under reverse charge (Rs. 6,00,000), value of sale of building (Rs. 2,50,000 /
2 x 100 = Rs. 1,25,00,000) and value of sale of shares (1% of Rs. 2,50,00,000 = Rs. 2,50,000),
which comes out to be Rs. 1,33,50,000.
Total turnover = Rs. 1,94,00,000 (Rs. 14,00,000 + Rs. 6,00,000 + Rs. 10,00,000 + Rs. 2,50,000 + Rs.
10,00,000 + Rs. 20,00,000 + Rs. 1,25,00,000 + Rs. 4,00,000 + Rs. 2,50,000)
Working Note 3
Computation of ITC available in the Electronic Credit Ledger of the Surana & Sons for the period
April 20XX- September 20XX
Particulars (Rs.)
Common credit on inputs and input services 6,90,000
[Tax on inputs - Rs. 4,20,000 (Rs. 35,00,000 x 12%) + Tax on input services –
Rs. 2,70,000 (Rs. 15,00,000 x 18%)]
Legal services used in the manufacture of taxable product ‘M’ 63,000
ITC available in the Electronic Credit Ledger 7,53,000
Q.10 PQR Company Ltd., a registered supplier of Bengaluru (Karnataka), is a manufacturer of goods. The
company provides the following information pertaining to GST paid on input supplies during the
month of April, 20XX:
Sl. No. Items GST paid in (₹)
(i) Life Insurance premium paid by the company on the life of 1,50,000
factory employees as per the policy of the company
(ii) Raw materials purchased for which invoice is missing but delivery 38,000
challan is available.
(iii) Raw materials purchased which are used for zero rated outward 50,000
supply.

(iv) Works contractor's service used for repair of factory building 30,000
which is debited in the profit and loss account of company.
(v) Company purchased the capital goods for ₹ 4,00,000 and claimed 48,000
depreciation of ₹ 44,800 (@ 10%) on the full amount of ₹
4,48,000 under Income Tax Act, 1961.
Other Information:-
(i) In the month of September, 20XX, of previous financial year, PQR Company Ltd. availed
input tax credit of₹ 2,40,000 on purchase of raw material which was directly sent to job
worker's premises under a challan on 25-09-20XX of the same financial year. The said raw
material has not been received back from the Job worker up to 30-04-20XX of the current
financial year.
(ii) All the above input supplies except (ii) above have been used in the manufacture of taxable
goods.
Compute the amount of net input tax credit available for the month of April, 20XX with
necessary explanations for your conclusion for each item. You may assume that all the other
conditions necessary for availing the eligible input tax credits have been fulfilled.
Ans: Computation of Input Tax Credit (ITC) available with PQR Ltd. for the month of April, 20XX
Particulars ₹
Life Insurance premium paid by the company on the life of factory Nil
employees [Note 1]
Raw materials purchased [Note 2] Nil
Raw materials used for zero rated outward supply [Note 3] 50,000
Work contractor’s service [Note 4] 30,000
Capital goods purchased wherein the depreciation is claimed on the tax Nil
component [Note 5]
Total ITC available 80,000
Notes:
(1) ITC on life insurance service is available only when it is obligatory for an employer to provide
said services to its employees under any law for the time being in force. In the absence of
any information, it is assumed that such services are not obligatory for the employer in the
instant case and thus, the ITC thereon is blocked [Proviso to section 17(5)(b) of the CGST
Act, 2017].
(2) ITC cannot be taken since invoice is missing and delivery challan is not a valid document to
avail ITC [Section 16 of the CGST Act, 2017]
(3) ITC can be availed for making zero-rated supplies, notwithstanding that such supply may be
an exempt supply – [Section 16 of the IGST Act, 2017]
(4) ITC is blocked on works contract services when supplied for construction of an immovable
property. However, “construction” includes only that repairs which are capitalized along with

the said immovable property. In this case, since repairs of building is debited to P & L
Account, the same does not amount to ‘construction’ and hence ITC thereon is available -
[Section 17(5)(c) of the CGST Act, 2017].
(5) ITC is not available when depreciation has been claimed on the tax component of the cost of
capital goods under the Income-tax Act - [Section 16(3) of the CGST Act, 2017]
(6) The principal is entitled to take ITC of inputs sent for job work even if the said inputs are
directly sent to job worker. However, where said inputs are not received back by the principal
within a period of 1 year of the date of receipt of inputs by the job worker, it shall be
deemed that such inputs had been supplied by the principal to the job worker on the day
when the said inputs were received by the job worker – [Section 19 of the CGST Act, 2017].
Hence, the ITC taken by PQR Company Ltd. in September, 20XX is valid and since 1 year
period has yet not lapsed in April, 20XX, there will be no tax liability on such inputs.
Q.11 KPl Ltd., registered in the State of Himachal Pradesh (HP), has a manufacturing unit at Baddi
(HP). The company manufactures two products: ‘Xt’ and ‘St’. While ‘Xt’ is taxable, ‘St’ is
exempt from GST.
KPI Ltd. has furnished the following details:
S. No. Particulars IGST (₹)
(a) Machinery 1 purchased on 1st July for being used in manufacturing Xt 72,000
and St
(b) Machinery 2 purchased on 1st July for being exclusively used in 36,000
manufacturing product Xt
(c) Machinery 3 purchased on 1st July for being exclusively used in 1,08,000
manufacturing product St
(d) Machinery 4 purchased on 1st October last year for being exclusively 1,44,000
used in manufacturing product St. From 1 st July, such machinery

will also be used for manufacturing
product Xt.
(e) Machinery 5 purchased on 1st January for being exclusively used in 18,000
manufacturing product Xt. From 1st July, such machinery will also
be used for manufacturing
product St.
(f) Machinery 6 purchased on 1st July two years ago for being used in 1,08,000
manufacturing Xt and St

Compute the following:
(i) Amount of input tax credit (ITC) credited to Electronic Credit Ledger for the month of July
(ii) Amount of ineligible credit (Tie) for the month of July
(iii) Amount of aggregate value of common credit (Tc)
(iv) Common credit for the month of July (Tm)
Note: All the conditions necessary for availing the ITC have been complied with. Make suitable
assumptions wherever required.
Ans:
S. No. Particulars ITC (₹)
(i) Amount of ITC credited to Electronic Credit Ledger, for the month of
July
Machinery 1 – ‘A’ [Note 1] 72,000
Machinery 2 [Note 2] 36,000
Machinery 3 [Note 3] -
Machinery 4 – ‘A’ [Note 4] 1,44,000
Machinery 5 [Note 5] -
Machinery 6 –‘A’ [Note 6] …………
ITC credited to Electronic Credit Ledger, for the month of July 2,52,000
(ii) Amount of ineligible credit (Tie) for the month of July [Note 7] 21,600
(iii) Aggregate value of common credit (Tc) [Note 8]
Value of ‘A’ for Machinery 1 purchased on 1st July and used for 72,000
effecting both taxable and exempt supplies
Value of ‘A’ for Machinery 4 purchased on 1 st October last year for 1,44,000
being used for effecting exclusively exempt supplies and used for
effecting both taxable and exempt supplies from 1st July
Value of ‘A’ for Machinery 6 purchased on 1st July two years ago 1,08,000
and used for effecting both taxable and exempt supplies
Input tax claimed on Machinery 5 purchased on 1 st January for being 18,000

used for effecting exclusively taxable supplies and used for effecting
both taxable and exempt supplies from 1st July [Note 9]
Aggregate value of common credit (Tc) for the month of July – Tc 3,42,000
[Note 9]
(iv) Common credit for the month of July (Tm) [Note 10] 5,700

Notes:
(1) ITC in respect of capital goods used commonly for effecting taxable supplies and exempt
supplies denoted as ‘A’ shall be credited to the electronic credi t ledger [Rule 43(1)(c) of the
CGST Rules, 2017].
(2) ITC in respect of capital goods used or intended to be used exclusively for effecting supplies
other than exempted supplies but including zero rated supplies shall be credited to the electronic
credit ledger [Rule 43(1)(b) of the CGST Rules, 2017].
(3) ITC in respect of capital goods used or intended to be used exclusively for effecti ng exempt
supplies shall not be credited to electronic credit ledger [Rule 43(1)(a) of the CGST Rules,
2017].
(4) When capital goods which were initially used exclusively for exempt supplies are subsequently
used commonly for exempt supplies as well as taxable supplies, input tax in respect of the
same denoted as ‘A’ shall be credited to the electronic credit ledger [Rule 43(1)(c) of the
CGST Rules, 2017].
(5) Machinery 5 is used for effecting both taxable and exempt supplies since 1 st July. Prior to
that, it was exclusively used for effecting taxable supplies. Therefore, ITC in respect of
such machinery would have already been credited to the electronic credit ledger.
(6) Machinery 6 is being used for effecting both taxable and exempt supplies from 1 st July two
years ago. Therefore, ITC in respect of such machinery would have already been credited
to the electronic credit ledger
(7) When capital goods which were used exclusively for exempt supplies are subsequently used
commonly for exempt supplies as well as taxable supplies, input tax in respect of the same is
credited in the electronic credit ledger. The ineligible credit ‘Tie’ attributable to the period
during which such capital goods were used for making exempt supplies is computed @ 5% per
quarter or part thereof and added tothe output tax liability of the tax period in which such
credit is claimed [Rule 43(1)(c) of the CGST Rules, 2017].
Thus, ‘Tie’ shall be computed as under-
= ₹ 1,44,000 × 5% × 3 quarters
= ₹ 21,600
(8) The aggregate of the amounts of ‘A’ credited to the electronic credit ledger in respect of
common capital goods whose useful life remains during the tax period, to be denoted as ‘Tc’,
shall be the common credit in respect of such capital goods [Rule 43(1)(d) of the CGST
Rules, 2017].
(9) Where any capital goods which were used exclusively for effecting taxable supplies are
subsequently also used for effecting exempt supplies, the input tax credit
claimed in respect of such capital goods shall be added to arrive at the aggregate value of
common credit ‘Tc’ [Proviso to rule 43(1)(d) of the CGST Rules, 2017].
(10) ITC attributable to a month on common capital goods during their useful life (Tm) shall be
computed in accordance with rule 43(1)(e) of CGST Rules, 2017 as under:

= Tc ÷ 60
= ₹ 3,42,000 ÷ 60
= ₹ 5,700
The useful life of any capital goods shall be considered as five years from the date of invoice
and the said formula shall be applicable during the useful life of the said capital goods
Q.12 Happy ltd a registered person is engaged in providing taxable as well as exempted services. Turnover
of Happy ltd. during the month of November 2017 is as under:
Description of Goods Amount (In Rs.)

Value of exempted supply of services 1500000
Value of Zero rated taxable supply of services 400000
Value of Taxable supply of services 2600000
Services made for personal use 5,00,000
Total 5000000
Amount of Input tax credit for the month of November,2017 are as under:
Particulars CGST SGST IGST
Total input tax credit available 175000 175000 175000
The above Input tax credit on input services
includes the following:
i) Credit of input services used only for
32000 32000 17400
providing exempted services
ii) Credit of input services used for providing

72,000 72,000 14000
taxable services (including zero rated supplies)
iii) Credit of input services used for supplying

25000 25000 8600
services for personal use
iv) Credit availed on inputs which are not
15000 15000 6200
eligible under section 17(5)
Determine the amount of input tax credit of Happy ltd for the month of November 2017, as per Rule
42 of CGST rules also calculate the amount to be added to output tax liability of Happy ltd.

Ans: Computation of input tax credit eligible for the period of November 2017.
Particulars Denoted as CGST SGST IGST
Total input tax credit in a tax period T 175000 175000 68000
Less: -
Credit of input services used for supplying
T1 25000 25000 8600
services for personal use
Credit of input services used only for
T2 32,000 32,000 17400
providing exempted services
Credit availed on inputs which are not
T3 15000 15000 6200
eligible under section 17(5)
Amount of ITC to be credited to electronic
C1 103000 103000 35800
credit ledger C1 =T –[T1+T2+t3]
Less : credit of input services used for
providing taxable services (including zero T4 72000 72000 14000
rated supplies )
Common credit of input & input services
used for providing supply of services C2 =C1 C2 31000 31000 21800
–T4
Total inadmissible common credit as per rule
10850 10850 7630
42 (1) D1 +D2{W.N 1}
Net eligible common credit C3 =C2 -
C3 20150 20150 14170
[D1+D2]
Total credit eligible i.e [T4 + C3] 92150 92150 28170
Amount to be added to output tax 10850 10850 7630
W.N. 1 :- Calculation of input tax credit amount attributable to exempt supplies and supply made for non-
business use
Particulars Denoted as CGST SGST IGST
Aggregate value of exempted supply of
E 1500000 1500000 1500000
services
Total turnover for November 2018 F 5000000 5000000 5000000
Credit attributable towards exempt supplies
D 9300 9300 6540
D1 = [E/F] *C2
Credit attributable for supplies made for non
business purpose as per clause (i) of rule 42 F 1,550 1,550 1090
(1) D2 =5%*C2
Total inadmissible common credit as per rule
10850 10850 7630
42 (1) D1 + D2

Q13. Sarani Weavers at Mumbai is an input service distributor and intends to distribute input tax credit
u/s 20 of the CGST Act, 2017, for the month of March 2018. The following are the details available
for such distribution:
Turnover of the last
Branch ITC specifically applicable to the branch (Amt in Rs.)
quarter (Amt. in Rs.)
IGST - Rs. 12000
Ganganagar Branch 10,00,000 CGST - Rs. 3000
SGST - Rs. 3000
Madhugiri Branch 5,00,000 Nil
Kosala Branch 15,00,000 Nil
IGST - Rs. 150000
Mumbai HO 20,00,000 CGST - Rs. 15000
SGST - Rs. 15000
Inputs /Input services used commonly by all branches against which lTC available is:
CGST – Rs. 60000
SGST – Rs. 60000
IGST – Rs. 120000
Madhugiri branch uses inputs to manufacture exempted products.
All branches are outside Maharashtra. Turnover excludes duties & taxes payable to Central and State
Government.
Determine the input tax distribution.
Ans: As per section 20 of the CGST Act read with rule 39 of CGST Rules, 2017:
(i) Total GST credit (CGST+ SGST + IGST) of Rs. 18,000 specifically attributable to Ganganagar
Branch will be distributed as IGST credit of Rs. 18,000 only to Ganganagar Branch. [Since
recipient and ISD are located in different states.]
(ii) IGST credit of ₹ 1,50,000, CGST credit of Rs. 15,000 and SGST credit of Rs. 15,000 specifically
attributable to Mumbai HO will be distributed as IGST credit of Rs. 1,50,000, CGST credit of
Rs. 15,000 and SGST credit of Rs. 15,000 respectively, only to Mumbai HO. [since recipient is
located in the same State in which ISD is located.]
(iii) CGST credit of Rs. 60,000, SGST credit of Rs. 60,000 and IGST credit of Rs. 1,20,000 have
to be distributed among the three branches and Mumbai HO in proportion of their turnover
of the last quarter.
Ganganagar Branch will get – ₹ 48,000 [₹2,40,000 x (10,00,000/50,00,000)] as IGST credit
Madhugiri Branch will get - ₹ 24,000 [₹2,40,000 x (5,00,000/50,00,000)] as IGST credit
The credit attributable to a recipient is distributed even if such recipient is making exempt supplies.
Kosala Branch will get - ₹ 72,000 [₹2,40,000 x (15,00,000/50,00,000)] as IGST credit
Mumbai HO will get – Rs. 24,000 [60,000 x (20,00,000/50,00,000)] as CGST credit, Rs. 24,000
[60,000 x (20,00,000/50,00,000)] as SGST credit and ₹ 48,000 [1,20,000 x
(20,00,000/50,00,000)] as IGST credit.

Notes:
1. In the above answer, Mumbai HO has been assumed as a Branch for the purpose of
distribution of credit. However, it is also possible to answer the question by not assuming
Mumbai HO as the branch for the purpose of distribution of credit. In that case, common
credit will be distributed among Ganganagar, Madhugiri and Kosala branches.
2. The aggregate amount of input tax credit for inputs/ input services used commonly by all
the branches is assumed to be the ITC pertaining to only input services.
Q.14 On 25th August, M/s Agarwal & Agarwal, a registered supplier of taxable goods located in
Bengaluru (Karnataka), purchased one machine for ₹ 12,39,000 (including IGST) from one supplier
of Maharashtra who issued the invoice on the same date. M/s Agarwal & Agarwal put the
machinery to use on the same day and availed ITC for the eligible amount.
M/s Agarwal & Agarwal used the machine in the process of manufacture of taxable goods.
However, M/s Agarwal & Agarwal sold this machine to Mr. Suresh Kumar of Andhra Pradesh on
20th August of next year for ₹ 7,50,000 (excluding lGST).
With reference to section 18(6), determine the amount payable, if any, by M/s Agarwal & Agarwal at
the time of sale of the machine.
Note: The applicable rate of IGST is 18%.
Ans: As per section 18(6), if capital goods/ plant and machinery on which 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 of such outward supply determined under section 15.
Accordingly, the amount payable on supply of machinery by M/s Agarwal & Agarwal shall be
computed as follows:

ITC taken on the machinery (₹ 12,39,000 × 18/118) 1,89,000
Less: Input tax credit to be reversed @ 5% per quarter for the 28,350
period of use of machine 18,900
(i) For the previous year = (₹ 1,89,000 × 5%) × 3 quarters
(ii) For the current year = (₹ 1,89,000 × 5%) × 2 quarters
Amount required to be paid (A) ** 1,41,750
Duty leviable on transaction value (₹ 7,50,000 × 18%) (B) 1,35,000
Amount payable towards disposal of machine is higher of (A) 1,41,750
and (B)
Thus, M/s Agarwal & Agarwal is required to pay an amount of ₹ 1,41,750 at the time of
sale of machinery.

** In the above solution, amount payable towards disposal of machine has been computed on the basis
of rule 40(2), i.e. ITC to be reversed for the period of use of capital goods/machine has been
computed @ 5% for every quarter or part thereof from the date of the issue of invoice.
However, the said amount can also be computed in accordance with rule 44(6), i.e. ITC involved in
the remaining useful life (in months) of the capital goods/ machine can be reversed on pro-rata
basis, taking the useful life as 5 years.
Q.15 With the help of information given below in respect of a manufacturer for the month of
September, compute the ITC credited to the Electronic Credit Ledger, for the month. Also,
compute the amount of ITC to be added to the output tax liability for the month of September.
Ignore interest, if any.
Particulars Amount
(₹)
Outward supply of taxable goods (exclusive of taxes) 70,000
Outward supply of exempt goods 40,000
Total turnover 1,10,000
Inward supplies GST paid (₹)
Capital goods used exclusively for taxable outward supply 2,000
Capital goods used exclusively for exempt outward supply 1,800
Capital goods used for both taxable and exempt outward supply 4,200
Subject to the information given above, assume that all the other conditions necessary for availing
ITC have been fulfilled.
Ans: Computation of ITC credited to Electronic Credit Ledger and amount of ITC to be added to
the output tax liability for the month of September
Particulars ITC (₹)
Capital goods used exclusively for taxable supply 2,000
[Since used exclusively for taxable supply, full ITC is available under rule
43(1)(b)]
Capital goods used exclusively for exempt supply Nil
[Since used exclusively for exempt supply, ITC is not available under rule
43(1)(a)]
Capital goods used for both taxable and exempt supply -Common credit (Tc) 4200
[Commonly used for taxable and exempt supplies – Rule 43(1)(c)]
Total ITC credited to Electronic Credit Ledger for the month of September 6,200
Common credit for the month of September (Tm) 70
= Tc ÷ 60 = 4,200 ÷ 60 [Rule 43(1)(e)]
Common credit attributable to exempt supplies in a month (Te) 25.45

= (E ÷ F) x Tr* where,
‘E’ is the aggregate value of exempt supplies, made, during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax
period [Rule 43(1)(g)]
= (40,000/1,10,000) × ₹ 70 (rounded off)
Amount to be added to the output tax liability for the month of September 25.45
[Rule 43(1)(h)]
Note: *Prior to the amendment vide Notification No. 16/2020 CT dated 23.03.2020 clause (f) of
rule 43(1) provided that the amount of ITC, at the beginning of a tax period, on all common
capital goods whose useful life remains during the tax period, be denoted as ‘Tr‘ and shall be the
aggregate of ‘Tm‘ for all such capital goods. However, clause (f) has been omitted vide the said
notification. Consequently, the term “Tr” becomes redundant in the formula provided in rule
43(1)(g). However, for the sake of computation of common credit attributable to exempt supply,
value of ‘Tm’ has been used here. It may be noted that as per the erstwhile clause (f) of rule
43(1) value of ‘Tr’ was the aggregate of ‘Tm.’
Q.16 X, a manufacturer of roofing sheets, has total ITC of ₹ 1,60,000 available with him on 01st June.
He provides the following information pertaining to the goods and services procured during the
month of June:
(1) Input tax on raw materials is ₹ 40,000. The raw material is used for both taxable and
exempt activity.
(2) Input tax on catering services procured from ‘Harvest Caterers’ in connection with his
housewarming ceremony is ₹ 10,000.
(3) Input tax on raw materials used in manufacture of exempt supplies of ₹ 2 lakh is ₹ 20,000.
(4) Input tax on cosmetic and plastic surgery of manager of the factory is ₹ 30,000.
Total turnover for the month of June is ₹ 60 lakh exclusive of tax.
Compute the ITC available for the month of June and net GST payable from Electronic Cash
Ledger by X for the month of June. Rate of GST is 18% (Ignore CGST, SGST or IGST for the sake
of simplicity).
Subject to the information given above, assume that all the other conditions necessary for availing
ITC have been fulfilled. All the purchases are made from registered suppliers.

Ans: Computation of ITC available and net GST payable from Electronic Cash Ledger for the month
of June
GST on taxable turnover for the month of June 10,80,000
[₹ 60,00,000 × 18%]
Less: ITC available as on 30th June in terms of rule 42
ITC available in the Electronic Credit Ledger on 1st June ₹ 1,60,000
Add: Total ITC credited to the Electronic Credit Ledger in ₹ 40,000
the month of June [Refer working note below]
Less: ITC out of common credit attributable to exempt (₹ 1,290) 1,98,710
supply [Refer working note below]
Net GST payable from Electronic Cash Ledger 8,81,290
Working Note:
Computation of ITC (out of common credit) attributable to exempt supplies

Input tax on raw materials [Note1] 40,000
Input tax on catering for housewarming [Note 2] Nil
Input tax on inputs contained in exempt supplies [Note 3] Nil
Input tax on cosmetic and plastic surgery of CEO of company [Note 4] Nil
Total ITC credited to the Electronic Credit Ledger in terms of rule 42 in the 40,000
month of June
Common credit [Note 5] 40,000
ITC attributable towards exempt supplies [Note 6] 1,290
Notes:
(1) Being used in the course or furtherance of business, input tax on raw materials is available
as ITC and is credited to the Electronic Credit Ledger [Section 16(1)].
(2) ITC on outdoor catering is blocked in terms of section 17(5) if the same is not used for
making an outward supply of outdoor catering or as an element of a taxable composite/mixed
supply. Hence, the same is not credited to the Electronic Credit Ledger [Rule 42].
(3) Input tax on inputs used for making exempt supplies is not available as ITC and thus, not
credited to the Electronic Credit Ledger in terms of rule 42.
(4) ITC on cosmetic and plastic surgery is blocked in terms of section 17(5) if the same are not
used for making the same category of outward supply or as an element of a taxable
composite/ mixed supply. Hence, the same is not credited to the Electronic Credit Ledger
[Rule 42].
(5) Since there are no inputs and input services which are used exclusively for effecting taxable
supplies, the entire ITC credited to Electronic Credit Ledger, i.e. ₹ 40,000 will be the
common credit [Rule 42].

(6) ITC attributable towards exempt supplies = Common credit x (Aggregate value of exempt
supplies during the tax period / Total turnover during the tax period)
= ₹ 40,000 × ₹ 2,00,000/ ₹ 62,00,000 - (rounded off)
= ₹ 1,290
Q.17 Quanto Enterprises is not required to register under CGST Act. However, it applied for voluntary
registration on 17th September. Registration certificate has been granted to the firm on 25th
September. The CGST and SGST liability of the firm for the month of September is ₹ 24,000
each. The firm is not engaged in making inter-State outward taxable supplies
Inputs procured on 2nd September lying in stock
- CGST @ 6% 4,500
- SGST @ 6% 4,500
Input received on 21st July contained in semi-finished goods held in stock:
-CGST @ 6% 7,500
- SGST @ 6% 7,500
Value of inputs contained in finished goods held in stock- ₹ 2,00,000 [Such
inputs were procured on 19th September last year. Invoice for the goods was
also dated the same day]
- IGST @ 18% 36,000
Inputs valued at ₹ 50,000 procured on 13th September lying in stock:
- IGST @ 18% 9,000
Capital goods procured on 12th September
-CGST @ 6% 12,000
-SGST @ 6% 12,000
You are required to compute the net GST payable from Electronic Cash Ledger by Quanto
Enterprises for the month of September.
You are also required to mention reasons for treatment of all above items.
Ans: Computation of net GST payable from Electronic Cash Ledger by Quanto Enterprises for the
month of September
Particulars CGST (Rs) SGST (Rs)
Output tax liability for the 24,000 24,000
month
Less: ITC [Notes 1 & 2] 9,000 (IGST) 12,000 (SGST)
12,000 (CGST)
Net GST payable (from 3,000 12,000
electronic cash ledger)
Notes:

1. Credit of IGST is first utilized towards payment of IGST and thereafter for CGST and SGST
in any order and in any proportion. Credit of CGST and SGST can be utilized only after IGST
credit has been fully utilized [Rule 88A read with sections 49(5), 49A and 49B].
Since Quanto Enterprises does not make any inter-State supply, in the above answer, entire
credit of IGST has been utilized towards payment of CGST. Credit of IGST can also be
utilised against SGST liability or against both CGST and SGST liabilities in any proportion
and thus, the final answer will change accordingly.
2. As per section 18(1)(b) a person who takes voluntary registration is entitled to take credit
of input tax in respect of inputs held in stock and inputs contained in semi-finished/
finished goods held in stock on the day immediately preceding the date of grant of
registration.
However, he cannot take ITC in respect of capital goods held on the day immediately
preceding the date of grant of registration.
ITC on inputs needs to be availed within 1 year from the date of issue of the invoice by the
supplier [Section 18(2)].
In this case, since Quanto Enterprises has been granted voluntary registration on 25th
September, it will be entitled to ITC on inputs held in stock and inputs contained in semi-
finished/ finished goods held in stock, on 24th September. In view of the said provisions,
eligible ITC for Quanto Enterprises is computed as follows:
Particulars CGST (₹) SGST (₹) IGST (₹)

Inputs held in stock since 2nd September 4,500 4,500
Inputs received on 21st July contained in semi- 7,500 7,500
finished goods held in stock
Inputs contained in finished goods held in stock Nil
which were procured on 19th September last
year [Procured prior to one year, hence ITC
cannot be availed]
Inputs held in stock since 13th September 9,000
Capital goods procured on 12th September Nil Nil

Total ITC 12,000 12,000 9,000

Q.18 ABC Company Ltd. of Bengaluru is a manufacturer and registered supplier of machineries. It has
provided the following details for a tax period:
Inward supplies GST paid (₹)

Health insurance of factory employees as required by the Factories Act, 1948 20,000
Raw materials for which invoice has been received and GST has also been 18,000
paid for full amount but only 50% of material has been received, remaining
50% will be received in next month
Work contractor’s service used for installation of plant and machinery 12,000
Purchase of manufacturing machine sent directly to job worker’s premises 50,000
under delivery challan
Purchase of car used by director exclusively for the purpose of 25,000
business meetings
Outdoor catering service availed for business meetings 8,000
ABC Company Ltd. also provides service of hiring of machines along with manpower for operation.
As per trade practice, machines are always hired out along with operators and also operators are
supplied only when machines are hired out.
Outward supply (exclusive of GST) for the tax period are as follows
Particulars Value (₹) Particulars
Hiring receipts for machine 5,25,000 Hiring receipts for machine
Service charges for supply of 2,35,000 Service charges for supply of
manpower operators manpower operators
Assume the rates of GST to be as under:
(i) Service of hiring of machine 12%
(ii) Supply of manpower operator service 18%
(Ignore CGST, SGST or IGST for the sake of simplicity)
Compute the amount of ITC available as also the net GST payable from the Electronic Cash
Ledger for the tax period by giving necessary explanations for treatment of various items.
Note: Opening balance of ITC is Nil.
Ans: Computation of net GST payable by ABC Company Ltd.
Particulars GST payable (₹)
Gross GST liability [Refer working note (2) below] 91,200
Less: Input tax credit [Refer working note (1) below] 82,000
Net GST payable from Electronic Cash Ledger 9,200
Working Notes

(1) Computation of ITC available with ABC Company Ltd.
Particulars GST (₹)
Health insurance of factory employees [Note – 1] 20,000
Raw material received in factory [Note – 2] Nil
Work’s contractor’s service used for installation of plant and machinery 12,000
[Note -3]
Manufacturing machinery directly sent to job worker’s premises under 50,000
challan [Note -4]
Purchase of car used by director for business meetings only [Note -5] Nil
Outdoor catering service availed for business meetings [Note -6] Nil
Total ITC available 82,000
Notes:
1. ITC of health insurance is available in the given case in terms of proviso to section 17(5)(b)
since it is obligatory for employer to provide health insurance to its employees under the
Factories Act, 1948. –
2. Where the goods against an invoice are received in lots/ instalments, ITC is allowed upon
receipt of the last lot/ instalment vide first proviso to section 16(2). Therefore, ABC
Company Ltd. will be entitled to ITC of raw materials on receipt of second instalment in
next month.
3. Section 17(5)(c) provides that ITC on works contract services is blocked when supplied for
construction of immovable property (other than plant and machinery) except when the same
is used for further supply of works contract service.
Though in this case, the works contract service is not used for supply of works contract
service, ITC thereon will be allowed since such services are being used for installation of
plant and machinery.
4. ITC on capital goods directly sent to job worker’s premises under challan is allowed in terms
of section 19(5) read with rule 45(1).
5. Section 17(5)(a) provides that 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 taxable supply of-
(i) further supply of such vehicles,
(ii) transportation of passengers,
(iii) imparting training on driving, flying, navigating such vehicles and
Since ABC Company Ltd is a supplier of machine and it does not use the car for
transportation of passengers or any other use as specified, ITC thereon will not be available.
6. Section 17(5)(b)(i) provides that ITC on outdoor catering is blocked except where the same
is used for making further supply of outdoor catering or as an element of a taxable
composite or mixed supply.
Since ABC Company Ltd is a supplier of machine, ITC thereon will not be available.

(2) Computation of gross GST liability
Value received (₹) Rate of GST GST payable (₹)
Hiring receipts for 5,25,000 12% 63,000
machine
Service charges for supply 2,35,000 12% 28,200
of manpower operators
Gross GST liability 91,200
Note:
Since machine is always hired out along with operators and operators are supplied only when the
machines are hired out, it is a case of composite supply, wherein the principal supply is the hiring
out of machines [Section 2(30) read with section 2(90)]. Therefore, service of supply of
manpower operators will also be taxed at the rate applicable for hiring out of machines (principal
supply), which is 12%, in terms of section 8(a).
Q.19 Pari Ltd. of Jodhpur (Rajasthan) is a registered manufacturer of cosmetic products. Pari Ltd. has
furnished following details for a tax period:
Particulars (₹)
Details of Outward supplies
(i) Supplies in Rajasthan 8,75,000
(ii) Supplies in States other than Rajasthan 3,75,000
(iii) Export under LUT 6,25,000
Details of expenses
(i) Raw materials purchased from registered suppliers located in 1,06,250
Rajasthan
(ii) Raw materials purchased from unregistered suppliers located in 37,500
Rajasthan
(iii) Raw materials purchased from Punjab from registered supplier 1,00,000
(iv) Integrated tax paid on raw materials imported from USA 22,732
(v) Consumables purchased from registered suppliers located in 1,56,250
Rajasthan including high speed diesel (Excise and VAT paid)
valuing ₹ 31,250 for running the machinery in the factory
(vi) Monthly rent for the factory building to the owner in Rajasthan 1,00,000
(vii) Salary paid to employees on rolls 6,25,000
(viii) Premium paid on life insurance policies taken for specified 2,00,000
employees. Life insurance policies for specified employees have
been taken by Pari Ltd. to fulfill a statutory obligation in this
regard. The life insurance service provider is registered in
Rajasthan.

All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the
applicable taxes have also been paid by Pari Ltd.
The opening balance of ITC with Pari Ltd. for the given tax period is-
CGST ₹ 20,000
SGST ₹ 15,000
IGST ₹ 15,000
Assume CGST, SGST and lGST rates to be 9%, 9% and 18% respectively, wherever applicable.
Assume that all the other necessary conditions to avail the ITC have been complied with by Pari
Ltd., wherever applicable.
Compute (i) ITC available with Pari Ltd. for the tax period; and (ii) Net GST payable [CGST,
SGST or IGST, as the case may be] from Electronic Cash Ledger by Pari Ltd. for the tax period.
Ans: Computation of ITC available with Pari Ltd.
S. No. Eligible input tax credit
(₹) (₹) (₹)
1 Raw Material
Purchased from local registered suppliers [Note 9,562.50 9,562.50
1(i)] (₹ 1,06,250 x 9%)
Purchased from local unregistered suppliers Nil Nil
[Note 1(ii)]
Purchased from Punjab from registered supplier 18,000
[Note 1(i)] (₹ 1,00,000 x 18%)
Raw material imported from USA [Note 1(iii)] 22,732
2. Consumables [Note 2] (₹ 1,56,250- ₹ 11,250 11,250
31,250) x 9%]
3. Monthly rent for the factory building to the 9,000 9,000
owner in Rajasthan [Note 3]
4. Salary paid to employees on rolls [Note 4] Nil Nil Nil
5. Premium paid on life insurance policies taken 18,000 18,000 -
for specified employees [Note 5] (₹ 2,00,000
x 9%)
Total 47,812.50 47,812.50 40,732
Add: Opening balance of ITC 20,000 15,000 15,000
Total ITC [Note 7] 67,812.50 62,812.50 55,732

(₹) (₹) (₹)
Intra-State supply 78,750 78,750
Inter-State supply 67,500
Exports under LUT [Note 6] Nil Nil Nil
Total output tax liability 78,750 78,750 67,500
Less: ITC 67,812.50 62,812.50 55,732
Net GST payable 10,937.50 15,937.50 11,768
Notes:
1. (i) Credit of input tax (CGST & SGST/ IGST) paid on raw materials used in the course or
furtherance of business is available in terms of section 16.
(ii) Tax on procurements made by a registered person from an unregistered supplier is levied
only in case of notified goods and services in terms of section 9(4). Therefore, since no
GST is paid on such raw material purchased, there does not arise any question of ITC on
such raw material.
(iii) IGST paid on imported goods qualifies as input tax in terms of section 2(62). Therefore,
credit of IGST paid on imported raw materials used in the course or furtherance of
business is available in terms of section 16.
2. ITC on consumables, being inputs used in the course or furtherance of business, is available.
However, since levy of GST on high speed diesel has been deferred till a date to be notified
by Government, there cannot be any ITC of the same.
3. ITC on monthly rent is available as the said service is used in the course or furtherance of
business.
supply in terms of section 7 read with Schedule III to the CGST Act. Therefore, since no
GST is paid on such services, there cannot be any ITC on such services.
5. ITC on life insurance service is available if the same is obligatory for an employer to provide
to its employees under any law for the time being in force as per proviso to section
17(5)(b).
6. Export of goods is a zero rated supply in terms of section 16(1)(a) of the IGST Act. A zero
rated supply under bond is made without payment of IGST in terms of section 16(3)(a).
7. Since export of goods is a zero rated supply, there will be no apportionment of ITC and full
credit will be available as per section 17(2).

Q.20 Sunshine Pvt. Ltd. manufactures taxable goods. The company is registered under GST in the
State of West Bengal. The company has provided following information in relation to inward
supplies received by it in the month of October:
S. No. Invoices received for inward supplies IGST (₹)

1. Raw material - X 2,00,000
2. Rent of the factory building 1,50,000
3. Raw material - Y 1,30,000
4. Car purchased for the use of the director 1,20,000
5. Consumables 80,000
6. Machinery for being used in the manufacturing process 1,50,000
7. Raw material - Z 1,10,000
8. Technical consultancy for improvement in the manufacturing 60,000
process
9. Raw material – W (imported from China) 50,000
Total 10,50,000
S. No. Particulars IGST (₹)

(i) Balance in Form GSTR-2A on 28th October (Invoices at S. 4,80,000
Nos. 1, 2 and 3 furnished by the respective suppliers in
their Form GSTR-1s)
(ii) Balance in Form GSTR-2A on 11th November 6,00,000
(Invoices at S. Nos. 1, 2, 3 and 4 furnished by the
respective suppliers in their Form GSTR-1s)
(iii) Balance in Form GSTR-2A on 20th November 6,80,000
(Invoices at S. Nos. 1, 2, 3, 4 and 5 furnished by the
respective suppliers in their Form GSTR-1s)
Compute the ITC that can be claimed by Sunshine Pvt. Ltd. in its Form GSTR-3B for the month
of October to be filed by 20th November.
Note: The due date of filing of Form GSTR-1 and Form GSTR-3B for the month of October are
11th November and 20th November respectively. Subject to the information given above, all the
other conditions for availing ITC have been complied with.
Ans: ITC to be claimed by Sunshine Pvt. Ltd. in its GSTR-3B for the month of October to be filed by
20th November will be computed as under-
Invoices Amount of input tax Amount of ITC that can

involved in the be availed (₹)
invoices (₹)

Balance in GSTR-2A on 11th November 6,00,000 4,80,000
[Note 1] [Note 2]
(Invoices at S. Nos. 1, 2, 3 and 4 uploaded
by the respective suppliers in their GSTR-1s)
Invoices at S. Nos. 5, 6 7 and 8 not 4,00,000 24,000
uploaded in GSTR-1 [Note 3]
Invoice at S. No. 9 50,000 50,000 [Note 4]
Total 10,50,000 5,54,000
Notes:
(1) ITC in respect of the invoices whose details have not been furnished by the suppliers shall
not exceed 5% of the eligible input tax credit available to the recipient in respect of invoices
or debit notes the details of which have been furnished by the suppliers under section 37(1)
of
the CGST Act, 2017 as on the due date of filing of the returns in Form GSTR-1 of the suppliers
for the said tax period. The taxpayer can ascertain the same from his auto populated Form
GSTR 2A as available on the due date of filing of Form GSTR-1 under section 37(1) [Rule
36(4) of the CGST Rules, 2017 read with Circular No. 123/42/2019 GST dated 11.11.2019].
(2) 100% ITC can be availed on invoices furnished by the suppliers in their Form GSTR-1.
However, section 17(5) of the CGST Act, 2017 blocks ITC on motor vehicles for
transportation of persons having approved seating capacity of not more than 13 persons if
they are not used for making the following taxable supplies, namely:—
(A) further supply of such motor vehicles; or
(B) transportation of passengers; or
(C) imparting training on driving such motor vehicles
Since Sunshine Pvt. Ltd. is not using the car for any of the aforesaid mentioned purpose, ITC
thereon will not be available. Thus, 100% ITC will be available in respect of invoices at
S.Nos. 1, 2 & 3.
(3) In respect of invoices at S.Nos. 5, 6 7 and 8 not furnished in Form GSTR-1s, the ITC has
been restricted to 5% of eligible ITC in respect of invoices furnished in Form GSTR-1s, i.e.
5% of ₹ 4,80,000 in terms of rule 36(4) of the CGST Rules, 2017.
(4) The restriction of availment of ITC is imposed only in respect of those invoices, details of
which are required to be furnished by the suppliers under section 37(1) of the CGST Act,
2017 and which have not been furnished Therefore, full ITC can be availed in respect of
IGST paid on imports which are outside the ambit of section 37(1) [Circular No.
123/42/2019 GST dated 11.11.2019].
Q.21 Paridhi Ltd. is a registered manufacturer engaged in taxable supply of goods. Paridhi Ltd. purchased
the following goods during the month of January and provided the following information:

S. No. Particulars GST paid (₹)
1. Capital goods purchased on which depreciation has been taken 15,000
on full value including input tax thereon
2. Goods purchased from Rupesh Enterprises 20,000
(Rupesh Enterprises sent the invoice in the month of January,
but goods were received in month of April)
3. Car purchased for making further supply of such car. Such car is 30,000
destroyed in accident while being used for test drive by potential
customers
4. Goods used for setting up telecommunication towers being 50,000
immovable property
5. Goods purchased from Sumo Ltd. 10,000
(Full payment has been made by Paridhi Ltd. to Sumo Ltd. against
such supply, but tax has been deposited by Sumo Ltd. in April)
6. Truck purchased for delivery of output goods 80,000
Determine the amount of input tax credit (ITC) available to Paridhi Ltd. while filing GSTR-3B
for the month of January by giving necessary explanations for treatment of various items as per
the provisions of the CGST Act, 2017. You may assume that all the necessary conditions for
availing the ITC have been complied with by Paridhi Ltd.
Ans: Computation of ITC available with Paridhi Ltd. in January
S. No. Particulars Amount (₹)
[Since depreciation has been claimed on the tax component of the
value of the capital goods, ITC of such tax cannot be availed in
terms of section 16 of the CGST Act, 2017.]
2. Goods purchased from Rupesh Enterprises Nil
[ITC in respect of goods not received cannot be availed (Section 16
of the CGST Act, 2017). Since the goods have been received in the
month of April, ITC thereon can be availed in April and not January
even though the invoice for the same has been received in January.]
3. Cars purchased for making further supply Nil
[Though ITC on motor vehicles used for further supply of such
vehicles is not blocked, ITC on goods destroyed for whichever reason
is blocked (Section 17(5) of the CGST Act, 2017).]
4. Goods used for setting telecommunication towers Nil
[ITC on goods used by a taxable person for construction of
immovable property on his own account is blocked even when such

goods are used in the course or furtherance of business (Section 17
of the CGST Act, 2017).]
5. Goods purchased from Sumo Ltd. 10,000
[ITC can be claimed provisionally in January since all the conditions
necessary for availing the same have been complied with (Section
16 of the CGST Act, 2017). However, the claim will get confirmed
only when the tax charged in respect of such supply has been
actually paid to the Government.]
6. Trucks purchased for delivery of output goods 80,000
[ITC on motor vehicles used for transportation of goods is not
blocked (Section 17(5) of the CGST Act, 2017).]
Total ITC available with Paridhi Ltd. 90,000
Q.22 Mr. Mehul Roy, proprietor of M/s. Royal Shoe & Company, is running a business of manufacturing
shoes with the brand name of ‘JUNOON’. The manufacturing unit is located in Delhi and is
registered under GST.
However, due to low profitability in the business, he has decided to transfer his business to his
friend Mr. Dilip Tijori. Mr. Dilip Tijori is already running the business of manufacturing shoes under
a proprietorship firm named M/s Hawai Shoes & Company which is located in Mumbai and
registered under GST.
Mr. Mehul Roy has approached you to help him with the issue of transfer of unutilized input tax
credit in electronic credit ledger of M/s. Royal Shoe & Company to M/s Hawai Shoes & Company.
Advise Mr. Rahul Roy with the correct option in accordance with the provisions of the CGST Act,
2017:
(a) M/s. Royal Shoe & Company cannot transfer unutilised input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company as the proprietors are different.
(b) M/s. Royal Shoe & Company can transfer the unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company and it can further be utilized in setting off GST liability
for succeeding period.
(c) M/s. Royal Shoe & Company can transfer unutilized input tax credit in its electronic credit ledger
to M/s Hawai Shoes & Company and it can be further utilized in setting off GST liability for a
period upto the month of September following the year in which ITC was transferred.
(d) M/s. Royal Shoe & Company cannot transfer unutilized input tax credit in its electronic credit
ledger to M/s Hawai Shoes & Company but can claim refund of such unutilized input tax credit.

Ans: (b) M/s. Royal Shoe & Company can transfer the unutilized input tax credit in its electronic
credit ledger to M/s Hawai Shoes & Company and it can further be utilized in setting off GST
liability for succeeding period.
Q.23 Pari Ltd. of Jodhpur (Rajasthan) is a registered manufacturer of cosmetic products. Pari Ltd. has
furnished following details for a tax period:
Particulars Rs
Details of Outward supplies
(i) Supplies in Rajasthan 8,75,000
(ii) Supplies in States other than Rajasthan 3,75,000
(iii) Export under LUT 6,25,000
Details of expenses
(i) Raw materials purchased from registered suppliers located in 1,06,250
Rajasthan
(ii) Raw materials purchased from unregistered suppliers located in 37,500
Rajasthan
(iii) Raw materials purchased from Punjab from registered supplier 1,00,000
(iv) Integrated tax paid on raw materials imported from USA 22,732
(v) Consumables purchased from registered suppliers located in 1,56,250
Rajasthan including high speed diesel (Excise and VAT paid)
valuing ` 31,250 for running the machinery in the factory
(vi) Monthly rent for the factory building to the owner in Rajasthan 1,00,000
(vii) Salary paid to employees on rolls 6,25,000
(viii) Premium paid on life insurance policies taken for specified 2,00,000
employees. Life insurance policies for specified employees have
been taken by Pari Ltd. to fulfill a statutory obligation in this
regard. The life insurance service provider is registered in
Rajasthan.
All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the
applicable taxes have also been paid by Pari Ltd.
The opening balance of ITC with Pari Ltd. for the given tax period is-
CGST ` 20,000
SGST ` 15,000
IGST ` 15,000
Assume CGST, SGST and lGST rates to be 9%, 9% and 18% respectively, wherever applicable.
Assume that all the other necessary conditions to avail the ITC have been complied with by Pari
Ltd., wherever applicable.
Compute (i) ITC available with Pari Ltd. for the tax period; and (ii) Net GST payable [CGST,
SGST or IGST, as the case may be] from Electronic Cash Ledger by Pari Ltd. for the tax period.

Ans: 1. Computation of ITC available with Pari Ltd.
S. No. Particulars Eligible input tax credit

CGST (`) CGST (`) IGST (`)
1. Raw Material
Purchased from local registered suppliers 9,562.50 9,562.50
[Note 1(i)] (`1,06,250 x 9%)
Purchased from local unregistered suppliers Nil Nil
[Note 1(ii)]
Purchased from Punjab from registered 18,000
supplier [Note 1(i)] (` 1,00,000 x 18%)
Raw material imported from USA [Note 1(iii)] 22,732
2. Consumables [Note 2] (` 1,56,250- ` 11,250 11,250
31,250) x 9%]
3. Monthly rent for the factory building to the 9,000 9,000
owner in Rajasthan [Note 3]
4. Salary paid to employees on rolls [Note 4] Nil Nil Nil
5. Premium paid on life insurance policies taken 18,000 18,000 -
for specified employees [Note 5] (` 2,00,000 x
9%)
Total 47,812.50 47,812.50 40,732
Add: Opening balance of ITC 20,000 15,000 15,000
Total ITC [Note 7] 67,812.50 62,812.50 55,732

Intra-State supply 78,750 78,750
Inter-State supply 67,500
Exports under LUT [Note 6] Nil Nil Nil
Total output tax liability 78,750 78,750 67,500
Less: ITC 67,812.50 67,812.50 55,732
Net GST payable 10,937.50 15,937.50 11,768

Notes:
1. (i) Credit of input tax (CGST & SGST/ IGST) paid on raw materials used in the course or furtherance
of business is available in terms of section 16.
(ii) Tax on procurements made by a registered person from an unregistered supplier is levied only in case
of notified goods and services in terms of section 9(4). Therefore, since no GST is paid on such raw
material purchased, there does not arise any question of ITC on such raw material.
(iii) IGST paid on imported goods qualifies as input tax in terms of section 2(62). Therefore, credit of
IGST paid on imported raw materials used in the course or furtherance of business is available in
terms of section 16.
2. ITC on consumables, being inputs used in the course or furtherance of business, is available.
However, since levy of GST on high speed diesel has been deferred till a date to be notified by
Government, there cannot be any ITC of the same.
3. ITC on monthly rent is available as the said service is used in the course or furtherance of
business.
supply in terms of section 7 read with Schedule III to the CGST Act. Therefore, since no GST is
paid on such services, there cannot be any ITC on such services.
5. ITC on life insurance service is available if the same is obligatory for an employer to provide to
its employees under any law for the time being in force as per proviso to section 17(5)(b).
6. Export of goods is a zero rated supply in terms of section 16(1)(a) of the IGST Act. A zero rated
supply under bond is made without payment of IGST in terms of section 16(3)(a).
7. Since export of goods is a zero rated supply, there will be no apportionment of ITC and full credit
will be available as per section 17(2).
Q.24 SR Associates is a partnership firm registered under GST in the State of Rajasthan. In the month
of July, following transactions were made by SR Associates:
1. Purchase of commodity X on 1st July for an amount of ` 5,00,000 at the rate of ` 1000 per tonne
from the open market. The said commodity was deposited in the warehouse of NCDEX Ltd. (an
agricultural commodity exchange) in Rajasthan as a security against transactions entered by SR
Associates on the same day.
2. In order to hedge the aforesaid transaction, on 1st July, SR Associates undertook a derivative sale
transaction in futures contract for the month of August at NCDEX at the rate of ` 1,100 per tone.
3. SR Associates took subscription for an AI (Artificial Intelligence) based platform from an
unrelated party, ABC Inc (a company based in US) to get real time updates on the pricing of
commodity X in the international market. ABC Inc charged ` 50,000 for such subscription. The invoice
was issued to SR Associates on 1st July, but the payment was made to ABC Inc on 20th August.
4. NCDEX charges rent from SR Associates at the rate of ` 10,000 per month and service charges
at the rate of ` 20,000 per month.

5. On the date of expiry of future contract of the month of August, i.e. 31st August for
commodity X, the rate of commodity X was ` 900 per tonne. SR Associates squared off the
contract for the month of August at the same rate.
6. NCDEX charged brokerage on the transactions (both purchase and sale of derivative contract
separately) at the rate of ` 5,000 per contract from SR Associates in the month
when such transaction was entered and when such transaction was squared off.
7. On the purchase of commodity X, additional levy in form of Mandi Tax was applicable at the
rate of ` 10 per tonne which is not included in the rate per tonne under point 1 above.
All the amounts given above are exclusive of GST unless otherwise provided. The opening balance
of input tax credit for the relevant tax period of SR Associates is Nil. Subject to the information
given above, assume that all the other conditions necessary for availing ITC have been fulfilled.
Assume that there is no other outward or inward supply transaction apart from aforesaid
transactions, in the months of July and August.
GST is applicable in the aforesaid case scenario at the following rates unless otherwise specified:
I. Intra-State supply - 9% CGST and 9% SGST
II. Inter-State supply - 18% IGST
Nos. 1 to 5 as follows:-
1. Compute the taxable value of supply of commodity X procured by SR Associates in the month of
July.
(a) 5,00,000
(b) 5,50,000
(c) 5,55,000
(d) 5,05,000
2. Compute the value of outward supply made by SR Associates in the month of August.
(a) Nil
(b) 5,55,000
(c) 5,60,000
(d) 5,00,000
3. What is the time of supply for subscription of AI based platform by SR Associates?

(a) July 1
(b) August 31
(c) August 20
(d) July 31
4. Compute the net GST payable in cash by SR Associates for the month of August.
(a) Nil

(b) 2,700
(c) 81,000
(d) 9,000
5. Compute the input tax credit balance available with SR Associates for the month of July.
(a) 9,000
(b) 16,200
(c) 97,200
(d) Nil
(RTP- Nov 21)
Ans: 1. (d)
2. (a)
3. (c)
4. (d)
5. (c)

9 – Job Work Procedure
Q 1. Should the principal referred to in Section 143 be registered?

A. Yes
B. No
C. Yes, Principal is located in other than special category states
Ans: A: Yes
Q 2. When will the inputs and/or capital goods sent to job-work become a supply?
A. When the inputs and/or capital goods sent to job-worker are not received within 1 year or
3 years respectively
B. When the inputs and/or capital goods sent to job-worker are not supplied, with or without
payment of tax, from the job-workers place within 1 year or 3 years respectively
C. Both under (a) or (b)
Ans: C: Both under (a) or (b)
Q 3. From when will the period of one or three years be calculated under Section 143?
A. The day when such inputs and/or capital goods sent to job-worker
B. The day when the job-worker receives the said goods, in case the job-worker receives the goods
directly
C. Both (a) and (b)
Ans: C: Both (a) and (b)
Q 4. Will a principal who sends moulds, dies, jigs, tools and fixtures to job worker's place liable to pay
GST on such removal?
A. No, it is not a supply
B. Yes, if not received within time limit

C. No, as capital goods as referred in section 143 excludes moulds, dies, jigs, tools and fixtures.
Ans: C: No, as capital goods as referred in section 143 excludes moulds, dies, jigs, tools and
fixtures.
Q 5. Can a principal supply inputs and/or capital goods from the job-worker's premises?
A. Yes, only when the job-worker is registered
B. Yes, even if the job-worker is unregistered by declaring the job-worker's premises as his additional
place of business
C. Yes, irrespective of whether the job-worker is registered or not, principal is engaged in the
supply of goods which are notified by the Commissioner on this behalf
D. All of the above
Q 6. Mr. X has sent his goods to Mr. Y on job-work on 07-05-2017. From when it will be considered as
deemed supply if not received back within one year?
A. 06-05-2018
B. 07-05-2017
C. 03-11-2018
D. Not Taxable
Ans: B: 07-05-2017
Q 7. If the inputs are not received back within the prescribed limit by the principal then, who is
responsible to pay the GST?
A. Job worker
B. Principal
C. Job worker is responsible when sending such inputs and Principal needs to reverse the ITC taken
earlier.
Ans: A: Principal

Q 8. If the inputs and/or capital goods are not received or returned within the prescribed time
limit:
A. It shall be deemed to be a supply on the day such inputs and/or capital goods are sent to job-
worker and the principal to discharge the GST along with interest.
B. No consequences
C. The job-worker to discharge GST on expiry of the prescribed time limit.
D. Principal to reverse the input tax credit taken on such inputs and or capital goods.
Ans: A: It shall be deemed to be a supply on the day such inputs and/or capital goods are sent
to job-worker and the principal to discharge the GST along with interest.
Q 9. In case of Job work Principal can avail the ITC on inputs and capital goods if Inputs
are received within and capital goods are received within .
A. Inputs – 1 Year and Capital Goods – 3 Years
B. Inputs – 1 Year and capital Goods – 2 Years
C. Inputs - 6 Months and capital goods – 18 Months
D. Inputs – 30 days and capital goods – 60 days
Ans: A: Inputs – 1 Year and Capital Goods – 3 Years
Q 10. In case of Job work transaction, The principal can avail ITC on goods sent to job-worker
which relates to
A. Inputs
B. Capital goods
C. Inputs/capital goods directly sent to job-worker
D. All of the above
Ans: D All of the above

Additional Question for Practice
Q 1. Is it mandatory that job worker and principal be located in the same State or Union territory for the
applicability of job work provisions under GST law? Discuss.
Ans: No, this is not mandatory that job worker and principal be located in the same State or Union
territory for the applicability of job work provisions under GST law. The provisions relating to job
work have been adopted in the IGST Act vide section 20 of the IGST Act. Therefore job-worker
and principal can be located either is same State or in same Union Territory or in different States
or Union Territories.
Q 2. Mr. X, a registered person supplied the following goods to Miss Neetu for further processing on job
work basis.
S. No. Goods Particulars
1 P Taxable under GST
2 Q Exempted vide an exemption notification under CGST Act
3 R Non-taxable under GST
You are required to examine whether the provisions of job work will be applicable to all categories of
goods?
Ans: Legal Provision: The provisions of job work are not applicable to all categories of goods. The
provisions relating to job work are applicable only when registered person intends to send taxable
goods. In other words, these provisions are not applicable to exempted or non-taxable goods or
when the sender is a person other than registered person.
Discussion: Thus, in the present case, the provisions of job work are not applicable to “Q” being
an exempted good and “R” as the same is not taxable good. Thus, job work provisions will apply
only to “P”, the same being taxable good.
Q 3. Alok Pvt Ltd, a registered manufacturer, sent steel cabinets worth Rs. 50 lacs under a delivery
challan to M/s Prem tools, a registered job worker, for job work on 28.01.20XX. The scope of job
work included mounting the steel cabinets on a metal frame and sending the mounted panels back
to job Alok Pvt Ltd. The metal frame is to be supplied by M/s Prem Tools has agreed to a
consideration of Rs. 5 lacs for the entire mounting activity, metal waste is generated which is sold
by M.s Prem tools for Rs. 45000. M/s Prem tools sent the steel cabinets mounted on the metal
frame to Alok Pvt Ltd. On 03.12.20XX.
Assuming GST rate for metal frame as 28%, for metal waste as 12% and standard rate for services
as 18%. You are required to compute the GST liability of M/s Prem Tools. Also give reasons for

inclusions or exclusions of the value of cabinets in the job charges for the purpose of payment of
GST by M/s Prem Tools.
Ans: As per Schedule II, any treatment or process which is applied to another person’s goods isa supply
of services and accordingly is subject to GST.
In the given case, M/s Prem tools (Job worker) undertakes the process of mounting the steel
cabinet of Alok Pvt Ltd. (Principal) on metal frames. In view Schedule II to the CGST Act, the
mounting activity classifies as service even though metal frames are also supplied as a part of the
mounting activity. Accordingly, the job charges will be chargeable to rate of 18%, which is the
applicable rate for services.
Further, the value of steel cabinets will not be included in the value of taxable supply made by
M/s Prem Tools as the supply of cabinets doesn’t fall within the scope of supply to be made by
M/s Prem Tools. M/s Prem Tools is only required to mount the steel cabinets, which are to be
supplied by Alok Pvt Ltd. on the metal frames, which are to be supplied by it.
As regards sale of waste generated during the job work, since M/s Prem Tools is registered, the
tax leviable on the supply will have to be paid by it in terms of section 143(5) of CGST Act. Such
supply will be treated as supply of goods and subject to GST rate applicable for metal waste
Accordingly, the GST liability of M/s Prem Tools will be computed as under:
Particulars Amount
Job Charges 500000
GST @ 18% (A) 90000
Sale of Metal waste 45000
GST @ 12 % (B) 5400
Total GST Payable (A+B) 95400
Q 4. Genie Engineers had a mould delivered directly to a job worker from the supplier for making certain
precision parts for use in the factory of Genie Engineers. As per agreement, the mould was to
remain with the job worker as long as work was being sent to him.
After four years a departmental audit team that visited the job worker noticed the mould and
traced it to Genie Engineers. GST was demanded from Genie Engineers for taking ITC without
receiving the mould and furthermore for not bringing the mould back after three years of delivery
to the job worker. How should they respond to this?
Ans: Genie Engineers should reply on the following lines:
Under section 19(6) of CGST Act, the principal may take ITC on capital goods sent to a job worker
for job work without being first brought to his place of business.
The capital goods sent for job work should either be returned to the principal or must be supplied
from the job worker’s premises within 3 years from sending them to the job worker or direct
receipt by the job worker from the supplier. If the above time-lines are not met, it is deemed

that the capital goods were supplied by the principal to the job worker (in other words, tax will be
payable on them) on the day they were sent out to the job worker [Section 19(6)].
However, sub-section (7) of section 19 provides that the time-limit of three years in sub-section
(6) for bringing back the capital goods from the job worker does not apply to moulds.
Hence, Genie Engineers have correctly taken the ITC on moulds.
Q.5 M/s. Lex Corp. (P) Ltd. is a registered manufacturer of fruit juices. It purchases plastic
bottles and cardboard and sends the same for affixing stickers on plastic bottles and
manufacturing boxes from cardboard to a registered job worker, M/s. Hammer Industries
(P) Ltd. These raw materials are sent directly from the place of business of supplier to
the premises of job worker. M/s. Lex Corp. (P) Ltd. booked input tax credit on purchase
of such items. The following transactions took place in this regard:
Value of goods sent Input tax Date of Date of receipt of Date of goods
to job worker paid on such purchase of goods by M/s received back
goods goods by M/s Hammer from M/sHammer
Lex Corp. (P) Industries (P) Industries (P)
Ltd. Ltd. Ltd.
₹ 50,000 ₹ 6,000 10-07-2017 15-07-2017 12-07-2018

₹ 2,00,000 ₹ 24,000 25-09-2017 27-09-2017 13-10-2018
₹ 8,00,000 ₹ 96,000 22-12-2017 25-12-2017 16-08-2019
₹ 10,00,000 ₹ 1,20,000 21-01-2018 25-01-2018 23-01-2019
₹ 3,50,000 ₹ 42,000 24-02-2018 26-02-2018 28-02-2019
Determine the total amount to be added to the output tax liability of M/s. Lex Corp. (P)
Ltd. in case of violation of section 143 of the CGST Act, 2017. Ignore the different point
of times when the amount is added to the output tax liability.
A. 2,88,000/- + Interest @ 18%

B. 2,88,000/- + Interest @ 24%
C. 1,62,000/- + Interest @ 24%
D. 1,62,000/- +Interest @ 18%
Ans: 1,62,000/- +Interest @ 18%

Q.6 Sudama Industries Ltd., registered in the State of Jammu & Kashmir, manufactures plastic pipes
for other suppliers on job-work basis. On 10.01.20XX, Plasto Manufacturers (registered in the
State of Himachal Pradesh) sent plastic worth Rs. 4 lakh and moulds worth Rs. 50,000, free of
cost, to Sudama Industries Ltd. to make plastic pipes.Sudama Industries Ltd. also used its own
material - a special type of lamination material for coating the pipes - worth Rs. 1 lakh in the
manufacture of pipes.It raised an invoice of Rs. 2 lakh as job charges for making pipes and
returned the manufactured pipes through challan to Plasto Manufacturers on 20.10.20XX in the
same financial year. The same quality and quantity of plastic pipes, as was made for Plasto
Manufacturers, were made by Sudama Industries Ltd. from its own raw material and sold to Solid
Pipes (registered in Jammu and Kashmir) for Rs. 7.5 lakh on 20.10.20XX. Examine the scenario
and offer your views on the following issues with reference to the provisions relating to job work
under the GST laws:
(i) Is there any difference between the manufacture of plastic pipes by Sudama Industries
Ltd. for Plasto Manufacturers and for Solid Pipes?
(ii) Whether Sudama Industries can use its own material even when it is manufacturing the
plastic pipes on job-work basis?
(iii) Whether sending the plastic and moulds to Sudama Industries Ltd. by Plasto Manufacturers
is a supply and a taxable invoice needs to be issued for the same?
(iv) Whether Sudama Industries should include the value of free of cost plastic and moulds
supplied by Plasto Manufacturers in its job charges?
Ans: (i) As per section 2(68) of the CGST Act, 2017, job work means any treatment or process
undertaken by a person on goods belonging to another registered person and the
expression “job worker” shall be construed accordingly. The registered person on whose
goods (inputs or capital goods) job work is performed is called the principal. Thus, the
job worker is expected to work on the goods sent by the principal.
Therefore, when the goods are manufactured by Sudama Industries Ltd. for Plasto
Manufacturers, it is job work as the manufacturing process is undertaken on inputs
(plastic and moulds) supplied by the principal (Plasto Manufacturers) and when goods
are manufactured for Solid Pipes, it is manufacture on own account as the pipes are
manufactured from company’s own raw material. Further, manufacture on job work
basis is a supply of service in terms of para 3 of Schedule II to the CGST Act, 2017 and
manufacture of pipes on own account is a supply of goods.
(ii) It has been clarified vide Circular No. 38/12/2018 GST dated 26.03.2018 that the job
worker, in addition to the goods received from the principal, can use his own goods for
providing the services of job work.
(iii) Section 143 of the CGST Act, 2017 provides that the registered principal may, without
payment of tax, send inputs or capital goods to a job worker for job work. Subsequently,
on completion of the job work, the principal shall either bring back the goods to his
place of business or supply (including export) the same directly from the place of

business/ premises of the job worker within one year in case of inputs or within three
years in case of capital goods (except moulds and dies, jigs and fixtures or tools). Thus,
the provision relating to return of goods is not applicable in case of moulds, die s, jigs,
fixtures and tools.
If the time frame of one year/ three years for bringing back or further supplying the
inputs/ capital goods is not adhered to, the activity of sending the goods for job work
shall be deemed to be a supply by the principal on the day when the said inputs/ capital
goods were sent out by him. Thus, essentially, sending goods for job work is not a supply
as such, but it acquires the character of supply only when the inputs/ capital goods sent
for job work are neither received back by the principal nor supplied further by the
principal from the place of business/ premises of the job worker within one/ three years
of being sent out.
Therefore, sending of plastic and moulds by Plasto Manufacturers to Sudama Industries
Ltd. (job worker) is not supply as the manufactured pipes are received back within the
stipulated time and the provisions relating to return of goods are not applicable in case
of moulds.
Rule 45 of the CGST Rules provides that the inputs, semi-finished goods or capital goods
being sent for job work shall be sent under the cover of a challan issued by the principal.
Therefore, Plasto Manufacturers need not issue a taxable invoice for sending the inputs
to Sudama Industries Ltd. but should send the inputs under the cover of a challan.
(iv) As per section 15(2)(b) of the CGST Act, any amount that the supplier is liable to pay
in relation to such 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 or services or both,
is includible in the value of supply. However, Sudama Industries Ltd. should not include
the value of free of cost plastic and moulds supplied by Plasto Manufacturers in its job
charges as Sudama Industries Ltd. is manufacturing the plastic pipes on job work basis.
The scope of supply of the Sudama Industries Ltd. is to manufacture plastic pipes from
the raw material supplied by the Plasto Manufacturers. Thus, at no point of time was
Sudama Industries Ltd. (supplier of job work service) liable to pay for the raw material
and therefore, the value thereof should not be included in its job charges even though
the same has been incurred by Plasto Manufacturers (recipient of job work service).
Q.7 Bedi Manufacturers, a registered person, instructs its supplier to send the capital goods directly
to Rajesh Enterprises, who is a job worker, outside its factory premises for carrying out certain
operations on the goods. The goods were sent by the supplier on 10-04-20XXand were received
by the job worker on 15-04-20XX. Rajesh Enterprises carried out the job work, but did not return
the capital goods to their principal - Bedi Manufacturers. Discuss whether Bedi Manufacturers

are eligible to retain the input tax credit availed by them on the capital goods. What action under
the GST Act is required to be taken by Bedi Manufacturers.
What would be your answer if in place of capital goods, jigs and fixtures are supplied to the job
worker and the same has not been returned to the principal?
Ans: As per section 19(5) of the CGST Act, 2017, the principal is entitled to take input tax credit of
capital goods sent for job work even if the said goods are directly sent to job worker.
Further, section 19(6) of the CGST Act, 2017 stipulates that where the capital goods sent directly
to a job worker are not received back by the principal within a period of 3 years of the date of
receipt of capital goods by the job worker, it shall be deemed that such capital goods h ad been
supplied by the principal to the job worker on the day when the said capital goods were received
by the job worker.
In view of aforementioned provisions, Bedi Manufacturers are eligible to retain the input tax credit
availed by them on the capital goods.
However, if the capital goods are not returned by Rajesh Enterprises within 3 years from
15.04.20XX (date of receipt of capital goods by job worker), it shall be deemed that such capital
goods had been supplied by Bedi Manufacturers to Rajesh Enterprises on 15.04.20XX and Bedi
Manufacturers shall be liable to pay the tax along with applicable interest.
However, there is no time limit for return of moulds and dies, jigs and fixtures or tools sent out
to a job worker for job work [Section 19(7) of the CGST Act, 2017.
However, if Rajesh Enterprises does not return the jigs and fixtures to Bedi Manufacturers, it
shall not be considered as a supply of jigs and fixtures to Rajesh Enterprises by Bedi
Manufacturers. In this case also, Bedi Manufacturers will be eligible to retain the input tax credit
availed by them.

Chapter 10 – Registration under GST
Q 1. Determine the effective date of registration in following cases:
a) The aggregate turnover of ABC Associates of Delhi has exceeded ₹ 20 lakh on 1st September.
It submits the application for registration on 20th September. Registration certificate is
granted to it on 25th September.

b) Mehta Teleservices is an internet service provider in Lucknow. Its aggregate turnover exceeds
Rs. 20 lakh on 25th October. It submits the application for registration on 27th November.
Registration certificate is granted to it on 5th December.

Ans:
a. Every supplier becomes liable to registration if his turnover exceeds Rs. 20 lakh [in a State/UT
other than Special Category States] in a financial year [Section 22]. Since in the given case,
the turnover of ABC Associates exceeded Rs. 20 lakh on 1st September, it becomes liable to
registration on said date.
Further, since the application for registration has been submitted within 30 days from such
date, the registration shall be effective from the date on which the person becomes liable
to registration [Section 25 read with rule 10 of the Chapter III - Registration of CGST Rules,
2017]. Therefore, the effective date of registration is 1st September.
b. Since in the given case, the turnover of Mehta Teleservices exceeds Rs. 20 lakh on 25 th
October, it becomes liable to registration on said date.
Further, since the application for registration has been submitted after 30 days from the date
such person becomes liable to registration, the registration shall be effective from the date of
grant of registration. Therefore, the effective date of registration is 5th December.
Q 2. Alpha Pvt. Ltd., Pune provides house-keeping services. The company supplies its services exclusively
through an e-commerce website owned and managed by Clean Indya Pvt. Ltd., Pune. The turnover
of Alpha Pvt. Ltd. in the current financial year is Rs. 18 lakh.
Advise Alpha Pvt. Ltd. as to whether they are required to obtain GST registration. Will your advice
be any different if Alpha Pvt. Ltd. sells readymade garments exclusively through the e-commerce
website owned and managed by Clean Indya Pvt. Ltd.?
Ans: Legal Provision: As per section 22 of the CGST Act every supplier of goods or services or both is
required to obtain registration in the State/ Union territory from where he makes the taxable
supply if his aggregate turnover exceeds Rs. 20 lakh [Rs. 10 lakh in case of specified Special

Category States] in a financial year.
However, section 24 of the said Act enlists certain categories of persons who are mandatorily required
to obtain registration, irrespective of their turnover. Persons who supply goods or services or both
through such electronic commerce operator (ECO), who is required to collect tax at source under
section 52, is one such person specified under clause (ix) of section 24.
However, where the ECO is liable to pay tax on behalf of the suppliers of services under a notification
issued under section 9(5), the suppliers of such services are entitled for threshold exemption.
Further, persons making supplies of services, other than supplies specified under section 9(5)
through an ECO who is required to collect tax at source under section 52, and having an aggregate
turnover, to be computed on all India basis, not exceeding an amount of Rs. 20 lakh [Rs. 10 lakh
for specified special category States] in a financial year, have been exempted from obtaining
registration vide Notification No. 65/2017 CT dated 15.11.2017.
Section 2(45) of the CGST Act defines ECO as any person who owns, operates or manages digital
or electronic facility or platform for electronic commerce.
Electronic commerce is defined under section 2(44) to mean the supply of goods or services or
both, including digital products over digital or electronic network. Since Clean Indya Pvt. Ltd.
owns and manages a website for e commerce where both goods and services are supplied, it will
be classified as an ECO under section 2(45).
Discussion and Conclusion: In the given case, Alpha Pvt. Ltd. provides house-keeping services
through an ECO. It is presumed that Clean Indya is an ECO which is required to collect tax at source
under section 52. However, house-keeping services provided by Alpha Pvt. Ltd., which is not liable
for registration under section 22(1) as its turnover is less than Rs. 20 lakh, is a service notified
under section 9(5). Thus, Alpha Pvt. Ltd. will be entitled for threshold exemption for registration
and will not be required to obtain registration even though it supplies services through ECO.
In the second case, Alpha Pvt. Ltd. sells readymade garments through ECO. Such supply cannot be
notified under section 9(5) as only supplies of services are notified under that section. Since turnover
on all India basis of said person is not exceeding Rs. 20 lacs. Hence he is not liable to be registered
under the Act.
Q 3. 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:

Particulars February March
(in Rs) (in Rs)
Serving of cooked food and cold drinks/non-alcoholic 5,50,000 6,50,000
beverages in restaurant in Maharashtra
Sale of alcoholic liquor for human consumption in 5,00,000
Uttarakhand
Interest received from banks on the fixed deposits 1,00,000 1,00,000
Supply of packed food items from restaurant in 1,50,000 2,00,000
Maharashtra
You are required to provide reasons for treatment of various items given above.
Ans: 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 ₹ 10 lakh.
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 ₹ 20 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’.
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
Turnover of February (In Cumulative turnover of

Particulars
Rs.) February and March (In Rs. )
Serving of cooked food and cold drinks/non-
12,00,000
alcoholic beverages in restaurant in 5,50,000
(550000+650000)
Maharashtra

Add: Sale of alcoholic liquor for human
- 5,00,000
consumption in Uttarakhand [Note-1]
Add: Interest received from banks on the Fixed 2,00,000
1,00,000
Deposits [Note-2] (Rs. 100000 + Rs. 100000)
Add: Supply of packed food items from 3,50,000 (Rs. 150000 + Rs.
1,50,000
restaurant in Maharashtra 200000)
Aggregate Turnover 8,00,000 2250000
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: Rishabh Enterprises was not liable to be registered in the month of February since its
aggregate turnover did not exceed ₹ 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.
Q 4. Shagun started supply of goods in Vasai, Maharashtra from 01.01.20XX. Her turnover exceeded ₹
40 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 ₹ 1,26,000.
Ans: Legal Provision: As per Notification No. 10/2019 CT dated 07.03.2019 any person who is engaged
in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed
40 lakh is exempted from registration. This applies to state of Maharashtra as well. Where the
aggregate turnover of a supplier making supplies from a State/UT exceeds ₹40 lakh in a
financial year, he is liable to be registered in the said State/UT. The said supplier must apply for
registration within 30 days from the date on which he becomes liable to registration. However, in
the given case, although Shagun became liable to registration on 25.01.20XX, she didn’t apply
for registration within 30 days of becoming liable to registration.
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. 10,000 or
(b) An amount equivalent to the tax evaded [Rs.1,26,000 in the given case], whichever is
higher.
Conclusion: Thus, the amount of penalty that can be imposed on Shagun is Rs. 1,26,000.
Q 5. Determine whether registration has to be obtained under GST in case of the following as per
provisions contained under CGST Act, 2017.
1) Fine oils mumbai is engaged in the business of machine oil as well as petrol and diesel. The
total turnover on supply of machine oil is only Rs. 8 lakhs and in case of petrol and diesel
is Rs. 8 crores.
2) Ram lal from Telangana, an agriculturist, for supply of produce out of cultivation of land
amounting to Rs. 21 lakhs.
Ans: Answers of the above mentioned questions are given below:
1. Supply of petrol and diesel is not leviable to GST, but supply of machine oil is taxable. In
order to determine whether Fine oils is liable for registration, turnover of both the supplies,
non-taxable as well as taxable would be taken into account for the threshold of Rs. 40 lakhs.
Here the turnover of machine oil, petrol and diesel exceeds Rs. 40 lakhs (Rs. 8.08 crores).
Thus, Fine oils is liable for registration.
2. As per section 23 of the CGST Act, an agriculturist, to the extent of supply of produce out
of cultivation of land is not liable for registration under GST. In the case of Mr. Ramlal, even
though the turnover of produce out of cultivation has exceeded Rs. 20 lakhs, he will not be
liable for registration.
Q 6. Pari & Sons Sikkim is an unregistered dealer. On 10 th August, 2017 aggregate turnover of Pari &
Sons exceeded Rs. 20,00,000. The firm applied for registration on 27th August, 2017 and was
granted the registration certificate on 1st 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.
Ans: Legal Provision: Section 22(1) of the CGST Act, 2017 provides that every supplier is 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 Rs.20 lakh.
Notification no 10.2019 is not applicable for the State of Sikkim, so the limit of aggregate turnover
will be governed by section 22(1).
Section 25(1) of the CGST Act, 2017 provides that a supplier whose aggregate turnover in a
financial year exceeds Rs. 20 lakh in a State/UT 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).
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 vide rule 10(2) of the CGST Rules, 2017;
otherwise it is the date of grant of registration in terms of rule 10(3) of the CGST Rules, 2017.
Discussion: In the given case, since Pari & Sons have applied for registration on 27.08.2017 which
is within 30 days from the date of becoming liable to registration (10.08.2017), its effective date
of registration is 10.08.2017.
Further, 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 1 month from the date of issuance
of registration certificate [Section 31(3)(a) of the CGST Act, 2017 read with rule 53(2) of CGST
Rules, 2017].
Conclusion: In view of the same, Pari & Sons may issue revised tax invoices against the invoices
already issued during the period between effective date of registration (10.08.2017) and the date
of issuance of registration certificate (01.09 2017), on or before 01.10.2017.
Q 7. With the help of the following information in the case of M/s Jayant Enterprises, Jaipur (Rajasthan)
for the year 2017-18, determine the aggregate turnover for the purpose of registration under the
CGST Act, 2017.
Sr. No Particulars Amount

Sale of diesel on which Sale Tax (VAT) is levied by Rajasthan
(i) 1,00,000
Government.
Supply of goods, after completion of job work, from the place of
(ii) 3,00,000
Jayant Enterprises directly by principal.
(iii) Export supply to England (U.K.) 5,00,000
(iv) Supply to its own additional place of business in Rajasthan. 5,00,000
Outward supply on which GST is to be paid by recipient under reverse
(v) 1,00,000
charge.
All the above amounts are excluding GST.

You are required to provide reasons for treatment of various items given above.

Ans: Computation of aggregate turnover of M/s Jayant Enterprises for the FY 2017 -18
Particulars Amount
Supply of diesel on which Sales Tax (VAT) is levied by Rajasthan Government
1,00,000
[Note-1]
Supply of goods, after the completion of job work, from the place of Jayant
Nil
Enterprises, directly by the principal [Note-2]
Export supply to England [Note-3] 5,00,000

Supply to its own additional place of business in Rajasthan1 [Note-4] Nil
Outward supply on which GST is to be paid by recipient under reverse charge
1,00,000
[Note-5]
Aggregate Turnover 7,00,000
Working Notes:
1. As per section 2(47) of the CGST Act, 2017, exempt supply includes non-taxable supply.
Thus, supply of diesel, being a non-taxable supply, is an exempt supply and exempt supply
is specifically includible in aggregate turnover in terms of section 2(6) of the CGST Act,
2017.
2. Supply of goods after completion of job work by a registered job worker shall be treated as
the supply of goods by the principal in terms of explanation (ii) to section 22 of the CGST
Act, 2017.
3. Export supplies are specifically includible in the aggregate turnover in terms of section 2(6)
of the CGST Act, 2017.
4. Supply made without consideration to units within the same State (under same registration)
is a not a supply and hence not includible in aggregate turnover.
5. Outward supplies taxable under reverse charge would be part of the “aggregate turnover” of
the supplier of such supplies. Such turnover is not included as turnover in the hands of
recipient.
Section 22(1) of the CGST Act, 2017 provides that a supplier whose aggregate turnover in a
financial year exceeds Rs. 20 lakh [Rs. 10 lakh in Special Category States other than Jammu
and Kashmir] in a State/UT is liable to be registered.
However as per Notification No. 10/2019 CT dated 07.03.2019 is issued which exempts any
person who is engaged in exclusive supply of goods and whose aggregate turnover in the
financial year does not exceed 40 lakh. The applicable turnover limit for registration, in the
given case, will be Rs. 40 lakh. Although, the aggregate turnover of M/s Jayant Enterprises
does not exceed Rs. 40 lakh, it is compulsorily required to register in terms of section 24(i)
of the CGST Act, 2017 irrespective of the turnover limit as it is engaged in making inter-State
supplies in the form of exports to England.

Q 8. State the time-period within which registration needs to be obtained in each of the following
independent cases:
(a) Casual taxable person
(b) Person making inter-State taxable supply
Ans: 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 person who is liable to be registered within 30 days from the date on which he
under section 22 or section 24 becomes liable to registration
a casual taxable person or a non-resident at least 5 days prior to the commencement of
taxable person business
In view of the aforesaid provisions:

(a) A casual taxable person must obtain registration at least 5 days prior to the commencement
of its business.
(b) As per section 24 of the CGST Act, person making inter-State taxable supply is liable to get
compulsorily registered. Therefore, such person must obtain registration within 30 days from
the date on which he becomes liable to registration.
Q 9. 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.
Ans: 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)].
Q 10. 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 Rs. 20 lakh during the financial year.
b) An agriculturist who is only engaged in supply of produce out of cultivation of land.
Ans: (a) 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 the threshold limit 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.

Q 11. What are the advantage of taking registration in GST?
Ans: Registration 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.
• Become eligible to avail various other benefits and privileges rendered under the GST laws.
Q 12. Can a person without GST registration collect GST and claim ITC?
Ans: 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.
Q 13. If a person is operating in different States, with the same PAN number, can he operate with a single
registration?
Ans: No. 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)
Q 14. Can a person having multiple place of business in a State obtain separate registrations for each place
of business?
Ans: Yes. In terms of the proviso to sub-section (2) of section 25, a person having multiple place of
business in a State may obtain a separate registration for each business of business, subject to
such conditions as may be prescribed.
Q 15. Is there a provision for a person to get himself voluntarily registered though he may not be liable to
pay GST?
Ans: Yes. In terms of sub-section (3) of section 25, a person, though not liable to be registered under
sections 22 or 24 may get himself registered voluntarily, and all provisions of this Act, as are
applicable to a registered taxable person, shall apply to such person.
Q 16. Can the Department, through the proper officer, suo-moto proceed to register of a person?
Ans: Yes. In terms of sub-section (8) of section 25, where a person who is liable to be registered
under GST law fails to obtain registration, the proper officer may, without prejudice to any action

which may be taken under CGST Act, or under any other law for the time being in force, proceed
to register such person in the manner as is prescribed in the CGST Rules, 2017.
Q 17. Whether the registration granted to any person is permanent?

Ans: Yes, the registration certificate once granted is permanent unless surrendered, cancelled, suspended
or revoked.
Q 18. Is it necessary for the UN bodies to get registration under GST?

Ans: Yes. In terms of section 25(9) of the CGST Act, all notified UN bodies, Consulate or Embassy of
foreign countries and any other class of persons so notified would be required to obtain a unique
identification number (UIN) from the GST portal.
The structure of the said ID would be uniform across the States in conformity with GSTIN structure
and the same will be common for the Centre and the States. This UIN will be needed for claiming
refund of taxes paid on notified supplies of goods and services received by them, and for any other
purpose as may be notified.
Q 19. What is the responsibility of the taxable person making supplies to UN bodies?
Ans: The taxable supplier making supplies to UN bodies is expected to mention the UIN on the invoices
and treat such supplies as supplies to another registered person (B2B) and the invoices of the
same will be uploaded by the supplier.
Q 20. What is the validity period of the registration certificate issued to a casual taxable person and non-
resident taxable person?
Ans: In terms of section 27(1) read with proviso thereto, 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 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 of 90 days by a further period not exceeding 90 days.
Q 21. What happens when the registration is obtained by means of willful misstatement, fraud or
suppression of facts?
Ans: In such cases, the registration may be cancelled with retrospective effect by the proper officer
[Section 29(2)(e)].

Q 22. Is there an option to take centralized registration for services under GST Law?
Ans: No, the tax payer has to take separate registration in every State from where he makes taxable
supplies.
Q 23. What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Ans: The transferee or the successor shall be liable to be registered with effect from such transfer or
succession and he will have to obtain a fresh registration with effect from the date of such
transfer or succession [Section 22(3)].
Q 24. At the time of registration, will the assessee have to declare all his places of business?
Ans: Yes. The principal place of business and place of business have been separately defined under
section 2(89) & 2(85) of the CGST Act respectively. The taxpayer will have to declare the
principal place of business as well as the details of additional places of business in the registration
form.
Q 25. What will be the time limit for the decision on the on-line registration application?
Ans: If the information and the uploaded documents are found in order, the proper officer has to
respond to the application within 3 common working days. If he communicates any deficiency or
discrepancy in the application within such time, then the applicant will have to remove the
discrepancy / deficiency within 7 days of such communication. Thereafter, for either approving the
application or rejecting it, the proper officer has 7 days’ time from the date when the taxable
person communicates removal of deficiencies. In case no response is given by the proper officer
within the said time line, the portal shall automatically generate the registration.
Q 26. What will be the time of response by the applicant if any query is raised in the online application?
Ans: If during the process of verification, one of the tax authorities raises some query or notices some
error, the same shall be communicated to the applicant and to the other tax authority through
the GST Common Portal within 3 common working days. The applicant will reply to the query/rectify
the error/ answer the query within a period of 7 days from the date of receipt of deficiency
intimation.
On receipt of additional document or clarification, the relevant tax authority will respond within
7 common working days from the date of receipt of clarification.

Q 27. Does cancellation of registration impose any tax obligations on the person whose registration is so
cancelled?
Ans: Yes, as per section 29(5) of the CGST Act, every registered taxable 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.
Q 28. ABC Ltd. of Jaipur, Rajasthan has effected intra-State supplies of taxable goods amounting Rs.
12,00,000 till 31-12-2017. On 01-01-2018 it has effected inter-State supply of taxable goods amounting
Rs. 1,00,000. ABC 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 the thre during financial year 2017-18. As a consultant
of the company you are required to advise the company relating to registration requirements.
Ans: The opinion of ABC Ltd. Is not correct. As per provisions of Section24 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 u/s 22 are not met. Hence, ABC Ltd, is mandatorily
required to obtain registration.
As per provisions of Section 25 of CGST Act, 2017 every person who is liable to be registered under
section 22 or section24 shall apply for registration in every such State or Union territory in which
he is so liable 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. Thus, ABC Ltd. Is required to obtain
registration up 31-01-2018
Multiple Choice Questions (MCQs)
1) Can a person without GST registration claim ITC and collect tax?
A. No
B. Yes
C. Only if he is located in special category states
D. Only with the prior permission of Central govt.
Ans: A: No

2) Within how many days an application for revocation of cancellation of registration can be
made?
A. 30 days
B. 15 days
C. 20 days
Ans: A: 30 days
3) In case where a person makes supply from multiple states and his aggregate turnover exceeds
threshold limit, he has to get registered.
A. All of the states
B. In only one state where turnover is greater than 20 lakhs
C. In states where turnover is greater than 20 lakhs
D. In any one of the states
Ans: A: All of the States
4) In case of job worker, once the work is being completed, the value of goods shall be included
in the turnover of .
A. Principal
B. Job worker
C. Agent
Ans: A: Principal
5) Mr. Jeet Ram, an agriculturist, located in the State of Uttar Pradesh, is a re-seller of agricultural
produce cultivated from land. His turnover for the period July, 2017 to March, 2018 is Rs.
20,00,000/-.He has made occasional inter-State taxable supplies also of Rs. 10,00,000/- of
handicraft goods to the State of Jammu and Kashmir during the month of March, 2018.
State whether he is liable for registration under the Act or not.
A. Yes liable for registration
B. Not liable for registration
Ans: B: Not liable for registration

6) Mr. Champak, located in the State of Himachal Pradesh, a job worker, is engaged in providing
job work services relating to silverware articles to his Principal, Mr. Mote Lal, in the State of
Rajasthan. The details of his turnover are as under:
For the period July, 2017 to March, 2018: Rs. 19,00,000/-.
Mr. Champak, has earned continuous rental income of Rs. 15,000/- per month from
his residential flat in Delhi for nine months from July, 2017 to March, 2018. He has
also made wholly exempt supplies of handicraft items of Rs. 50,000/- during the period,
December, 2017 to March, 2018.
Compute the aggregate turnover of Mr. Champak for the financial year 2017-18 under
the CGST Act, 2017, and also state whether he is liable for registration under the Act
or not.
A. Rs. 20,85,000/-; Liable for registration.
B. Rs. 20,35,000/-; Liable for registration.
C. Rs. 19,00,000/-; Not liable for registration.
D. Rs. 19,50,000/-; Liable for registration.
Ans: A: Rs. 20,85,000/-; Liable for registration.
7) Where the business carried on by a registered person is transferred as a going concern, then
will the transferee be liable to register in GST?
A. Yes
B. No
C. Option of transferee
D. Depends on terms of transfer
Ans: A: Yes
8) Application for registration under GST has to be made in which form :

A. GSTREG - 01
B. GSTREG - 03
C. GSTREG - 06
D. GSTREG – 02
Ans: A: GSTREG – 01

9) If a person is located in Maharashtra and engaged in supply of services, then what is limit of
aggregate turnover above which the person shall be liable for registration?
A. Rs. 20 lacs
B. Rs. 10 lacs
C. Rs. 5 Lacs
D. Rs. 1 crore
Ans: A: Rs. 20 lacs
10) A person making inter-state taxable supply of services is compulsory required to obtain
registration even if his aggregate turnover in India on all India basis doesn’t exceeds Rs. 20
lacs / Rs. 10 lacs (in case of special category states)
A. Correct
B. Incorrect
C. At the discretion of proper officer
Ans: A: Correct
11) Mr. Rupesh is a dealer and has one office in Delhi and another in Mumbai. In order to
determine the eligibility of obtaining registration under GST the turnover of both the offices
needs to be considered. Whether the statement is correct?
A. Correct
B. Incorrect
C. Turnover of the both units to be considered with permission of CG
Ans: A: Correct
12) Mr. Suresh of Mumbai is engaged in making export and supply to SEZ units and his aggregate
turnover in a year doesn’t exceed Rs. 20 lacs. Is he liable to register under GST?
A. Yes, since export and supply to SEZ is an interstate supply
B. No, since aggregate turnover doesn’t exceed Rs. 20 lacs

Ans: A: Yes, since export and supply to SEZ is an interstate supply
13) A person engaged in supply of services where the recipient of services is liable to pay tax under
RCM basis. Whether supplier of service is liable to register under GST?
A. Yes
B. No
Ans: B: No
14) Is it mandatory for e-commerce operator to obtain registration?

A. Yes ECO who is required to collect TCS U/S 52;
B. No
Ans: A: Yes ECO who is required to collect TCS U/S 52;
15) Mr. Suresh works as an agent located in Delhi. Mr. Ramesh is a manufacturer and located
in Maharashtra. Mr. Suresh (Agent) agrees to purchase certain goods from New Delhi on
behalf of Mr. Ramesh (Principal) and supplies them to the customers. The aggregate
turnover of Mr suresh during an year is less than Rs. 20. State whether he is liable to
obtain registration under GST or not?
A. Yes, as per Section 24 he needs to obtain registration compulsorily
B. No
Ans: A: Yes, as per Section 24 he needs to obtain registration compulsorily
16) 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
st
by 1 December [30 days] in the State of Madhya Pradesh. It applies for registration on
28th November and is granted registration certificate on 5th December. The effective date of

registration of Sugam Services Ltd. is 1st November. State whether statement is correct or not
A. Yes
B. No
C. Partially correct
Ans: A: Yes
17) Within how many days a person should apply for registration?
A. Within 30 days from the date he is liable for registration
B. Within 15 days from the date he is liable for registration
C. Within 7 days from the date he is liable for registration
D. Within 45 days from the date he is liable for registration
Ans: A: Within 30 days from the date he is liable for registration
18) GSTIN consists of how many digits?

A. 10 Digits
B. 15 Digits
C. 7 Digits
D. 12 Digits
Ans: B: 15 Digits
19) The application shall be forwarded to the who shall examine the application and
the accompanying documents for GST registration.
A. Proper Ofﬁcer
B. GSTN
C. GSTP
D. GST Portal
Ans: B: Proper Officer

20) A person having place of business in a state obtain a separate registration for
each place of business.
A. Single, shall
B. Multiple, Shall
C. Multiple, May
D. Single, May
Ans: B: Multiple, May
21) Who are liable to make advance deposit of tax at the time of registration ?
A. ISD
B. Job Worker
C. CTP and NRTP
D. Agent
Ans: C: CTP and NRTP
22) Which is valid application form for registration of CTP

A. GSTREG - 01
B. GSTREG - 02
C. GSTREG - 09
Ans: C: GSTREG – 09
23) Which of the following statement is correct for Casual taxable Person?
A. CTP is not required to obtain registration under GST
B. CTP is required to obtain registration if the aggregate turnover crosses Rs. 20 lacs
C. CTP may voluntarily apply for registration under GST
D. As per section 24 a CTP is compulsorily required to obtain registration
Ans: D: As per section 24 a CTP is compulsorily required to obtain registration

24) The registration certificate granted for NRTP is valid for days.
A. 30 days
B. 15 days
C. 90 days
D. 120 days
Ans: C: 90 Days
25) In case a person registered other than section 10(i.e. Composition Scheme) has not filed return
for months then registration granted shall be cancelled by proper officer.
A. 3 consecutive Months
B. 6 consecutive Months
C. 4 consecutive Months
Ans: C: 6 consecutive Months
26) In case of firm if there is change in constitution of the firm due to change in Legal name of
Business then the firm has to apply for
A. Fresh Registration
B. Amendment of Registration
C. Cancellation of Registration
Ans: B: Amendment of Registration
27) What is the validity of registration certificate?

A. 1 year
B. 6 months
C. 5 years
D. Valid till it is cancelled
Ans: D: Valid till it is cancelled

28) As per Section 24, An E Commerce operator is liable to obtain registration irrespective of
aggregate turnover?
A. Correct
B. Incorrect
Ans: A: Correct
Q1. LMN Pvt. Ltd., Coimbatore exclusively manufactures and sells product ‘X’ which is exempt from
GST vide notifications issued under relevant GST legislations. The company sells ‘X’ only within
Tamil Nadu. The turnover of the company in the previous year was ₹ 45 lakh. The company
expects the sales to grow by 30% in the current year. The company purchased additional machinery
for manufacturing ‘X’ on 01.07.20XX. The purchase price of the capital goods was ₹ 30 lakh exclusive
of GST @ 18%.
However, effective from 01.11.20XX, exemption available on ‘X’ 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 ₹ 45 lakh.
(a) Examine the above scenario and advise LMN Pvt Ltd. whether it needs to get registered under
GST.
(b) If the answer to the above question is in affirmative, advise LMN Pvt. Ltd. whether it can
avail input tax credit on the additional machinery purchased exclusively for manufacturing “X”?
Ans: (a) Section 22(1) of the CGST Act, 2017 read with Notification No. 10/2019 CT dated 07.03.2019
inter alia provides that every supplier who is engaged in intra-State exclusive supply of goods is
liable to be registered under GST in the State/ Union territory from where he makes the taxable
supply of goods only when aggregate turnover in a financial year exceeds ₹ 40,00,000.
However, the above provisions are not applicable to few specified States, i.e. States of
Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana,
Tripura, Uttarakhand.
Further, a person exclusively engaged in the business of supplying goods and/or services that are
not liable to tax or are wholly exempt from tax is not liable to registration in terms of section
23(1)(a) of CGST Act, 2017.
In the given case, the turnover of the company for the half year ended on 30.09.20XX is
45 lakh which is more than the applicable threshold limit of 40 lakh. Therefore, as per above
mentioned provisions, the company should be liable to registration. However, since LMN 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.

However, the position will change from 01.11.20XX as the supply of goods become taxable from
that day and the turnover of company is above ₹ 40 lakh. It is important to note here
that in terms of section 2(6) of the CGST Act, 2017, the aggregate turnover limit of ₹ 40
lakh includes exempt turnover also.
Therefore, turnover of ‘X’ will be considered for determining the limit of ₹ 40 lakh even
though the same was exempt from GST. Therefore, the company needs to register within 30
days from 01.11.20XX (the date on which it becomes liable to registration) in terms of section
25(1) of the CGST Act, 2017.
(b) Section 18(1)(a) of the CGST Act, 2017 provides that a person who has applied for registration
within 30 days from the date on which he becomes liable to registration and has been
granted such registration shall be entitled to take credit of input tax in respect of inputs held
in stock and inputs contained in semi-finished or finished goods held in stock on the day
immediately preceding the date from which he becomes liable to pay tax under the provisions
of this Act.
Thus, LMN Pvt. Ltd. cannot avail credit for additional machinery purchased exclusively for
manufacturing X as input tax credit of only inputs is allowed when a person gets registered for
the first time.
Q2. Mahadev Enterprises, a sole proprietorship firm, opened a shopping complex dealing in supply of goods
at multiple locations, i.e. in Himachal Pradesh, Uttarakhand and Tripura in the month of June.
It has furnished the following details relating to the sale made at such multiple locations for
the month of June:-
Particulars Himachal Pradesh Uttarakhand Tripura
(₹)* (₹)* (₹)*

Intra- State sale of taxable goods 22,50,000 - 7,00,000
Intra-State sale of exempted goods - - 6,00,000
Interest received from banks on the - - 60,000
fixed deposits
Intra-State sale of non-taxable goods - 21,00,000 40,000
* excluding GST
With the help of the above mentioned information, answer the following questions giving reasons:-
(1) Determine whether Mahadev Enterprises is liable to be registered under GST law and what
is the threshold limit of taking registration in this case.
(2) Explain with reasons whether your answer in (1) will change in the following independent cases:
(a) If Mahadev Enterprises is dealing in taxable supply of goods only from Himachal Pradesh;
(b) If Mahadev Enterprises is dealing in taxable supply of goods and services only from Himachal
Pradesh;

(c) If Mahadev Enterprises is dealing in taxable supply of goods only from Himachal Pradesh
and has also effected inter - State supplies of taxable goods amounting to ₹ 4,00,000.
Ans: As per section 22 of the CGST Act, 2017 read with Notification No. 10/2019 CT dated 07.03.2019, a
supplier is liable to be registered in the State/Union territory from where he makes a taxable supply
of goods and/or services, if his aggregate turnover in a financial year exceeds the threshold limit.
The threshold limit for a person making exclusive intra- State taxable supplies of goods is as under:-
(i) ₹ 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(ii) ₹ 20 lakh for the States of States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(iii) ₹ 40 lakh for rest of India.
The threshold limit for a person making exclusive taxable supply of services or supply of both goods
and services is as under:-
(i) ₹ 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(ii) ₹ 20 lakh for the rest of India.
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.
In the light of the afore-mentioned provisions, the aggregate turnover of Mahadev Enterprises is
computed as under:
Computation of State-wise aggregate turnover of Mahadev Enterprises
Particulars Himachal Uttarakhand Tripura
Pradesh
(₹)* (₹)* (₹)*
Intra- State sale of taxable goods 22,50,000 - 7,00,000
Intra-State sale of exempted goods - - 6,00,000
Interest received from banks on the fixed - - 60,000
deposits [Note-1]
Intra-State sale of non-taxable goods [Note-2] - 21,00,000 40,000
Aggregate Turnover 22,50,000 21,00,000 14,00,000
Notes:
1. 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. Since
aggregate turnover includes exempt supply, interest received from banks on the fixed
deposits, being exempt supply, is included in the aggregate turnover.

2. As per section 2(47) of the CGST Act, 2017, exempt supply includes non-taxable supply. Thus,
intra -State supply of non-taxable goods in Uttarakhand, being a non- taxable supply, is an
exempt supply and is, therefore, included in the aggregate turnover.
In the given case, Mahadev Enterprises is engaged in exclusive intra-State supply of goods
from Himachal Pradesh and Uttarakhand and in supply of both goods and exempted
services from Tripura, the threshold limit for registration will be ₹ 40 lakh, ₹ 20 lakh and ₹ 10
lakh respectively.
Further, since Mahadev Enterprises also makes taxable supply of goods from one of the specified
Special Category States (i.e. Tripura), the threshold limit for registration will be reduced to ₹
10 lakh.
(1) Thus, in view of the above-mentioned provisions, Mahadev Enterprises is liable to be
registered under GST law with the aggregate turnover amounting to ₹ 57,50,000
(computed on all India basis). The applicable threshold limit of registration in this
case is ₹ 10 lakh.
(2) (a) If Mahadev Enterprises is dealing in supply of goods only from Himachal
Pradesh, the applicable threshold limit of registration would be ₹ 40 lakh. Thus,
Mahadev Enterprises will not be liable for registration as its aggregate turnover would be
₹ 22,50,000.
(b) If Mahadev Enterprises is dealing in taxable supply of goods and services only from
Himachal Pradesh then higher threshold limit of ₹ 40 lakh will not be applicable as the
same applies only in case of exclusive supply of goods. Therefore, in this case, the
applicable threshold limit will be ₹ 20 lakh and hence, Mahadev Enterprises will be
liable to registration.
(c) In case of inter-State supplies of taxable goods, section 24 of the CGST Act, 2017
requires compulsory registration irrespective of the quantum of aggregate turnover. Thus,
Mahadev Enterprises will be liable to registration.
Q3. Which among the following cannot be a reason for cancellation of registration?
(a) There is a change in the constitution of business from partnership firm to proprietorship.
(b) The business has been discontinued.
(c) A composition taxpayer has not furnished returns for three consecutive tax periods .
(d) A registered person, other than composition taxpayer, has not furnished returns for three consecutive
tax periods.
Ans: A registered person, other than composition taxpayer, has not furnished returns for three consecutive
tax periods.

Q4. M/s. Shahrukh Beedi Company (P) Ltd., is a manufacturer of cigarettes. It has been registered under
GST in the State of West Bengal.
The turnover of the company from the period April, 2018 to March, 2019 is Rs. 90,00,000/-. The
Excise duty paid on the cigarettes removed is Rs. 10,00,000/-. CGST and SGST paid on the cigarettes
is Rs. 18,00,000/-.
The company also recovered actual freight of Rs. 5,00,000/- on the supply of cigarettes so made
during the financial year 2018-19, and also charged CGST/ SGST thereon. The company paid RCM @
5% while availing the services of GTA of Rs. 5,00,000/-.
Compute the aggregate turnover of M/s. Shahrukh Beedi Company (P) Ltd.,
(a) Rs. 90,00,000/-
(b) Rs. 1,00,00,000/-
(c) Rs. 1,18,00,000/-
(d) Rs. 1,05,00,000/-
Ans : (d) Rs. 1,05,00,000/-
Q5. The aggregate turnover of Sangri Services Ltd., Delhi exceeded Rs. 20 lakh on 12 th August. He
applied for registration on 3rd September and was granted the registration certificate on 6 th
September. You are required to advice Sangri Services Ltd. 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.
Ans: As per section 31 read with CGST Rules, 2017, every registered person who has been granted
registration with effect from a date earlier than the date of issuance of certificate of registration to
him, may issue Revised Tax Invoices. Revised Tax Invoices shall be issued within 1 month from the
date of issuance of certificate of registration. Revised Tax Invoices shall be issued within 1 month
from the date of issuance of registration in respect of taxable supplies effected during the period
starting from the effective date of registration till the date of issuance of certificate of registration.
Therefore, in the given case, Sangri Services Ltd. has to issue the Revised Tax Invoices in respect of
taxable supplies effected during the period starting from the effective date of registration (12th
August) till the date of issuance of certificate of registration (6th September) within 1 month from
the date of issuance of certificate of registration, i.e. on or before 6th October.
Q6. Rajesh Dynamics, having its head office in Chennai, Tamil Nadu carries on the following activities with
respective turnovers in a financial year:
Particular Amount
Supply of petrol at Chennai, Tamil Nadu 18,00,000
Value of inward supplies on which tax is payable on reverse charge basis 9,00,000

Supply of transformer oil at Chennai, Tamil Nadu 2,00,000
Value of branch transfer from Chennai, Tamil Nadu to Bengaluru, 1,50,000
Karnataka without payment of consideration
Value of taxable supplies at Manipur branch 11,50,000
It argues that it does not have taxable turnover crossing threshold limit of ₹40,00,000 either
at Chennai, Tamil Nadu or Bengaluru, Karnataka and including turnover at Manipur branch. It
believes that the determination of aggregate turnover is not required for the purpose of
obtaining registration, but is required for determining composition levy.
Decide based on the above facts:
(i) The aggregate turnover of Rajesh Dynamics.
(ii) All conditions that fulfil the requirements for registration under CGST Act, 2017 in the given
circumstances.
Ans : Computation of aggregate turnover of Rajesh Dynamics:
Particulars RS
Supply of petrol at Chennai, Tamil Nadu [Being a non-taxable supply, it is 18,00,000
an exempt supply and thus, includible in aggregate turnover vide section
2(6) of CGST Act, 2017]
Value of inward supplies on which tax is payable on reverse charge basis Nil
Supply of transformer oil at Chennai, Tamil Nadu 2,00,000
Value of branch transfer from Chennai, Tamil Nadu to Bengaluru, 1,50,000
Karnataka without payment of consideration [Being a taxable supply, it is
includible in aggregate turnover]
Value of taxable supplies of Manipur Branch 11,50,000
Aggregate turnover 33,00,000
Rajesh Dynamics is not liable to be registered in Chennai, Tamil Nadu, if his aggregate turnover in a
financial year does not exceeds ₹ 40 lakh. However, since Rajesh Dynamics also makes supplies from
Manipur, a specified Special Category State, the threshold exemption gets reduced to ₹ 10 lakh in
terms of section 22(1) of CGST Act, 2017 [Notification No.10/2019-CT dated. 07.03.2019].
Rajesh Dynamics’ argument that it is not liable to registration since the threshold exemption of ₹ 40
lakh is not being crossed either at Chennai, Tamil Nadu, Bengaluru, Karnataka or Manipur is not
correct as firstly, the aggregate turnover to be considered in its case is ₹ 10 lakh and not ₹ 40 lakh
and secondly, the same is computed on all India basis and not State-wise.
Further, Rajesh Dynamics is also wrong in believing that aggregate turnover is computed only for the
purpose of determining the eligibility limit for composition levy since the aggregate turnover is
required for determining the eligibility for both registration and composition levy.
Further, Rajesh Dynamics is compulsorily required to register under section 24 of the CGST Act, 2017
irrespective of the turnover limit as it is liable to pay tax on inward supplies under reverse charge and
it also makes inter-State taxable supply.

Q.7 State which of the following statements is incorrect:
(i) An agent, supplying taxable goods on behalf of principal where invoice is issued in the name of
principal, is required to get compulsorily registered under GST.
(ii) Persons who are required to deduct tax under section 51 of the CGST Act, 2017, whether or not
separately registered under CGST Act, are compulsory required to get registered under GST without
any threshold limit.
(iii) Every person supplying online information and database access or retrieval services from a place
outside India to a registered person in India is compulsory required to get registered under
GST without any threshold limit.
(iv) Persons who supply services, other than supplies specified under sub-section (5) of section 9 of
the CGST Act, 2017, through such electronic commerce operator who is required to collect tax at
source under section 52 of the CGST Act, 2017 are compulsory required to get registered under GST
without any threshold limit.
(a) (i), (ii)
(b) (iii), (iv)
(c) (i), (iii), (iv)
(d) (i), (ii), (iii) and (iv)
Ans: (c) (i), (iii), (iv)
Q.8 Mr. Lal, a registered person under GST, was the proprietor of M/s. Spiceton Restaurant.
He died and left behind his wife and son on 15th August. His son – Mr. Pal - wants to continue the
business of the deceased father.
The GST consultant of M/s. Spiceton Restaurant gives advice to Mr. Palas to how he can continue the
business of his deceased father.
Which of the following options is correct in accordance with the
provisions of GST law?
(a) Mr. Pal should get himself registered under GST in the name and style M/s. Spiceton Restaurant
under his own PAN and file Form GST ITC 02.
(b) Mr. Pal can get the authorized signatory changed by approaching to the Proper Officer and can
continue the same business.
(c) Mr. Pal should close the old firm and start new business under different name.
(d) Mr. Pal should do the business with his mother as the new proprietor of the M/s. Spiceton
Restaurant, and Mr. Pal should act as a Manager.
Ans: (a) Mr. Pal should get himself registered under GST in the name and style M/s. Spiceton
Restaurant under his own PAN and file Form GST ITC 02.

Q.9 Mrs. Reena is a consultant. She has provided the following details relating to services provided and
received by her:
1. Supply of management consultancy services for ₹ 500,000 p.a.
2. Supply of accounting services for ₹ 200,000 p.a.
3. Renting of immovable property for residential purposes for ₹ 10,000 p.m.
4. Management consultancy services provided to a hospital for ₹ 50,000 one time
5. Services provided to a client outside India for ₹ 50,000 p.m.
6. Services received from a lawyer for ₹ 1,00,000
Note: Assume that amounts given above are exclusive of GST, wherever applicable.
What shall be her aggregate turnover for the financial year under GST provided her aggregate turnover
during previous financial year was ₹ 24 lakh?
(a) ₹ 9,10,000
(b) ₹15,70,000
(c) ₹ 14,70,000
(d) ₹ 8,20,000
Ans: (c) ₹ 14,70,000
Q.10 Mr. Manjot is a trader supplying goods from his firm M/s. Singh Traders. The office of the firm is
located in Delhi whereas its godowns are located in the State of Uttar Pradesh, Punjab and Jammu &
Kashmir (J & K) respectively.
M/s. Singh Traders made following intra-State supplies from different States during the current
financial year:
(i) Delhi - Taxable supplies: ₹ 21,00,000
(ii) Punjab – Exempted supplies: ₹ 6,00,000
(iii) Uttar Pradesh – Taxable and exempted supplies: ₹ 3,00,000 each respectively.
(iv) J & K – Taxable and exempted supplies: ₹ 8,00,000 and ₹ 3,00,000 respectively.
Ascertain the States in which Mr. Manjot is required to take registration under GST:
(a) Delhi, Punjab, Uttar Pradesh and J & K
(b) Delhi, Uttar Pradesh and J & K
(c) Delhi and Uttar Pradesh
(d) Delhi
Ans: (b) Delhi, Uttar Pradesh and J & K
Q.11 Shah Beedi Company (P) Ltd. is a manufacturer of cigarettes. It has been registered under GST in
the State of West Bengal.
The turnover of the company from the current financial year is ₹ 90,00,000. The excise duty paid on
the cigarettes removed is ₹ 10,00,000. CGST and SGST paid on the cigarettes is ₹ 18,00,000 each.
The company also recovered actual freight of ₹ 5,00,000 from the buyers on the supply of cigarettes
so made during the current financial year and also charged CGST/ SGST thereon. The company paid

tax @ 5% under reverse charge while availing the services of GTA of
₹ 5,00,000.
Compute the aggregate turnover of Shah Beedi Company (P) Ltd. assuming that the amounts given
above are exclusive of GST.
(a) ₹ 90,00,000
(b) ₹ 1,00,00,000
(c) ₹ 1,18,00,000
(d) ₹ 1,05,00,000
Ans: (d) ₹ 1,05,00,000
Q.12 SNP Pvt ltd Coimbatore, Tamil Nadu, exclusively manufactures and sells product ‘Z’ which is exempt
from GST vide notifications issued under relevant GST legislation. The company sells product ‘Z’ only
within Tamil nadu and it not registered under GST Further all inward supplies of the company are
taxable under forward charge. The turnover of the company in the previous year was ` 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 1st July. The purchase
price of such capital goods was ` 20 lakh exclusive of GST @ 18%.
However, effective from 1st November Exemption available Z was withdrawal by the central
Government and GST @ 12% was imposed thereon. The turnover of the company for the half
year ended on 30th September was ` 50 lakh. The Board of Directors of SNP Pvt. Ltd. wants to
know whether they have to register under GST? Advice SNP Pvt. Ltd. on the above issue with
reference to the provisions of GST law. (MTP-Nov21)
Ans: Section 22(1) of the CGST Act, 2017 read with Notification No. 10/2019 CT dated 07.03.2019
inter alia provides that every supplier who is exclusively engaged in intra-State supply of
goods is liable to be registered under GST in the State/ Union territory from where he makes the
taxable supply of goods only when aggregate turnover in a financial year exceeds ` 40,00,000.
However, the above provisions are not applicable to few specified States, i.e. States of Arunachal
Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura,
Uttarakhand.
However, a person exclusively engaged in the business of supplying goods and/or services that
are not liable to tax or are wholly exempt from tax is not liable to registration in terms of section
23(1)(a) of the CGST Act, 2017.
In the given case, the turnover of the company for the half year ended on 30th September is ` 50
lakh which is more than the applicable threshold limit of ` 40 lakh. Therefore, as per section 22,
the company will be liable to registration. However, since SNP Pvt. Ltd. supplied exempted goods
till 31st October, it was not required to be registered till that day; though voluntary registration was
allowed under section 25(3) of the CGST Act, 2017.

However, the position will change from 1st November as the supply of goods become taxable
from that day and the turnover of company is above ` 40 lakh. It is important to note here that in
terms of section 2(6), the aggregate turnover limit of ` 40 lakh includes exempt turnover also.
Therefore, turnover ‘Z’ will be determining the threshold limit even though the
same was exempt from GST. Therefore, the company needs to register within 30 days from
1st November (the date on which it becomes liable to registration) in terms of section 25(1) of the
CGST Act, 2017.
Further, the company cannot avail exemption of ` 40 lakh from 1st November as the GST law
does not provide any threshold exemption from payment of tax but threshold exemption from
obtaining registration (which in this case had been crossed).
Q.13 Mr. Lal, a registered person under GST, was the proprietor of M/s. Spiceton Restaurant.
He died and left behind his wife and son on 15th August.
His son - Mr. Pal - wants to continue the business of the deceased father.
The GST consultant of M/s. Spiceton Restaurant gives advice to Mr. Pal as to how he can continue
the business of his deceased father.
Which of the following options is correct in accordance with the provisions of GST law?
(a) Mr. Pal should get himself registered under GST in the name and style M/s. Spiceton Restaurant
under his own PAN and file Form GST ITC 02.
(b) Mr. Pal can get the authorized signatory changed by approaching to the Proper Officer and can
continue the same business.
(c) Mr. Pal should close the old firm and start new business under different name.
(d) Mr. Pal should do the business with his mother as the new proprietor of the M/s. Spiceton
Restaurant, and Mr. Pal should act as a Manager.
Ans: (a) Mr. Pal should get himself registered under GST in the name and style M/s. Spiceton
Restaurant under his own PAN and file Form GST ITC-02.

Chapter 11 – IGST Act – Place of Supply, Import, Export and
Zero Rated Supply
Q 1. 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?
Ans: In respect of B2B transactions, the taxes paid are taken as credit by the recipient so such
transactions are just pass 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.
Q 2. 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.
Ans: Legal Provision: 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 use 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). Conclusion: 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.
Q 3. In case of a domestic supply, what is the place of supply where goods are removed?
Ans: As per section 10(1)(a), 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.

Q 4. 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?
Ans: As per section 10(1)(b), it would be deemed that the third person has received the goods and the
place of supply of such goods will be the principal place of business of such person.
Q 5. What is the place of supply where the goods or services are supplied on board a conveyance, such
as a vessel, an aircraft, a train or a motor vehicle?
Ans: As per section 10(1)(e), in respect of goods, the place of supply is the location at which such
goods are taken on board.
However, in respect of services, the place of supply is the location of the first scheduled point of
departure of that conveyance for the journey in terms of sections 12(10) and 13(11).
Q 6. The place of supply in relation to immovable property is the location of immovable property. Suppose
a road is constructed from Delhi to Mumbai covering multiple states. What will be the place of
supply of construction services?
Ans: Where the immovable property is located in more than one State, the supply of service is treated
as made in each of the States in proportion to the value for services separately collected or
determined, in terms of the contract or agreement entered into in this regard or, in the absence
of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf
[Explanation to section 12(3) for domestic supplies].
In absence of contract where the immovable property or boat or vessel is located in more than one
State/ UT, the service is deemed to have been supplied in each of the respective States/ UT,
proportionately in terms of value of services determined as per rule 4 in the following manner :

Factor which
determines the
S.No. Type of service in relation to immovable property
proportionate value of
service
Service provided by way of lodging accommodation by hotel, inn, guest
house etc. and its ancillary services(other than the cases where such Number of nights
(a)
property is a single property located in 2 or more contiguous States/ stayed in such property
UT or both)
(b) All other services provided in relation to immovable property including :
• services by way of accommodation in any immovable property

for organising any marriage or reception etc.
Area of the immovable
• Supply of accommodation by a hotel, inn, guest house, club or
property lying in each
campsite, by whatever name called where such property is a
State/ UT
single property located in 2 or more contiguous States or/and
UT
• Services ancillary to services mentioned above
Time spent by the boat
or vessel in each such
Services by way of lodging accommodation by a house boat or vessel State/ UT, to be
(c)
and its ancillary services determined on the basis
of declaration made by
the service provider
Conclusion: It will be covered under all other services provided in relation to immovable property and
Place of supply will be on the basis of Area of immovable property lying in each State/UT.
Q 7. What would be the place of supply of services provided by an event management company for
organizing a sporting event for a Sports Federation which is held in multiple States?
Ans: In case of an event, if the recipient of service is registered, the place of supply of services for
organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place where event is held.
Since the event is being held in multiple states and a consolidated amount is charged for such
services, the place of supply will be taken as being in each state in proportion to the value of
services so provided in each state [Explanation to section 12(7)].
In the absence of any such contract or agreement the value is determined in accordance
with rule 5 by the application of generally accepted accounting principles.

Q 8. Mr. X (a supplier registered in Uttar Pradesh having principal place of business at Noida) asks
Mr. Y of Ahmedabad, Gujarat to deliver 50 washing machines to his buyer Mr. 2 at Jaipur,
Rajasthan.
Ans: In given case, goods are supplied by Mr. Y to Z on directions given by X As per Sec 10(1)(b), in
this case, the place of supply of goods is not the location of delivery of such goods (Jaipur) but
the principal place of business of third person i.e., principal place of business of Mr. X located at
Noida.
Q 9. What is the place of supply of services by way of transportation of goods, including mail or
courier when the both the supplier and the recipient of the services are located in India?
Ans: If the recipient is registered, the location of such person is the place of supply. However, if the
recipient is not registered, the place of supply is the place where the goods are handed over
for transportation [Section 12(8)].
Where the transportation of goods is to a place outside India, the place of supply shall be the
place of destination of such goods. Therefore, in case where the location of supplier and
recipient is in India and goods are transported to a place outside India, the place of supply
of transportation service shall be the place of destination of such goods, i.e. outside India.
Q 10. What will be the place of supply of passenger transportation service, if a person travels from
Mumbai to Delhi and back to Mumbai?
Ans: 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)].
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)].
Q 11. What is the place of supply for mobile connection? Can it be the location of supplier?
Ans: For domestic supplies
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. However, if the recharge is done through

internet/e-payment, the location of recipient of service on record will be taken as the place of
supply.
For international supplies
The place of supply of telecom services is the location of the recipient of service.
Q 12. A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in Manali.
What is the place of supply?
Ans: 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.
Q 13. An unregistered person from Gurugram travels by Air India flight from Mumbai to Delhi and
gets his travel insurance done in Mumbai.
What is the place of supply of insurance services?
Ans: 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. So Gurugram
is the place of supply [Section 12(13)].
Q 14. Quickdeal Enterprises (Ahmednagar, Gujarat) opens a new branch office at Hissar, Haryana. It
purchases a building for office from Ruhani Builders (Hissar) along with pre-installed office
furniture and fixtures. Determine place of supply of the pre-installed office furniture and fixtures.
Ans: 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.
Q 15. 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.

Ans: 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 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.
Q 16. 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.
Ans: 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 by 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 of supply is Mumbai
hence it is intra state transaction CGST and SGST will be payable
Q 17. 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?

Ans: As per section 13(2) of the IGST Act,2017, in case where the location of the supplier of sevices 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 under sub-section (2) of section 13 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 1 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.
Q 18. Mr. Dhiraj, an unregistered person and a resident of Pune, hires the services of M/s Nice Ltd. an
event management company registered in Delhi, for organising of the new product launch in
Bengaluru.
(a) Determine the place of supply of services provided by M/s Nice Ltd.
(b) What would your answer be in case the product launch takes place in Bangkok?
(c) What would your answer be in case Mr. Dhiraj is a registered person and product launches
take place in Bengaluru and Bangkok?
Ans: Answer to above mentioned questions will be as follows:
a) 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. Dhiraj] 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.
b) However, if product launch takes place outside India [Bangkok], the place of supply will be
the location of recipient i.e., Pune.
c) 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. Dhiraj 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.
Q 19. 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 65 per US $.
Ans: Legal Provision: Section 2(13) of the IGST Act, 2017 defines “intermediary” to mean 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.
Discussion: In this case, since ABC Pvt. Ltd. is arranging or facilitating supply of goods between
the foreign customer and the Indian vendor, the said services can be classified as intermediary
services.
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, 2017. Since, 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 section 13(8)(b), 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 leviable 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%)

Q 20. 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.
Ans: 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.
Q 21. 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
Ans: 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. 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 the service provider and place of supply are both in Maharashtra (inter-
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 state
(inter-state) IGST will be triggered.
c. Legal Provision – As per section 12 (2) (b) (i) 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.
Q 22. Determine the place of supply of services for the following cases:-
1. DEO Consultants (Kolkata) impart GST training to account and finance personnel of Sun Cement
Ltd. (Guwahati, Assam registered person) at the company’s Kolkata office.
2. Mr. Suresh (unregistered person based in Noida) signs up with Excellent Linguistics (New Delhi) for
training on English speaking at their New Delhi Centre
Ans: Legal Provision – As per sec 12 (5) is applicable to determine, the place of supply of service, relation
to training & performance appraisal
1. As per sec 12(5) of IGST Act, the recipient is registered, the place of supply is the location
of the registered person i.e., Guwahati.
2. As per sec 12(5) of IGST Act, the recipient is unregistered, the place of supply is location
where service are performed i.e., New Delhi.
Q 23. Damini Industries has recruited Super Event Pvt. Ltd., an event management company of Gujarat,
for organizing the grand party for the launch of its new product at Bangalore. Damini Industries is
registered in Mumbai. Determine the place of supply of the services provided by Super Events Pvt.
Ltd to Damini Industries.
Will your answer be different if the product launch party is organized at Dubai?
Ans: 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 Damini Industries
(registered in Mumbai), place of supply is the location of Damini Industries i.e., Mumbai.
In case the product lunch party is organized at Dubai, the answer will remain the same, i.e. the place
of supply is the location of Damini Industries – Mumbai.
Q 24. Shaan company of Mumbai has temporarily imported x – ray machine from its customer located in
Japan for repairs. Determine POS in following cases
1. The said goods have been re – exported to Japan after carrying out the necessary repairs
without being put to any use in Mumbai.
2. The said goods have been re – exported after repair but used for other purpose

Ans: The answer to above mentioned questions are given below:
1. 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 service 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.
2. 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.
Conclusion: In the above case place of Supply is Mumbai.
Q 25. 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. Z 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. Z of New York to provide
professional services in respect of immovable properties of Mr. Z located is Pune and New
York.
Ans: The answer to above mentioned questions are given below:
Legal Provision – For the given case above section 13 (4) of IGST Act is applicable 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.
Q 26. 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.
Ans: 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 non – taxable territories.
Q 27. Mr. Sumit has a permanent residence at Ahmedabad. He has a savings bank account with Ahemedabad
Branch of Safe and Sound Bank. On April 1, 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.
Ans: 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 Ahemedabad 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 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 services

provided in a taxable territory and not falling under negative list is chargeable to GST. The above
case does not falls within the purview of Section 7 Schedule 111 of CGST Act.
Q 28. Determine the place of supply for the following services:-

1. A travel agent registered in New Delhi books a tour famous Indian cities for a Dubai resident
2. Mr. D, an unregistered person based in New Delhi, leaves for a European holiday. He hires a
car from London, UK for 20 days
Ans: 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 above provision the place of supply of services shall be:-
1. 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
2. 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 up to period of 1 month.
Q 29. 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.
Ans: 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
Q 30. AM Ltd. of Mumbai (having diversified businesses) has provided the following services, whose values
are listed below. Computes its GST liability @ 12%
1. Services provided to a company located in Dubai in relation to organization of a festival
celebration event in Dubai ₹ 4 lakh
2. Services provided to a unregistered company located in Jammu being an unregistered person
in relation to fashion show in Jammu ₹ 3 lakh
3. Services provided to a unregistered company located in Dehli in relation to fashion show in
Jammu ₹ 3 lakh

4. Services of allowing downloading of digital content from various websites ₹ 4 lakh, the
recipient of which is located in Singapore
Ans:
Legal
No. Particulars Provision Discussion Conclusion GST
IGST is triggered. As
per section 16 of IGST
Act this is export of
Place of Supply shall service and can be
Services be the place where dealt with in two
1 provided in Section the event is actually ways:
relation to 13(5) of held. In the above 1) Export without = Rs. 400,000*12 %
organization of IGST Act case event is held in the payment of = Rs. 48,000
a festival Dubai. Hence, place of IGST under a
celebration supply is Dubai. Bond or Letter of
event outside Location of service Undertaking
India provider is Mumbai 2) Pay IGST and
(India) claim a refund
2 Services Place of Supply shall IGST will be triggered
provided in be the place where (inter-state)
relation to the event is actually
fashion show in Section held. In the above
Jammu 12(7) case the event is held = Rs. 300,000* 12%
in Jammu. Location of = Rs. 36,000
service provider is
Mumbai, Maharashtra
Place of supply shall
be the place where
the event is actually
Services held. In the above
provided to a case the event is held
company in Section in Jammu. Location of IGST will be triggered = Rs. 300,000* 12%
3 Delhi in 12 (7) service provider is (inter-state) = Rs. 36,000
relation to Mumbai, Maharashtra.
fashion show in Here it does not
Jammu matter whether the
services are provider
to a company in Delhi

IGST is triggered. As
per section 16 of IGST
Place of supply is the Act this is export of
location of the service and can be
Services of recipient of services. dealt with in two
allowing Here the recipient is ways: = Rs. 400,000*12
4 downloading of Section located in Singapore. 1) Export without %
digital content 13(12) Hence, place of supply the payment of = Rs.
from its is Singapore. Location IGST under a 48,000
website of service provider is Bond or Letter of
Mumbai, Maharashtra Undertaking
2) Pay IGST and
claim a refund
Q 31. 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?
Ans: 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, shall be treated to be a supply of goods or services or both
in the course of inter-State trade or commerce.
Chapter 11 –Place of Supply
1) What is the significance of Place of Supply under GST?

A. The place of supply determines whether a transaction is intra – State or inter – State
B. The place of supply determines the place where the supplier is supposed to deliver his
goods
C. The place of supply determines the location of the recipient of goods
D. All the above
Ans: A: The place of supply determines whether a transaction is intra – State or inter –
State

2). A service is said to be imported into India when the place of supply of such service is:
A. in non-taxable territory
B. in India
C. at the location of recipient
Ans: b in India
3). Mr. A an importer located in Chennai taken some repairs and maintenance service from
Mr. C located in Dubai. The Location of machinery is in Chennai. The supply of service by
Mr. C to Mr. A is said to be:
A. Export of service
B. Import of service
C. Inter-state supply of service
D. both b & c
Ans: d. both b & c
4). A taxable service provider wants to claim the benefit of export services. He wants to
know the conditions to be fulfilled for a service to be qualify as export of service. The
conditions are:
A. supplier of service is located in India
B. recipient of service is located outside India
C. payment for such supply is received in convertible foreign exchange
D. All of the above
Ans: d. All of the above
5). Supply to own establishment located outside India is treated as export in case of:
A. Export of Goods
B. Export of Service
C. Export of Goods or Services both
D. not treated as export
Ans: a. Export of Goods

6). Mr.Veer imported some taxable goods from USA. When the goods was on High Seas Mr.Veer
sold the goods to Mr. P State the levy of tax on supply of goods by Mr. Veer to Mr. P
A. IGST will be levied on high seas sale
B. IGST will be levied at the time of clearance from custom on value including additions due
to high seas sale.
C. No tax will be levied.
D. CGST & SGST will be levied
Answer: c. No tax will be levied
8). Sam Ltd. of Maharashtra contracts with Tam Ltd. Rajasthan to sell his old used furniture
for Rs. 150000. The goods will be delivered to Tam Ltd. at Gujarat to his new branch (not
Registered under GST). Identify the place of supply if the delivery was made by Sam
Ltd.at his own risk
A. Maharashtra
B. Rajasthan
C. Gujarat
D. none of above
Ans: c. Gujarat
9). Where will be the place of supply when goods are supplied on the direction of the third
party (bill to ship model)
A. Location of the recipient
B. location of the supplier
C. location of the third party
Ans: c) location of the third party
10). Mr. A in Goa delivers goods in Goa itself to B. Such delivery was on direction of C
situated at Pune, which of the following is true,
A. A will charge IGST to C
B. A will charge CGST and SGST to B
C. Both of above

Ans: A. A will charge IGST to C
13). Pure Refineries (Mumbai, Maharashtra) gives a contract to PQ Ltd. (Ranchi, Jharkhand)
to assemble a power plant in its Kutch, Gujarat refinery. Determine Place of supply.
A. Mumbai, Maharashtra
B. Ranchi, Jharkhand
C. Kutch, Gujarat
Ans: c) Kutch, Gujarat
14). Place of supply where the goods are supplied on board a conveyance such as vessel, an
aircraft, a train or motor vehicle?
A. Location of supplier
B. Location of recipient
C. Location at which such goods are taken on board
D. None of these
Ans: c. Location at which such goods are taken on board
15). Where will be the place of supply of goods supplied in a train which is heading towards
Delhi From Thiruvananthapuram if the goods were taken on board from Coimbatore?
A. Thiruvananthapuram – kerala
B. Coimbatore- Tamil Nadu
C. Delhi
Ans: C. Coimbatore- Tamil Nadu
17). 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

A. New Delhi
B. Kanpur
C. Aligarh
Ans: c. Aligarh
18). Determine the place of supply of goods.

(i) XYZ 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.
A. Jaipur, Noida
B. Jaipur, China
C. Canada, China
D. Canada, Noida
Ans: a. Jaipur, Noida
19). If Mr. A of Jaipur, is constructing a house in Goa and appoints Mr. B of Pune to provide
architectural services with regard to construction of house located in Goa, then the
place of supply shall be ____________________
A. Goa
B. Jaipur
C. Pune
D. All of above can be the place of supply
Ans: a. Goa
20). 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?
A. Location of Mr. P Mumbai
B. location of flat , Mumbai
C. Pune

Ans: b. location of flat , Mumbai
21). Mr. Alex, a Chartered Accountant practicing in Jaipur has undergone plastic surgery in a
Chennai based hospital and for this it hires services of senior doctor & consultant
from USA. The POS shall be:
A. location of recipient of service – Jaipur
B. location of supplier of service – USA
C. location where service is actually performed– Chennai
Ans: c. location where service is actually performed – Chennai
22). A registered supplier supply services of training and performance appraisal to various
unregistered person. Identify the POS:
A. Location of such person
B. Location of recipient of service
C. Location of supplier of service
D. Location where service is actually performed
Ans: d. Location where service is actually performed
22). The POS of supply of passenger transport service by a registered person to a pe rson
other than registered person is:
A. location at which the passenger embarks on the conveyance for a continuous journey
B. location of recipient of such service
C. location of supplier of such service
D. location of such person
Ans: A. location at which the passenger embarks on on the conveyance for a continuous
journey

23). Mr. C (registered person in Chennai) has come to Delhi on a vacation. He buys prepaid
Delhi Metro Card from Delhi Metro (New Delhi) for hassle free commute in the National
Capital Region. Determine place of supply for service answer:
A. Chennai
B. New Delhi
Ans: a. Chennai
24). 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.
A. Delhi – being the location of first schedule point of departure
B. Mumbai - being the location of last schedule point of the conveyance
C. Delhi – being the location from where the passenger embarks on the flight
D. none of above
Ans: a. Delhi – being the location of first schedule point of departure
25). 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. Determine place of supply.
A. location of Mr. A New Delhi
B. location of supplier, Germany
C. location of machine, New Delhi
Ans: c. location of machine, New Delhi
26). 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.
A. United States of America (USA)
B. Bangalore
C. None of the above
D. both a & b of the above
Ans: b .Bangalore

27) . Mr. Anil of Mumbai avail the hotel service located in China. The place of supply will be:
A. Mumbai – under reverse charge
B. China – under normal charge
C. China – being the place where hotel (i.e. immovable property) is located
D. Either b or c above
Ans: C. China – being the place where hotel (i.e. immovable property) is located
28). An Indian company located in pune provided services to a Dubai firm, in relation to
organization of IPL in Dubai. Determine the place of supply
A. Dubai
B. India
C. Pune
Ans: a. Dubai
29). A Soil testing company from Japan performed some testing services in India (25%),
Nepal(35%) & Bhutan(40%). What will be the place of supply?
A. India – being the location in taxable territory
B. Bhutan – being maximum portion of service performed there
C. India, Nepal & Bhutan
D. Either a or b above
Ans: a. India – being the location in taxable territory
30). A Craft Company from China conducted an exhibition of handy crafts goods in various
parts of India such as in Rajasthan (40%), Maharashtra (30%), West Bengal (20%)
and Assam (10%). State the place of supply of such service.
A. Rajasthan
B. Maharashtra
C. China
D. Rajasthan, Maharashtra, West Bengal & Assam
Ans: d. Rajasthan, Maharashtra, West Bengal & Assam

31). Mr. Ambani of Mumbai hires an aircraft of foreign company for 5 days for business tour.
Determine the place of supply of service.
A. location of supplier of service
B. location of recipient of service
C. location where service is performed
D. location where passenger embarks for journey
Ans: b. location of recipient of service
32). Mr. Oswal, of Delhi a stock broker arranges securities for Mr. Alex of Netherland a foreign
investor. The transaction is carried out at BSE Mumbai. The POS shall be:
A. Delhi
B. Mumbai
C. Netherland
Ans: b. Mumbai
33). Mr. Timmy Ferreira, a makeup artist at Kolkata, goes to Jaipur, Rajasthan for doingthe
makeup of Ms. Simran Kapoor, a Bollywood actress based in Mumbai. Determine the place
of supply. answer:
A. Kolkata
B. Jaipur
C. Mumbai
Ans: b) Jaipur
ADDITIONAL QUESTIONS FOR PRACTICE
Q.1 (i) 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.
You are required to determine the place of supply(ies) in the above situation.

(ii) 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?
Ans:(i) The supply between Parth (Pune) and Bakul (Bareilly) is a bill to ship to supply where
the goods are delivered by the supplier [Parth] to a recipient [Shreyas (Shimoga)] or any
other person on the direction of a third person [Bakul]. The place of supply in case of 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 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). 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 (Shreyas) i.e., Shimoga,
Karnataka.
(ii) 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.
Q.2 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 CGST/SGST or IGST as would be applicable in this case
Ans: 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 and SGST.
Q.3 Aflatoon Spares (P) Ltd., located and registered in Haryana, supplied spare parts (FOB basis) to
Mr. Laxmi Khurana, an unregistered person, located in Rajasthan. Mr. Laxmi Khurana booked the
courier himself with Black Dart Courier (P) Ltd., registered in Delhi for delivery in Rajasthan.
Black Dart Courier (P) Ltd. picked up the goods from Haryana and delivered the courier in
Rajasthan while passing through the State of Uttar Pradesh.
Determine the place of supply of service provided by Black Dart Courier (P) Ltd. to Mr. Laxmi
Khurana:
(a) Haryana
(b) Delhi
(c) Rajasthan
(d) Uttar Pradesh
Ans: Haryana

Q.4 The place of supply in relation to immovable property is the location of immovable property. Suppose
a road is constructed from Delhi to Mumbai covering multiple states.
What will be the place of supply of construction services?
Ans: Where the immovable property is located in more than one State, the supply of service is treated as
made in each of the States in proportion to the value for services separately collected or determined,
in terms of the contract or agreement entered into in this regard or, in the absence of such contract
or agreement, on such other reasonable basis as may be prescribed in this behalf [Explanation to
section 12(3) for domestic supplies].
In the absence of a contract or agreement between the supplier and recipient of services in this
regard, the proportionate value of services supplied in different States/Union territories (where the
immovable property is located) is computed on the basis of the area of the immovable property lying
in each State/ Union territories [Rule 4 of the IGST Rules].
Q.5 An importer imported certain inputs for manufacture of final product. A small portion of the imported
inputs were damaged in transit and could not be used in the manufacture of the final product. An
exemption notification was in force providing exemption in respect of specified raw materials imported
into India for use in manufacture of specified goods, which was applicable to the imports made by
the importer in the present case.
Briefly examine whether the importer could claim the benefit of the aforesaid notification in respect
of the entire lot of the inputs imported including those that were damaged in transit.
Ans: The facts of the case are similar to the case of BPL Display Devices Ltd. v. CCEx., Ghaziabad
(2004) 174 ELT 5 (SC) wherein the Supreme Court has held that the benefit of the notifications
cannot be denied in respect of goods which are intended for use for manufacture of the final product
but cannot be so used due to shortage or leakage.
The Apex Court has held that no material distinction can be drawn between loss on account of
leakage and loss on account of damage. The benefit of said exemption cannot be denied as inputs
were intended for use in the manufacture of final product but could not be so used due to
shortage/leakage/damage. It has been clarified by the Supreme Court that words “for use” have to
be construed to mean “intended for use”.
Therefore, the importer can claim the benefit of the notification in respect of the entire lot of the
inputs imported including those that were damaged in transit.
Q.6 State whether the following statements are true or false:

1. Zero rated supply means supply of any goods or services or both which attracts nil rate of tax.
2. Exempt supply means export of goods or services or both, or supply of goods or services or both
to a Special Economic Zone developer or a Special Economic Zone unit.

3. Non-taxable supply means supply of goods or services or both which is not leviable to tax under
CGST Act, 2017 but leviable to tax under the Integrated Goods and Services Tax Act, 2017.
4. ITC may be availed for making zero rated supply of exempt goods.
(a) False, False, False, True
(b) True, False, False, False
(c) True, True, False, False
(d) False, False, False, False
Ans: False, False, False, True
Q.7 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 event management company, Supriya (P) Ltd. (registered in Delhi)
for organising the said music concert at an agreed consideration of ` 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 ` 4,00,000. Musicera Pvt. Ltd. fixes the entry fee to the music
concert at ` 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 ` 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.
Ans: Indw the given situation, three supplies are involved:
(i) Services provided by Musicera Pvt. Ltd. to audiences by way of admission to music concert.
(ii) Services provided by Supriya (P) Ltd. to Musicera Pvt. Ltd. by way of organising the music
concert.
(iii) Services provided by Hotel Dumdum to Supriya (P) Ltd. by way of accommodation in the Hotel
lawns for organising the music concert.
The CGST and SGST or IGST liability in respect of each of the above 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 @ ` 5,000 per ticket) = ` 20,00,000 IGST @ 18% on value of
supply = ` 20,00,000 x 18% = ` 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 = ` 10,00,000
IGST @ 18% on value of supply = ` 10,00,000 x 18% = ` 1,80,000
(iii) As per the provisions of section 12(3)(c) of the IGST 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 = ` 4,00,000
CGST @ 9% on value of supply = ` 4,00,000 x 9% = ` 36,000 SGST @ 9% on value of supply = `
4,00,000 x 9% = ` 36,000
If the price for the entry ticket is fixed at ` 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
` 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
` 500 per person. However, there will be no change in the answer in respect of supplies mentioned
in point (ii) and (iii) above.
Q.8 XY Ltd. (registered in Rajasthan) received legal services from an attorney in UK (unrelated
person) in relation to registration of a trademark in UK. A consideration of £ 8,000 was paid by
the company to the attorney in UK.
Determine the place of supply for the service and suggest if XY Ltd. is required to pay tax under
reverse charge on this transaction.
Ans: In the given case, the service provider is outside India, and the service recipient is in India. Thus,
the place of supply will be determined on the basis of the provisions of section 13. Since the
given service does not get covered under any of the specific provisions of section 13, the place

of supply thereof will be governed by the general rule, i.e. place of supply of services will be the
location of the recipient of service, which in this case is Rajasthan (India).
Further, the given case is import of service in terms of section 2(11) as the supplier of service
is located outside India, the recipient of service is located in India and the place of supply of
service is in India. Since the services are imported for a consideration from an unrelated person,
the same tantamounts to supply in terms of section 7(1)(b) of CGST Act and are liable to GST.
As per reverse charge Notification No. 10/2017 IT(R) dated 28.06.2017, if a service is supplied by
a person located in a non-taxable territory to a person located in the taxable territory, other than
non-taxable online recipient, the tax is payable by the recipient of service under reverse charge.
Therefore, XY Ltd. will pay GST under reverse charge on £ 8000 paid by it to the attorney in
UK.
Q.9 Determine the place of supply for the following independent cases:
(i) Grand Gala Events, an event management company at Kolkata, organises two award functions
for Narayan Jewellers of Chennai (Registered in Chennai, Tamil Nadu) at New Delhi and at Singapore.
(ii) Perfect Planners (Bengaluru, Karnataka) is hired by Dr. Kelvin (unregistered person based in
Kochi, Kerala) to plan and organise his son's wedding at Mumbai, Maharashtra.
Will your answer be different if the wedding is to take place in Malaysia?
Ans: (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).
Since, in the given case, the award functions at New Delhi and Singapore are organized for Narayan
Jewellers (registered in Chennai), place of supply in both the cases is the location of Narayan
Jewellers, i.e. Chennai, Tamil Nadu.
(ii) As per section 12(7)(a)(ii), 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, Maharashtra.
However, if the wedding is to take place outside India [Malaysia], the place of supply is the location
of recipient, i.e. Kochi, Kerala.
Q.10 Briefly discuss how exports are treated under the GST Law.
Ans: Under the GST Law, export of goods or services has been treated as:
• Inter-State supply and covered under the IGST Act.
• ‘Zero rated supply’, i.e. the goods or services exported shall be relieved of GST levied upon them
either at the input stage or at the final product stage.

Q.11 Explain how imports are taxed under GST.
Ans: All imports are deemed as inter-State supplies for the purposes of levy of GST (IGST). The incidence
of tax follows the destination principle and the tax revenue accrues to the State where the imported
goods and services are consumed. IGST paid on import of goods and services is available as ITC for
set off against the output tax liability. IGST on import of goods is levied under the IGST Act but
the machinery of the customs law is used to levy and collect the same.
Q.12 Describe how exports are taxed under GST.

Ans: Exports of goods and services are zero rated. The exporter has the option either to export under
bond/LUT without payment of IGST and claim refund of ITC or pay IGST at the time of export
and claim refund thereof.
Q.13 A Ltd. is making zero rated supplies which are also specifically exempt from GST. The company has
paid input tax of ` 2,00,000 on inputs and input services which have been used exclusively in effecting
such zero rated supplies.
Examine if A Ltd. can avail ITC of input tax of ` 2,00,000 paid on inputs and input services used
exclusively in effecting such zero rated supplies.
Ans: As per section 16(2), ITC may be availed for making zero rated supplies, notwithstanding that such
supplies are exempt supplies. However, the same is subject to provisions u/s 17(5) of the CGST Act,
i.e. blocked credit.
Hence, A Ltd. can take credit of ` 2,00,000 even if the outward zero rated supply is exempt from
GST. However, the credit would not be available in respect of the inputs and input services, the
credit on which is blocked under section 17(5) of the CGST Act.
Q.14 Whether services of short-term accommodation, conferencing, banqueting etc. provided to a SEZ
unit/developer by a supplier located in the same State as that of the SEZ unit/developer should be
treated as an inter-State supply under section 7(5)(b) or an intra-State supply in terms of section
8(2) read with section 12(3)(c)? Examine.
Ans: Circular No. 48/22/2018 GST has clarified on this issue as under:
As per section 7(5)(b), the supply of goods and/or services to a SEZ unit/developer is treated as a
supply of goods and/or services in the course of inter-State trade or commerce. Whereas, as per
section 12(3)(c), the place of supply of services by way of accommodation in any immovable property
for organising any functions shall be the location at which the immovable property is located. Thus,
in such cases, if the location of the supplier and the place of supply are in the same State/ Union
territory, it would be treated as an intra-State supply.

It is an established principle of interpretation of statutes that in case of an apparent conflict
between two provisions, the specific provision shall prevail over the general provision. In the instant
case, section 7(5)(b) is a specific provision relating to supplies of goods and/or services made to a
SEZ unit/developer, which states that such supplies shall be treated as inter-State supplies.
Further, proviso to section 8(2) also lays down that intra-State supply of services do not include
supply of services to a SEZ unit/developer. It is, therefore, clarified that services of short-term
accommodation, conferencing, banqueting etc., provided to a SEZ unit/developer shall be treated as
an inter-State supply.
Q.15 Mr. Amar Kant, a Chartered Accountant, being a partner in GST registered firm orders a gaming
software for his son from a company located in USA. He makes the payment for the same from his
personal bank account.
Examine whether the transaction will be liable to GST. If yes, in whose hands the tax liability will
arise?
Ans: The supply of gaming software is in the nature of OIDAR service in terms of section 2(17).
The transaction is for personal consumption of Mr. Amar Kant and the payment has also
been made from the personal bank account of Mr. Amar Kant and not from the bank
account of his GST registered firm. Therefore, being an individualreceiving OIDAR service for
personal consumption, Mr. Amar Kant is a non-taxable online recipient in terms of section 2(16).
Services received from a provider of service located in a non- taxable territory by an individual in
relation to any purpose other than commerce, industry or any other business or profession is exempt
from IGST. However, such exemption is not available in case of OIDAR services [Notification No.
9/2017 IT (R) dated 28.06.2017].
Therefore, being an OIDAR service provided by a supplier located outside India and received by a
non-taxable recipient, the same is liable to GST.
Tax on service supplied by any person located in a non-taxable territory to any person other than
non-taxable online recipient is payable by the recipient of such service under reverse charge.
Therefore, tax on OIDAR services provided by the company located in USA to Mr. Amar Kant, a non-
taxable online recipient, will be payable by such company under forward charge.
Q.16 AXT Ltd. entered into a high sea sale transaction with BYU Ltd. for certain goods. AXT Ltd. is of
the view that GST on such sale transaction is payable at the time of such sale and basic customs
duty is payable at the time of filing the bill of entry for import of goods.
Examine whether the view taken by AXT Ltd. is correct.
Ans: AXT Ltd.’s view is partially correct.

Supply of goods by the consignee to any other person, by endorsement of documents of title
to the goods, after the goods have been dispatched from the port of origin located outside
India but before clearance for home consumption (high sea sale)
Thus, GST is not leviable on high sea sales. Therefore, AXT Ltd.’s view that GST is payable on a
high sea sale transaction at the time of sale, is not correct.
As per section 14 of the Customs Act, 1962, the value for the purpose of charging customs duty on
imported goods is the value at the time of importation, i.e. at the time of filing of the bill of entry.
Further, IGST on imported goods is also levied at the time of filing of bill of entry. Therefore, in
case of high sea sales, the assessable value of imported goods for levying customs duty and IGST is
determined on the basis of the price paid by the last high sea sales buyer who files the bill of entry
for home consumption.
Therefore, AXT Ltd.’s view that basic customs duty is payable at the time of filing the bill of entry
for import of goods is correct.
is neither treated as supply of goods nor supply of services in terms of paragraph 8(b) of
Schedule III to the CGST Act.
Q.17 When is a deficiency memo issued in respect of a refund claim made under section 54?
Ans: Rule 90(3) provides for communication in prescribed form (deficiency memo) where deficiencies
are noticed. The said sub-rule also provides that once the deficiency memo has been issued, the
claimant is required to file a fresh refund application after the rectification of the deficiencies.
Q18. Determine the place of supply in the following independent cases:-

(i) Mr. Sahukaar (New Delhi) boards the New Delhi-Kota train at New Delhi. Mr. Sahukaar sells
the goods taken on board by him (at New Delhi), in the train, at Jaipur during the journey.
(ii) Vidhyut Pvt. Ltd. imports electric food processors from China for its Kitchen Store in Noida,
Uttar Pradesh. Vidhyut Pvt. Ltd. is registered in Uttar Pradesh.
(iii) Mr. Aatmaram, a manager in a Bank, is transferred from Bareilly, Uttar Pradesh to Bhopal,
Madhya Pradesh. Mr. Aatmaram’s family is stationed in Kanpur, Uttar Pradesh. He hires Gokul
Carriers of Lucknow, Uttar Pradesh (registered in Uttar Pradesh), to transport his household
goods from Kanpur to Bhopal.
(iv) Bholunath, a resident of New Delhi, opens his saving account in New Delhi branch of Best
Bank after undergoing the KYC process. He goes to Amritsar for some official work and
withdraws money from Best Bank’s ATM in Amritsar thereby crossing his limit of free ATM
withdrawals.

(v) Mr. Chakmak, an architect (New Delhi), enters into a contract with Mr. Zeeshaan of New
York to provide professional services in respect of immovable properties of Mr. Zeeshaan located
in Pune and New York.
Ans: (i) Section 10(1)(e) of the IGST Act, 2017 lays down that place of supply of goods supplied on
board a conveyance like aircraft, train, vessel, or a motor vehicle, is the location where such
goods have been taken on board. Thus, in the given case, the place of supply of the goods sold
by Mr. Sahukaar is the location at which the goods are taken on board, i.e. New Delhi and not
Jaipur where they have been sold.
(ii) As per section 11(a) of the IGST Act 2017, if the goods have been imported in India, the place
of supply of goods is the place where the importer is located. Thus, in the present case, the
pla ce of supply of the goods imported by Vidhyut Pvt. Ltd. is Noida, Uttar Pradesh.
(iii) As per section 12(8) of the IGST Act, 2017, the place of supply of services by way of
transportation of goods, including by mail or courier provided to an unregistered person, is the
location at which such goods are handed over for their transportation.
Since in the given case, the recipient – Aatmaram – is an unregistered person, the place of
supply is the location where goods are handed to Gokul Carriers over for their transportation,
i.e. Kanpur.
(iv) As per section 12(12) of the IGST Act, 2017, the place of supply of banking and other financial
services, including stock broking services to any person is the location of the recipient of
services in the records of the supplier of services. Thus, in the given case, the place of supply
is the location of the recipient of services in the records of the supplier bank, i.e. New Delhi.
(v) As per section 13(4) read with section 13(6) of the IGST Act, 2017, where services supplied
directly in relation to an immovable property 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.
Since in the given case, the immovable properties are located in more than one location
including a location in the taxable territory, the place of supply of architect service is the
location in the taxable territory, i.e. Pune.
Q.19 M/s. Dhoom Furniture Mart, located and registered under GST in the State of Chhattisgarh, sells
furniture from its showroom to M/s. Lucky Dhaba (located and registered under GST in the State
of Jharkhand). M/s. Lucky Dhaba requested to deliver the furniture to Mr. Pyare Lal (his landlord)
at his new rented home at Patna, Bihar. M/s. Dhoom Furniture Mart sends the furniture with a
proper e-way bill to Patna through a transporter who made the delivery to Mr. Pyare Lal.
Determine the place of supply of furniture sold by M/s. Dhoom Furniture Mart to M/s. Lucky Dhaba
in the above case.
(a) Chhattisgarh
(b) Jharkhand
(c) Bihar

(d) Either Jharkhand or Bihar, at the option of the recipient
Ans: (b) Jharkhand
Q.20 M/s. Buildwell Engineering Consultants, located and registered under GST in Gurugram, Haryana,
provided architectural services to Taj India Ltd., located and registered under GST in Mumbai,
Maharashtra, for its hotel to be constructed on land situated in Dubai.
Determine the place of supply of architectural services provided by M/s. Buildwell Engineering
Consultants to Taj India Ltd.:
(a) Gurugram, Haryana
(b) Mumbai, Maharashtra
(c) Dubai
(d) Either Maharashtra or Dubai, at the option of the recipient
Ans: (b) Mumbai, Maharashtra
Q.21 Mr. Javed, an unregistered person residing in Hisar, Haryana, went to Delhi for seeking admission of
his child - Mr. Arjun - in CA IPCC. Mr. Javed got the demand draft generated at ICIDI Bank Ltd.,
registered under GST in Sahibabad, Uttar Pradesh against cash, for depositing the registration fee to
the ICAI.
Mr. Javed does not have a bank account in ICIDI Bank Ltd. and the bank doesn’t have any policy
of KYC requirements (name, address and other identity verification policy) for customers not having
account with any of its branch in India.
Determine the place of supply of service provided by ICIDI Bank Ltd., Delhi to Mr. Javed.
(a) Delhi
(b) Uttar Pradesh
(c) Either Delhi or Uttar Pradesh, at the option of the recipient
(d) Haryana
Ans: (b) Uttar Pradesh
Q.22 Lucky Singh, a resident of Noida, U.P. (working in a private firm), went to Himachal Pradesh for a
family vacation via Delhi-Chandigarh-Himachal Pradesh in his own car. After entering Chandigarh,
his car broke down due to some technical issue. He called ‘ONROARDS’ – an emergency roadside
car assistance company (registered under GST in
Delhi) to repair the car. The car was repaired by the staff of ‘ONROARDS’. ‘ONROARDS’ does not
have a record of the addresses of the persons taking the car assistance service. The value of supply
amounted to ` 50,000 (being labour charges ` 40,000 and spares ` 10,000). The bill was supposed to
be generated online though the server, but due to some technical issue, it was not so generated.
Determine the place of supply in the given case.
(a) Delhi

(b) Chandigarh
(c) Noida, U.P
(d) Himachal Pradesh
Ans: (a) Delhi
Q.23 Fury Ltd., India has received an order for supply of services amounting to $ 5,00,000 from a US
based client. Fury Ltd., India is unable to supply the entire services from India and asks Neik Inc.,
Mexico (who is not an establishment of Fury Ltd.) to supply a part of the services, i.e. 40% of the
total contract value to the US client. Fury Ltd. raised the invoice for entire value of $ 5,00,000, but
the US client paid $ 3,00,000 to Fury Ltd. and $ 2,00,000 directly to Neik Inc., Mexico which is
approved by a special order of RBI. Fury Ltd. also paid IGST@ 18% on the services imported from
Neik Inc. Mexico. Assuming all the conditions of section 2(6) of the IGST Act, 2017 are fulfilled,
determine the value of export of services assuming that the amounts given above are exclusive of
GST.
(a) $ 3,00,000
(b) $ 5,00,000
(c) $ 3,90,000
(d) $ 5,90,000
Ans: (b) $ 5,00,000
Q.24 Mr. Murthy, an unregistered person and a resident of Pune, Maharashtra hires the services of
Sun Ltd. an event management company registered in Delhi, for organising of the new product
launch in Bengaluru, Karnataka.
(i) Determine the place of supply of services provided by Sun Ltd.
(ii) What would be your answer if the product launch takes place in Bangkok?
(iii) What would be your answer if Mr. Murthy is a registered person and product launch takes place
in-
(a) Bengaluru
(b) Bangkok? (MTP- Oct 21)
Ans: (i) As per section 12(7)(a)(ii) of the IGST Act, 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, Karnataka.
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, Maharashtra.
(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 the IGST Act.
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, Maharashtra.
Q.25 Kaushal Manufacturers Ltd., registered in Delhi, is a manufacturer and supplier of electronic
home appliances. It is paying tax under regular scheme. It supplies the
electronic home appliances in the domestic as well as overseas market. For supplies in
other States of India, the company has appointed consignment agents in each such State ,
except Gurgaon, Haryana and Noida, Uttar Pradesh, where the goods are supplied directly from
its Delhi warehouse.
In the month of January, consignments of electronic home appliances were sent to Cardinal
Electricals Pvt. Ltd. and Rochester Technos agents of Kaushal Manufacturers Ltd. in
Punjab and Madhya Pradesh respectively. Cardinal Electricals Pvt. Ltd. and Rochester
Technos supplied these electronic home appliances under their invoices to the stores located
in their respective States for ` 40,00,000 and ` 70,00,000 respectively. Open market value of
such appliances is not available.
Further, in January, electronic home appliances have been supplied to Ronn Technomart
- a wholesale dealer of electronic home appliances in Noida, Uttar Pradesh for
consideration of ` 23,00,000, from its Delhi warehouse. Kaushal Manufacturers Ltd. owns 75%
shares of Ronn Technomart. Open market value of the electronic home appliances
supplied to Ronn Technomart is ` 30,00,000. Further, Ronn Technomart is not eligible for full
input tax credit.
Kaushal Manufacturers Ltd. also provides repair and maintenance services to electronic
appliance manufacturers located in India.
The company has also furnished the following information for the month of January
Particulars Rs
Supply of electronic home appliances to wholesale dealers of such 84,00,000
appliances in Delhi
Electronic home appliances supplied to Anchor Electricals Inc., USA 1,26,00,000
under LUT [Consideration received in convertible foreign exchange]
Repair and maintenance services provided to Unitech Ltd., an 8,40,000
electronic appliance manufacturer, located in Delhi
Advance received towards repair and maintenance services to be 7,00,000
provided to Orelec Ltd., an electronic appliance manufacturer, located
in Delhi
[Repair and maintenance services have been provided in February and
invoice is issued on 28th February]
Advance received for electronic home appliances to be supplied to 8,40,000

Novick Electricals, a wholesale dealer of such appliances in Gurgaon,
Haryana [Invoice for the goods is issued at the time of delivery of
the electronic appliances in March]
You are required to determine the gross GST liability [CGST & SGST and/or IGST] of Kaushal
Manufacturers Ltd. for the month of January.
Note:
(i) All the given amounts are exclusive of GST, wherever applicable.
(ii) Assume the rates of GST to be as under:

Electronic home appliances 2.5% 2.5% 5%
Repair and maintenance services 9% 9% 18%
You are required to make suitable assumptions, wherever necessary. (RTP-Nov21)

Ans: Computation of gross GST Liability of Kaushal Manufacturers Ltd. for the month of January

Supply of electronic home appliances 4,95,000
to consignment agents - Cardinal [99,00,000 ×
Electricals Pvt. Ltd. and Rochester 5%]
Technos of Punjab and Madhya
Pradesh [Note - 1]
Supply of electronic home appliances 1,50,000
to Ronn Technomart of Noida, Uttar [30,00,000 ×
Pradesh [Note - 2] 5%]
Supply of electronic home appliances 2,10,000 2,10,000
to wholesale dealers of such [84,00,000 × [84,00,000 ×
appliances in Delhi [Note - 3] 2.5%] 2.5%]
Electronic home appliances supplied Nil
to Anchor Electricals Inc., USA
under LUT [Note - 4]
Supply of repair and maintenance 75,600 [8,40,000 75,600
services to Unitech Ltd., an × 9%] [8,40,000 ×
electronic appliance manufacturer, 9%]
located in Delhi [Note - 5]
Advance received for repair and 63,000 [7,00,000 63,000
maintenance services supplied to × 9%] [5,00,000 ×
Orelec Ltd., a electronic appliances 9%]

manufacturer, located in Delhi [Note
- 6]
Advance received for electronic home Nil
appliances to be supplied to Novick
Electricals, a wholesale dealer of
electronic appliances in Gurgaon,
Haryana [Note - 7]
Total GST liability 3,48,600 3,48,600 6,45,000
Notes:
1. Value of supply of goods made through an agent is determined as per rule 29 of the CGST
Rules, 2017. Accordingly, the value of supply of goods between the principal and his agent
is the open market value of the goods being supplied, or at the option of the supplier, is
90% of the price charged for the supply of goods of like kind and quality by the recipient
to his unrelated customer, where the goods are intended for further supply by the said
recipient.
In the given case, since open market value is not available, value of electronic home
appliances supplied to consignment agents - Cardinal Electricals Pvt. Ltd. and
Rochester Technos 􀂱 will be ` 99,00,000 [90% of (40,00,000 + 70,00,000)]. Further, being
an inter-State supply of goods, supply of electronic home appliances to the consignment
agents is subject to IGST @ 5%.
2. If any person directly or indirectly controls another person, such persons are deemed as
related persons. [Clause (a)(v) of explanation to section 15 of the CGST Act]. In the given
case, since Kaushal Manufacturers Ltd. owns 75% shares of Ronn Technomart, both are
related persons.
Value of supply of goods between related persons (other than through an agent) is
determined as per rule 28 of the CGST Rules, 2017. Accordingly, the value of supply of
goods between related persons is the open market value of such goods and not the invoice
value. Furthermore, since Ronn Technomart is not eligible for full input
tax credit, value declared in the invoice cannot be deemed to be the open market value of
the goods. Thus, open market value of the electronic home appliances supplied to Ronn
Technomart, i.e. ` 30,00,000 is the value of supply of such goods. Further, being an inter-
State supply of goods, supply of electronic home appliances to Ronn Technomart is subject
to IGST @ 5%.
3. Being an intra-State supply of goods, supply of electronic home appliances to wholesale
dealers of said appliances in Delhi is subject to CGST and SGST @ 2.5 % each.
4. Section 2(5) of the IGST Act defines export of goods as taking goods out of India to a
place outside India. In view of the said definition, supply of the electronic home appliances
to Anchor Electricals Inc. of USA under LUT is export of goods. Export of goods is a zero-

rated supply [Section 16(1) of the IGST Act]. A zero-rated supply under LUT is made
without payment of integrated tax [Section 16(3)(a) of IGST Act].
5. Being an intra-State supply of services, supply of repair and maintenance services to Unitech
Ltd. of Delhi is subject to CGST and SGST @ 9% each. 6. Being an intra-State supply of
services, supply of repair and maintenance services to Orelec Ltd. of Delhi is subject to
CGST and SGST @ 9% each. Further, in terms of section 13(2) of the CGST Act, the
time of supply of services is the earlier of the date of invoice or date of receipt of payment,
if the invoice is issued within 30 days of the supply of service. In the given case, invoice
is issued within 30 days of the supply of service. Therefore, time of supply of services will
be date of receipt of advance and hence, GST is payable on the advance received in January.
7. Being an inter-State supply of goods, supply of electronic home appliances to Novick
Electricals of Gurgaon, Haryana is subject to IGST @ 5%. Further, in terms of section
12(2) of the CGST Act, the time of supply of goods is the earlier of the date of issue of
However, Notification No. 66/2017 CT dated 15.11.2017 specifies that time of supply of
goods for the purpose of payment of tax is the date of issue of invoice/last date when the
invoice ought to have been issued under section 31.
Thus, GST is not payable at the time of receipt of advance against supply of goods. The
time of supply of the advance received for electronic home appliances to be supplied to
Novick Electricals is the time of issue of invoice, which is in March. Thus, said advance
will be taxed in March and not in January.
Q.26 Dobriyal Technocrats Ltd., registered in Gurgaon, Haryana, is engaged in manufacturing heavy
steel machinery. It enters into an agreement with Mindsharp Associates, registered in Delhi, for
imparting motivational training to the top management of Dobriyal Technocrats Ltd. in a 5-day
residential motivational training programme at an agreed consideration of ` 20,00,000.
Mindsharp Associates books the conference hall alongwith the rooms of Hotel Chumchum,
Neemrana (registered in Rajasthan) for the training programme, for a lump sum
consideration of ` 12,00,000.
You are required to determine the place of supply in respect of the supply(ies) involved in the
given scenario. (RTP-Nov21)
Ans: In the given situation, two supplies are involved:
(i) Services provided by Mindsharp Associates to Dobriyal Technocrats Ltd. by way of providing
motivational training to its top management.
(ii) Services provided by Hotel Chumchum to Mindsharp Associates by way of accommodation in
said hotel for organizing the training programme.
The place of supply in respect of each of the above supplies is determined as under:

(i) As per the provisions of section 12(5)(a) of the IGST Act, 2017, the place of supply of
services provided in relation to training and performance appraisal to a registered person, shall be
the location of such person.
Therefore, the place of supply of services supplied by Mindsharp Associates to the registered
recipient - Dobriyal Technocrats Ltd. by way of providing motivational training to its top
management is the location of Dobriyal Technocrats Ltd., i.e. Gurgaon, Haryana.
(ii) As per the provisions of section 12(3)(c) of the IGST Act, 2017, the place of supply of
services, by way of accommodation in any immovable property for organizing, inter alia, any
official/ business function including services provided in relation to such function at such property,
shall be the location at which the immovable property is located.
Therefore, the place of supply of services supplied by Hotel Chumchum to Mindsharp Associates
by way of accommodation of conference hall alongwith the rooms of Hotel Chumchum for the
training programme shall be the location of the Hotel Chumchum, i.e. Neemrana, Rajasthan.

Chapter 12 - Tax Invoice, Debit Note and Credit Note
Q 1. Jai, a registered supplier, runs a general store in Ludhiana, Punjab. Some of the goods sold by him
are exempt whereas some are taxable. You are required to advise him on the following issues:
(i) Whether Jai is required to issue a tax invoices in all cases, even if he is selling the goods
to the end consumers?
(ii) Jai sells some exempted as well as taxable goods valuing ` 5,000 to a school student. Is he
mandatorily required to issue two separate GST documents?
(iii) Jai wishes to know whether it’s necessary to show tax amount separately in the tax
invoices issued to the customers. You are required to advise him.
Ans: Answers to above mentioned questions are given as below:
i. No, he is not required to issue tax invoice in all cases. As per section 31(1) of the CGST
Act, 2017, every registered person supplying taxable goods is required to issue a ‘tax invoice’.
Section 31(3)(c) of the CGST Act, 2017 stipulates that every registered person supplying
exempted goods is required to issue a bill of supply instead of tax invoice.
Further, rule 46A of the CGST Rules, 2017 provides that a registered person supplying taxable
as well as exempted goods or services or both to an un-registered person may issue a single
‘invoice-cum-bill of supply’ for all such supplies.
However, as per section 31(3)(b) of the CGST Act, 2017 read with rule 46 of the CGST
Rules, 2017, a registered person may not issue a tax invoice if:
(i) value of the goods supplied < ` 200,
(ii) the recipient is unregistered; and
(iii) the recipient does not require such invoice.
Instead, such registered person shall issue a Consolidated Tax Invoice for such supplies at
the close of each day in respect of all such supplies.
ii. As per rule 46A of the CGST Rules, 2017, where a registered person is supplying taxable as
well as exempted goods or services or both to an unregistered person, a single “invoice-
cum-bill of supply” may be issued for all such supplies. Thus, there is no need to issue
a tax invoice and a bill of supply separately to the school student in respect of supply of
the taxable and exempted goods respectively.
iii. As per section 33 of the CGST Act, 2017 read with rule 46(m) of the CGST Rules, 2017,
where any supply is made for a consideration, every person who is liable to pay tax for such
supply shall prominently indicate in all documents relating to assessment, tax invoice and
other like documents, the amount of tax which shall form part of the price at which such
supply is made. Hence, Jai has to show the tax amount separately in the tax invoices issued
to customers.

Q 2. Sultan Industries Ltd., Delhi, entered into a contract with Prakash Entrepreneurs, Delhi, for supply
of spare parts of a machine on 7th September. The spare parts were to be delivered on 30th
September. Sultan Industries Ltd. removed the finished spare parts from its factory on 29th
September. Determine the date by which invoice must be issued by Sultan Industries Ltd. under
GST law.
Ans: As per the provisions of section 31, invoice shall be issued before or at the time of removal of
goods for supply to the recipient, where the supply involves movement of goods. Accordingly, in
the given case, the invoice must be issued on or before 29th September.
Q 3. MBM Caretakers, a registered person, provides the services of repair and maintenance of electrical
appliances. On April 1, it has entered into an annual maintenance contract with P for its Air
Conditioner and Washing Machine. As per the terms of contract, maintenance services will be
provided on the first day of each quarter of the relevant financial year and payment for the same
will also be due on the date on which service is rendered. During the year, it provided the
services on April 1, July 1, October 1, and January 1 in accordance with the terms of contract.
When should MBM Caretakers issue the invoice for the services rendered?
Ans: Continuous supply of service means, inter alia, supply of any service which is provided, or agreed
to be provided continuously or on recurrent basis, under a contract, for a period exceeding 3 months
with the periodic payment obligations.
Therefore, the given situation is a case of continuous supply of service as repair and maintenance
services have been provided by MBM Caretakers on a quarterly basis, under a contract, for a period
of one year with the obligation for quarterly payment.
In terms of section 31, in case of continuous supply of service, where due date of payment is
ascertainable from the contract (as in the given case), invoice shall be issued on or before the
due date of payment.
Therefore, in the given case, MBM Caretakers should issue quarterly invoices on or before April 1, July
1, October 1, and January 1.
Q 4. The aggregate turnover of Sangri Services Ltd., Delhi exceeded Rs. 20 lakh on 12th August. He
applied for registration on 3rd September and was granted the registration certificate on 6th
September. You are required to advice Sangri Services Ltd. 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.
Ans: Legal Provision: As per section 25 read with CGST Rules, 2017, where an applicant submits
application for registration within 30 days from the date he becomes liable to registration,
effective date of registration is the date on which he becomes liable to registration. Since,
Sangri Services Ltd.’s turnover exceeded Rs. 20 lakh on 12th August, it became liable to registration

on same day. Further, it applied for registration within 30 days of so becoming liable to registration,
the effective date of registration is the date on which he becomes liable to registration, i.e. 12th
August.
As per section 25 read with CGST Rules, 2017, where an applicant submits application for
registration within 30 days from the date he becomes liable to registration, effective date of
registration is the date on which he becomes liable to registration. Since, Sangri Services Ltd.’s
turnover exceeded ` 20 lakh on 12th August, it became liable to registration on same day. Further,
it applied for registration within 30 days of so becoming liable to registration, the effective date
of registration is the date on which he becomes liable to registration, i.e. 12th August.
Conclusion: Therefore, in the given case, Sangri Services Ltd. has to issue the Revised Tax
Invoices in respect of taxable supplies effected during the period starting from the effective date
of registration (12th August) till the date of issuance of certificate of registration (6th September)
within 1 month from the date of issuance of certificate of registration, i.e. on or before 6th
October.
Q 5. Shyam Fabrics has opted for composition levy scheme in the current financial year. It has
approached you for advice whether it is mandatory for it to issue a tax invoice. You are required
to advice him regarding same.
Ans: A registered person paying tax under the provisions of section 10 [composition levy] shall issue,
instead of a tax invoice, a bill of supply containing such particulars and in such manner as may
be prescribed [Section 31(3)(c) read with CGST Rules, 2017].
Q 6. Discuss the provisions relating to issuance of refund voucher under CGST Act and rules thereunder.
Ans: Where, on receipt of advance payment with respect to any supply of goods or services or both the
registered person issues a Receipt Voucher, but subsequently no supply is made and no tax invoice
is issued in pursuance thereof, the said registered person may issue to the person who had made
the payment, a Refund Voucher against such payment.
Q 7. Is a registered person liable to pay tax under reverse charge under section 9(3) of the CGST
Act required to issue an invoice? Discuss the relevant provisions under CGST Act and rules
thereunder.
Ans: Refer para No. 15 in Main Book
Q 8. Discuss the provisions relating to issuance of credit and debit notes under CGST Act and rules
thereunder.
Ans: Refer para No. 22 in Main Book

Q 9. What is the time period within which invoice has to be issued for supply of services?
Ans: Refer Section 31 in Time of Supply Chapter in Main Book
Q 10. What is the time period within which invoice has to be issued in a case involving continuous supply
of goods?
Q 11. What is the time period within which invoice has to be issued in a case involving continuous supply
of services?
Q 12. What is the time period within which invoice has to be issued where the goods being sent or taken
on approval for sale?
Chapter 12 – Tax Invoice
1) A continuous supply of goods requires one of the following as a must:

A. The goods must be notified by the Commissioner in this behalf
B. The contract for supply lasts for a minimum period of 3 months
C. The supply is made by means of a wire, cable, pipeline or other conduit
D. Supplier invoices the recipient on a regular or periodic basis
Ans d) Supplier invoices the recipient on a regular or periodic basis
2) Tax Invoice must be issued within ______________from the date of removal of

goods sent or taken on approval for sale or return.
A. 3 months
B. 30 days
C. 15 days
D. 6 months
Ans: d) 6 months

3). Which documents is to be issued by the consignor instead of tax invoice for
transportation of goods for job work?
A. E – way bill
B. Delivery Challan
C. Debit Note
D. Receipt Voucher
Ans: b) Delivery Challan
4) Bill of Supply is issued by the registered person –

A. Paying tax under composition scheme
B. Supplying exempted goods or services or both
C. (a) and (b) both
Ans c) (a) and (b) both
4A. M/s. Rajdhani (P) Ltd., registered in Delhi, wishes to transport the taxable goods to
one of its business Vertical having same PAN and registered within same State. Which
document shall be issued by the Company in this situation?
A. Delivery Challan
B. Tax Invoice
C. Bill of Supply
D. Invoice-cum-bill of supply
Ans b) Tax Invoice
5). In case of supply of services, the tax invoice shall be prepared in the manner of:
A. Only original
B. Two copies
C. Three copies
D. Four copies.
Ans b) Two copies

6). A person operating in composition issue a tax invoice to a customer. Is the person
correct in raising the invoice
A. Yes
B. No
C. Yes, but tax amount should not be separately shown
Ans b) No
7). Invoice cum Bill of Supply may be issued by registered person

A. Supplying taxable as well as exempted goods and / or services
B. Supplying taxable goods and exempted services
C. Supplying taxable services and exempted goods
D. Supplying taxable as well as exempted services
Ans a) Supplying taxable as well as exempted goods and / or services
8). Invoice shall be prepared in (I) ___________ in case of taxable supply of goods and
in (ii)_____________ in case of taxable supply of services.
A. Triplicate, (ii) Duplicate
B. Duplicate, (ii) Triplicate
C. Duplicate, (ii) Duplicate
Ans a)(i) Triplicate, (ii) Duplicate
9). A registered taxable person shall, on receipt of advance payment w.r.t. any supply, issue
A. Debit note
B. Credit note
C. Receipt voucher
D. Tax invoice
Ans: c) Receipt voucher

10). Is it mandatory to indicate the word “Revised invoice” on revised tax invoice?
A. Yes
B. No
C. Yes, but if the value exceeds Rs.5,000
D. Yes, but if the value exceeds Rs.500
Ans a) Yes
11). In case of taxable supply of services, tax invoice shall be issued within __________
from the date of supply of service provided that the supplier is other than an insurer /
banking company / financial institution / non – banking financial company ?
A. 15 days
B. 30 days
C. 45 days
D. 60 days
Ans b) 30 days
12). If prices are increased renegotiations, the supplier should issue

A. Credit note with GST
B. Debit note without GST
C. Credit note without GST
D. Debit note with GST
Ans d) Debit note with GST
13). Law permits collection of tax on supplies effected prior to registration, but after
applying for Registration:
A. Yes, but only on intra-State supplies, if the revised invoice is raised within one month
B. Yes, but only on intra-State supplies effected to unregistered persons, if the revised
invoice is raised within one month
C. Yes, on all supplies, if the revised invoice is raised within one month
D. No, tax can be collected only on supplies effected after registration is granted .
Ans. c) Yes, on all supplies, if the revised invoice is raised within one month

1. Which of the following statements is correct while issuing a tax invoice?

(i) Place of supply in case of inter-State supply is not required to be mentioned
(ii) The power of attorney holder can sign the tax invoice in case the taxpayer or his authorised
representative has been travelling abroad
(iii) Quantity is not required to be mentioned in case of goods when goods are sold on “as is
where is basis”
(iv) Description of goods is not required to be given in case of mixed supply of goods
(a) (ii), (iii)

(b) (i), (ii), (iii)
(c) None of the above
(d) All of the above
Ans: None of the above
Q.2 Which of the following statements is correct while issuing a tax invoice?
(i) Place of supply in case of inter-State supply is not required to be mentioned.
(ii) A registered person whose annual turnover is greater than ` 5 crores in the preceding financial
year is not required to mention
HSN code for goods or services, supplied by it to a registered person.
(iii) Quantity is not required to be mentioned in case of goods when goods are sold on “as is
where is basis”.
(iv) Description of goods is not required to be given in case of mixed supply of goods.
(a) (ii), (iii)
(b) (i), (ii), (iii)
(c) None of the above
(d) (i), (iii), (iv)
Ans: (c) None of the above

Q.3 What will be the rate of tax and nature of supply of a service if the same is not determinable at
the time of receipt of advance?
(a) 12%, inter-State supply
(b) 12%, intra-State supply
(c) 18%, inter-State supply
(b) 18%, intra-State supply
Ans: (c) 18%, inter-State supply
Q.4 ASC, a registered person under GST, supplied goods amounting to ` 1,18,000 (inclusive of GST,
taxable @ 18%) to BSC, a registered person under GST on 30th September. BSC further sold such
goods to
Rakesh, a consumer who came to his shop on 30th October in cash, for ` 2,36,000 (inclusive of
GST, taxable @ 18%). ASC issued a credit note of `11,800 (`10,000 + ` 1800 - GST) for rate
difference on 2nd November to BSC. Thereafter, BSC entered a credit note in its books for the
same amount in the name of Rakesh, without intimating him, on 2nd November and reduced its
output tax liability accordingly.
As per the provisions of GST law, which of the above-mentioned suppliers are allowed to reduce
their output tax liability?
(a) ASC
(b) BSC
(c) Both ASC and BSC
(d) Neither ASC nor BSC, since incidence of tax has been passed on to another person.
Ans: (a) ASC

Chapter 13 – Accounts and Records
Q 1. Mr. Raj an unregistered person sent Handicraft goods worth Rs. 45000/- from Delhi to Punjab,
whether EWB needs to generate?
Ans: In case of movement of handicraft goods, it is mandatory to generate e-way bill irrespective of
amount, therefore in this case EWB needs to be generate even though Mr Raj is an unregistered
person he is required to generate an E way bill
Q 2. Mala Services Ltd. is a supplier of management consultancy services. It has approached you to
ascertain the period for which the books of accounts or other records need to be maintained?
Ans: Section 36 of the CGST Act stipulates that every registered person required to keep and maintain
books of account or other records in accordance with the provisions of sub-section (1) of section
35 shall retain them until the expiry of 72 months from the due date of furnishing of annual
return for the year pertaining to such accounts and records.
However, a registered person, who is a party to an appeal or revision or any other proceedings
before any Appellate Authority or Revisional Authority or Appellate Tribunal or court, whether filed
by him or by the Commissioner, or is under investigation for an offence under Chapter XIX, shall
retain the books of account and other records pertaining to the subject matter of such appeal
or revision or proceedings or investigation for a period of one year after final disposal of such
appeal or revision or proceedings or investigation, or for the period specified above, whichever is
later.
Q 3. Essel Groups has started making taxable supplies. You are required to advice it about the accounts
and records required to be maintained by it as required under section 35(1) of the CGST Act,
2017.
Ans: Section 35(1) of the CGST Act, 2017 stipulates that a true and correct account of following is
to be maintained:
I. production or manufacture of goods;
II. inward and outward supply of goods or services or both;
III. stock of goods;
IV. input tax credit availed;
V. output tax payable and paid
VI. Such other particulars as may be prescribed.
x

Q 4. Swad Restaurant has opted for composition scheme in the current financial year. Discuss the
records which are not to be maintained by a supplier opting for composition levy as enumerated
in rule 56 of the CGST Rules, 2017.
Ans: Following records are not required to be maintained by a supplier who has opted for composition scheme
as per rule 56(2) and (4) of the CGST Rules, 2017:
i. Stock of goods: Accounts of stock in respect of goods received and supplied by him, and such
accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen,
destroyed, written off or disposed of by way of gift or free sample and the balance of stock
including raw materials, finished goods, scrap and wastage thereof.
ii. Details of tax: Account, containing the details of tax payable (including tax payable under
reverse charge), tax collected and paid, input tax, input tax credit claimed, together with a
register of tax invoice, credit notes, debit notes, delivery challan issued or received during any
tax period.
Q 5. ABC Manufacturers Ltd. engages Raghav & Sons as an agent to sell goods on its behalf. For the
purpose, ABC Manufacturers Ltd. has supplied the goods to Raghav & Sons located in Haryana.
Enumerate the accounts required to maintained by Raghav & Sons as per rule 56(11) of the CGST
Rules, 2017.
Ans: Rule 56(11) of the CGST Rules, 2017 provides that every agent shall maintain accounts depicting
the-
(a) Particulars of authorisation received by him from each principal to receive or supply goods or
services on behalf of such principal separately;
(b) Particulars including description, value and quantity (wherever
applicable) of goods or services received on behalf of every principal;
(c) Particulars including description, value and quantity (wherever applicable) of goods or
services supplied on behalf of every principal;
(d) Details of accounts furnished to every principal; and
(e) Tax paid on receipts or on supply of goods or services effected on behalf of every principal.
Q 6. State the requirement of books of accounts required to be maintained by person engaged in works
contract service.
Ans: Refer relevant para. i.e. Rule 56(14) in Main Book
Q 7. State the period of retention of books of accounts?

Ans: Refer relevant para. i.e. Section 36 in Main Book

Q 8. With reference to the provisions relating to the electronic way bill (E-way bill) as prescribed
under the GST laws, answer the following questions:
I. Sindhi Toys Manufacturers, registered in Punjab, sold electronic toys to a retail seller in
Gujarat, at a value of ` 48,000 (excluding GST leviable @ 18%). Now, it wants to send the
consignment of such toys to the retail seller in Gujarat.
You are required to advise Sindhi Toys Manufacturers on the following issues:
(a) Whether e-way bill is mandatorily required to be generated in respect of such
movement of goods?
(b) If yes, who is required to generate the e-way bill?
(c) What will be the consequences for non-issuance of e-way bill?
II. Power Electricals Ltd., a registered supplier of air-conditioners, is required to send from
Mumbai (Maharashtra), a consignment of parts of air-conditioner to be replaced under
warranty at various client locations in Gujarat. The value of consignment declared in delivery
challan accompanying the goods is ` 70,000. Power Electricals Ltd. claims that since
movement of goods to Gujarat is caused due to reasons other than supply, e-way bill is
not mandatorily required to be generated in this case.
You are required to examine the technical veracity of the claim made by Power Electricals Ltd.
III. Beauty Cosmetics Ltd. has multiple wholesale outlets of cosmetic products in Mumbai,
Maharashtra. It receives an order for cosmetics worth Rs. 1,20,000 (inclusive of GST leviable
@ 18%) from Prasannaa, owner of a retail cosmetic store in Delhi. While checking the stock,
it is found that order worth Rs. 55,000 can be fulfilled from the company’s Dadar (Mumbai)
store and remaining goods worth Rs. 65,000 can be sent from its Malad (Mumbai) store.
Both the stores are instructed to issue separate invoices for the goods sent to Prasannaa.
The goods are transported to Prasanna in Delhi, in a single conveyance owned by Radhey
Transporters. You are required to advise Beauty Cosmetics Ltd. with regard to issuance of e-
way bill(s)
Ans:
i. (a) Rule 138(1) of the CGST Rules, 2017 provides that e-way Bill is mandatorily required
to be generated if the goods are moved, inter alia, in relation to supply and the consignment
value exceeds ` 50,000. Further, explanation 2 to rule 138(1) stipulates that the
consignment value of goods shall be the value, determined in accordance with the provisions
of section 15, declared in an invoice, a bill of supply or a delivery challan, as the case may
be, issued in respect of the said consignment and also includes CGST, SGST/UTGST, IGST
and cess charged, if any, in the document and shall exclude the value of exempt supply of
goods where the invoice is issued in respect of both exempt and taxable supply of goods.
Accordingly, in the given case, the consignment value will be as follows:
= Rs. 48,000 × 118%
= Rs. 56,640.
Since the movement of goods is in relation to supply of goods and the consignment value

exceeds Rs. 50,000, e-way bill is mandatorily required to be issued in the given case.
(b) An e-way bill contains two parts namely, Part A to be furnished by the registered person
who is causing movement of goods of consignment value exceeding ` 50,000/- and part B
(transport details) is to be furnished by the person who is transporting the goods.
Where the goods are transported by the registered person as a consignor or the recipient
of supply as the consignee, whether in his own conveyance or a hired one or a public
conveyance, by road, the said person shall generate the e-way bill on the common portal
after furnishing information in Part B [Rule 138(2)].
Where the goods are transported by railways or by air or vessel, the e-way bill shall be
generated by the registered person, being the supplier or the recipient, who shall, either
before or after the commencement of movement, furnish, on the common portal, the
information in Part B [Rule 138(2A)].
Where the goods are handed over to a transporter for transportation by road, the registered
person shall furnish the information relating to the transporter on the common portal and
the e-way bill shall be generated by the transporter on the said portal on the basis of the
information furnished by the registered person in Part A [Rule 138(3)].
Where the consignor or the consignee has not generated the e-way bill and the aggregate
of the consignment value of goods carried in the conveyance is more than ` 50,000/, the
transporter, except in case of transportation of goods by railways, air and vessel, shall, in
respect of inter-State supply, generate the e-way bill on the basis of invoice or bill of supply
or delivery challan, as the case may be, and may also generate a consolidated e-way bill
on the common portal prior to the movement of goods [Rule 138(7)].
(c) It is mandatory to generate e-way bill in all cases where the value of consignment of goods
being transported is more than Rs. 50,000/- and it is not otherwise exempted in terms of
rule 138(14) of CGST Rules, 2017. If e- way bills, wherever required, are not issued in
accordance with the provisions contained in rule 138, the same will be considered as
contravention of rules. As per section 122(1)(xiv) of CGST Act, 2017, a taxable person who
transports any taxable goods without the cover of specified documents (e-way bill is one
of the specified documents) shall be liable to a penalty of ` 10,000/- or tax sought to be
evaded (wherever applicable) whichever is greater. Moreover, as per section 129(1) of CGST
Act, 2017, where any person transports any goods or stores any goods while they are in
transit in contravention of the provisions of this Act or the Rules made thereunder, all such
goods and conveyance used as a means of transport for carrying the said goods and documents
relating to such goods and conveyance shall be liable to detention or seizure.
ii. The goods to be moved to another State for replacement under warranty is not a ‘supply’.
However, rule 138(1) of the CGST Act, 2017, inter alia, stipulates that every registered
person who causes movement of goods of consignment value exceeding Rs. 50,000:
a. in relation to a supply; or
b. for reasons other than supply; or

c. due to inward supply from an unregistered person,
shall, generate an electronic way bill (E-way Bill) before commencement of such movement.
Thus, in the given case, since the consignment value exceeds Rs. 50,000, e-way bill is
required to be mandatorily generated. Therefore, the claim of Power Electric als Ltd. that
e-way bill is not mandatorily required to be generated as the movement of goods is caused
due to reasons other than supply, is not correct.
iii. Beauty Cosmetics Ltd. would be required to prepare two separate e-way bills since each
invoice value exceeds Rs. 50,000 and each invoice is considered as one consignment for the
purpose of generating e-way bills.
The FAQs on E-way Bill issued by CBIC clarify that if multiple invoices are issued by
the supplier to one recipient, that is, for movement of goods of more than one invoice of
same consignor and consignee, multiple e-way bills have to be generated. In other words,
for each invoice, one e-way bill has to be generated, irrespective of the fact whether same
or different consignors or consignees are involved. Multiple invoices cannot be clubbed to
generate one e-way bill. However, after generating all these e-way bills, one consolidated
e-way bill can be prepared for transportation purpose, if goods are going in one vehicle.
Q 9. A truck contains 3 consignments based on 3 invoices, invoice 1 for Rs. 55000/-, invoice 2 for Rs.
35000/- and invoice 3 for Rs. 90000/-, how many e-way bill will be generated.
Ans: E-way bill will be generated bill/invoice wise i.e. when value of invoice exceed Rs. 50000/- therefore,
in this case e-way bill will be generated for invoice 1 & 3 only
Q 10. Mr. Rahul sent goods for job work worth Rs. 25000/- from delhi to UP, whether E-way bill needs
to be generated?
Ans: In case of Inter-state movement of goods for job work, it is mandatory to generate EWB irrespective
of amount, therefore in this case EWB needs to be generated.

Chapter 13 – Accounts, Records and E-way Bill
1). Who is required to maintain records u/s 35?

A. Every registered person
B. Every owner or operator of warehouse or godown or any other place used for storage of
goods
C. Every transporter
D. All of the above
Ans:- d).All of the above
2). Records u/s 35 shall be maintained at

A. Principal address of Proprietor / Partner /Director
B. Principal place of Business mentioned in registration certificate
C. At accountant office
D. All of the above
Ans:- b) Principal place of Business mentioned in registration certificate
3). Who has to maintain records u/s 35, irrespective of, whether he is a registered person
or not?
A. Every owner or operator of warehouse or godown
B. Every owner or operator of any other place used for storage of goods
C. Every transporter
D. All of the above
Ans:- d). All of the above
4). Accounts maintained by the registered person shall be preserved for a period of
A. 60 months from the due date of furnishing of annual return
B. 72 months from the due date of furnishing of annual return
C. 84 months from the due date of furnishing of annual return
D. 96 months from the due date of furnishing of annual return

Ans:- b).72 months from the due date of furnishing of annual return
5). If due date of filing the annual return is 31.12.2019, then the books of record of 2018 -
19 must be maintained for how many years?
A. 31.12.2023
B. 31.12.2020
C. 31.12.2025
D. 31.12.2024
Ans:- c) 31.12.2025
6). Which of the records are not to be maintained by an agent?

A. Particulars of authorisation on received by him from each principal to receive or supply
goods or services on behalf of such principal separately
B. Raw materials or services used in the manufacture
C. Tax paid on receipts or on supply of goods or services effected on behalf of every
principal.
D. Details of accounts furnished to every principal
Ans:- b) Raw materials or services used in the manufacture
7). Who among the following, even if not registered, is required to maintain records
A. Owner or operator of warehouse
B. Owner or operator of go down
C. Owner or operator of any other place used for storage of goods
D. Every transporter
E. All the above
Ans:- e).All the above
8). Which of the following statements are true w.r.t. accounts and records?
1) All accounts and records are to be retained for 6 years.
2) Stock record is to be maintained by all registered dealers except the dealers
registered under composition scheme.

3) Stock record is to be maintained by all registered dealers including composition
dealers.
4) Monthly product on records are to be maintained by all dealers except the dealers
who have taken option for composition.
5) Monthly product on records are to be maintained by a deslers including composition
dealers
6) Records are to be maintained at principal place of business.
7) Records are to be maintained at principal place of business as also at all additional
places of business. Which of the above are correct?
A. 1,2,5,6
B. 1,3,5,7
C. 1,3,4,7
D. 1,2,4,6
Ans:- d).1,2,4,6
9) What shall be limit of generation of e – way bill in case of inter – State movement of
goods by a principal to a Job worker?
A. Rs. 50,000
B. Rs. 1,00,000
C. Rs. 20,000
D. No limit
Ans:- d).No limit
10). In what circumstances the transporter need to issue e-way bill if the supplier has not
issued it?
A. If the single consignment document is less than Rs. 50,000
B. If aggregate of all the consignment exceeds Rs. 50,000 but individually the
consignment does not exceed Rs. 50,000
C. If the aggregate consignment does not exceed Rs. 50,000
Ans b) If aggregate of all the consignment exceeds Rs. 50,000 but individually the
consignment does not exceed Rs. 50,000

11). Is it mandatory to generate an e way bill in case where goods are transported within a
State from the place of consignor to the place of transporter and the distance as such
is less than 50 kms.
A. Yes
B. No
C. Optional
Ans:- c) Optional
12). in how many parts E-way bill has been bifurcated as per Form GST EWB-01
A. Part A
B. Part B
C. both a & b
Ans:- c). both a & b
13). Mr. Tushar got his goods transported through an ecommerce operator worth of Rs.
1,00,000. Mr. Tushar however was not able to fill Part A of Form GST EWB – 01. What
are the alternatives to stand the viability of such movement of goods?
A. Movement of goods shall stand cancelled
B. E – commerce operator on an authorization from Mr. Tushar shall generate e – way
bill
C. Either A and B at the option of proper officer
Ans:- b) E – commerce operator on an authorization from Mr. Tushar shall generate e –

way bill
14). An over dimensional cargo containing a consignment or goods or cargo, takes a visit of
58 km in total. What shall be the validity of E way bill generated as per the provision
under this case?
A. 2 days
B. 3 days

C. 4 days
Ans:- b. 3 days
15). Can validity of an expired E – way bill be extended?

A. Yes
B. No
C. Only in case of trans – shipment or circumstances of exceptional nature
Ans:- c. Only in case of trans – shipment or circumstances of exceptional nature
16). Goods are handed over by consignor to transporter on Friday evening at 17:00 hrs and
the transporter starts the movement of goods on Monday evening at 17:00 hrs after
generating e- way bill. When will the validity period for e-way bill end if the distance
is upto 75 Km?
A. Tuesday at 24:00 hrs
B. Monday at 24:00 hrs
C. Tuesday at 17:00 hrs
D. Saturday at 24:00 hrs
Ans:- a) Tuesday at 24:00 hrs
17). An Army battalion took a shift from Maharashtra to Kashmir. As a consequence there
was movement of goods from such place. Is the Ministry of Defence liable to generate
e – way bill under this case?
A. Yes
B. No
C. As no fied by the appropriate authority
Ans:- b. No

18). What is the significance of consolidated E – way bill?
A. Useful where single consignment is being transported through multiple vehicles
B. Useful where multiple consignments are being transported in one conveyance
C. Useful in both the cases
Ans:- b.Useful where multiple consignments are being transported in one conveyance
19). Who can create consolidated E – way bill under the GST regime?
A. Consignor
B. Consignee
C. Transporter
D. All of the above
Ans:- c. Transporter
20). M/s ABC is having a turnover of less than 1.5 crores and does not mean on HSN code
on his E– way Bill. Whether such E- way bill generation is possible without HSN
codes?
A. Yes
B. No
C. At the option of proper officer
Ans:- b. No
21). Rakesh & Company has got multiple retail outlets of cosmetic products in Mumbai. He
receives an order from a customer of Kerala worth Rs. 1,20,000/- at one store. While
checking the stock he found that order worth Rs. 55,000/- can be fulfilled from his
one store situated in Dadar and remaining goods worth Rs. 65,000/- can be sent from
his another store situated in Malad. He instructs both the stores to bill separately the
goods to Kerala customer. Which one of the below is TRUE?
A. He would be required to prepare one e-way bill since one order shall be considered as
one consignment for the purpose of e-way bills.
B. He will not be required to prepare e-way bill.
C. Rakesh & Company would be required to prepare 3 e-way bills. One for movement from

Dadar Store, one for movement from Malad store and one consolidated for movement
from Transporter to Customer.
D. He would be required to prepare two separate e-way bills since each invoice value
exceeds Rs.50,000/- and each invoice shall be considered as one consignment for the
purpose of generating e-way bills
Ans: d) He would be required to prepare two separate e-way bills since each invoice value
exceeds Rs. 50,000/- and each invoice shall be considered as one consignment for the
purpose of generating e-way bills
Q 1. Which of the following statements are true with respect to accounts and records?
(1) All accounts and records are to be retained for 6 years.
(2) Stock record is to be maintained by all registered dealers except the dealers
registered under composition scheme.
(3) Stock record is to be maintained by all registered dealers including composition
dealers.
(4) Monthly production records are to be maintained by all dealers except the dealers
who have taken option for composition.
(5) Monthly production records are to be maintained by all dealers including
composition dealers.
(6) Records are to be maintained at principal place of business.
(a) 1, 2, 5, 6
(b) 1, 3, 5
(c) 1, 3, 4
(d) 1, 2, 4, 6
Ans: 1, 2, 5, 6
Q2. With reference to the provisions relating to the electronic way bill (E-way bill) as prescribed
under the GST laws, answer the following questions:
(i) Sindhi Toys Manufacturers, registered in Punjab, sold electronic toys to a retail seller
in Gujarat, at a value of ` 48,000 (excluding GST leviable @ 18%). Now, it wants to send
the consignment of such toys to the retail seller in Gujarat.
You are required to advise Sindhi Toys Manufacturers on the following issues:

(a) Whether e-way bill is mandatorily required to be generated in respect of such movement
of goods?
(b) If yes, who is required to generate the e-way bill?
(c) What will be the consequences for non-issuance of e-way bill?
(ii) Power Electricals Ltd., a registered supplier of air-conditioners, is required to send from
Mumbai (Maharashtra), a consignment of parts of air-conditioner to be replaced under
warranty at various client locations in Gujarat. The value of consignment declared in
delivery challan accompanying the goods is ` 70,000. Power Electricals Ltd. claims that
since movement of goods to Gujarat is caused due to reasons other than supply, e -
way bill is not mandatorily required to be generated in this case.
You are required to examine the technical veracity of the claim made by Power Electricals Ltd.
(iii) Beauty Cosmetics Ltd. has multiple wholesale outlets of cosmetic products in Mumbai,
Maharashtra. It receives an order for cosmetics worth ` 1,20,000 (inclusive of GST leviable
@ 18%) from Prasannaa, owner of a retail cosmetic store in Delhi. While checking the
stock, it is found that order worth ` 55,000 can be fulfilled from the company’s Dadar
(Mumbai) store and remaining goods worth ` 65,000 can be sent from its Malad
(Mumbai) store. Both the stores are instructed to issue separate invoices for the
goods sent to Prasannaa. The goods are transported to Prasanna in Delhi, in a single
conveyance owned by Radhey Transporters.
You are required to advise Beauty Cosmetics Ltd. with regard to issuance of e -way bill(s).
Ans: (i) (a) Rule 138(1) of the CGST Rules, 2017 provides that e-way Bill is mandatorily required to
be generated if the goods are moved, inter alia, in relation to
supply and the consignment value exceeds ` 50,000. Further, explanation 2 to rule 138(1)
stipulates that the consignment value of goods shall be the value, determined in accordance
with the provisions of section 15, declared in an invoice, a bill of supply or a delivery challan,
as the case may be, issued in respect of the said consignment and also includes CGST,
SGST/UTGST, IGST and cess charged, if any, in the document and shall exclude the value of
exempt supply of goods where the invoice is issued in respect of both exempt and taxable
supply of goods.
Accordingly, in the given case, the consignment value will be as follows:
= ` 48,000 × 118%
= ` 56,640.
Since the movement of goods is in relation to supply of goods and the consignment value
exceeds ` 50,000, e-way bill is mandatorily required to be issued in the given case.
(b) An e-way bill contains two parts namely, Part A to be furnished by the registered
person who is causing movement of goods of consignment value exceeding ` 50,000/- and
part B (transport details) is to be furnished by the person who is transporting the goods.
Where the goods are transported by the registered person as a consignor or the recipient
of supply as the consignee, whether in his own conveyance or a hired one or a public

conveyance, by road, the said person shall generate the e-way bill on the common portal
after furnishing information in Part B [Rule 138(2)].
Where the goods are transported by railways or by air or vessel, the e-way bill shall be
generated by the registered person, being the supplier or the recipient, who shall, either
before or after the commencement of movement, furnish, on the common portal, the
information in Part B [Rule 138(2A)].
Where the goods are handed over to a transporter for transportation by road, the
registered person shall furnish the information relating to the transporter on the common
portal and the e-way bill shall be generated by the transporter on the said portal on the
basis of the information furnished by the registered person in Part A [Rule 138(3)].
Where the consignor or the consignee has not generated the e-way bill and the aggregate
of the consignment value of goods carried in the conveyance is more than ` 50 ,000/, the
transporter, except in case of transportation of goods by railways, air and vessel, shall, in
respect of inter-State supply, generate the e-way bill on the basis of invoice or bill of
supply or delivery challan, as the case may be, and may also generate a consolidated e-
way bill on the common portal prior to the movement of goods [Rule 138(7)].
(c) It is mandatory to generate e-way bill in all cases where the value of consignment of
goods being transported is more than ` 50,000/- and it is not otherwise exempted in
terms of rule 138(14) of CGST Rules, 2017. If e-way bills, wherever required, are not
issued in accordance with the provisions contained in rule 138, the same will be
considered as contravention of rules. As per section 122(1)(xiv) of CGST Act, 2017, a
taxable person who transports any taxable goods without the cover of specified
documents (e-way bill is one of the specified documents) shall be liable to a penalty of
` 10,000/- or tax sought to be evaded (wherever applicable) whichever is greater. Moreover,
as per section 129(1) of CGST Act, 2017, where any person transports any goods or
stores any goods while they are in transit in contravention of the provisions of this
Act or the Rules made thereunder, all such goods and conveyance used as a means of
transport for carrying the said goods and documents relating to such goods and
conveyance shall be liable to detention or seizure.
(ii) The goods to be moved to another State for replacement under warranty is not a ‘supply’.
However, rule 138(1) of the CGST Act, 2017, inter alia, stipulates that every registered
person who causes movement of goods of consignment value exceeding ` 50,000:
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person, shall, generate an electronic way bill
(E-way Bill) before commencement of such movement.
CBIC vide Q 9. of FAQs on E-way Bill has also clarified that even if the movement
of goods is caused due to reasons others than supply [including replacement of goods
under warranty], e-way bill is required to be issued.

Thus, in the given case, since the consignment value exceeds ` 50,000, e-way bill is
required to be mandatorily generated. Therefore, the claim of Power Electric als Ltd. that
e-way bill is not mandatorily required to be generated as the movement of goods is
caused due to reasons other than supply, is not correct.
(iii) Beauty Cosmetics Ltd. would be required to prepare two separate e-way bills since each
invoice value exceeds ` 50,000 and each invoice is considered as one consignment for the
purpose of generating e-way bills.
The FAQs on E-way Bill issued by CBIC clarify that if multiple invoices are issued by
the supplier to one recipient, that is, for movement of goods of more than one invoice of
same consignor and consignee, multiple e-way bills have to be generated. In other
words, for each invoice, one e-way bill has to be generated, irrespective of the fact
whether same or different consignors or consignees are involved. Multiple invoices cannot
be clubbed to generate one e-way bill.
However, after generating all these e-way bills, one consolidated e-way bill can be
prepared for transportation purpose, if goods are going in one vehicle.
Q.3 When is an e-way bill required to be generated?

Ans: As per rule 138 of the CGST Rules, 2017, whenever there is a movement of goods of consignment
value exceeding ` 50,000:
(i) in relation to a supply; or
(ii) for reasons other than supply; or due to inward supply from an unregistered person, e-way bill
needs to be generated prior to the commencement of transport of goods.
Further, in the following situations, e-way bill needs to be issued even if the value of the consignment
is less than ` 50,000:
(i) Where goods are sent by a principal located in one State/Union territory to a job worker located
in any other State/Union territory, the e-way bill shall be generated either by the principal or
the job worker, if registered, irrespective of the value of the consignment.
(ii) Where specified handicraft goods are transported from one State/Union territory to another
State/Union territory by a person who has been exempted from the requirement of obtaining
registration under section 24 of the CGST Act,2017, the eway bill shall be generated by the
said person irrespective of the value of the consignment.
Q.4 Happy Company is a registered supplier of electric goods. It has three stores for electric goods in
Jodhpur (Rajasthan) namely Ram Store, Shyam Store, Mohan Store. It receives an order for supply
of electric goods worth ` 1,40,000 (exclusive of GST @ 18%) from Kishan Sons of Bhopal (Madhya
Pradesh). Happy Company found that order worth

` 43,000 can be fulfilled from the company's Ram Store, order worth ` 45,000 can be fulfilled from
its Shyam Store and remaining goods worth ` 52,000 can be sent from its Mohan Store. All three
stores are instructed to issue separate invoices for the goods sent to Kishan Sons. The goods are
transported to Kishan Sons in Bhopal in a single conveyance owned by Shiv Transporters.
You are required to advise Happy Company with regard to issuance of e-way bills as per the provisions
of the CGST Act, 2017.
Ans: Rule 138 of the CGST Rules, 2018 stipulates that e-way Bill is mandatorily required to be generated
if the goods are moved, inter alia, in relation to a supply and the consignment value [including CGST,
SGST/UTGST, IGST and cess charged] exceeds ` 50,000.
Further, the FAQs on E-way Bill issued by CBIC clarify that if multiple invoices are issued by the
supplier to one recipient, multiple e-way bills have to be generated - one e-way bill for each invoice.
Each invoice is considered as separate consignment for the purpose of generating e-way bills.
In the given case, consignment value of goods supplied against separate invoices from Ram Store,
Shyam Store and Mohan Store is ` 50,740 [` 43,000 × 118%], ` 53,100 [` 45,000 × 118%] and `
61,360 [` 52,000 × 118%] respectively.
Thus, Happy Company is required to prepare 3 separate e-way bills since value of each invoice
exceeds ` 50,000.
Q.5 GQF Private Limited, registered under GST in the State of Maharashtra, is engaged in manufacturing
of goods which are used for further production in automobile industry. The company sends some
semi-finished inputs to job workers, M/s Yamuna Enterprises and M/s Jamuna Enterprises, for
necessary processing. The processed goods are sent back by the job workers to the company where
they are used for manufacturing the finished products.
M/s Yamuna Enterprises has its place of business in Maharashtra. M/s Jamuna Enterprises has its
place of business in the State of Madhya Pradesh viz. 35 km away from the place of business of
GQF Private Limited.
The company imports some raw material and stores the same for few months in the warehouse
operated by M/s Gajanan Enterprises in the State of Tamil Nadu. Later on, it is transported to the
company’s factory in Maharashtra M/s Gajanan Enterprises is not registered under GST. The
aggregate turnover of M/s Gajanan Enterprises for the current financial year is ` 18,25,000.
The company maintains all the records, documents and books of accounts at its place of business
in Maharashtra.
Following are the relevant details of GQF Private Limited for the month of August

Particulars Amount
Total turnover 36,00,000
Total inputs received during the month 21,12,000
Total input services received during the month 8,99,000
Goods sent to M/s Yamuna Enterprises during the month for job work 75,000
purpose by motor vehicle
Goods sent to M/s Jamuna Enterprises during the month for job work 46,800
purpose by motor vehicle
Note: All afore-mentioned amounts are exclusive of GST, wherever applicable.

GQF Private Limited procures the service of M/s Speedofast Enterprises, a goods transport agency,
having its place of business in Maharashtra. GQF Private Limited transports its finished goods to
different customers located in the State through M/s Speedofast Enterprises. M/s Speedofast
Enterprises prepares a consignment note containing the details of consignor and consignee, value of
consignment, vehicle number, details of party paying the taxes etc.
Based on the facts of the case scenario given above, choose the most appropriate answer to Q. Nos.
1.1. to 1.5.:-
1.1. M/s Gajanan Enterprises, owner of warehouse in Tamil Nadu, wishes to know as whether it is
required to obtain registration under GST to conduct its business. Which of the following
statements is true in this regard?
(a) Yes, being a warehouse operator, M/s Gajanan Enterprises has to compulsorily take GST
registration to conduct the business irrespective of the quantum of aggregate turnover.
(b) No, M/s Gajanan Enterprises is not required to take registration under GST as its aggregate
turnover is below the threshold limit for registration. However, it is required to obtain a
unique enrolment number under GST.
(c) M/s Gajanan Enterprises is neither required to obtain registration nor unique enrolment
number under GST to conduct business.
(d) Yes, M/s Gajanan Enterprises is required to take registration compulsorily under GST.
Further, it is also required to obtain a unique enrolment number under GST as its aggregate
turnover is more than ` 10 lakh.
1.2. GQF Private Limited is required to keep and maintain its books of accounts or other records:
(a) for 5 years from the due date of furnishing of Annual Return for the year pertaining to such
accounts and records.
(b) for 72 months from the due date of furnishing of Annual Return for the year pertaining to
such accounts and records.
(c) for 72 months from the end of respective financial year.
(d) for 8 years from the end of respective financial year.

1.3. Whether GQF Private Limited is required to generate e-way bill in case of transfer of goods to
M/s Jamuna Enterprises?
(a) No, as the value of the consignment is within the prescribed limit of ` 50,000.
(b) No, as the movement of goods is within the prescribed distance limit of 50 Kms.
(c) Yes, e-way bill is required to be generated irrespective of the value of the consignment.
(d) Yes, a registered person has to generate e-way bill for every movement of goods.
1.4. M/s Speedofast Enterprises wants to transport multiple consignments in a single conveyance.
These consignments are of different consignors and consignees and individual e-way bills
(EWBs) with different validity periods have been generated for these consignments. Can M/s
Speedofast Enterprises generate one consolidated e-way bill for such multiple consignments?
(a) No, M/s Speedofast Enterprises cannot generate a consolidated e-way bill containing the
details of different EWBs since all the EWBs have different validity periods.
(b) Yes, M/s Speedofast Enterprises can generate a consolidated e-way bill containing the
details of different EWBs even if all the EWBs have different validity periods and even if it
is transporting consignments of different consignors and consignees in a single conveyance.
(c) No, M/s Speedofast Enterprises cannot generate a consolidated e-way bill since it is
transporting consignments of different consignors and consignees in a single conveyance.
(d) There are no provisions to generate a consolidated e-way bill under the GST law.
1.5. M/s Speedofast Enterprises wants to update Part B of the e-way Bill. Can it update the same? If
yes, then within what time span is it required to do so?
(a) Yes, within 15 days from the generation of unique e-way bill number
(b) Yes, within 24 hours from the generation of the unique e-way bill number
(c) Yes, within 7 days from the generation of the unique e-way bill number
(d) No, once unique e-way bill is generated, Part B of the same cannot be updated.
Ans 1.1 (b) No, M/s Gajanan Enterprises is not required to take registration under GST as its
aggregate turnover is below the threshold limit for registration. However, it is required
to obtain a unique enrolment number under GST.
1.2 (b) for 72 months from the due date of furnishing of Annual Return for the year pertaining
to such accounts and records.
1.3 (c) Yes, e-way bill is required to be generated irrespective of the value of the consignment.
1.4 (b) Yes, M/s Speedofast Enterprises can generate a consolidated e-way bill containing the
details of different EWBs even if all the EWBs have different validity periods and it is
transporting consignments of different consignors and consignees in a single
conveyance.
1.5 (a) Yes, within 15 days from the generation of unique e-way bill number

Chapter 14 – Returns
Q 1. Mr. X, , did not render any taxable supply during the month of July Is he required to file any
goods and service tax return?
Ans: A registered person has to furnish return u/s 39 for every tax period even if no supplies have been
effected during such period. In other words, filing of Nil return is also mandatory. Therefore, Mr. X
is required to file the return even if he did not render any taxable supply during the quarter July-
September.
Q 2. If a return has been filed, how can it be revised if some changes are required to be made?
Ans: In GST since the returns are built from details of individual transactions, there is no requirement
for having a revised return. Any need to revise a return may arise due to the need to change a set
of invoices or debit/ credit notes. Instead of revising the return already submitted, the system
allows changing the details of those transactions (invoices or debit/credit notes) that are required
to be amended. They can be amended in any of the future GSTR- 1 in the tables specifically
provided for the purposes of amending previously declared details.
As per section 39(9), omission or incorrect particulars discovered in the returns filed u/s 39 can be
rectified in the return to be filed for the month/quarter during which such omission or incorrect
particulars are noticed. Any tax payable as a result of such error or omission will be required to be
paid along with interest. The rectification of errors/omissions is carried out by entering appropriate
particulars in “Amendment Tables” contained in GSTR-1.
Q 3. Which type of taxpayers need to file Annual Return?

Ans: Every registered person, other than ISD’s, casual/non-resident taxpayers, TDS/TCS deductors, are
required to file an annual return in Form GSTR-9. Taxpayer under composition scheme are required
to file annual return in Form GSTR-9A. Casual tax payers, non-resident taxpayers, ISDs and persons
authorized to deduct/collect tax at source are not required to file annual return.
Q 4. Is an Annual Return and a Final Return one and the same?

Ans: No. Annual Return has to be filed by every registered person paying tax as a normal taxpayer.
Final Return has to be filed only by those registered persons who have applied for cancellation of
registration. The Final return has to be filed within three months of the date of cancellation or
the date of cancellation order.

Q 5. Do Input Service Distributors (ISDs) need to file separate statement of outward supplies with their
return?
Ans: No, the ISDs need to file only a return in Form GSTR-6 and the return has the details of credit
received by them from the service provider and the credit distributed by them to the recipient
units. Since their return itself covers these aspects, there is no requirement to file separate
statement of outward supplies.
Q 6. Is it compulsory for a taxpayer to file return by himself?

Ans: No. A registered taxpayer can also get his return filed through a Goods and Services Tax Practitioner.
Q 7. M/s. Sahu & Co. a registered firm has filed its GST Return in GSTR-1 for the month of February,
2018 declaring an outward supply of Rs. 300 lakhs. The return was filed within the due date of its
filing. However, on a subsequent reconciliation of the return with the books of accounts it was found
that 5 invoices having a total value of Rs. 20 lacs towards supply made to local parties were
inadvertently omitted to be reported. Sahu & Co. have approached you for an advice as to the course
of action to be adopted to rectify the omission ?
Ans: As per GST law, the mechanism of filing revised returns for any correction of errors/omissions has
been done away with. The rectification of errors/omissions is allowed in the subsequent Returns.
However, no rectification is allowed after furnishing the return for the month of September
following the end of the financial year to which such details pertain or furnishing of the relevant
annual return, whichever is earlier.
Hence, the omission in the month of Feb 2018 can be included in the Return for the month when
the omission is noticed. The tax and interest @ 18% due on the turnover omitted to be reported
for the month of Feb 2018 has to be paid along with the taxes for the month in which the omission
is noticed. However, such rectification will be allowed only within the prescribed period as mentioned
above.
Q 8. Discuss the provisions of return Form GSTR-3B as contained in sub rules (5) and (6) of rule
61 of CGST Rules, 2017.
Ans: Provisions of return Form GSTR-3B as contained in sub rules (5) and (6) of rule 61 of the
CGST Rules, 2017 are as under:
FORM GSTR-3B is notified as the form for return by the Commissioner when the due dates for
furnishing GSTR-1 and GSTR-2 get extended. GSTR-3B is a simple return containing summary
of outward and inward supplies liable to reverse charge, eligible ITC, payment of tax etc. Thus,

GSTR-3B does not require invoice-wise data of outward supplies. GSTR-3B can be submitted
electronically through the common portal, either directly or through a notified Facilitation Centre.
Currently, return in Form GSTR-3B is being notified as the monthly return to be filed by the
registered persons who are required to file GSTR- 3. Presently, the due date of submission for
GSTR-3B is being notified as 20th day of the month succeeding the relevant month.
Chapter – 14 Return
1. Which return is required to be furnished for outward supplies made by the registered
person?
A. Form GSTR-1
B. Form GSTR-2
C. Form GSTR-4A
D. Form GSTR-6
Ans:- a) Form GSTR-1
2. In Form GSTR-01 which of the following information is to be filed?

A. detail of outward supplies of taxable goods/supplies
B. Details of inward supplies of taxable goods/supplies
C. detail of tax deducted
D. Detail of amount deposited in cash ledger
Ans:- a) detail of outward supplies of taxable goods/supplies
3. Every tax payer paying tax under section 10 (Composition levy) shall file the return in
A. Form GSTR 3 by 18th of the month succeeding the quarter
B. Form GSTR 4 by 30th of the month succeeding FY
C. Form GSTR 4 by 18th of the succeeding month
D. Form GSTR 4 by 20th of the month succeeding the quarter
Ans:- b) Form GSTR 4 by 30th of the month succeeding FY

4. In case of monthly returns, taxes will be payable _________.
A. Before filing the return
B. At the time of filing return
C. After or at the time of filing return
D. Before or at the time of filing return
Ans:- d) Before or at the time of filing return
5. Challan in FORM GST PMT-06 generated at the common portal shall be valid for a
period of ------.
A. 7 days
B. 15 days
C. 20 days
D. 30 days
Ans:- b) 15 days
6. Which class of person is required to file monthly details of outward supplies of goods
or services or both in Form GSTR-1?
A. Non resident taxable person
B. Person required to deduct tax at source
C. Person who has opted to pay tax under composition scheme
Ans:- d)None of the above
7. Filing of return on quarterly basis by a regular person is -------.

A. Mandatory
B. Optional
C. Optional for persons having turnover >Rs. 5 Crores
D. Mandatory for persons having turnover >Rs. 5 crores
Ans:- b) Optional

8. Input Service Distributor (ISD), Tax Deductor & Tax Collector are required to file return
_______.
A. Annually
B. Quarterly
C. Monthly
D. Half-Yearly
Ans:- c) Monthly
9. Every registered taxable person who has made outward suppliers in the period between
the date on which he become liable to registration till the date on which is
registration has been granted shall declare the same in the
A. First return filed by him after grant of registration
B. First two return filed by him after grant of registration
C. FORM GSTR-7
D. FORM GSTR-11
Ans:- a). First return filed by him after grant of registration
10. Final return shall be furnished in

A. Form GSTR-8
B. Form GSTR-9
C. Form GSTR-10
D. Form GSTR-11
Ans:- c) Form GSTR-10
11. The due date of filing Final Return is ______.

A. 20th of the next month
B. 18th of the month succeeding the quarter
C. Within 3 months of the date of cancellation or date of order of cancellation, whichever
is later
D. 31st December of next financial year
Ans:- c) Within 3 months of the date of cancellation or date of order of cancellation,

whichever is later

12. A goods and services tax practitioners can undertake the following activities if
authorized by the taxable person.
A. Furnish details inward and outward supplies.
B. Furnish monthly / quarterly return
C. Furnish Annual and Final return
D. All of the above
Ans: d) All of the above
Q1. Explain the provisions of section 39(9) of the CGST Act, 2017 with reference to rectification
of returns.
ANS: As per section 39(9) of the CGST Act, 2017, if any registered person after furnishing a return
discovers any omission or incorrect particulars therein, he shall rectify such omission or
incorrect particulars in the return to be furnished for the month or quarter during which such
omission or incorrect particulars are noticed, subject to payment of interest.
However, section 39(9) does not permit rectification of error or omission discovered on account
of scrutiny, audit, inspection or enforcement activities by tax authorities. Further, no such
rectification of any omission or incorrect particulars shall be allowed after the due date for
furnishing of return for the month of September or second quarter following the end of the
financial year, or the actual date of furnishing of relevant annual return, whichever is earlier
Q2. Mr. Anand Kumar, a regular taxpayer, filed his return of outward supply (GSTR-1) for the month
of August, 20XX before the due date. Later on, in February, 20XX he discovered error in the
GSTR-1 return of August 20XX already filed and wants to revise it.
You are required to advise him as to the future course of action to be taken by him according to
statutory provisions.
Ans: The mechanism of filing revised return for any correction of errors/omission is not available under
GST. The rectification of errors/omission is allowed in the subsequent returns.
Therefore, Mr. Anand Kumar who discovered an error in GSTR-1 for August, 20XX, cannot revise it.
However, he should rectify said error in the GSTR-1 filed for February, 20XX and should pay the
tax and interest, if any, in case there is short payment, in the return to be furnished for February,
20XX. The error can be rectified by furnishing appropriate particulars in the “Amendment Tables”
contained in GSTR-1.

However, as per section 37(3) of the CGST Act, 2017, no rectification of details furnished in
GSTR-1 shall be allowed after:
(i) filing of monthly return/ GSTR-3 for the month of September following the end of the
financial year to which such details pertain, or
(ii) filing of the relevant annual return,
whichever is earlier.
Q.3 Is an annual return under section 44 and a final return one and the same? Explain.
Ans: No. Annual return has to be filed by every registered person paying tax as a normal taxpayer, with
certain exceptions. Final return has to be filed only by those registered persons who have applied for
cancellation of registration. The final return has to be filed within three months of the date of
cancellation or the date of cancellation order, whichever is later.
Q.4 B Ltd. has filed the return for the month of October belatedly. At the time of computing the late
fee to be paid for delay in filing return, B Ltd. has taken a view that if the late fee has been paid
as per the provisions under the CGST Act, there is no requirement of paying the late fee under the
SGST Act for the same default.
Whether B Ltd. has taken a correct view? Examine.
Ans: The understanding of B Ltd. is incorrect. For arriving at the late fee payable on account of delayed
filing of GST return, the computation of late fee is made separately for CGST and SGST/UTGST. This
is because the provisions of late fee on delayed filing of return are prescribed in both CGST Act and
SGST/UTGST Act although a common return is filed for both the laws.
Q.5 Tax authorities have been scrutinizing the returns furnished by A Ltd. During the scrutiny process,
A Ltd. has been made aware by the authorities about an incorrect disclosure in a return under
section 39 filed by it for a particular tax period.
A Ltd. seeks your opinion to rectify the incorrect disclosure made in the return.
Ans: In terms of section 39(9), any rectification in the return (under section 39) furnished by the
registered person is allowed only when the error or omission is discovered on account of reasons
other than scrutiny, audit, inspection, or enforcement activity by the tax authorities.
In the present case, since the incorrect disclosure has been highlighted to A Ltd. by the tax
authorities during the process of scrutiny, the rectification of the incorrect disclosure cannot be
made by A Ltd. on its own.

Q.6 ABC Ltd. has applied for cancellation of GST registration in the month of March. The consultant
of ABC Ltd. has suggested to furnish the final return in the month of September. He has advised
the company that a final return needs to be furnished before the due date of furnishing the
return for the month of September of subsequent financial year or before furnishing of annual
return (for the financial year in which cancellation has been sought for), whichever is earlier.
However, the jurisdictional authorities have yet not passed the order of cancellation due to reasons
not known to ABC Ltd.
Whether the advice given by the consultant of ABC Ltd. is correct? Examine.
Ans: No, the advice of the consultant is not correct.
In terms of section 45 read with rule 81, every registered person who is required to furnish GSTR-
3B and whose registration has been cancelled is required to file a final return within three months
of the date of cancellation or date of order of cancellation, whichever is later.
In the given case, the registration of the company has not been cancelled. Therefore, requirement of
filing final return will arise only when the registration of the company gets cancelled.
Q.7 XYZ Ltd. has deducted TDS from the consideration payable to A Ltd. for supplies made by it. The
deductee, i.e. A Ltd., seeks your advice on taking credit for the TDS deducted by XYZ Ltd. Also,
whether the tax deducted by XYZ Ltd. will be shown in the electronic credit ledger or electronic
cash ledger of A Ltd.?
Ans: In terms of section 51(5) read with rule 66(2), the deductee shall claim credit, in his electronic
cash ledger, of the tax deducted and reflected in GSTR-7 of the deductor, after validation.
Similarly, rule 87(9), inter alia, provides that any amount deducted under section 51 shall be
credited to the electronic cash ledger of the deductee.
Therefore, in the present case, A Ltd., can take credit of TDS amount deducted by XYZ Ltd. in its
electronic cash ledger and use the same for payment of tax, interest, penalty, late fee or any other
amount.
Q.8 Whether GSTPs are required to furnish any return for disclosure of activities carried out by them for
any of the registered person during a tax period? Elucidate.
Ans: In terms of section 48(2), a registered person may authorise an approved GSTP to furnish
the details of outward supplies under section 37, the details of inward supplies under
section 38 and the return under section 39 or annual return under section 44 or final
return under section 45 and to perform other prescribed functions. Thus, the GSTP can
furnish the specified documents or information on behalf of the registered person with
prior authority of the registered person.

However, there is no specific return furnishing mechanism for GSTP to disclose the activities carried
out by it for any of the registered person during a tax period.
Q.9 GST compliance rating shall be assigned to:

(a) only a person who is liable to deduct TDS/ collect TCS.
(b) only a composition dealer.
(c) only an input service distributor.
(d) every registered person.
Ans: (d) every registered person.
Q.10 Padmavati Traders, registered in Karnataka, is engaged in supply of taxable goods. Its turnover
in the preceding financial year was ` 230 lakh and was furnishing its GST return
on monthly basis.
In the beginning of April month in the current financial year, it sought advice from its tax
consultant, Dua Consultants, whether it can furnish its GST returns on quarterly basis from
now onwards. Dua Consultants advised Padmavati Traders that it cannot furnish its return
on quarterly basis as the GST law does not provide for quarterly return under nay
circulstances. Discuss the technical veracity of the advice given by Dua Consultants.
(RTP-Nov21)
Ans: No, the advice given by Dua Consultants is not valid in law. With effect from 01.01.2021, a
quarterly return has been introduced under GST law where the payment of tax is to be made
on monthly basis. The scheme is known as Quarterly Return Monthly Payment
(QRMP) Scheme. The scheme has been introduced as a trade facilitation measure and in order
to further ease the process of doing business. It is an optional return filing scheme, introduced
for small taxpayers having aggregate annual turnover (PAN based) of upto ` 5 crore in the
current and preceding financial year to furnish their Form GSTR-1 and Form GSTR-3B on
a quarterly basis while paying their tax on a monthly basis through a simple challan. Thus, the
taxpayers need to file only 4 GSTR-3B returns instead of 12 GSTR-3B returns in a year.
Similarly, they would be required to file only 4 GSTR-1 returns since Invoice Filing Facility
(IFF) is provided under this scheme.
Opting of QRMP scheme is GSTIN wise. Distinct persons can avail QRMP scheme option
for one or more GSTINs. It implies that some GSTINs for a PAN can opt for the QRMP
scheme and remaining GSTINs may not opt for the said scheme.
Since the aggregate turnover of Padmavati Traders does not exceed ` 5 crores in the
preceding financial year, it is eligible for furnishing the return on quarterly basis till the time
its turnover in the current financial year does not exceed ` 5 crore. In case its aggregate

turnover crosses ` 5 crore during a quarter in the current financial year, it shall no longer
be eligible for furnishing of return on quarterly basis from the first month of the succeeding
quarter and needs to opt for furnishing of return on a monthly basis, electronically, on the
common portal, from the first month of the quarter, succeeding the quarter during which its
aggregate turnover exceeds ` 5 crore.

Chapter 15 – Payment of Tax, TDS and TCS
Q 1. How many types of electronic ledger are there?

Ans: There are 3 types of ledger:
a) Electronic cash ledger
b) Electronic credit ledger
c) Electronic liability register
Q 2. Explain the following terms in brief:

• E-FPB
• CPIN
• CIN
Ans: Refer Relevant Para in main Book
Q 3. Are principles of unjust enrichment applicable for payment made under GST?
Ans: 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.
Q 4. State the name of output tax under GST, where any of the input tax credit under GST can be
availed?
Ans: IGST. IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output tax liability
known as IGST.
Q 5. Can one use input tax credit for payment of interest, penalty, and payment under reverse charge?
Ans: 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 cannot be used for payment of
interest, penalty, and payment under reverse charge.

Q 6. 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.
Explain what are the implications for ABC limited as per relevant provisions?
Ans: 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.
Q 7. Who is liable to pay GST? Explain in the context of general and special circumstances.
Ans: General rule - Supplier of goods or services is liable to pay GST.
Specific circumstances –
• Import supplies – Recipient of goods or services has to pay tax under reverse charge
• The Government may, on the recommendations of the 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 supplied through it
• TDS – If total value of supply under contract > ` 2.5 lakhs, then Central and State Government,
Local authority, 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
Q 8. What will happen if the deductor fails to issue TDS Certificate within the time prescribed?
Ans: As per section 51(4) of the CGST Act, 2017, if any deductor fails to furnish to the deductee the
certificate, after deducting the tax 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.
Q 9. Whether the rate of tax of 1% notified under section 52 is CGST or SGST or a combination of both
CGST and SGST?
Ans: The rate of TCS as notified under CGST Act, 2017 is payable under CGST and the equal rate of TCS
is expected under the SGST Act also, in effect aggregating to 1%.

Q 10. Is every e-commerce operator required to collect tax on behalf of actual supplier?
Ans: Yes, every e-commerce operator is required to collect tax where consideration with respect to the supply
is being collected by the e-commerce operator.
Q 11. What are the main features of GST payment process?

Ans: 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 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
Q 12. PQR ltd has the following tax liabilities under the provisions of act –
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 of returns 20,000
belonging to 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 20,000
belonging to September 2017
5 Demand raised as per section 73 or section 74 under CGST Act, 8,00,000
2017 belonging to July 2017
6 Demand raised as per the old provisions of Indirect Tax 1,00,000
PQR ltd has Rs. 5,00,000 in Electronic Cash Ledger, Suggest PQR 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 5,00,000
Less:-
Tax liability of CGST, SGST/UGST, IGST for supplies made during 1,00,000
August 2017
Interest & Penalty on delayed payment and filing of returns belonging 20,000
to August 2017
Tax liability of CGST, SGST/USGST, IGST for supplies made during 1,20,000
September 2017
Interest & Penalty on delayed payment and filing of returns belonging 20,000
to 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 Rs. 5,60,000 (₹ 8,00,000 - ₹ 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.
Q 13. 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 ₹ 47040 (including GST @ 12%)
2. Purchased textile material from local dealer ₹ 94500 (including GST @ 5%)
3. Purchased machinery for manufacture of taxable goods ₹ 3,18,600 (including GST @
18%), Depreciation @ 15% is charged.
4. Other direct and indirect expenses ₹ 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.

Ans: Computation of Invoice Value and Tax liability:
1 Purchase fabric material from local dealer (₹ 42,000
47040*100/112) [wn]
2 Purchase of textile material from local dealer 90,000
(94500*100/105) [wn]
3 Depreciation expense [(3,18,600*18/118)*15%] 40,500
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
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
Q 14. In the month of September, Mr. Sumit has to made outward supplies of Rs. 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 GSTR1 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:

Ans: Tax payable Rs. 1,20,000. Interest shall be calculated from the next day of the due date of
payment i.e. 21st October to the actual date of payment i.e. 5th December. Interest is 120000
* 18% * 46/365 = Rs. 2,772/-
Q 15. M/s Asha Pvt. Ltd. reduced the amount of ₹ 2,25,000 from the output tax liability in
contravention of the provision 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
Ans: As per sec 42(10) read with section 50(30) 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)
Q 16. 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?
Ans: 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.
Q 17. Who is liable to deduct tax at source?

Ans: The Central Government or state Government may mandate the following person to deduct tax at
source;

(a) A department or establishment of the Central or State Government, or
(b) Local authority, or
(c) Government agencies, or
(d) Such person or category of person as may be notified, by the Central or a State Government
on the recommendations of the Council.
The following persons have been notified under 51(1)(d) of the CGST Act by the Central
Government:
(a) 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;
(b) society established by the Central Government or the State Government or a Local
Authority under the Societies Registration Act, 1860;
(c) public sector undertakings:
Categories of persons not liable to deduct TDS Tax is not liable to be deducted at source
in the following cases:-
▪ When goods and/or services are supplied from a public sector undertaking
(PSU) to another PSU, whether or not a distinct person
▪ When supply of goods and/or services takes place between one person to
another person specified in clauses (a), (b), (c) and (d) of section 51(1) of
the CGST Act.
Q 18. What is the threshold limit for tax deduction at source?

Ans: The threshold limit for tax deduction at source is Rs. 2.5 Lakh. For the purpose computation of
threshold limit, contract value needs to be considered and not the invoice value or payment amount.
However, for the purpose of ascertaining the threshold limit, the value of supply shall be considered
as the amount excluding taxes.
Q 19. What will happen if the deductor fails to issue TDS Certificate within the time prescribed? (ICAI)
certificate, after deducting the tax at source, within five days of crediting the amount 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.

Q 20. M/s Asha Pvt. Ltd. has its place of business in Mysore supplied goods worth ₹ 2,75,000 the value
of supply includes GST @ 5% during the month of August to a Govt. Agency located at Bangalore.
Determine the amount of tax to be deducted at source.
certificate, after deducting the tax at source, within five days of crediting the amount 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.
As per section 51 of CGST ACT, The Government has mandated the following categories:-
(a) A department or establishment of the Central Government or State Government or
(b) Local authority
(c) Such persons or 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 of taxable goods or services or
both, where total value of such supply exceeds 2,50,000 rupees. 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 follows:
Particulars Amount
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% (c) 2,619
Thus as computed above the amount of TDS to be deducted by the Govt. Agency shall be Rs. 5,238.
Q 21. Aasma Ltd. had supplied goods to a local authority for Rs. 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 20.12.2017.
Ans: As per the provisions of section 50(1) of the GST Act, the local authority has to deduct tax @
1% from the payment made or credited to the supplier of 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 within 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% CGST & 1% SGST of Rs. 6,75,000 [7,56,000 – 81000 i.e. GST @ 12%] = Rs. 13,500.

Computation of interest on delay in deposit of TDS:-
Sr. No. Particulars
A Due date of deposit 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 [d * 18% * c / 365 days] 266
Q 22.Mr. X is a supplier selling his own products through a web site hosted by him. Does he fall under the
definition of an “electronic commerce operator”? Whether he is required to collect TCS on such supplies?
(ICAI)
Ans: As per the definitions in Section 2(44) and 2(45) of the CGST Act, 2017, Mr. X will come under
the definition of an “electronic commerce operator”. However, according to section 52 of the Act
ibid, TCS is required to be collected on the net value of taxable supplies made through it by other
supplier where the consideration is to be collected by the ECO. In cases where someone is selling
their own products through a website, there is no requirement to collect tax at source as per the
provisions of this section. These transactions will be liable to GST at the prevailing rates.
Q 23. 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)
Ans: No. According to 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
Chapter 15– Payment of Tax

1) Which of the following registers / ledgers are maintained at the GST Portal?
A. Electronic liability ledger
B. Electronic cash ledger
C. Electronic credit ledger
D. All of the above

2). Payment made through challan will be credited to which registers / ledgers?
A. Electronic Tax liability register
B. Electronic Credit Ledger
C. Electronic cash ledger
D. All of the above
Answer: c) Electronic cash ledger
3). While making purchases the dealer has to pay GST which is available as credit while
making payment for outward supply. Such credit is reflected in GST portal in,
A. Electronic Cash ledger
B. Electronic liability ledger
C. Electronic Credit ledger
D. All of the above
Answer: c) Electronic Credit ledger
4). The major heads in the electronic cash ledger, electronic liability register and challan
for deposit of Tax are.
A. IGST, CGST, SGST, UTGST & GST Compensation Cess
B. Tax, Interest, Penalty, Fee, others and total
C. Total – cash, liability
D. All of the above
Answer: a) IGST, CGST, SGST, UTGST & GST Compensation Cess
5). Credit available in Electronic Credit Ledger can be used for payment of
A. Output Tax
B. Output Tax and Interest
C. Output Tax, Interest and Penalty
D. Output Tax and Tax under reverse charge
Answer: a) Output Tax

6). Payment of tax, interest or penalty for each month shall be made by debiting
__________on or before the due date of filing return.
A. Electronic Cash Ledger
B. Electronic Credit Ledger
C. Electronic Liability Ledger
D. Both (a) and (b)
Answer: d) Both (a) and (b)
7). Which of the following statement is correct: -

A. Payment of GST can be done by Cash
B. Payment of GST can be done by Cheque
C. Payment of GST Can be done by Internet banking
D. Payment of GST can be done within 24 hours of filing of Monthly / Quarterly return
Answer:- c) Payment of GST Can be done by Internet banking
8). Where a person has claimed refund of any amount from the electronic cash ledger, the
said amount shall be debited to the _______________ .
A. Electronic Credit Ledger
B. Electronic Liability Ledger
C. Electronic Cash Ledger
D. Whichever has the higher balance of above
Answer:- c) Electronic Cash Ledger
9). Balance in electronic credit ledger under IGST can be used against which liability?
A. IGST Liability only
B. IGST and CGST liability
C. IGST, CGST and SGST liability
D. None of them
Answer:- c) IGST, CGST and SGST liability

10). M/s. Kuber Anand is registered under GST. He has output tax liability as under-
CGST: Rs. 85,00,000
SGST: Rs. 85,00,000
IGST: Rs. 1,05,00,000
It has input tax credits as under-
CGST: Rs. 1,50,00,000 including credit of Rs.75,00,000 carried forward from TRAN-1
SGST: Rs. 30,00,000
IGST: Rs. 1,20,00,000
Calculate the amount of tax to be deposited in cash?
A. CGST: Nil; SGST: Rs. 55,00,000; IGST: Nil

B. CGST: Rs. 10,00,000; SGST: Rs. 55,00,000; IGST: Nil
C. CGST: Nil; SGST: Rs. 50,00,000; IGST: Nil
D. CGST: Nil; SGST: Rs. 40,00,000; IGST: Nil
Answer:- d) CGST: Nil; SGST: Rs. 40,00,000; IGST: Nil
11). Mr. A was liable to pay GST of Rs.10,000 on 20.8.2018 but he failed to pay. Later he
decided to pay tax on 26.10.2018. what would be the period for which interest has
to be paid by him?
A. 66 days
B. 67 days
C. 68 days
D. 70 days
Answer:- b) 67 days
12). From which date interest is liable in case of excess input tax credit claimed?
A. From the late date of the month in which credit is claimed
B. From the due date for filing GSTR-02 of the month in which credit is claimed
C. From the due date for filing GSTR-03 of the month in which credit is claimed
D. From the date of utilization of credit
Answer:- c) From the due date for filing GSTR-03 of the month in which credit is claimed

Q1. Manihar Enterprises, registered in Delhi, is engaged in supply of various goods and services exclusively
to Government departments, agencies etc. and persons 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, 20XX as under:
S.No. Particulars Total contract Payment due in
value(inclusive October,
of GST) (`) 20XX (`)
(i) Supply of stationery to Fisheries Department, 2,60,000 15,000
Kolkata
(ii) Supply of car rental services to Municipal 2,95,000 20,000
Corporation of Delhi
(iii) Supply of a heavy machinery to Public Sector 5,90,000 25,000
Undertaking located in Uttarakhand
(iv) Supply of taxable goods to Delhi office of National 6,49,000 50,000

Housing Bank, a society established by Government
of India under the Societies Registration Act, 1860
(v) Interior decoration of Andhra Bhawan located in 12,39,000 12,39,000
Delhi. Service contract is entered into with the
Government of Andhra Pradesh (registered only in
Andhra Pradesh).
(vi) Supply of printed books and printed post cards to 9,72,000 50,000
a West Delhi Post Office [Out of total for books &
contract value of 20,000 for
` 9,72,000, contract value for supply of books printed post
(exempt from GST) is` 7,00,000 and cards
for supply of printed post cards (taxable
under GST) is` 2,72,000.]
(vii) Maintenance of street lights in Municipal area of 3,50,000 3,50,000
East Delhi* [The maintenance contract entered
into with the Municipal Corporation of Delhi also
involves 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.
Will your answer be different, if Manihar Enterprises is registered under composition scheme?
Ans: 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 persons 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; 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; or
(e) Society established by the Central Government or the State Government or a Local Authority
under the Societies Registration Act, 1860, or
(f) Public sector undertakings.
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, Manihaar Enterprises is supplying goods and services exclusively to
Government departments, agencies etc. and persons notified under section 51 of the CGST
Act, 2017, applicability of TDS provisions on its various receivables is examined in accordance
with the above-mentioned provisions as under:
S. No. Particulars Total Payment Tax to be deducted
contract due (`) CGST SGST IGST
value (`) (`) (`) (`)
(i) Supply of stationery to 2,60,000 15,000 --
Fisheries Department, Kolkata
(Note-1)
(ii) Supply of car rental services to 2,95,000 20,000 --
Municipal Corporation of Delhi
(Note-2)

(iii) Supply of a heavy machinery to 5,90,000 25,000 500
Public Sector Undertaking
located in Uttarakhand (Note-
3)
(iv) Supply of taxable goods to 6,49,000 50,000 500 500
Delhi office of National
Housing Bank, a society
established by Government
of India under the Societies
Registration Act, 1860 (Note-
4)
(v) Interior decoration of Andhra 12,39,000 12,39,00 --
Bhawan located in Delhi 0
(Note-5)
(vi) Supply of printed books and 9,72,000 --
printed post cards to a West
Delhi Post Office (Note-6)
(vii) Maintenance of street lights in 3,50,000 3,50,000 --
Municipal area of East Delhi
(Note-7)
Notes:
1. Being an inter-State supply of goods, supply of stationery 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)
Since the total value of supply under the contract does not exceed ` 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 follows:
= ` 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 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:
= ` 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 is subject 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. ` 1,000.
5. Proviso 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 or 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 decoration of
Andhra Bhawan shall be Delhi.
Since the location of the supplier (Manihar Enterprises) and the place of supply is 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 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 lights (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 service 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.
The 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.
Q2. XYZ Ltd., New Delhi, manufactures biscuits under the brand name ‘Tastypicks’. 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 engages goods transport agencies (GTA) to transport the
flour from the factories of the vendors to its factory located in New Delhi.
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 (` 20,00,000), the company arranged a local minivan
belonging to an individual and paid him ` 54,000.
- For sales to locations in distant States (` 1,78,00,000), the company booked the goods
by Indian Railways and paid rail freight of ` 3,17,000.
- For sales to locations in neighbouring States (` 55,00,000), the company booked the
goods by road carriers (GTAs) and paid road freight of ` 3,73,000. Out of the total
sales to neighbouring States, goods worth ` 10,00,000 were booked through a GTA which
paid tax @ 12%. Freight of ` 73,000 was paid to such GTA.
- For purchase of flour from Madhya Pradesh (` 25,00,000), the company booked the
goods by a GTA and paid road freight of ` 55,000.
- For purchase of butter from Punjab (` 15,00,000), the company booked the goods by
a GTA and paid road freight of ` 35,000.
- For local purchase of baking powder, the company booked the goods by a GTA in a
single carriage and paid road freight of ` 1,500.
- For transferring the biscuits (open market value - ` 4,00,000) to one of its sister
concern in Rajasthan, the company booked the goods by a GTA and paid road freight
of ` 40,000.

(a) 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.
(b) 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: (i) Computation of GST payable on amount paid for transportation by XYZ Ltd. when
it avails the services of different transporters
Particulars Freight [`] GST
payable [`]
Transportation of biscuits in a local mini van belonging to an 54,000 Nil

individual
[Only the transportation of goods by road by a GTA is liable
to GST. Therefore, transportation of goods by road otherwise
than by a GTA is exempt from GST – Notification No. 12/2017
CT (R) & 9/2017 IT
(R) both dated 28.06.2017.]
Transportation of biscuits by Indian Railways 3,17,000 15,850
Transportation of biscuits by GTA 3,00,000 15,000
[GST is payable by XYZ Ltd. under reverse charge in terms of
section 5(3) of the IGST Act, 2017 read with Notification No.
10/2017 IT (R) dated 28.06.2017.]
Transportation of biscuits by GTA @ 12% 73,000 8,760
[When the GTA pays tax @ 12%, tax is payable by the GTA
under forward charge and not by the recipient under reverse
charge - Notification No. 10/2017 IT (R) dated 28.06.2017.]
Transportation of flour by GTA 55,000 Nil
[Services provided by GTA by way of transport (in a goods
carriage) of, inter alia, flour are exempt from GST vide
Notification No. 9/2017 IT (R) dated 28.06.2017.]
Transportation of butter by GTA 35,000 1,750
[Though services provided by GTA by way of transport (in a
goods carriage) of, inter alia, milk is exempt from GST vide
Notification No. 9/2017 IT (R) dated 28.06.2017, road transport
of butter will not be exempted as butter is milk product and
not milk.

GST is payable by XYZ Ltd. under reverse charge in terms of
10/2017 IT (R) dated 28.06.2017.]
Transportation of baking powder by GTA 1,500 Nil

[Services provided by a GTA by way of transport in a goods
carriage of goods, where consideration charged for the
transportation of goods on a consignment transported in a single
carriage does not exceed ` 1,500, are exempt from GST vide
Transportation of biscuits by GTA to sister concern 40,000 2,000
[GST is payable by XYZ Ltd. under reverse charge in terms of
10/2017 IT (R) dated 28.06.2017.]
Total tax payable by XYZ Ltd. on availing services of different 43,360
transporters
(ii) Computation of GST charged on transportation cost billed by XYZ Ltd. to its customers
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 Act, 2017].
Particulars Freight GST paid Freight GST

paid [`] on freight Billed (with charged
[A] [`] [B] mark-up @ @ 12%
2% on [A] + [`]
[B]) [`]
Transportation of biscuits in a local mini
van belonging to an individual
54,000 - 55,080 6,610
Transportation of biscuits by Indian
Railways 3,17,000 15,850 3,39,507 40,741
Transportation of biscuits by GTA
3,00,000 15,000 3,21,300 38,556

Transportation of biscuits by GTA @
12% 73,000 8,760 83,395 10,007
Total tax charged by XYZ Ltd. on 95,914
transportation cost billed to the
customers*
*Note: It has been assumed that there is no mark-up on transportation cost billed to sister
concern (non-customer).
Q.3 Jaskaran, a registered supplier of Delhi, has made the following supplies in the month of
January, 20XX:
S. No. Particulars Amount*(`

)
(i) Supply of 20,000 packages at ` 30 each to Sukhija Gift Shop in Punjab 6,00,000
[Each package consists of 2 chocolates, 2 fruit juice bottles and a packet of
toy balloons]
(ii) 10 generators hired out to Morarji Banquet Halls, Chandigarh [including cost of 2,50,000
transporting the generators (` 1,000 for each generator) from Jaskaran’s
warehouse to the Morarji Banquet Halls]
(iii) 500 packages each consisting of 1 chocolate and 1 fruit juice bottle given as free
gift to Delhi customers on the occasion of Diwali
[Cost of each package is ` 12, but the open market value of such package of
goods and of goods of like kind and quality is not available. Input tax credit
has not been taken on the items contained in the package]
(iv) Catering services provided free of cost for elder son’s business inaugural function
in Delhi
[Cost of providing said services is ` 55,000, but the open market value of
such services and of services of like kind and quality is not available.]
*excluding GST
You are required to determine the GST liability [CGST & SGST and/or IGST, as the case may be]
of Jaskaran for the month of January, 20XX with the help of the following additional information
furnished by him for the said period:
1. Penalty of ` 10,000 was collected from Sukhija Gift Shop for the payment received with a
delay of 10 days.
2. The transportation of the generators from Jaskaran’s warehouse to the customer’s premises
is arranged by Jaskaran through a Goods Transport Agency (GTA) who pays tax @ 12%.
3. Assume the rates of GST to be as under:

Chocolates 9% 9% 18%
Fruit juice bottles 6% 6% 12%
Toy balloons 2.5% 2.5% 5%
Service of renting of generators 9% 9% 18%
Catering service 9% 9% 18%
ANS : Computation of GST liability of Jaskaran for the month of January, 20XX
Supply of 20,000 packages to Sukhija 1,09,526
Gift Shop, Punjab [6,08,475 ×
18%]
[Note-1]
Renting of 10 generators to Morarji 45,000
Banquet Halls, Chandigarh [Note-2] [2,50,000 ×
18%]
500 packages given as free gift to the Nil Nil Nil
customers [Note-3]
Catering services provided free of cost 5,445 5,445
for elder son’s business inaugural [60,500 [60,500 ×
×9%] 9%]
function in Delhi [Note-3]
Total GST liability (rounded off) 5,445 5,445 1,54,526
Notes:
1. As per section 2(74) of the CGST Act, 2017, mixed supply means two or more individual supplies
of goods or services, or any combination thereof, made in conjunction with each other by a taxable
person for a single price where such supply does not constitute a composite supply.
Supply of a package containing chocolates, fruit juice bottles and a packet of toy balloons is a
mixed supply as each of these items can be supplied separately and is not dependent on any
other. Further, as per section 8(b) of the CGST Act, 2017, the mixed supply is treated as a
supply of that particular supply which attracts the highest rate of tax. Thus, in the given case,
supply of packages is treated as supply of chocolates [since it attracts the highest rate of tax].
Consequently, being an inter-State supply of goods, supply of packages to Sukhija Gift Shop of
Punjab is subject to IGST @ 18% each.
Further, value of supply includes interest or late fee or penalty charged for delayed payment of
any consideration for any supply in terms of section 15(2)(d) of the CGST Act, 2017. Thus,
penalty of ` 10,000 [considered as inclusive of GST] collected from Sukhija Gift Shop for the
delayed payment will be included in the value of supply. The total value of supply is
` 6,08,475 [` 6,00,000 + (` 10,000 × 100/118)]

Services by way of transportation of goods by road except the services of a Goods
Transportation Agency (GTA) are exempt vide Notification No. 9/2017 IT (R) dated 28.06.2017.
Since Jaskaran is not a GTA, transportation services provided by him are exempt from GST.
However, since the generators are invariably hired out along with their transportation till
customer’s premises, it is a case of composite supply under section 2(30) of the CGST Act, 2017
wherein the principal supply is the renting of generator.
As per section 8(a) of the CGST Act, 2017, the composite supply is treated as the supply of
the principal supply. Therefore, the service of transportation of generators will also be taxed at
the rate applicable for renting of the generator (principal supply).
Consequently, being an inter-State supply of service, service of hiring out the generators to
Morarji Banquet Halls of Chandigarh is subject to IGST @ 18% each.
2. As per section 7(1)(c) of the CGST Act, 2017, an activity made without consideration can be
treated as supply only when it is specified in Schedule I of the CGST Act, 2017. Para 2. of
Schedule I provides that 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,
are to be treated as supply even if made without consideration.
However, since the question does not provide that customers are related to Jaskaran, free gifts
given to the customers cannot be considered as a supply under section 7. Consequently, no tax is
leviable on the same.
Further, the catering services provided by Jaskaran to his elder son without consideration will be
treated as supply as Jaskaran and his elder son, being members of same family, are related
persons in terms of explanation (a)(viii) to section 15 of the CGST Act, 2017 and said services
have been provided in course/furtherance of business. Value of supply of services between related
persons, other than through an agent is determined as per rule 28 of the CGST Rules, 2017.
Accordingly, the value of supply is the open market value of such supply; if open market value is
not available, the value of supply of goods or services of like kind and quality. However, if value
cannot be determined under said methods, it must be worked out based on the cost of the supply
plus 10% mark-up. Thus, in the given case, value of catering services provided to the elder son of
Jaskaran is ` 60,500 [` 55,000 × 110%]. Further, being an intra-State supply of services, catering
services are subject to CGST and SGST @ 2.5% each.
4. As per Notification No. 13/2017 CT(R) dated 28.06.2017, 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,
Jaskaran has received services from a GTA who has paid GST @ 12%, reverse charge provisions
will not be applicable.

Q4. 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 Purchases (`) Sales (`) Tax Rate

New Delhi 5,00,000 10,00,000 18%
Trivandrum 2,50,000 8,00,0009% 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 (`) Interest (`) Penalty (`)

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?
Ans : Computation of net CGST, SGST and IGST payable in cash by Mr. George during April 2018
Particulars Amount CGST @ SGST @ IGST @

(`) 9% (`) 9% (`) 18% (`)
Sales made outside Kerala 10,00,000 1,80,000
(New
Delhi) –
[Being inter-State sale, the
same is liable to IGST.]
Sales made in Trivandrum 8,00,000 72,000 72,000
Less: ITC available during (52,500) (52,500) (1,80,000)
April 2018 for set off CGST SGST
[Refer Working Note
Below]
(10,000)
IGST
Net tax liability payable in 9,500 19,500 Nil
cash u

Working Note: ITC available 30,000 30,000 1,00,000
during April 2018 is
Opening balance of ITC
Purchases from New Delhi 5,00,000 90,000
[Being inter-State purchase,
IGST
would have been paid on it.]
Purchases from Trivandrum 2,50,000 22,500 22,500
Total input tax credit 52,500 52,500 1,90,000
Note: ITC of IGST has been utilized to pay IGST liability first and the balance ITC of IGST
has been used to pay CGST liability. Interest and penalty paid are not available as credit.
Q.5 Flowchem Palanpur (Gujarat) has entered into a contract with R Refinery, Abu Road (Rajasthan) on
1st July, 2018 to supply 10 valves on FOR basis for its project, with following terms and conditions:
1. List price per valve is ` 1,00,000, exclusive of taxes.
2. The valves go through two stage third party inspection during manufacturing, as required
by R Refinery. Cost of inspection of ` 15,000 is directly paid by R Refinery to testing
agency.
3. A special packing is to be done, as required by R Refinery. Cost of special packing
is ` 10,000.
4. After making supply of valves, Flowchem has to arrange for erection and testing at
the site for commissioning. Cost of erection etc. is of ` 15,000.
5. The goods were dispatched with tax invoice on 20th July, 2018 and they reached the
destination at Abu-Road on 21st July, 2018. The lorry freight of ` 5,000 has been
paid by R Refinery directly to lorry driver.
Assume the CGST and SGST rates to be 9% each and IGST rate to be 18%.
Opening ITC of CGST is ` 20,000 and SGST is ` 20,000. All the given amounts are
exclusive of GST, wherever applicable.
It has also undertaken following local transactions during the month of July, 2018 on
which it has paid CGST and SGST as under:

S. No. Particulars Amount paid Amount paid
CGST (`) SGST (`)
1. It has availed services of works contractor to erect 5,000 5,000

foundation for fixing the machinery to earth in
the factory.
2. It has laid pipe line upto the gate of its factory
to bring the water to the factory for the purpose 10,000 10,000
of production facility.
3. For the purpose of smooth and convenient 5,000 5,000
communication in its factory, it has installed
telecommunication tower of a mobile company
(with due permission), the mobile phones of
which have been provided to staff for factory
work.
4. It has entered into an agreement with a travel 2,500 2,500
company to provide home travel facility to its
employees when they are on leave.
5. It has entered into an agreement with a fitness 2,000 2,000
centre to provide wellness services to its
employees after office hours
Work out the GST liability [CGST & SGST or IGST, as the case may be] of Flowchem
Palanpur (Gujarat) for July, 2018 after making suitable assumptions, if any.
ANS : Computation of GST liability of Flowchem, Palanpur (Gujarat) for July 2018
Particulars CGST @ SGST @ IGST @ 18%

9% (`) 9% (`) (`)
Output tax liability [Working Note 1] 1,88,100
Less: ITC available for set off [Working 25,000 25,000
Note 2]
(25,000) CGST
(25,000) SGST
Net GST liability payable in cash 1,38,100
Working Note 1 - Computation of output tax liability of Flowchem for July 2018

Particulars Amount (`)
List price of 10 valves (` 1,00,000 x 10)1 10,00,000
Add: Amount paid by R Refinery to testing agency [Note 1] 15,000

Add: Special packing [Note 2] 10,000
Add: Erection and testing at site [Note 2] 15,000
Add: Freight [Note 3] 5,000
Value of taxable supply 10,45,000
IGST @ 18% [Note 4] 1,88,100
Notes:
(1) As per section 15(2) of the CGST Act, 2017, 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. Assuming that in the given case, arranging inspection was the liability of the
supplier, the same should be included in the value of supply charges for the same, however,
have been paid directly to the third party service provider by the recipient. Therefore,
(2) As per section 15(2) of the CGST Act, 2017, 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) As per section 15(2) of the CGST Act, 2017, 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.
Since, in the given case, the supply contract is on FOR basis, payment of freight is the liability
of supplier but the same has been paid by the recipient and thus, should be included in the
value of supply.
(4) As per section 10(1) of the IGST Act, 2017, where the supply involves movement of goods,
the place of supply is the location of the goods at the time at which the movement of
goods terminates for delivery to the recipient, which in the given case is Abu Road
(Rajasthan). Since the location of the supplier (Gujarat) and the place of supply
(Rajasthan) are in two different States, the supply is an inter-State supply liable to IGST.

Working Note 2 - Computation of ITC available with Flowchem for the month of July 2018
Particulars CGST (`) SGST (`)

Opening input tax credit 20,000 20,000
Wok contract services availed for erecting foundation for fixing the 5,000 5,000
machinery to the earth in the factory [Note 1]
Laying of pipe line upto the gate of factory [Note 2] Nil Nil
Installation of telecommunication towers [Note 2] Nil Nil
Services of travel company to provide home travel facility to Nil Nil
employees Note 3]
Services of fitness centre to provide wellness services to employees
[Note 3] Nil Nil
Total ITC 25,000 25,000
Notes:
a. As per section 17(5) of the CGST Act, 2017, ITC on 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, is blocked. Further, plant and
machinery includes foundation and structural supports used to fix the machinery to earth.
b. As per section 17(5) of the CGST Act, 2017, ITC on goods and/or services received by a taxable
person for construction of an immovable property (other than plant or machinery) on his own
account including when such and/or services are used in course/furtherance of business, is
blocked. However, plant and machinery excludes pipelines laid outside the factory premises
and telecommunication towers.
c. As per section 17(5) of the CGST Act, 2017, ITC on travel benefits extended to employees
on home travel concession and membership of health and fitness centre is blocked unless
it is obligatory for an employer to provide the same to its employees under any law for
the time being in force
Q.6 Mrs. Kajal, a registered supplier of Jaipur (Rajasthan), has made the following supplies in the
month of January, 2019:
(i) Supply of a laptop bag along with the laptop to a customer of Mumbai for ` 55,000 (exclusive
of GST).
(ii) Supply of 10,000 kits (at ` 50 each) amounting to ` 5,00,000 (exclusive of GST) to Ram
Fancy Store in Kota (Rajasthan). Each kit consists of 1 hair oil, 1 beauty soap and 1 hair
comb.

(iii) 100 kits are given as free gift to Jaipur customers on the occasion of Mrs. Kajal's birthday.
Each kit consists of 1 hair oil and 1 beauty soap. Cost of each kit is ` 35, but the open
market value of such kit of goods and of goods of like kind and quality is not available.
Input tax credit has not been taken on the goods contained in the kit.
(iv) Event management services provided free of cost for brother's son marriage function in
Indore (Madhya Pradesh). Cost of providing said services is ` 80,000, but the open market
value of such services and of services of like kind and quality is not available.
(v) 1,400 chairs and 100 coolers hired out to Function Garden, Ajmer (Rajasthan) for
` 3,30,000 (exclusive of GST) including cost of transporting the chairs and coolers [` 20
(exclusive of GST) for each chair and each cooler] from Mrs. Kajal's godown at Jaipur to
the Function Garden, Ajmer. The cost of transportation of chairs and coolers is paid by Mrs.
Kajal to an unregistered Goods Transport Agency (GTA).
Interest of ` 6,400 (inclusive of GST) was collected by Mrs. Kajal from Ram Fancy Store, Kota
for the payment received with a delay of 30 days.
Assume rates of GST to be as under:-
S. No. Particulars Rate of Rate of Rate of

CGST (%) SGST (%) IGST (%)
1. Laptop 9 9 18
2. Laptop bag 14 14 28
3. Hair oil 9 9 18
4. Beauty soap 14 14 28
5. Hair comb 6 6 12
6. Event management service 2.5 2.5 5
Service of renting of chairs and
7. 6 6 12
coolers
8. Transportation service 2.5 2.5 5
From the above information, compute the GST liability (CGST and SGST and /or IGST, as the
case may be) of Mrs. Kajal for the month of January, 2019

ANS : (a) Computation of GST liability of Mrs. Kajal for the month of January, 2019
S.No. Particulars Amount(`) CGST (`) SGST (`) IGST(`)
(i) Supply of laptop bag along with laptop to 55,000 9,900

Mumbai customer
[Being naturally bundled, supply of laptop
bag along with the laptop is a composite
supply which is treated as the supply of
the principal supply [viz. laptop] in terms
of section 8(a) of the CGST Act, 2017
and is an inter-State supply. Accordingly,
IGST
@ 18% will be charged]
(ii) Supply of kits to Ram Fancy Store 5,05,000 70,700 70,700

[It is a mixed supply and is treated as
supply of that particular supply which
attracts highest tax rate [viz. beauty soap]
in terms of section 8(b) of the CGST Act,
2017. Also, it’s an intra State supply.
Accordingly, CGST and SGST @ 14% each
will be charged.]
Further, interest of ` 6,4002 charged for
delayed payment as collected from Ram
Fancy Store will be included in the value of
supply in terms of section 15(2) of the
CGST Act, 2017.
Therefore, total value of supply =
` 5,05,000 [` 5,00,000 + (` 6,400 ×
100/128)]
(iii) Free gifts to customers Nil Nil Nil
[Cannot be considered as supply under
section 7 read with Schedule I of the CGST
Act as the gifts are given to unrelated
customers without consideration]

(iv) Event management services provided free Nil Nil Nil
of cost for brother’s son marriage
[Cannot be considered as supply under
section 7 read with Schedule I of the CGST
Act as the service is provided to unrelated
person without consideration.]
(v) Chairs and coolers hired out to Function 3,30,000 19,800 19,800
Garden
[Since Mrs. Kajal is not a GTA,
transportation services provided by her are
exempt [Notification No. 12/2017 CT(R)
dated 28.06.2017].
However, since chairs and coolers are hired
out along with their transportation, it is a
case of composite supply wherein the
principal supply is hiring out of chairs and
coolers. Also, it’s an intra-State supply.
Accordingly, transportation service will also
be taxed at the rate applicable for renting of
chairs and coolers, viz. CGST and SGST @
6% each.]
(vi) Transportation of chairs and coolers by GTA 30,000 (` 750 750
[GST on GTA services availed is payable 20 ×1,500)
under reverse charge mechanism since GST
is payable @ 5%3. Being an intra-State
supply, CGST and SGST will be chargeable @
2.5% each4.]
Total GST liability 91,250 91,250 9,900
Notes:
(1) The above answer is based on the assumption that either the event management services are
provided to brother for his son’s marriage and brother is not wholly dependent on Mrs. Kajal
or such services are provided directly to brother’s son for his marriage. However, it is also
possible to assume that the services are provided to brother for his son’s marriage and brother
is wholly dependent on Mrs. Kajal.

(2) As per section 2(30) of the CGST Act, 2017, composite supply means a supply made by a
taxable person to a recipient consisting of two or more taxable supplies. Since in point (v),
service of hiring out of chairs & coolers is taxable while transportation service is exempt (being
provided by a person other than a GTA), it is possible to take a view that this is not a case
of composite supply. In that case, the two services will be treated as independent services
and taxed accordingly
Q.7 Yash Shoppe, a registered supplier of Jaipur, is engaged in supply of various goods and
services exclusively to Government departments, agencies, local authority and persons
notified under section 51 of the CGST Act, 2017.
You are required to briefly explain the provisions 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 cases) assuming that
the payments as per the contract values are made on 31.10.2018. 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 generator renting service to Municipal Corporation of Jaipur. Total contract value
is ` 3,50,000 (inclusive of GST)
Ans: As per section 51 of the CGST Act, 2017, Government departments, agencies, local authority
and notified persons are required to deduct tax @ 2% (1% CGST + 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
departments, agencies, local authority and persons notified under section 51 of the CGST Act,
2017, applicability of TDS provisions on its various receivables is examined in accordance with
the above-mentioned provisions as under:
S. Particulars Total Tax to be deducted

No. contract CGST SGST IGST
value due to @ 1% (`) @ 1% @ 2%
be received (`) (`)
[excluding
GST] (`)

(1) Supply of computer stationery to 2,42,857 -- --
PSU in Mumbai [2,72,000 ×
[Since the total value of supply 100 / 112]
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 conditioner to GST 2,55,000 --

Department in Delhi 5,100
[Since the total value of supply
under the contract [excluding IGST
(being inter-State supply)]
exceeds ` 2,50,000, tax is
required to be deducted.]
(3) Supply of a generator renting 3,12,500 3,125 3,125

service to Municipal Corporation of [3,50,000×
Jaipur [Since the total value of 100 / 112]
supply under the contract
[excluding CGST and SGST (being
intra-State supply)] exceeds `
2,50,000, tax is required to be
deducted.]
Q8. In which of the following supplies of goods and services made exclusively to Government
departments, agencies etc. and persons notified under section 51 of the CGST Act, 2017,
TDS is required to be deducted?
(i) Health Department executed a contract with a local supplier to supply “medical grade
oxygen” of Rs.2.6 lakh (including GST) and is making full payment.
(ii) Government school is making a payment of Rs.3.5 Lakh to a supplier for supply of
cooked food as mid-day meal under a scheme sponsored by Central/State Government
(iii) Municipal Corporation of Kolkata purchases a heavy generator from a supplier in Delhi.
Now, it is making payment of Rs.5 lakh and IGST @18% on Rs.5 lakh for such
purchase.
(iv) Finance Department is making a payment of Rs.3 lakh (including GST) to a supplier of
‘printing & stationery’.

Assume all other conditions for deduction of TDS are fulfilled.
(a) (i), (ii) and (iii)
(b) (ii), (iii) and (iv)
(c) Only (i) and (ii)
Ans (d) Only (iii) and (iv)
Q9 XYZ Ltd., New Delhi, manufactures biscuits under the brand name ‘Tastypicks’. 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 engages goods transport agencies (GTA) to transport the flour from
the factories of the vendors to its factory located in New Delhi.
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 (` 20,00,000), the company arranged a local mini-van belonging
to an individual and paid him ` 54,000.
- For sales to locations in distant States (` 1,78,00,000), the company booked the goods by Indian
Railways and paid rail freight of ` 3,17,000.
- For sales to locations in neighbouring States (` 55,00,000), the company booked the goods by
road carriers (GTAs) and paid road freight of ` 3,73,000. Out of the total sales to neighbouring
States, goods worth ` 10,00,000 were booked through a GTA which paid tax @ 12%. Freight of `
73,000 was paid to such GTA.
- For purchase of flour from Madhya Pradesh (` 25,00,000), the company booked the goods by a
GTA and paid road freight of ` 55,000.
- For purchase of butter from Punjab (` 15,00,000), the company booked the goods by a GTA and
paid road freight of ` 35,000.
- For local purchase of baking powder, the company booked the goods by a GTA in a single carriage
and paid road freight of ` 1,500.
- For transferring the biscuits (open market value - ` 4,00,000) to one of its sister concern in
Rajasthan, the company booked the goods by a GTA and paid road freight of ` 40,000.
(i) 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.

(ii) Compute the GST charged on transportation cost billed by the company to its customers.
Note: - Assume the rate of GST on transportation of goods to be 5% [except where any other rate
is specified in the question] and GST on supply of biscuits to be 12%.
Ans: (i) Computation of GST payable on amount paid for transportation by XYZ Ltd. when it avails the
services of different transporters
Particulars Freight [₹] GST payable
[₹]
Transportation of biscuits in a local mini van belonging to 54,000 Nil
an individual [Only the transportation of goods by road
by a GTA is liable to GST. Therefore, transportation of
goods by road otherwise than by a GTA is exempt from
GST – Notification No. 12/2017 CT (R) & 9/2017 IT
(R) both dated 28.06.2017.]
Transportation of biscuits by Indian Railways 3,17,000 15,850
Transportation of biscuits by GTA [GST is payable by XYZ 3,00,000 15,000
Ltd. under reverse charge in terms of section 5(3) of
the IGST Act, 2017 read with Notification No. 10/2017
IT (R) dated 28.06.2017.]
Transportation of biscuits by GTA @ 12% [When the GTA 73,000 8,760
pays tax @ 12%, tax is payable by the GTA under forward
charge and not by the recipient under reverse charge -
Transportation of flour by GTA [Services provided by GTA by 55,000 Nil
way of transport (in a goods carriage) of, inter alia, flour
are exempt from GST vide Notification No. 9/2017 IT (R)
dated 28.06.2017.]
Transportation of butter by GTA [Though services provided 35,000 1,750
by GTA by way of transport (in a goods carriage) of, inter
alia, milk is exempt from GST vide Notification No. 9/2017
IT (R) dated 28.06.2017, road transport of butter will not
be exempted as butter is milk product and not milk.
GST is payable by XYZ Ltd. under reverse charge in terms
of section 5(3) of the IGST Act, 2017 read with
Transportation of baking powder by GTA 1,500 Nil
[Services provided by a GTA by way of transport in a goods
carriage of goods, where consideration charged for the

transportation of goods on a consignment transported in a
single carriage does not exceed ` 1,500, are exempt from GST
vide Notification No. 9/2017 IT (R) dated 28.06.2017.]
Transportation of biscuits by GTA to sister concern 40,000 2,000
[GST is payable by XYZ Ltd. under reverse charge in terms
of section 5(3) of the IGST Act, 2017 read with Notification
No. 10/2017 IT (R) dated 28.06.2017.]
Total tax payable by XYZ Ltd. on availing services of 43,360
different transporters
(ii) Computation of GST charged on transportation cost billed by XYZ Ltd. to its customers
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 Act,
2017].
Particulars Freight paid GST paid on Freight billed GST charged

[₹] [A] freight [₹] (with mark-up @ 12% [₹]
[B] @ 2% on [A] + [B])
Transportation of biscuits in 54,000 - 55,080 6,610
a local minivan belonging to
an individual
Transportation of biscuits 3,17,000 15,850 3,39,507 40,741
by Indian Railways
Transportation of biscuits 3,00,000 15,000 3,21,300 38,556
by GTA
Transportation of biscuits 73,000 8,760 83,395 10,007
by GTA @ 12%
Total tax charged by XYZ 95,914
Ltd. on transportation cost
billed to the customers*
*Note: It has been assumed that there is no mark-up on transportation cost billed to sister concern
(non-customer).

Q10 Starkart Limited owns and operates a web portal in the name of “Starkart” and is registered
with the jurisdictional GST authorities in Delhi as an electronic commerce operator and is liable to
collect tax at source under section 52 of the Central Goods and Services Tax Act, 2017. Starkart
provides listing service to various sellers for selling the goods to ultimate customers. Besides this,
Starkart also sells its own products through the same web portal.
For the listing services provided to sellers, Starkart charges a listing fee at the rate of 10% of
turnover of goods sold by the seller in a particular month. Such listing fee is recovered from the
seller irrespective of any return of goods sold through Starkart. The customers can choose from
wide range of goods listed on the web portal and place an online order for goods. The payment is
made by the customers through the payment gateway in online mode only. At the time of
monthly settlement, Starkart makes the payment to the sellers after adjusting the tax collection
at source at the applicable rates.
The invoice for goods sold on Starkart is issued by the seller in the name of customers and tax
is charged on the basis of location of seller and customer. The goods are shipped directly by
the seller to the customer and there is no responsibility of shipping the goods on Starkart for
third party sellers. In case of return of goods by the customer, the shipping is arranged by
Starkart. It charges a fee equivalent to 20% of the value of goods returned as cancellation charges
and refunds the balance amount to the customer. Further, 10% of the value of goods returned is
collected from the seller by Starkart as handling charges for return of goods.
In the month of January, Pulkit, a resident of Rajasthan, purchased following goods from Starkart:
a. Laptop having a value of ` 50,000 and a printer having a value of ` 10,000. Both the
products are sold by Infocom Limited, a seller listed on Starkart and registered under GST in
the State of Uttar Pradesh.
b. Mobile phone having a value of ` 30,000 sold by Starkart in its own capacity.
c. CCTV camera system having a value of ` 1,00,000 sold by Secure World, listed on Starkart
and registered under GST in the State of Gujarat.
All the above transactions are exclusive of GST, wherever applicable.
There is no input tax credit balance as on 1st January for Starkart, Infocom Limited and
Secure World.
GST is applicable in the aforesaid case scenario at the following rates unless otherwise
specified:
CGST - 9%, SGST - 9%, IGST - 18%.
Basis the aforesaid case scenario, please answer the following questions:
1. The net tax liability (including amount payable as tax collection at source and after set
- off of credits, if any) of Starkart Limited for the month of January is:
(a) IGST ` 8,280
(b) IGST ` 5,400

(c) CGST ` 3,500 and SGST ` 3,500
(d) IGST ` 9,880
2. The net tax liability (after set-off of credits, if any) of Infocom Limited and Secure World
for the month of January is:
(a) IGST ` 10,800 and IGST ` 18,000 respectively
(b) IGST ` 9,720 and IGST ` 16,200 respectively
(c) IGST ` 9,120 and IGST ` 15,200 respectively
(d) IGST ` 10,200 and IGST ` 17,000 respectively
3. In case, it is assumed that Secure World’s turnover does not exceed the threshold limit
for obtaining registration under applicable GST Law:
(a) Secure World shall discharge tax only on the sales made through Starkart
(b) Secure World is not required to obtain registration as threshold limit for obtaining
registration is not crossed and no tax is payable
(c) Starkart shall be liable to discharge tax liability of sales made by Secure World
(d) Secure World is required to obtain registration and shall be liable to pay tax on all the
taxable supplies made through Starkart or on its own
4. Assuming that Pulkit returns the printer purchased from Infocom Limited in the month of
January. As per the return policy, Starkart charges 20% of the value of the printer as
cancellation charges from Pulkit and 10% of the value of the printer as handling charges
from Infocom Limited. The net tax liability (including amount payable as tax collection at
source and after set- off of credits, if any) of Starkart in such scenario for the month of
January would be:
(a) ` 6,900 payable as IGST
(b) ` 3,450 payable as CGST and ` 3,450 payable as SGST
(c) ` 10,320 payable as IGST
(d) ` 7,440 payable as IGST
5. Starkart provides a free gift voucher worth ` 2,000 to Pulkit on January 31, which can be
redeemed against any purchases of goods made in future on Starkart. The supply of
voucher in hands of Starkart would become:
(a) taxable supply of ` 2,000 liable to GST in the month of January.
(b) taxable supply of ` 2,000 liable to GST in the month in which such voucher is redeemed by
Pulkit.
(c) discount offered to Pulkit on the purchases made in the month of January and no tax
would be payable on such voucher.

(d) discount offered to Pulkit at the time of redemption of voucher and no tax would be
payable on such voucher.
Ans: 1. (d)
2. (c)
3. (d)
4. (c)
5. (b)
Q11. Suvidha Technologies is in the business of development of e-commerce platforms for various
customers. Chennai Creations obtained the ownership rights of an e-commerce platform developed
by Suvidha Technologies by paying a specified amount against ownership rights of said portal.
Chennai Creations also entered into an annual maintenance contract with Suvidha Technologies for
technical maintenance of the said portal. Chennai Creations supplies its own goods and services
through the said portal to ultimate customers. Examine who is the e-commerce operator in the
given case as per the provisions of the GST law.
Ans: As per section 2(44), electronic commerce means the supply of goods or services or both,
including digital products over digital or electronic network. Further, as per section 2(45),
electronic commerce operator means any person who owns, operates or manages digital or
electronic facility or platform for electronic commerce.
In the given transaction, the e-commerce platform is developed by Suvidha Technologies. However,
the ownership of the electronic platform is sold by Suvidha Technologies to Chennai Creations.
Thus, Chennai Creations is the owner of the e-commerce platform and is also operating/managing
the said platform for supply of its own goods and services. In view of the definition of e-
commerce operator, it is Chennai Creations which owns, operates or manages digital or electronic
facility or platform for electronic commerce. Suvidha Technologies is merely providing the annual
management services for the electronic platform, but the ownership rights lie with Chennai
Creations. Thus, Suvidha Technologies cannot be termed as electronic commerce operator in the
given case and Chennai Creations is the e-commerce operator.
Q.12 State whether the provisions pertaining to tax collected at source under section 52 of CGST
Act, will be applicable in below mentioned scenarios -
(a) Fitan sells watch on its own through its own website
(b) ABC limited who is dealer of Fitan brand sells watches through Slipkart, an electronic
commerce operator

Ans: Answers for both the scenarios is as follows:
As per Section 52, every electronic commerce operator not being an agent, shall collect an amount
calculated at such rate not exceeding one per cent., as may be notified by the Government on the
recommendations of
(a) the Council, of 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.
Hence, if the person sells on his own, provisions pertaining to tax collected at source (TCS)
won’t be applicable.
(b) If ABC limited who is dealer of Fitan brand sells watches through Slipkart, then the provision
of TCS will be applicable to Slipkart.
Q13. A is an e-commerce operator supplying goods through its electronic portal in capacity of an agent.
The goods belong to B and the consideration for such supplies is received by A and remitted to B
as per the contractual arrangement. A requires your help in arriving at the rate at which tax shall
be collected from the amount which is received by it against the supplies?
Ans: As per Section 52(1) of the CGST Act, 2017, the TCS provisions are not applicable in cases where
the ECO is an agent of the supplier. In the present case, A being an ECO is supplying goods
through the electronic portal in capacity of an agent and hence the liability to collect tax as per
Section 52 shall not arise in this case.
Q14. X booked a Hotel in Udaipur, Rajasthan through an e-commerce portal for an amount of ` 25,000.
As per the terms and conditions, the amount was payable at the hotel at the time of check in.
Whether TCS provisions shall apply in the present case?
Ans: No, as per the provisions under Section 52 of the CGST Act, 2017 the TCS provisions shall trigger
only when the ECO is receiving the consideration for supply from the recipient of supply. In the
present case the supplier i.e. the hotel is directly receiving the consideration from the recipient of
the services i.e. X. Hence, the present transactions shall not trigger the TCS provisions under
Section 52.
Q.15 In respect of a consignment supplied on 20th August, provisional assessment was resorted to. The
assessment was finalized on 20th November and the taxpayer became liable to pay differential
IGST of ` 10,000. The taxpayer paid this amount on 20th February next year. The number of days
for which the taxpayer is liable to pay interest are-
(a) 184 days
(b) 153 days
(c) 92 days
(d) 204 days
Ans: (b) 153 days

Chapter 16 – Refund
Q 1. Is there any time limit for sanctioning of refund under section 54 of the CGST Act, 2017?
Ans: Yes, refund has to be sanctioned within 60 days from the date of receipt of application complete
in all respects. If refund is not sanctioned within the said period of 60 days, interest @ 6% p.a.
will have to be paid in accordance with section 56 of the CGST/SGST Act.
However, in case where provisional refund to the extent of 90% of the amount claimed is refundable
in respect of zero-rated supplies made by certain categories of registered persons in terms of sub-
section (6) of section 54 of the CGST/SGST Act, the provisional refund has to be given within
7 days from the date of acknowledgement of the claim of refund.
Q 2. Discuss the provisions relating to refund of the amount of advance tax deposited by a casual taxable
person under section 27(2) of the CGST Act, 2017.
Ans: The amount of advance tax deposited by a casual taxable under section 27(2), shall be refunded
only when such person has, in respect of the entire period for which the certificate of registration
granted to him had remained in force, furnished all the returns required under section 39 [Section
54(13)].
Further, refund of any amount, after adjusting the tax payable by the applicant out of the advance
tax deposited by him under section 27 at the time of registration, shall be claimed in the last
return required to be furnished by him [Fourth proviso to rule 89(1)].
Q 3. In case of refund under exports of goods, whether BRC/FIRC is necessary for granting refund?
Ans: In case of refund on account of export of goods, the refund rules do not prescribe BRC/FIRC as a
necessary document for filing of refund claim. However, for export of services details of BRC/FIRC
is required to be submitted along with the application for refund.
Q 4. A taxable person has mistakenly paid CGST and SGST for an inter-State supply. Subsequently, when
he discovers the same, can he adjust the IGST liability against the wrongly paid CGST and SGST?
Ans: Section 77, inter alia, stipulates that a registered person who has paid the Central tax and State tax
or, as the case may be, the central tax and the Union territory tax on a transaction considered by
him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall
be refunded the amount of taxes so paid in such manner and subject to such conditions as may be
prescribed.
The IGST liability cannot be adjusted against the CGST and SGST wrongly paid.

Q 5. State the exceptions to the principle of unjust enrichment as applicable to refund claims.
Ans: The principle of unjust enrichment is applicable in all cases of refund except in the following cases:-
i. Refund of tax paid on exports of goods or services or both or on inputs or input services used
in making such zero-rated supplies.
ii. Unutilized input tax credit in respect of (i) zero rated supplies made without payment of tax
or, (ii) where the credit has accumulated on account of rate of tax on inputs being higher
than the rate of tax on output supplies.
iii. refund of tax paid on a supply which is not provided, either wholly or partially, and for which
invoice has not been issued.
iv. refund of tax in pursuance of section 77 of CGST/SGST Act i.e. tax wrongfully collected and
paid to Central Government or State Government.
v. if the incidence of tax or interest paid has not been passed on to any other person.
vi. such other class of persons who has borne the incidence of tax as the Government may notify.
Q 6. With reference to section 54(3) of the CGST Act, 2017, mention the cases where refund of
unutilised input tax credit is allowed.
Ans: As per section 54(3) of the CGST Act, 2017, a registered person may claim refund of unutilised
input tax credit at the end of any tax period in the following cases:
i. Zero rated supplies: Supply of goods/services/both to an SEZ developer/unit or export of goods
or services or both. However, refund of unutilized input tax credit shall not be allowed if:
a. the goods exported out of India are subjected to export duty;
b. the supplier of goods or services or both avails of drawback in respect of CGST or
claims refund of the IGST paid on such supplies.
ii. Accumulated ITC on account of inverted duty structure: Where the credit has accumulated
on account of rate of tax on inputs being higher than the rate of tax on output supplies (other
than nil rated or fully exempt supplies), except supplies of goods or services or both as may be
notified by the Government on the recommendations of the Council.
Q 7. State five cases where refundable amount shall be paid to the applicant, instead of being credited
to Consumer Welfare Fund under CGST Act, 2017.
Ans: Section 54(8) of the CGST Act, 2017 provides that the refundable amount shall be paid to the
applicant, instead of being credited to the Consumer Welfare Fund, if such amount is relatable
to—
i. refund of tax paid on exports of goods and/or services or on inputs or input services used
in making such zero-rated supplies;

ii. refund of unutilized ITC in case of zero rated supplies made without payment of tax or
accumulated ITC on account of inverted duty structure;
iii. refund of tax paid on a supply which is not provided, either wholly or partially, and for
which invoice has not been issued, or where a refund voucher has been issued;
iv. refund of tax paid on a transaction treating it to be an intra-State supply, but which is
subsequently held to be an inter-State supply or vice-versa;
v. the tax and interest, if any, or any other amount paid by the applicant, if he had not
passed on the incidence of such tax and interest to any other person; or
vi. the tax or interest borne by notified class of applicants.
Q 8. State the provision of refund of IGST paid on export of Goods / Services

Ans: Refer Rule 96A in main Book
Q 9. State who are entitled for refund u/s 55?

Ans: Refer Section 55 in main Book
Q 10. M/s. RLL Ltd. filed an application for refund of tax amounting Rs. 5,00,000 on 1- 10-2017. The
refund was granted on 25-12-2017. Compute the amount of interest, if any payable to RLL
Ltd as per provisions of Section 56 of the CGST Act, 2017.
Ans: If any tax ordered to be refunded under section 54 (5) to any applicant, and such tax is not
refunded within 60 days from the date of receipt of application under section 54 (1 ), interest at
@ 6% p.a shall be payable in respect of such refund from the date immediately after the expiry
of 60 days from the date of receipt of application till the date of refund of such tax. The relevant
computation is as
Particulars Amount
Amount of refund (A) 500000
Date of making application (B) 01-10-2017
60 days period from the date of application expires on-[C] =[B ]= +60 days 30-11-2017
Date of making refund [D] 25-12-2017
No. of days for which interest to be granted [E] =[D] – [ C] 25
Interest on refund @ 6% {A} * {E} X 6% + 365 2055 2055

Chapter 16 – Refund
1). Which among the following are zero rated supplies?
A. Exports
B. Supplies to SEZ
C. Exports and Imports
D. Both (a) and (b)
Ans:- d . Both (a) and (b)
2). The time limit for filing refund claim is ___________from the relevant date.
A. One year
B. Two years
C. One and half year
D. Half year
Ans:- b. Two years
3). A registered person can claim refund any unutilized input tax credit on zero rated
supplies without payment of tax or the credit accumulated on account of inverted tax
rate structure:
A. at the end of the tax period, but before the expiry of 2 years from the relevant date.
B. before the expiry of the tax period.
C. before the expiry of 3 years from the relevant date.
D. before the expiry of 18 months from the relevant date.
Ans:- (a) at the end of the tax period, but before the expiry of 2 years from the relevant
date
4). _____________ will be treated as application for refund in case of IGST paid on
goods exported.
A. GSTR – 3
B. Form GST RFD-01A
C. Shipping Bill / Bill of Export
D. FIRC
Ans:- c. Shipping Bill / Bill of Export

5). Refund shall not be paid to the applicant if the amount of refund is less than
A. Rs. 1000
B. Rs. 5000
C. Rs. 7000
D. Rs. 10000
Ans;- a . Rs. 1000
6). What is the maximum time limit allowed to proper officer for issuing order (whether in
favour or against the refund application?
A. 15 days
B. 60 days
C. 45 days
D. 6 months
Ans:- b . 60 days
7). Interest on refund amount is required to be paid after expiry of from the date of
receipt of the application
A. 60 days
B. 90 days
C. 180 days
D. 240 days
Ans:- a. 60 days
8). The interest shall be payable @ _______ for withholding the refund amount.
A. 5%
B. 7%
C. 6%
D. 6.5%
Ans:- c. 6%

9). Refund amount is credited to________, if the amount is refundable to applicant and
to_________, if the amount is not refundable to applicant.
A. Bank account of the registered applicant, Consumer application fund
B. Bank account of the unregistered applicant, Consumer application fund
C. Bank account of the registered applicant, Consumer Welfare Fund
D. Consumer Welfare Fund, Bank account of registered applicant
Ans:- c. Bank account of the registered applicant, Consumer Welfare Fund
10). Which of the following options is not available to exporters:

A. Pay IGST on exports and claim refund of IGST
B. Clear goods for export without payment of IGST and claim refund of ITC
C. If part supplies are exports, he can utilize that credit for payment of GST on supplies
within India
Ans:- d . None of the above
11). Mode of calculation of refund of ITC in zero rated supplies is as follows:

A. Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated
supply of services)*Net ITC / Adjusted Total turnover
B. Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated
supply of services)*Net ITC / Gross Total turnover
C. Refund Amount = Turnover of zero-rated supply of goods * Net ITC / Adjusted Total
turnover
D. Refund Amount = Turnover of zero-rated supply of services* Net ITC / Adjusted Total
turnover
Ans:- a . Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated

supply of services)*Net ITC / Adjusted Total turnover
12). Mode of calculation of refund in case of inverted duty structure :

a. Refund Amount = {[(Turnover of inverted rated supply of goods and services)* Net
ITC] / Adjusted Total turnover}- tax payable on such inverted rated supply of goods
and services

b. Refund Amount = {[(Turnover of inverted rated supply of goods and services)* Net
ITC] / Gross Total turnover}- tax payable on such inverted rated supply of goods and
services
c. Refund Amount = {[(Turnover of supply of goods and services)* Net ITC] / Adjusted
Total turnover}- tax payable on such supply of goods and services
d. Refund Amount = {[(Turnover of inverted rated supply of goods and services)* Net
ITC] / Net turnover}- tax payable on such inverted rated supply of goods and
services
Ans:- a. Refund Amount = {[(Turnover of inverted rated supply of goods and services)* Net
ITC] / Adjusted Total turnover} - tax payable on such inverted rated supply of goods
and services
13). Mr. Z comes to India as a tourist. here he took some services worth Rs. 1,00,000 having
tax element of say Rs. 20,000. What amount of tax shall be allowed as refund?
A. 20000
B. 1,00,000
C. 80,000
D. 0
Ans:- d) 0
14). The applicant is not required to furnish certificate of CA or CMA if the amount of
refund claimed is Less than:-
A. Rs. 6 lacs
B. Rs. 2 lac
C. Rs. 10 lac
D. Rs. 20 lac
Ans:- b . Rs. 2 lac
15). Mr. A has claimed refund of GST of INR 10,000/-. He asks you the possibilities where
refund can be withheld by the department?
A. If a person has failed to furnish any return, refund will be withheld till he files such
return.

B. If the registered person is required to pay any tax, interest, or penalty which has not
been stayed by the appellate authority / Tribunal court, till he pays such interest or
penalty, refund will be withheld. The proper officer can also deduct unpaid taxes,
interest, penalty, late fee, if any, from the refundable amount.
C. The commissioner can withhold any refund if the order of refund is under appeal and
he is of the opinion that grant of such refund will adversely affect revenue in the said
appeal on account of malfeasance or fraud commited.
D. In all of the above circumstances, refund can be withheld
Ans:- d) In all of the above circumstances, refund can be withheld
16) . M/s XYZ ltd. filed & application for refund of tax amounting 10 lakh on 01 Oct 2018.
the refund was granted on 25 Dec 2018. Compute the amount of interest, if any
payable to XYZ ltd. As per the provision of Sec 56 of CGST Act 2017 ?
A. 4110
B. 13973
C. 9863
D. Nil
Ans:- a. 4110
Q1. Kailash Global (P) Ltd. supplies various goods in domestic and international markets. It is
engaged in both manufacturing and trading of goods. The company is registered under GST
in the State of Karnataka. The company exports goods without payment of tax under letter of
undertaking in accordance with the provisions of section 16(3)(a) of the IGST Act, 2017.
The company has made the following supplies during a tax period:
S.No Particulars (`)
(i) Export of product ‘A’ to UK for $ 10,000. Assessable value 7,00,000

under customs in Indian rupees.
[Export duty is levied on product ‘A’ at the time of exports]
(ii) Domestic supplies of taxable product ‘B’ during the period [excluding tax @ 10,00,000
5%] [Inputs used in manufacturing of such goods are taxable @18%]
*not notified as a product, in respect of which refund of un utilised ITC

shall not be allowed under section 54(3)(ii) of the CGST Act, 2017
(iii) Supply of goods to Export Oriented Unit [excluding tax @ 18%] [ITC has 5,00,000
been claimed by the recipient]
(iv) Export of exempt supplies of goods ( However value of such product when 6,00,000
supplied domestically by the company in similar quantities is 500000)
The ITC available for the above tax period is as follows:

S.No. Particulars (`)
(i) On inputs (including ` 50,000 on export of exempt supplies) 3,50,000

(ii) On capital goods 1,20,000
(iii) On input services (including ` 18,000 on outdoor catering) 2,00,000
Determine the maximum amount of refund admissible to Kailash Global (P) Ltd. for the given
tax period.
ANS: Computation of maximum amount of refund admissible to Kailash Global (P) Ltd.
Particulars Amount
Exports of product ‘A’ to UK [Note 1] Nil
Domestic supplies of taxable product ‘B’ during the period [Note 2] 75,000
Supply of goods to Export Oriented Unit [Note 3] Nil
Export of exempt supplies [Note 4] 1,14,000
Total refund claim admissible 1,89,000
Notes:
1. Export of goods is a zero rated supply in terms of section 16(1)(a) of the IGST Act, 2017.
Further, Kailash Global (P) Ltd. exports goods without payment of tax under letter of
undertaking in accordance with the provisions of section 16(3)(a) of the IGST Act, 2017.
Therefore, as per clause (i) of first proviso to section 54(3) of the CGST Act, 2017, a registered
person may claim refund, of any unutilised ITC in the case of zero rated supply at the end of
any tax period. However, second proviso to section 54(3) lays down that refund of unutilized
ITC is not allowed if the goods exported out of India are subjected to export duty.
2 Refund of unutilised ITC is allowed in case of inverted duty structure, i.e. where the credit has
accumulated on account of rate of tax on inputs being higher than the rate of tax on output
supplies (other than nil rated or fully exempt supplies) except supplies of goods or services or
both as may be notified by the Government on the recommendations of the GST Council [Clause
(ii) of the first proviso to section 54(3) of the CGST Act, 2017].
Rule 89(5) of the CGST Rules, 2017 stipulates that in the case of refund on account of inverted
duty structure, refund of ITC is granted as per the following formula –
𝑀𝑎𝑥𝑖𝑚𝑢𝑚 𝑟𝑒𝑓𝑢𝑛𝑑 𝐴𝑚𝑜𝑢𝑛𝑡
𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑜𝑓 𝑖𝑛𝑣𝑒𝑟𝑡𝑟𝑑 𝑟𝑎𝑡𝑒𝑑 𝑠𝑢𝑝𝑝𝑙𝑦 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑎𝑛𝑑 𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑠 × 𝑁𝑒𝑡 𝐼𝑇𝐶
=
𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑 𝑡𝑜𝑡𝑎𝑙 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟
− 𝑇𝑎𝑥 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑜𝑛 𝑠𝑢𝑐ℎ 𝑖𝑛𝑣𝑒𝑟𝑡𝑒𝑑 𝑟𝑎𝑡𝑒𝑑 𝑠𝑢𝑝𝑝𝑙𝑦 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑎𝑛𝑑 𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑠

where-
“Net ITC” means ITC availed on inputs during the relevant period other than the ITC availed for
which refund is claimed under sub-rules (4A) or (4B) or both.
“Adjusted total turnover” means the sum total of the value of:
(a) the turnover in a State/ Union territory, as defined under section 2(112), excluding turnover
of services; &
(b) the turnover of zero-rated supply of services determined in terms of specified manner and
non-zero-rated supply of services,
excluding:
(i) the value of exempt supplies other than zero-rated supplies; and
(ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-
rule (4B) or both, if any,during the relevant period.
Tax payable on inverted rated supply of goods = ` 10,00,000 × 5% = ` 50,000
Here, Net ITC = ` 3,50,000,
Adjusted Total Turnover = 28,00,000 [ 7,00,000 +` 10,00,000 + ` 5,00,000 + ` 6,00,000]
and Turnover of inverted rated supply of goods = 10,00,000
Thus, maximum refund amount under rule 89(5) =
(` 10,00,000 × 3,50,000) / 28,00,000 - 50,000 = 75,000
3 As per section 2(39) of the CGST Act, 2017, deemed exports means such supplies of goods as
may be notified under section 147 of the CGST Act, 2017. Supplies to EOU is notified as deemed
export under section 147 vide Notification No. 48/2017 CT dated 18.10.2017. In respect of supplies
regarded as deemed exports, the application of refund can be filed by the supplier of deemed
export supplies only in cases where the recipient does not avail of ITC on such supplies and
furnishes an undertaking to the effect that the supplier may claim the refund [Third proviso to
rule 89(1) of the CGST Rules, 2017]. Therefore, since in the given case, the recipient is claiming
ITC, Kailash Global (P) Ltd. (supplier of deemed exports) cannot claim refund of ITC.
4 Section 16(2) of the IGST Act, 2017 stipulates that subject to the provisions of section 17(5)
of the CGST Act, ITC may be availed for making zero-rated supplies, notwithstanding that such
supply may be an exempt supply. Section 54(3) of the CGST Act, 2017 allows refund of ITC in
the case of zero rated supply made without payment of tax.
Rule 89(4) of the CGST Rules, 2017 stipulates that in the case of zero-rated supply of goods or
services or both without payment of tax under bond/LUT in accordance with the provisions of
section 16(3) of the IGST Act, 2017, refund of ITC shall be granted as per the following formula:
𝑹𝒆𝒇𝒖𝒏𝒅 𝑨𝒎𝒐𝒖𝒏𝒕
(𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝒐𝒇 𝒛𝒆𝒓𝒐 𝒓𝒂𝒕𝒆𝒅 𝒔𝒖𝒑𝒑𝒍𝒚 𝒐𝒇 𝒈𝒐𝒐𝒅𝒔 + 𝒕𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝒛𝒆𝒓𝒐 𝒓𝒂𝒕𝒆𝒅 𝒔𝒖𝒑𝒑𝒍𝒚 𝒐𝒇 𝒔𝒆𝒓𝒗𝒊𝒄𝒆 )
=
𝑨𝒅𝒋𝒖𝒔𝒕𝒆𝒅 𝑻𝒐𝒕𝒂𝒍 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓
× 𝑵𝒆𝒕 𝑰𝑻𝑪
where
“Net ITC” means ITC availed on inputs and input services during the relevant period other
than the ITC availed for which refund is claimed under sub-rules (4A) or (4B) or both.

“Turnover of zero-rated supply of goods” means the value of zero-rated supply of goods made
during the relevant period without payment of tax under bond/LUT, other than the turnover
of supplies in respect of which refund is claimed under sub- rules (4A) or (4B) or both.
“Adjusted total turnover” means the same as explained in point 2 above.
Here, Turnover of zero rated supply of goods :

1. 6,00,000 or
2. 1.5 x ( 500000) = 7,50,000
Whichever is less i.e 6,00,000
Net ITC = 5,32,000 (ITC on outdoor catering disallowed under section 17(5) of CGST Act,
2017) and Adjusted Total Turnover = ` 28,00,000 (as computed in point 2 above)
Thus, maximum refund amount under rule 89(4) = 6,00,000 × 5,32,000 / 28,00,000 = 1,14,000.
Q.2 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* (`)Outpu GST RatesITC availed (`) Input GST Rates
A 500,000 5% 54,000 18%

B 350,000 5% 54,000 18%
C 100,000 18% 10,000 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: Section 54(3)(ii) of the CGST Act, 2017 allows refund of unutilized input tax credit (ITC) at
the end of any tax period to a registered person where the credit has accumulated on account of
inverted duty structure i.e. rate of tax on inputs being higher than the rate of tax on output
supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or
both as may be notified by the Government on the recommendations of t he Council.
In the given case, the rates of tax on inputs used in Products A and B (18% each) are higher
than rates of tax on output supplies of Products A and B (5% each). However, Product B is
notified as a product, in respect of which no refund of unutilised ITC shall be allowed under
section 54(3)(ii) of the CGST Act, 2017. Therefore, only Product A is eligible for refund under
section 54(3)(ii).

Further, rule 89(5) of the CGST Rules, 2017 stipulates that in the case of refund on account of
inverted duty structure, refund of ITC shall be granted as per the following formula –
Maximum refund amount= (turnover of inverted related supply of goods and service ×Net
ITC)/(Adjusted Total turnover )-tax payable on such inverted rated supply of goods and services
"Net ITC" means input tax credit availed on inputs during the relevant period;
"Adjusted Total turnover" means the turnover in a State or a Union territory, excluding the value
of exempt supplies other than zero-rated supplies, during the relevant period.
In accordance with the aforesaid provisions, the maximum refund amount which Super Engineering
Works is eligible to claim shall be computed as follows:
Tax payable on inverted rated supply of Product A = ` 5,00,000 × 5% = ` 25,000
Net ITC = ` 1,18,000 (` 54,000 + ` 54,000 + ` 10,000) [Net ITC availed during the relevant period
needs to be considered irrespective of whether the ITC pertains to inputs eligible for refund of
inverted rated supply of goods or not]
Adjusted Total Turnover = ` 9,50,000 (` 5,00,000 + ` 3,50,000 + ` 1,00,000) Turnover of inverted
rated supply of Product A = ` 5,00,000
Maximum refund amount for Super Engineering Works is as follows:
= [(` 5,00,000 × ` 1,18,000)/ ` 9,50,000] - ` 25,000
= ` 37,105 (rounded off)
Q.3 Wye Ltd. provides the following details of September 2018 for computation of refund claim under rule
89(4) of the CGST Rules, 2017. Compute the eligible claim under the said rule assuming that other
conditions are fulfilled.
Particulars Amount
Opening balance of ITC 5,00,000
ITC availed during the period, which includes the claim for refund made of
` 5,00,000 eligible under rule 89(4A)/89(4B) of the CGST Rules, 2007 25,00,000
Zero rated supply of goods made during the period without payment of tax
under bond/LUT, which include the supply of ` 1,00,00,00 6,00,00,000
for which refund claim is made under rule 89(4A)/89(4B) of the CGST
Rules, 2017 ( Value of such product when supplied domestically by company
is 4,00,00,000 excluding supply under rule 89(4A)/(4B)
Supply of goods other than zero rated supply 3,00,00,000
Ans: As per rule 89(4) of the CGST Rules, 2017, in case of zero-rated supply of goods without
payment of tax under bond/LUT, refund of ITC is granted as per the following formula:

(Turnover of zero−rated supply of goods +Turnover of zero−rated supply of services)
Refund Net Amount = × ITC
Adjusted Total Turnover
Net ITC excludes ITC availed for which refund is claimed under rule 89(4A)/(4B) of the CGST
Rules, 2017. Further, turnover of zero-rated supply of goods and adjusted total turnover exclude
turnover of supplies in respect of which refund is claimed under 89 (4A)/(4B).
Accordingly, turnover of zero rated supply of goods lesser of =
1. 5,00,00,000 [ 6,00,00,000 – 1,00,00,000]
OR
2. 1.5 X (4,00,00,000)= 6,00,00,000
Therefore turnover of zero rated supply of goods is lesser of above 2 i.e 5,00,00,000
Net ITC = ` 20,00,000 [` 25,00,000 – ` 5,00,000] and
Adjusted Total Turnover = ` 8,00,00,000 [` 6,00,00,000 + ` 3,00,00,000 – ` 1,00,00,000]
Thus, maximum refund amount under rule 89(4)
= ` 20,00,000 × ` 5,00,00,000 / ` 8,00,00,000 = ` 12,50,000. (MAY19 QP NEW Modified)
Q4. Mr. Prabhu Deva, registered under GST in Mumbai, is in the business of trading of marble
handicraft items domestically as also exporting the same. His annual turnover and input tax
details are as follows:
Turnover Tax paid on Input tax
Taxable goods 1,25,00,000/- 12,50,000/-
Exported goods 75,00,000/- 5,50,000/-
Exempt goods 50,00,000/- 5,00,000/-
Mr. Prabhu Deva exported the goods under LUT without payment of IGST. Exported goods when
supplied domestically by company in similar quantities is Rs. 70,00,000
Now, Mr. Prabhu Deva seeks your help in calculating the amount of refund of ITC, which he is
eligible to claim.
(a) 18,00,000/-
(b) 6,75,000/-
(c) 5,40,000/-
(d) 6,90,000/-
Ans : 6,75,000/- [ 1800000 x 7500000/(12500000+7500000)]

Q5 M/s. Raman Plastics is a manufacturer of plastic toys. It is registered person under GST in
Shimla, Himachal Pradesh.
It procures its raw materials from Punjab. During the month of April-2019, it purchased material
of Rs. 35.00 Lakh and paid IGST thereon amounting to Rs. 6.30 Lakh. It supplied 30% of its
production in the State of Jammu and Kashmir, whereas the 70% of its production was supplied
taxable @ 0.1% to a merchant exporter during the month of Apr-2019. The returns for the month
of April, 2019 were duly filed in time. The last date upto which the taxpayer can claim refund of
input tax credit on account of inverted duty structure is
(a) 20-Apr-2021
(b) 20-May-2021
(c) 31-Mar-2022
(d) 20-Apr-2020
Ans : 20-May-2021
Q6 Synotex Pvt. Ltd. manufactures taxable goods, ‘Q’ and exempt goods ‘S’. Product ‘S’ is sold in
international markets without payment of tax under letter of undertaking. The company is
registered under GST in the State of Maharashtra
The company provides the following information in relation to various supplies made by it during a
tax period:
(a) Product ‘S has been exported to UK for £ 12,000
(b) Product ‘Q’ has been supplied to Betty Enterprises within India for ` 20,00,000 Note: The
above amounts are exclusive of taxes, wherever applicable.
The company provides the following information in relation to tax paid on inward supplies received
during the said tax period:
(a) GST of ` 5,00,000 has been paid on inputs
(b) GST of ` 2,40,000 has been paid on capital goods
(c) GST of ` 2,00,000 has paid on input services
(d) All the above inputs, input services and capital goods are used in the manufacturing process
Following additional information is also provided:
(i) Value of product ‘S’ exported to UK in Indian rupees is ` 12,00,000. However, value of such
product when supplied domestically by the company in similar quantities is ` 10,00,000.
(ii) Betty Enterprises is a 100% export-oriented undertaking. It has claimed the ITC on goods
supplied to it by Synotex Pvt. Ltd.
(iii) The balance in the electronic credit ledger of Synotex Pvt. Ltd. at the end of the tax period
for which the refund claim is being filed after GSTR-3B for the said period has been filed
is ` 5,80,000.
(iv) The balance in the electronic credit ledger of Synotex Pvt. Ltd. at the time of filing the
refund application is ` 3,00,000.

Compute the amount refundable to Synotex Pvt. Ltd. for the tax period.
Ans: Export of goods is a zero rated supply in terms of section 16(1)(a) of the IGST Act, 2017. Section
16(2) of the IGST Act, 2017 stipulates that subject to the provisions of section 17(5) of the CGST
Act, 2017, ITC may be availed for making zero-rated supplies even if such supply may be an exempt
supply. As per section 54(3)(i) of the CGST Act, 2017, a registered person may claim refund, of
any unutilised ITC at the end of any tax period in the case of zero rated supply made without
payment of tax.
Therefore, in the given case, Synotex Pvt. Ltd. will be eligible to claim ITC for export of exempt
product ‘S’ in terms of section 16(2) of the IGST Act, 2017 and will thus, be able to claim refund
of unutilised ITC in terms of section 54(3)(i) of the CGST Act, 2017.
As per rule 89(4) of the CGST Rules, 2017, refund of unutilized ITC in case of zero rated supply
without payment of tax under letter of undertaking is granted in accordance with the following
formula:
𝑟𝑒𝑓𝑢𝑛𝑑 𝑎𝑚𝑎𝑜𝑢𝑛𝑡
(𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑜𝑓 𝑧𝑒𝑟𝑜 𝑟𝑎𝑡𝑒𝑑 𝑠𝑢𝑝𝑝𝑙𝑦 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 + 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑜𝑓 𝑧𝑒𝑟𝑜 𝑟𝑎𝑡𝑒𝑑 𝑠𝑢𝑝𝑝𝑙𝑦 𝑜𝑓𝑠𝑒𝑟𝑣𝑖𝑐𝑒𝑠)
=
𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑 𝑡𝑜𝑡𝑎𝑙 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟
× 𝑁𝑒𝑡 𝐼𝑇𝐶
Here,
Net ITC = ` 7,00,000 [Net ITC includes ITC on inputs and input services but not ITC on capital
goods].
Turnover of zero-rated supply of goods (Product ‘S’) = ` 12,00,000 [Lower of the value of zero
rated supply of goods (` 12,00,000) or the value which is 1.5 times the value of like goods
domestically supplied by the same or, similarly placed, supplier (` 15,00,000)].
Adjusted total turnover = ` 32,00,000 [` 20,00,000 + ` 12,00,000]
Thus, refund amount under rule 89(4)
= ` 7,00,000 x ` 12,00,000/ ` 32,00,000 = ` 2,62,500.
Circular No. 125/44/2019 GST dated 18.11.2019 provides that amount refundable to the applicant
is least of the following amounts:
(a) Maximum refund amount as per the formula in rule 89(4) of the CGST Rules
[` 2,62,500]
(b) Balance in the electronic credit ledger at the end of the tax period for which the refund
claim is being filed after GSTR-3B for the said period has been filed [`
5,80,000]
(c) Balance in the electronic credit ledger at the time of filing the refund application
[` 3,00,000]
Thus, amount refundable to Synotex Pvt. Ltd. of unutilized ITC is
` 2,62,500.
Supply of product ‘R’ to Betty Enterprises, a 100% EOU

Supplies to EOU is notified as deemed export under section 147 vide Notification No. 48/2017 CT
dated 18.10.2017. In respect of supplies regarded as deemed exports, the application of refund can
be filed by the supplier of deemed export supplies only in cases where the recipient does not avail
of ITC on such supplies and furnishes an undertaking to the effect that the supplier may claim
the refund [Third proviso to rule 89(1) of the CGST Rules, 2017]. Therefore, since in the given
case, Betty Enterprises (recipient) is claiming ITC, Synotex Pvt. Ltd. (supplier of deemed exports)
cannot claim refund of ITC.
Therefore, amount refundable to Synotex Pvt. Ltd. is ` 2,62,500
Q7 Answer the following questions:

(i) Subhashini Ltd. agreed to provide consultancy services to Madhu Enterprises in the month of
May for which it received an advance of `1,00,000 on 20th April from Madhu Enterprises.
Subsequently, in the month of May, before supply of service, the said service contract has
to be cancelled owing to some inadvertent circumstances. However, Subhashini Ltd. has
issued the invoice for the advance received in April itself and has paid the GST thereon.
You are the tax consultant of Subhashini Ltd. Please advise whether it can claim refund of tax
paid or is it required to adjust its tax liability in its returns?
(ii) Narmada Enterprises, a registered person, pays CGST and SGST on a transaction considered
by it to be an intra-State supply. However, subsequently said transaction is held to be
an inter-State supply. Examine the recourse available with Narmada Enterprises.
Ans:
(i) In case GST is paid by the supplier on advances received for a future event which got cancelled
subsequently and for which invoice is issued before supply of service, the supplier is required to
issue a “credit note” in terms of section 34 of the CGST Act, 2017. He shall declare the details
of such credit notes in the return for the month during which such credit note has been issued.
The tax liability shall be adjusted in the return subject to conditions of section 34. There is no
need to file a separate refund claim.
However, in cases where there is no output liability against which a credit note can be adjusted,
registered persons may proceed to file a refund claim [Circular No. 137/07/2020 GST dated
13.04.2020].
Therefore, in the given case, Subhashini Ltd. is required to issue a credit note, declare its details
in the return for the month during which such credit note has been issued and adjust the tax
liability. However, if there is no output liability of Subhashini Ltd. against which the said credit
note can be adjusted, it may proceed to file a refund claim.
(ii) Section 77(1) of the CGST Act, 2017 stipulates that a registered person who has paid the
Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on
a transaction considered by him to be an intra -State supply, but which is subsequently held to
be an inter-State supply, shall be refunded the amount of taxes so paid.
Further, section 19(2) of the IGST Act, 2017 provides that a registered person who has paid central

tax and State tax or Union territory tax, as the case may be, on a transaction considered by him
to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall not
be required to pay any interest on the amount of integrated tax payable
Thus, in the given case, Narmada Enterprises shall be refunded the amount of taxes so paid
and it shall not be required to pay any interest on the amount of IGST payable by it on the
transaction wrongly considered by it earlier as intra-State transaction
Q.8 ‘Separate LUT is to be furnished for every export supply.’With reference to the provisions of the
GST law, examine the veracity or otherwise of the statement.
Ans: No, the statement is not correct.
The LUT remains valid for the whole financial year and there is no need to furnish separate LUT for
each export supply.
However, in case goods are not exported within the time limit specified in rule 96A(1) of the CGST
Rules and the registered person fails to pay the amount mentioned in the said sub rule, the facility
of export under LUT will be deemed to have been withdrawn. However, if the amount mentioned in
the said sub-rule is paid subsequently, the facility of export under LUT shall be restored. As a result,
exports, during the period from when the facility to export under LUT is withdrawn till the time the
same is restored, shall be either on payment of the applicable IGST or under bond with bank
guarantee.
Rule 96A(1) provides inter alia that an exporter of goods has to execute the bond or LUT prior to
export, binding himself to pay the tax due along with interest @ 18% within 15 days after the
expiry of 3 months, or such further period as may be allowed by the Commissioner, from the date
of issue of the invoice for export, if the goods are not exported out of India.
Q9. Y Ltd. exported service valued at US $ 1,00,000. Supply of service was completed on 15 th January.
Payment for this service was received on 28th February. Refund claim was filed by Y Ltd. in respect
of tax paid on inputs and inputs services for ` 6,00,000 on 31st March. The refund claim was sanctioned
on 30th June. What is the amount of refund Y Ltd. will get in accordance with law? What is the
relevant date and rate of interest as per GST law?
Ans: As per clause (i) of first proviso to section 54(3), refund claim admissible to Y Ltd. on account of
export of services being a zero-rated supply, is the unutilized ITC of ` 6,00,000.
Where the supply of services had been completed prior to the receipt of payment, relevant date
is the date of receipt of payment in convertible foreign exchange, i.e. 28th February [Explanation
to section 54].
As per section 56, where any tax ordered to be refunded to any applicant is not refunded within
60 days from the date of receipt of application, interest shall be payable @ 6% p.a. from the
date immediately after the expiry of 60 days from the date of receipt of application till the date
of refund of such tax.

Since in the given case, tax ordered to be refunded is not refunded within 60 days from the date of
receipt of application, viz., 31st March, interest @ 6% p.a. is payable.
Q.10 M/s. Raman Plastics is a manufacturer of plastic toys. It is registered under GST in Shimla, Himachal
Pradesh. It procures its raw materials from Punjab. During the month of April 2020, it purchased
material of ` 35.00 lakh and paid IGST thereon amounting to ` 6.30 lakh. It supplied 30% of its
production in the State of Jammu and Kashmir, whereas the 70% of its production was supplied
taxable @ 0.1% to a merchant exporter during the month of April 2020.
The returns for the month of April 2020 were duly filed in time, i.e. within the due date of 20th
May, 2020. The last date upto which the taxpayer can claim refund of input tax credit on account
of inverted duty structure is:
(a) 20th April, 2022
(b) 20th May, 2022
(c) 31st March, 2023
(d) 20th April, 2021
Ans: (b) 20th May, 2022
Q.11 Mr. Chamcham, registered under GST in Delhi, is a domestic trader as also an exporter of whole
sale goods. His annual turnover and input tax details are as follows:
Turnover Tax paid on inputs
Taxable goods 90,00,000 9,00,000
Exempt goods 10,00,000 1,00,000
Exported goods 15,00,000 2,00,000
No GST is payable on exempt and exported goods. Mr. Chamcham seeks your expert help in
calculating the amount of ITC which he is eligible to claim under GST law. The refund amount is:
(a) ` 12,00,000
(b) ` 11,00,000
(c) ` 10,00,000
(d) ` 9,00,000
Ans: (b) ` 11,00,000

Chapter 17 – Assessment and Audit
Q 1. Is summary assessment order to be necessarily passed against the taxable person?

Ans: No. In certain cases, like when goods are under transportation or are stored in a warehouse, and
the taxable person in respect of such goods cannot be ascertained, the person in charge of such
goods shall be deemed to be the taxable person and will be assessed to tax.
Q 2. Whether principal of natural justice is must to be followed before passing assessment order against
the taxable person?
Ans: Yes, principal of natural justice is must to be followed before passing assessment order against the
taxable person seeking to impose any financial burden on him.
Q 3. In what cases, assessment order passed by proper officer may be withdrawn?

Ans: Assessment Order passed by proper officer may be withdrawn in the following cases:-
(i) Assessment of Non-filers of return – The best judgment order passed by the Proper Officer
under section 62 of CGST Act shall automatically stand withdrawn if the taxable person
furnishes a valid return for the default period (i.e. files the return and pays the tax as
assessed by him), within thirty days of the receipt of the best judgment assessment order
(ii) Summary Assessment – A taxable person against whom a summary assessment order has
been passed can apply for its withdrawal to the jurisdictional Additional/Joint Commissioner
within thirty days of the date of receipt of the order. If the said officer finds the order
erroneous, he can withdraw it and direct the proper officer to carry out determination of tax
liability in terms of section 73 or 74 of CGST Act. The Additional/Joint Commissioner can
follow a similar course of action on his own motion if he finds the summary assessment order
to be erroneous.
Q 4. What recourse may be taken by the officer in case proper explanation is not furnished for the
discrepancy detected in the return filed, while conducting scrutiny under section 61 of CGST ACT?
Ans: If the taxable person does not provide a satisfactory explanation within 30 days of being informed
(extendable by the officer concerned) or after accepting discrepancies, fails to take corrective
action in the return for the month in which the discrepancy is accepted, the Proper Officer may
take recourse to any of the following provisions:

(a) Proceed to conduct audit under section 65 of the Act;
(b) Direct the conduct of a special audit under section 66 which is to be conducted by a
Chartered Accountant or a Cost Accountant nominated for this purpose by the Commissioner;
or
(c) Undertake procedures of inspection, search and seizure under section 67 of the Act; or
(d) Initiate proceeding for determination of tax and other dues under Section 73 or 74 of the
Act.
Q 5. Who can conduct audit of taxpayers?

Ans: There are three types of audit prescribed in the GST Act(s) as explained below:
(a) Audit by Chartered Accountant or a Cost Accountant: Every registered person whose
turnover exceeds the prescribed limit, shall get his accounts audited by a chartered
accountant or a cost accountant. (Section 35(5) of the CGST Act)
(b) Audit by Department: The Commissioner or any officer of CGST or SGST or UTGST
authorized by him by a general or specific order, may conduct audit of any registered person.
The frequency and manner of audit will be prescribed in due course. (Section 65 of the
CGST Act)
(c) Special Audit: If at any stage of scrutiny, inquiry, investigations or any other proceedings,
if department is of the opinion that the value has not been correctly declared or credit
availed is not with in the normal limits, department may order special audit by chartered
accountant or cost accountant, nominated by department. (Section 66 of the CGST Act)
Q 6. Explain the procedure for finalization of Provisional Assessment

Ans: Refer Section 60 in Main Book
Q 7. Kulbhushan & Sons has entered into a contract to supply two consignments 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 request.
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 consignments 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. 1,80,000 becomes due on 1st consignment whereas a tax of Rs.
4,20,000 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 05.06.20 XX.
Determine the interest payable and receivable, if any, by Kulbhushan & Sons in the above case.
Ans: Legal Provision: Section 60(4) of the CGST Act, 2017 stipulates that where the tax liability as per
the final assessment is higher than under provisional assessment i.e. tax becomes due consequent
to order of final assessment, the registered person shall be liable to pay interest on tax payable
on supply of goods but not paid on the due date, at the rate specified under section 50(1) [18%
p.a.], from the first day after the due date of payment of tax in respect of the goods supplied
under provisional assessment till the date of actual payment, whether such amount is paid
before/after the issuance of order for final assessment.
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. 1,80,000 × 18% × 48/365
= Rs. 4,261 (rounded off)
Further, section 60(5) of the CGST Act, 2017 stipulates that where the tax liability as per the
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 under section 54(1) till the date of refund of such tax.
However, since in the given case, refund has been made (05.06.20XX) within 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 8. How tax authorities conduct audit ?

Ans: The proper officer authorised to conduct audit of the records and books of account of the registered
person shall, with the assistance of the team of officers and officials accompanying him, verify the
documents on the basis of which the books of account are maintained and the returns and
statements furnished under the Act and the rules made thereunder, the correctness of the
turnover, exemptions and deductions claimed, the rate of tax applied in respect of supply of goods
or services or both, the input tax credit availed and utilized, refund claimed, and other relevant
issues and record the observations in his audit notes.
During the course of audit, the authorised officer may require the registered person,—

a) To facilitate the verification of accounts/records available or requisitioned by the authorities,
b) to provide such information as the authorities may require for the conduct of the audit, and
c) to render assistance for timely completion of the audit.
The proper officer may inform the registered person of the discrepancies noticed, if any, as
observations of the audit and the said person may file his reply and the proper officer shall finalise
the findings of the audit after due consideration of the reply furnished.
Q 9. What is meant by commencement of audit of tax authorities ?

Ans: The term ‘commencement of audit’ is important because audit has to be completed within a given
time frame in reference to this date of commencement. Commencement of audit means the later
of the following:
a) The date on which the records/accounts called for by the audit authorities are made available to
them, or
b) The actual institution of audit at the place of business of the taxpayer.
Chapter 17– Audit & Assessment
1). What is the time period within which the proper officer is required to reply on
application for provisional assessment?
A. 90 days from the date of decision of applicant
B. 60 days from the date of decision of applicant
C. 90 days from the date of receipt of such request
D. 60 days from the date of receipt of such request
Ans: c. 90 days from the date of receipt of such request
2). What are the circumstances in which provisional assessment can be obtained?
A. Value of supply cannot be ascertained
B. Rate of tax cannot be ascertained
C. (a) or (b)
D. (a) and (b)
Ans:- c . (a) or (b)

3). What is the rate of interest for refund and if the order is passed by the Court for
such refund?
A. 9% p.a.
B. 12% p.a.
C. 18% p.a.
D. 24% p.a.
Ans:- a. 9% p.a.
4). Under provisional assessment, if a registered person liable to pay tax has not paid on
due date, then he shall be liable to pay interest @___________ from the first day
after due date till the actual date of payment.
A. 6% p.a.
B. 12% p.a.
C. 18% p.a.
D. 24% p.a.
Ans:- c. 18% p.a.
5). What is the time period specified for the final assessment order by the proper officer?
A. 1 month from the date of provisional assessment
B. 3 months from the date of provisional assessment
C. 6 months from the date of provisional assessment
D. 9 months from the date of provisional assessment
Ans:- c. 6 months from the date of provisional assessment
6). Which of the following is correct for extending the time period of 6 months for the
final assessment order?
A. Extension up to 6 months by the Additional/joint Commissioner, Extend further up to
4 years by the Commissioner
B. Extend up to 18 months by the Commissioner, Extend further up to 3 years by the
Additional Commissioner
C. Extension up to 6 months by the Commissioner, Extend further up to 4 years by the
Additional Commissioner
D. Extend up to 18 months by the Additional Commissioner, Extend further up to 3 years

by the Commissioner
Ans:- a. Extension up to 6 months by the Additional/joint Commissioner, Extend further
up to 4 years by the Commissioner
7). What is the time period allowed to an unregistered taxable person for furnishing a
reply to the proper officer?
A. 15 days
B. 21 days
C. 30 days
D. 45 days
Ans:- a. 15 days
8). What are the conditions where the proper officer may opt for summary assessment of
an assessee?
A. Evidence showing tax liability
B. Prior permission of Additional Commissioner or Joint Commissioner
C. Reason to protect the Interest of Revenue
D. All of the above
Ans:- d. All of the above
9). In case of summary assessment, where the taxable person is not identified and such
tax liability is related to supply of goods, then the person ________shall be treated
as taxable person and shall be liable to pay tax.
A. Supplying such goods
B. In charge of such goods
C. Delivering such goods
Ans:- b. In charge of such goods
10). Mr. A has failed to furnish a return u/s 39. For which proper officer issued a notice for
assessment. What is the condition for which such assessment order shall be deemed to
have been withdrawn?

A. File a valid return within 30 days of serving notice
B. File a valid return within 15 days of serving notice
C. File a valid return within 30 days of serving of assessment order
D. File a valid return within 45 days of serving notice
Ans:- c. File a valid return within 30 days of serving of assessment order
11). What are the consequences, where a registered person fails to furnish the return
required u/s 39, even after the service of a notice for assessment?
A. The proper officer may proceed to assess the tax liability of the said person to the
best of his judgment.
B. Issue an assessment order within a period of 3 years from the date specified u/s 44
C. Both (a) & (b)
Ans:- a. The proper officer may proceed to assess the tax liability of the said person
to the best of his judgment
12). “Commencement of Audit” shall mean the date on which the records and other
documents
A. Date on which all the documents & information called for by the tax authorities, are
made available by the registered person
B. The actual institution of audit at the place of business
C. (a) or (b), whichever is earlier
D. (a) or (b), whichever is later
Ans:- d. (a) or (b), whichever is later
13). Commissioner may extend the period of audit u/s 65 by a further period __________.
A. 1 month
B. 3 months
C. 4 months
D. 6 months
Ans:- d. 6 months

14). Prior to the conduct of audit u/s 65 the registered person shall be informed, by way of
a notice, sufficiently in advance:
A. not less than fifteen working days
B. not less than thirty working days
C. not less than ten working days
D. No prior intimation required
Ans:- a. not less than fifteen working days
15). The expenses of the examination and audit of records under special audit, including the
remuneration of CA or CMA , shall be determinedand paid by the_______________.
A. Commissioner
B. Any Officer authorized by the Commissioner
C. Deputy / Assistant Officer of Central Tax
D. Additional Commissioner / Joint Officer of Central
Ans:- a. Commissioner
16). A special Audit under GST is conducted by :

A. The CGST Officials
B. The SGST Officials
C. Chartered Accountant or Cost Accountant
D. Any of the above
Ans:- c) Chartered Accountant or Cost Accountant
17). Special audit u/s 66 can be directed at any stage of scrutiny, enquiry, investigation or
any other Proceedings having regard to nature and complexity of the case if, any
officer not below the rank of Assistant Commissioner:
A. Is of the opinion that the value has not been correctly declared
B. the credit availed is not within the normal limits
C. assessee does no co-operate
D. (a) or (b)
Ans:- d. (a) or (b)

Q.1 Ms. Reena Banerji is engaged in retail business of selling mobile phones in the State of West
Bengal. She has effected supplies to the customers in the State of Uttar Pradesh and
Haryana. Her total turnover during the financial year ending 31st March, 20XX is
18,00,000. Owing to low profit margins in the business, she has decided to shut down the
business in April 20XX.
The proper officer has collected evidences of the inter-State sale of mobile phones effected
by Ms. Reena Banerjee during the FY ending 31st March 20XX. Now, the proper of ficer wants
to make the assessment as she was liable for registration but did not get herself registered.
You are required to assist the proper officer by determining which assessment can be done
in this case under the CGST Act, 2017?
(a) Self-assessment
(b) Provisional Assessment
(c) Assessment of un-registered persons
(d) Special assessment
Ans: Assessment of un-registered persons
Q2. Subharti Enterprises collected GST on the goods supplied by it from its customers on the belief
that said supply is taxable. However, later it discovered that goods supplied by it are exempt
from GST.
The accountant of Subharti Enterprises advised it that the amount mistakenly collected by
Subharti Enterprises representing as tax was not required to be deposited with Government.
Subharti Enterprises has approached you for seeking the advice on the same. You are required to
advise it elaborating the relevant provisions.
ANS: The provisions of section 76 of the CGST Act, 2017 make it mandatory on Subharti Enterprises to
pay amount collected from other person representing tax under this Act, to the Government.
Section 76 of the CGST Act, 2017 stipulates that notwithstanding anything to the contrary
contained in any order or direction of any Appellate Authority or Appellate Tribunal or Court or in
any other provisions of the CGST Act or the rules made thereunder or any other law for the time
being in force, every person who has collected from any other person any amount as representing
the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay
the said amount to the Government, irrespective of whether the supplies in respect of which such
amount was collected are taxable or not.
Where any amount is required to be paid to the Government as mentioned above, and which has
not been so paid, the proper officer may serve on the person liable to pay such amount a notice
requiring him to show cause as to why the said amount as specified in the notice, should not
be paid by him to the Government and why a penalty equivalent to the amount specified in the
notice should not be imposed on him under the provisions of this Act.

The proper officer shall, after considering the representation, if any, made by the person on
whom show cause notice (SCN) is served, determine the amount due from such person and
thereupon such person shall pay the amount so determined.
The person who has collected any amount as representing the tax, but not deposited the same
with the Government shall in addition to paying the said amount determined by the proper officer
shall also be liable to pay interest thereon. Interest is payable at the rate specified under section
50. Interest is payable from the date such amount was collected by him to the date such amount
is paid by him to the Government.
The proper officer shall issue an order within 1 year [excluding the period of stay order] from the
date of issue of the notice. The proper officer, in his order, shall set out the relevant facts and
the basis of his decision.
Q3 In what cases, assessment order passed by proper officer may be withdrawn?

ANS: Assessment Order passed by proper officer may be withdrawn in the following cases:-
(a)Assessment of Non-filers of return – The best judgment order passed by the Proper Officer
under section 62 of CGST Act shall automatically stand withdrawn if the taxable person
furnishes a valid return for the default period (i.e. files the return and pays the tax as assessed
by him), within thirty days of the receipt of the best judgment assessment order
(B) Summary Assessment – A taxable person against whom a summary assessment order has
been passed can apply for its withdrawal to the jurisdictional Additional/Joint Commissioner
within thirty days of the date of receipt of the order. If the said officer finds the order
erroneous, he can withdraw it and direct the proper officer to carry out determination of tax
liability in terms of section 73 or 74 of CGST Act. The Additional/Joint Commissioner can
follow a similar course of action on his own motion if he finds the summary assessment order
to be erroneous.
Q4 Divy Trader obtained permission for provisional assessment and supplied three consignments of
furniture on 28th April, 20XX. The tax payment on provisional basis was made in respect of all
the three consignments on 20th May, 20XX.
Consequent to the final assessment order passed by the Assistant Commissioner on 21stJune,
20XX, a tax of ` 1,20,000 and ` 1,50,000 became refundable on 1st and 3rd consignments, whereas
a tax of ` 1,20,000 became due on 2nd consignment. Divy Trader applies for the refund of the
tax on 1stand 3rd consignments on 12thJuly, 20XX and pays the tax due on 2nd consignment on
the same day. Tax was actually refunded to it of 1st consignment on 8thSeptember, 20XX,
whereas of 3rd consignment on 18th September, 20XX. Customers of Divy Trader who purchased
the consignments have not taken Input Tax Credit (ITC).
Determine the interest payable and receivable, if any, under CGST Act, 2017 by Divy Trader.

Ans: Where tax becomes due consequent to order of final assessment, interest is payable @ 18% p.a.,
from the first day after the due date of payment of tax in respect of the goods supplied under
provisional assessment till the date of actual payment, whether such amount is paid before/after
the issuance of order for final assessment.
In the given case, due date for payment of tax on goods cleared on 28.04.20XX under provisional
assessment is 20.05.20XX.
Thus, interest payable in respect of 2nd consignment
= ` 1,20,000 × 18% × 53 [21.05.20XX – 12.07.20XX]/365
= ` 3,136 (rounded off)
Further, section 56 of CGST Act, 2017 provides that where tax becomes refundable consequent to
the order of final assessment, interest is receivable @ 6% p.a. from the date immediately after
the expiry of 60 days from the date of receipt of refund application till the date of refund of
such tax.
In the given case, since refund of tax of 1st consignment has been paid on 08.09.20XX which is
within 60 days from the date of receipt of application of refund (12.07.20XX), interest is not
receivable on tax refunded in respect of 1st consignment.
However, interest receivable in respect of 3rd consignment is as follows:
60 days from the date of receiving the refund application expire on 10.09.20XX.
= ` 1,50,000 × 6% × 8 [11.09.20XX-18.09.20XX]/365
= `197 (rounded off).
Q5 Explain the recourse that may be taken by the officer in case proper explanation is not
furnished for the discrepancy detected in the return filed, while conducting scrutiny under
section 61 of the CGST Act, 2017.
ANS: If proper explanation is not furnished for the discrepancy detected in return filed, while
conducting scrutiny under section 61 of the CGST Act, 2017, the proper officer may:
(i) conduct audit of the registered person under scrutiny,
(ii) direct the registered person under scrutiny to get his records including books of account
examined and audited by the Chartered Accountant or a Cost Accountant,
(iii) the Chartered Accountant or a Cost Accountant shall be a person/firm as nominated by
the Commissioner,
(iv) exercise the powers of inspection, search and seizure with respect to registered person
under scrutiny, or
(V) proceed to determine the tax and other dues of the registered person under scrutiny.

Q.6 The time-limit for issuance of order of best judgment assessment is:
(a) 5 years from the date specified for furnishing of the annual return for the financial year to which
the tax not paid relates.
(b) 4 years from the date specified for furnishing of the annual return for the financial year to which
(c) 3 years from the date specified for furnishing of the annual return for the financial year to which
Ans: (a) 5 years from the date specified for furnishing of the annual return for the financial year
to which the tax not paid relates.
Q.7 (i) Prithviraj Ltd., registered under GST in Uttar Pradesh, is served a notice for audit by the tax
authority under GST law on 10th July. The records and other documents as sought by the tax
authority have been made available by Prithviraj Ltd. on 25th July.
The tax authority visits the office of Prithviraj Ltd. located in Noida, Uttar Pradesh on 8th August
for conducting audit.
Determine the time-limit within which the audit under section 65 of the CGST Act, 2017 is required
to be completed assuming that no extension is permitted in the given case.
(RTP-Nov21)
Ans: (i) As per section 65(4) of the CGST Act, 2017, audit shall be completed within a period of 3
months from the date of commencement of the audit. Further, commencement of audit means the
later of the following:
(a) the date on which the records and other documents, called for by the tax authorities, are made
available by the registered person, or
(b) the actual institution of audit at the place of business of the taxpayer.
Accordingly, in the given case, date of commencement of audit is later of:
(a) the date on which the records and other documents, are made available by Prithviraj Ltd., i.e.
25th July, or
(b) the actual institution of audit at the place of business of Prithviraj Ltd., i.e. 8th August.
Thus, date of commencement of audit is 8th August.
Hence, audit shall be completed within 3 months from the date of commencement of the audit
(8th August).

Chapter 18 – Inspection, search and Seizure
Q 1. Who can order for carrying out “Inspection” and under what circumstances?
Ans: A Joint Commissioner or an officer higher in rank can give such authorization only if he has reasons
to believe that :
a) taxable person has done one of the following:-

• suppressed any transaction of supply of goods or services;
• suppressed stock of goods in hand;
• claimed excess input tax credit;
• contravened any provision of the Act to evade tax;
b) Any person engaged in transporting of goods has kept goods which have escaped payment of tax
or has kept his accounts or goods in a manner that is likely to cause evasion of tax, whether or
not he is a registered taxable person.
c) An owner or an operator of a warehouse or a godown has kept goods which have escaped
payment of tax or has kept his accounts or goods in a manner that is likely to cause evasion of
tax.
Q 2. Who can order for search and seizure under the provisions of CGST Act?
Ans: Where the proper officer, not below the rank of Joint commissioner, either pursuant to an inspection
carried or otherwise, has a reason to believe that-
• Any goods liable o confiscation, or
• Any documents or books or things, which in his opinion shall be useful for or relevant to any
proceedings under this act:
Are secreted in any place, he-
• May authorise in writing any other central tax officer to search and seize, or
• May himself search and seize such goods, documents or books or things.
Detention of goods which cannot be seized: Where it is not practicable to seize any such goods,
the proper officer or any officer authorized by him, may-
• Serve on the owner or the custodian of the goods an order that-
• He shall not remove, part with, or otherwise deal with the goods.
• Except with the previous permission of such office

Q 3. What are the duties of the person to whom summons has been issued?
Ans: Refer relevant para “Precautions to be observed while issuing summons” in main book
Q 4. What is meant by the term “arrest”? When can the proper officer authorize ‘arrest’ of any person
under CGST Act?
Ans: Refer relevant para no. 10 & 11 in Main Book
Q 5. Explain the procedure for carrying out Inspection, search and seizure
Ans: Inspection search and seizure 9(Rule 139 of CGST Rules, 2017)
1. Authorization by officer not below rank of Joint Commissioner for conduct of
Inspection, search and seizure (Rule 139(1) : When the proper officer not below the rank
of a Joint Commissioner has reasons to believe that a place of business or any other place
is to be visited for the purposes of inspection or search or as the case may be seizure in
accordance with the provisions of Section 67, he shall issue an authorization In FORM GST
INS-01 authorizing any other officer subordinate to him to conduct the inspection or search
or as the case may be seizure of goods, documents, books or things liable to confiscation
2. Seizure order (Rule 139(2) : Where any goods, documents, books or things are liable for
seizure under section 67(2), the proper officer or an authorized officer shall made an order
of seizure in FORM GST INS-02.
3. Custodian to keep safe custody of goods and not to remove them except with Previous
permission of Proper Officer (Rule 139(3) : The proper officer or an authorized officer
may entrust upon the owner or the Custodian of goods, from whose custody such goods
or things are seized, the custody of such goods or things for sale upkeep and the said
person shall not remove part with or otherwise deal with the goods or things except with
the previous permission of such officer.
4. Prohibitory order (Rule 139(4) : Where it is not practicable to seize any such goods, the
proper officer or the authorized Officer may serve on the owner or the custodian of the
goods, an order or prohibition in FORM GST INS-03 that he shall not remove, part with,
or otherwise , deal with the goods except with the previous permission of such officer.
5. Preparation of inventory of seized goods (Rule 139(5) : The officer seizing the goods,
documents, books or things shall prepare an inventory of such goods or documents or books
or things containing, inter alia, description, Quantity or unit, make, mark or model, where
applicable, and get it signed by the Person from whom such goods or documents or books
or things are seized.

Q 6. What is search warrant and also state its contents ?
Ans: The written authority to conduct search is generally called search warrant. The competent
authority to issue search warrant is an officer of the rank of Joint Commissioner or above. A
search warrant must indicate the existence of a reasonable belief leading to the search. Search
Warrant should contain the following details:
I. the violation under the Act,
II. the premise to be searched,
III. the name and designation of the person authorized for search,
IV. the name of the issuing officer with full designation along with his round seal,
V. date and place of issue,
VI. serial number of the search warrant,
VII. Period of validity i.e. a day or two days etc.
Chapter 18 – Inspection, Search and Seizure
1) ___________ denotes an action of a Government machinery to go, look through)

examine carefully a place, area, person, object etc. in order to find something
concealed or for the purpose of discovering evidence of a crime.
A. Search
B. Seizure
C. Inspection
D. Recovery
Ans: a . Search
2) . ____________ means the taking into custody of a person under some lawful
command or authority.
A. Seizure
B. Arrest
C. Inspection
D. Search
Ans: b. Arrest

3) Who will authorize the conduct of inspection?
A. GST Commissioner
B. Proper Officer not below the rank of Joint Commissioner
C. State Commissioner
D. Central Commissioner
Ans b. Proper Officer not below the rank of Joint Commissioner
4) Which are the places of business / premises which can be inspected by the proper
officer under this section?
A. Any places of business of a taxable person
B. Any places of business of a taxable person engaged in the business of transporting
goods
C. Any places of business of an owner or an operator of a warehouse or go down or any
other place.
D. All of the above
5) In which of the following cases, the proper officer has the power of making conduct of
inspection, search and seizure?
A. The taxable person has suppressed any transaction relating to supply of goods or
services
B. The taxable person has claimed ITC in excess of his entitlement
C. The taxable person engaged in the business of transporting goods is keeping goods
which have escaped payment of tax
D. All of the above
6) . Seized goods can be released on____________basis u/s 67(6).

A. Provisional
B. Permanent
C. Temporary
D. Periodical

Ans: a. Provisional
7) Section 68 authorizes the proper officer to conduct transit checks for inspection of
goods. Comment.
A. Yes
B. No
C. Partially Correct
Ans: a. Yes
8) All arrests should be made as per the provisions of...................

A. Code of Criminal Procedure,1973
B. Civil Procedure Code
C. Indian Penal Code
D. Foreign Exchange Management Act
Ans: a. Code of Criminal Procedure,1973
9) Is officer bound to communicate the grounds of arrest in case of non bailable &
cognizable offences?
A. Yes
B. No
C. Optional
D. Yes, it permitted by the GST Council
Ans: b. No
10) If a person is arrested for a cognizable offence, he must be informed in writing of the
grounds of arrest and he must be produced before a Magistrate
within______________.
A. 24 hours of his warrant
B. 24 hours of his arrest
C. 24 hours of his seizure
D. 48 hours of his arrest

Ans b. 24 hours of his arrest
11) If a taxable person has done the following act, inspection can be ordered:
A. Suppression of any transaction of supply of goods or services
B. Suppression of stock of goods in hand
C. Contravention of any provision of the GST law to evade tax
D. All of the above
Ans: (d) All of the above
Q.1 State the circumstances when the proper officer can authorize ‘arrest’ of any person under the
CGST Act.
Ans: The Commissioner of CGST can authorize a CGST officer to arrest a person if he has reasons to
believe that the person has committed an offence attracting a punishment prescribed under
section 132(1) (a), (b), (c), (d) or section 132(2). This essentially means that a person can be
arrested only where the tax evasion is more than ` 2 crore and the offences are specified offences
namely, making supply without any invoice; issue of invoice without any supply; amount collected
as tax but not paid to the Government beyond a period of 3 months and taking input tax credit
without receiving goods and services. However, the monetary limit shall not be applicable if the
offences are committed again (even after being convicted earlier), i.e. repeat offender of the
specified offences can be arrested irrespective of the tax amount involved in the case.
Q.2 For which of the following acts done by a taxable person, inspection can be ordered under GST
law?
(i) Suppression of any transaction of supply of goods or services
(ii) Suppression of stock of goods in hand
(iii) Contravention of any of the provisions of the GST law to evade tax
(a) (i), (ii)
(b) (i), (iii)
(c) (ii), (iii)
(d) (i), (ii), (iii)
Ans: (d) (i), (ii), (iii)

Chapter 19 – Demand and Recovery
Q 1. Mohan Enterprises is entitled for exemption from tax under GST law. However, it collected tax
from its buyers worth Rs. 50,000 in the month of August. It has not deposited the said amount
collected as GST with the Government. You are required to brief to Mohan Enterprises the
consequences of collecting tax, but not depositing the same with Government as provided under
section 76 of the CGST Act, 2017.
Ans: It is mandatory to pay amount, collected from other person representing tax under GST law, to
the Government. Every person who has collected from any other person any amount as representing
the tax under GST law, and has not paid the said amount to the Government, shall forthwith
pay the said amount to the Government, irrespective of whether the supplies in respect of which
such amount was collected are taxable or not.
For any such amount not so paid, proper officer may issue SCN for recovery of such amount and
penalty equivalent to amount specified in notice. The proper officer shall, after considering the
representation, if any, made by the person on whom SCN is served, determine the amount
due from such person and thereupon such person shall pay the amount so determined along
with interest at the rate specified under section 50 from the date such amount was collected by
him to the date such amount is paid by him to the Government.
Q 2. Discuss briefly the time limit for issue of show cause notice as contained under sections 73 and
74 of the CGST Act, 2017.
Ans: The provisions relating to ‘relevant date’ as contained in CGST Act, 2017 are as under:
i. In case of section 73 (cases other than fraud/suppression of facts/willful misstatement),
the time-limit for issuance of SCN is 2 years and 9 months from the due date of filing
Annual Return for the Financial Year to which the demand pertains or from the date of
erroneous refund.
ii. In case of section 74 (cases involving fraud/suppression of facts/willful misstatement), the
time-limit for issuance of SCN is 4 years and 6 months from the due date of filing of
Annual Return for the Financial Year to which the demand pertains or from the date of
erroneous refund.

Q 3. Is there any time limit prescribed for adjudication of the cases under CGST Act, 2017? If yes,
discuss the same.
Ans: The provisions relating to time-limit for adjudication of cases as contained in section 73 and 74
of the CGST Act, 2017 are as under:
i. In case of section 73 (cases other than fraud/suppression of facts/willful misstatement),
the time limit for adjudication of cases is 3 years from the due date for filing of annual
return for the financial year to which demand relates to [Section 73(10)].
ii. In case of section 73 (cases other than fraud/suppression of facts/willful misstatement),
the time limit for adjudication of cases is 3 years from the due date for filing of annual
return for the financial year to which demand relates to [Section 73(10)].
Q 4. A person is chargeable with tax in case of fraud. He decides to pay the amount of demand
along with interest before issue of notice. Is there any immunity available to such person?
Ans: Yes. Person chargeable with tax, shall have an option to pay the amount of tax along with interest
and penalty equal to 15% per cent of the tax involved, as ascertained either on his own or
ascertained by the proper officer, and on such payment, no notice shall be issued with respect to
the tax so paid [Section 74(6)].
Q 5. Briefly discuss the modes of recovery of tax available to the proper officer.
Ans: The proper officer may recover the dues in following manner:
i. Deduction of dues from the amount owned by the tax authorities payable to such person.
ii. Recovery by way of detaining and selling any goods belonging to such person;
iii. Recovery from other person, from whom money is due or may become due to such
person or who holds or may subsequently hold money for or on account of such person,
to pay to the credit of the Central or a State Government;
iv. Distrain any movable or immovable property belonging to such person, until the amount
payable is paid. If the dues not paid within 30 days, the said property is to be sold and
with the proceeds of such sale the amount payable and cost of sale shall be recovered.
v. Through the Collector of the district in which such person owns any property or resides
or carries on his business, as if it was an arrear of land revenue.
vi. By way of an application to the appropriate Magistrate who in turn shall proceed to
recover the amount as if it were a fine imposed by him.
vii. By enforcing the bond/instrument executed under this Act or any rules or regulations
made thereunder.
viii. CGST arrears can be recovered as an arrear of SGST and vice versa [Section 79]
Q 6. Rajul has been issued a show cause notice (SCN) on 31.12.2021 under section 73(1) of the CGST
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.
Ans: The written submissions in reply to SCN issued to Rajul are as follows:
i. The show cause notice (SCN) issued for normal period of limitation under section 73(1)
of the CGST Act, 2017 is not sustainable.
ii. The SCN under section 73(1) of the CGST Act, 2017 can be issued at least
3 months prior to the time limit specified for issuance of order under section 73(10) of
the CGST Act, 2017. The adjudication order under section 73(10) of the CGST Act, 2017
has to be issued within 3 years from the due date for furnishing of annual return for the
financial year to which the short-paid tax relates to.
The due date for furnishing annual return for a financial year is on or before the
31st day of December following the end of such financial year [Section 44 of the CGST
Act, 2017]. Thus, SCN under section 73(1) of the CGST Act, 2017 can be issued within 2
years and 9 months from the due date for furnishing of annual return for the financial
year to which the short-paid tax relates to.
iii. 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.
iv. 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.
Q 7. Richmond has self-assessed tax liability under IGST Act, 2017, as Rs. 80,000. He fails to pay the
tax within 30 days from the due date of payment of such tax.Determine the interest and penalty
payable by him explaining the provisions of law, with the following particulars available from his
records:
Date of collection of tax 18th December, 2017 Date of payment of tax 26th February, 2018
No Show Cause Notice (SCN) has been issued to him so far, while he intends to discharge
his liability, even before it is issued to him, on the assumption that no penalty is leviable on him
as payment is made before issue of SCN.
Ans: Due date for payment of tax collected on 18.12.2017 is 20.01.2018. However, since tax is actually
paid on 26.02.2018, interest @ 18% p.a. is payable for the period for which the tax remains unpaid
[37 days] in terms of section 50 of CGST Act, 2017 read with Notification No. 13/2017 CT dated

28.06.2017. Amount of interest is:
= Rs. 80,000 × 18% × 37/365 = Rs. 1,460 (rounded off)
As per section 73(11) of CGST Act, 2017, where self-assessed tax/any amount collected as tax is
not paid within 30 days from due date of payment of tax, then, inter alia, option to pay such tax
before issuance of SCN to avoid penalty, is not available.
Consequently, penalty equivalent to
(i) 10% of tax, viz., Rs. 8,000 or
(ii) Rs. 10,000, whichever is higher,
is payable in terms of section 73(9) of CGST Act, 2017. Therefore, penalty of Rs. 10,000 will have
to be paid by Richmond.
Chapter 19– Demand & Recovery
1) Different designations have been prescribed to function as a proper officer on the basis
of ___________ for issue of notice and demand.
A. Subordinate level of Central Tax Officers
B. Seniority level of Central Tax Officers
C. Monetary limit of the tax involved
D. Type of tax involved
Ans:- c . Monetary limit of the tax involved
2) What is the time limit for issue of order in case of reasons other than fraud,
misstatement or suppression?
A. 1 year
B. 2 years
C. 3 years
D. 5 years
Ans:- c. 3 years

3) Repeat notices can be sent to the assessee on the same grounds on which once a SCN
has been issued. Comment.
A. Yes
B. No
Ans:- a. Yes
4) What is the prescribed monetary limit of Central Tax for Superintendent of Central Tax
for issuance of show cause notices and orders under Section 73 and 74?
A. Not exceeding Rupees 10 lakhs
B. Above Rupees 10 lakhs and not exceeding Rupees 1crore
C. Above Rupees 1 crore without any limit
D. Not exceeding Rupees 20 lakhs
Ans;- a. Not exceeding Rupees 10 lakhs
5) What is the prescribed monetary limit of Integrated Tax for Superintendent of Central
Tax for issuance of show cause notices and orders under Section 73 and 74 read with
Section 20 of the IGST Act?
A. Not exceeding Rupees 10lakhs
B. Above Rupees 10 lakhs and not exceeding Rupees 1crore
C. Above Rupees 1 crore without any limit
D. Not exceeding Rupees 20 lakhs
Ans:- d. Not exceeding Rupees 20 lakhs
6) What is the rate of interest that needs to be paid in case of default as per section
73?
A. 5%

B. 12%
C. 18%
D. 28%
Ans:- c. 18%
7) .What is the rate of penalty for default u/s 74 if the payment has been made after
issue of notice?
A. 10 %
B. 12 %
C. 15 %
D. 25 %
Ans:- d. 25 %
8) The notice should be issued at least ______before me limit of issue of order u/s 23.
A. 1 month
B. 2 months
C. 6 months
D. 3 months
Ans:- d. 3 months
9) What is the time limit for issue of order in pursuance of the direction of the Appellate
Authority or Appellate Tribunal or a Court, from the date of communication of the said
direction?
A. 30 months
B. 18 months
C. 2 years
D. 5 years

Ans:- c. 2 years
10) Any amount of demand debited in the electronic liability register shall stand --------
---- given by the appellate authority or Appellate Tribunal or Court & the electronic
liability register shall be credited accordingly.
A. Reduced to the extent of relief
B. Increased to the extent of relief
C. Similar to the extent of relief
D. Either (a) or (b)
Ans: a) Reduced to the extent of relief
11) Maximum number of monthly installments permissible under section 80 is:

A. 36
B. 12
C. 48
D. 24
Ans:- d. 24
12) What liabilities can be recovered on account of first charge on the property of such
taxable person or such person as per section 82 of the CGST Act, 2017?
A. Tax
B. Interest
C. Penalty
D. All of the above

13) When Commissioner is not required to serve fresh notice to recover the Government
dues?
A. Demand amount is reduced

B. Already proceedings of recovery of Government dues is served before disposal of appeal,
revision of application or other proceedings
C. Demand amount is enhanced
D. Both (a) and (b)
Ans:- d. Both (a) and (b)
Q.1 Enlist the circumstances for which a show cause notice can be issued by the proper officer
under section 73 of the CGST Act, 2017. Specify the time limit for issuance of such show cause
notice as also the time period for issuance of order by the proper officer under section 73.
ANS: As per section 73 of the CGST Act, 2017, a show cause notice can be issued by the proper
officer if it appears to him that:
• tax has not been paid; or
• tax has been short paid; or
• tax has been erroneously refunded; or
• input tax credit has been wrongly availed or utilized,
for any reason other than the reason of fraud or any wilful misstatement or suppression of
facts to evade tax.
The notice should be issued at least 3 months prior to the time limit specified for passing the
order determining the amount of tax, interest and any penalty payable by defaulter [Sub -
section (2) of section 73].
The order referred herein has to be passed within three years from the due date for furnishing
the annual return for the financial year to which the tax not paid or short paid or input
tax credit wrongly availed or utilised relates to or within three years from the date of erroneous
refund [Sub-section (10) of section 73].
Thus, the time-limit for issuance of show cause notice is 2 years and 9 months from the due
date of filing annual return for the financial year to which the demand pertains or from the
date of erroneous refund. As per section 44(1) of the CGST Act, 2017, the due date of filing
annual return for a financial year is 31st day of December following the end of such
financial year.
Q.2 On 05.07.2018, a show cause notice for ` 5,00,000 was issued to Mr. Vijay Kumar Sharma
demanding short payment of GST of ` 4,50,000 for the month of January, 2018 and also interest
of ` 50,000.

Mr. Sharma raised objections and after personal hearing on 30.08.2018, adjudicating authority
passed the final order for ` 3,50,000 for GST, without any reference with regard to payment of
interest.
Mr. Sharma deposited the tax of ` 3,50,000 on 02.09.2018 and informed the department on the
same day. Subsequently, on 15.09.2018, department demanded payment of interest of ` 60,000
on GST of ` 3,50,000.
Mr. Vijay Kumar Sharma is not ready to pay any interest. His contention is that he is not liable
for interest because he deposited all the amount specified in the final adjudication order.
Examine with a brief note the validity of the action taken by the Department with reference
to provisions of the CGST Act, 2017.
ANS: As per section 75 of the CGST Act, 2017, the interest on the tax short paid has to be paid
whether or not the same is specified in the order determining the tax liability.
Thus, in view of the same, Mr. Vijay Kumar Sharma will have to pay the interest even though
the same is not specified in the final adjudication order. His contention that he is not liable
for interest because he deposited all the amount specified in the final adjudication order is not
valid in law.
However, the amount of interest demanded in the order cannot be in excess of the amount
specified in the notice.
Therefore, in the given case, Department cannot demand the interest in excess of the amount
specified in the notice, which will be ` 50,000.
(MAY 19 0LD QB)
Q.3 A taxable person has mistakenly paid CGST and SGST for an inter-State supply. Subsequently
when he discovers the same, can he adjust the IGST liability against the wrongly paid CGST
and SGST?
ANS: Section 77, inter alia, stipulates that a registered person who has paid the Central tax and
State tax or, as the case may be, the central tax and the Union territory tax on a transaction
considered by him to be an intra-State supply, but which is subsequently held to be an inter-
State supply, shall be refunded the amount of taxes so paid in such manner and subject to
such conditions as may be prescribed.
The IGST liability cannot be adjusted against the CGST and SGST wrongly paid.
As per section 25 read with CGST Rules, 2017, where an applicant submits application for
registration within 30 days from the date he becomes liable to registration, effective date of
registration is the date on which he becomes liable to registration. Since, Sangri Services
Ltd.’s turnover exceeded Rs. 20 lakh on 12th August, it became liable to registration on same
day. Further, it applied for registration within 30 days of so becoming liable to registration,

the effective date of registration is the date on which he becomes liable to registration, i.e.
12th August.
Q.4 On 05.07.20XX, a show cause notice for Rs. 5,00,000 was issued to Mr. Janak Singhal
demanding short payment of GST of Rs. 4,50,000 for the month of January, 20XX and also
interest of Rs. 50,000.
Mr. Janak Singhal raised objections and after personal hearing on 30.08.20XX, adjudicating
authority passed the final order for Rs. 3,50,000 for GST, without any reference with regard to
payment of interest.
Mr. Janak Singhal deposited the tax of Rs. 3,50,000 on 02.09.20XX and informed the
department on the same day. Subsequently, on 15.09.20XX, department demanded payment of
interest of Rs. 60,000 on GST of Rs. 3,50,000.
Mr. Janak Singhal is not ready to pay any interest. His contention is that he is not liable for
interest because he deposited all the amount specified in the final adjudication order.
Examine with a brief note the validity of the action taken by the Department with reference
to provisions of the CGST Act, 2017.
ANS: As per section 75 of the CGST Act, 2017, the interest on the tax short paid has to be paid
whether or not the same is specified in the order determining the tax liability.
Thus, in view of the same, Mr. Janak Singhal will have to pay the interest even though the
same is not specified in the final adjudication order. His contention that he is not liable for
interest because he deposited all the amount specified in the final adjudication order is not
valid in law.
However, the amount of interest demanded in the order cannot be in excess of the amount
specified in the notice.
Therefore, in the given case, Department cannot demand the interest in excess of the amount
specified in the notice, which will be Rs. 50,000.
Q.5 Briefly discuss the modes of recovery of tax available to the proper officer.
ANS: The proper officer may recover the dues in following manner:
(a) Deduction of dues from the amount owned by the tax authorities payable to such person.
(b) Recovery by way of detaining and selling any goods belonging to such person;
(c) Recovery from other person, from whom money is due or may become due to such person or
who holds or may subsequently hold money for or on account of such person, to pay to the
credit of the Central or a State Government;

(d) Distrain any movable or immovable property belonging to such person, until the amount
payable is paid. If the dues not paid within 30 days, the said property is to be sold and with
the proceeds of such sale the amount payable and cost of sale shall be recovered.
(e) Through the Collector of the district in which such person owns any property or resides or
carries on his business, as if it was an arrear of land revenue.
(f) By way of an application to the appropriate Magistrate who in turn shall proceed to recover
the amount as if it were a fine imposed by him.
(g) By enforcing the bond/instrument executed under this Act or any rules or regulations made
thereunder.
(h) CGST arrears can be recovered as an arrear of SGST and vice versa [Section 79].
Q.6 Everest Technologies Private Limited has been issued a show cause notice (SCN) on 31.01.2021
under section 73(1) of the CGST Act, 2017 on account of short payment of tax during the period
between 01.07.2017 and 31.12.2017. Everest Technologies Private Limited contends that the show
cause notice issued to it is time-barred in law.
You are required to examine the technical veracity of the contention of Everest Technologies
Private Limited.
Ans: The contention of Everest Technologies Private Limited is not valid in law. The SCN under section
73(1) of the CGST Act can be issued at least 3 months prior to the time limit specified for
issuance of order under section 73(10) of the CGST Act [Section 73(2) of the CGST Act]. The
adjudication order under section 73(10) of the CGST Act has to be issued within 3 years from the
due date for furnishing of annual return for the financial year to which the short-paid/not paid tax
relates to.
The due date for furnishing annual return for a financial year is 31st day of December following
the end of such financial year [Section 44 of the CGST Act]. Thus, SCN under section 73(1) of
the CGST Act can be issued within 2 years and 9 months from the due date for furnishing of
annual return for the financial year to which the short-paid/not paid tax relates to.
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 in the given case,
the notice has been issued on 31.01.2021, notice is not time-barred.
Q.7 Mr. Anant Kumar Gupta self-assessed his tax liability as ` 90,000 for the month of April 20XX but
failed to make the payment.

Subsequently the Department initiated penal proceedings against Mr. Anant Kumar Gupta for
recovery of penalty under section 73 of CGST Act, 2017 for failure to pay GST and issued show
cause notice on 10-08-20XX which was received by Mr. Anant Kumar Gupta on 14-08-20XX.
Mr. Anant Kumar Gupta deposited the tax along with interest on 25/08/20XX and informed the
department on the same day.
Department is contending that he is liable to pay a penalty of ` 45,000 (i.e. 50% of 90000).
Examine the correctness of the stand taken by the Department with reference to the provisions of
the CGST Act, 2017, explain the relevant provisions in brief.
Ans: Due date for payment of tax for the month of April, 20XX is 20.05.20XX.
As per section 73 of the CGST Act, 2017, where self-assessed tax is not paid within 30 days from
due date of payment of such tax, penalty equivalent to 10% of tax or ` 10,000, whichever is higher,
is payable. Thus, option to pay tax within 30 days of issuance of SCN to avoid penalty, is not
available in case of self-assessed tax.
Since in the given case, Mr. Anant Kumar Gupta has not paid the self-assessed tax within 30 days
of due date [i.e. 20.05.20XX], penalty equivalent to:
(i) 10% of tax, viz., ` 9,000 (10% of ` 90,000) or
(ii) ` 10,000,
whichever is higher, is payable by him. Thus, penalty payable is ` 10,000.
Hence, the stand taken by the Department that penalty will be levied on Mr. Anant Kumar Gupta
is correct, but the amount of penalty` 45,000 is not correct.
Q.8 A show cause notice was issued demanding GST of ` 1,80,180 for the month of July, 20XX on 1st
October, 20XX. However, adjudicating authority after the personal hearing found that there was a
typographical error while mentioning the amount of GST and he confirmed the demand for `
10,80,180. Assessee seeks your advice.
What would be your advice if: (a) assessee comes to you after issue of order or (b) a
corrigendum revising the amount to ` 10,80,180 on 15th November, 20XX, is issued.
Ans: (i) Advice after issue of order1:
As per section 75(7) of the CGST Act, 2017, inter alia, the amount of tax, interest and penalty
demanded in the order cannot exceed the amount specified in the notice.
Since, in the given case, the amount of tax demanded in the order exceeds the amount of tax
demanded in the show cause notice, the assessee can file an appeal against the adjudication order
within the prescribed time limit.
(ii) Advice after issue of corrigendum2
Any authority, who has issued, inter alia, any notice, may rectify any error which is apparent on
the face of record in such notice, inter alia, on its own motion within a period of 6 months from
the date of issue of such notice except where the rectification is purely in the nature of correction

of a clerical or arithmetical error, arising from any accidental slip or omission [Section 161 of the
CGST Act, 2017].
In the given case, since the corrigendum has been issued to rectify a typographical error in the
show cause notice, which is an error apparent on the face of the record, the rectification is correct
in law. Further, being rectification of a clerical error, the time limit of 6 months will not apply.
Therefore, the assessee should reply to the show cause notice considering the revised amount of
demand.
Q.9 Advance Traders is a partnership firm in Jaipur, Rajasthan. The firm has obtained GST registration
at its Head Office (HO) in Jaipur. Further, the firm is having its depot for storage for goods in
other districts in Rajasthan. The depots are added as additional place of business in the GST
registration obtained at HO. Following details are provided about the firm for the month of July:
a. Advance Traders received goods worth ` 5,00,000 for which GST is payable on reverse charge basis.
The goods were received on 25th July. The supplier issued an invoice dated 24th July and
payment for the same was made by Advance Traders on 30th July. Due to the absence of
accountant, the transaction was recorded in the books of accounts on 1st August.
b. In the month of July, Advance Traders issued vouchers worth ` 2,00,000 to its customers, which
were eligible to be redeemed against identified goods. Also, certain set of customers were issued
vouchers worth ` 5,00,000. The said vouchers were eligible to be redeemed against any supply of
goods in next 6 months.
c. Mr. X, a partner in the firm, booked a Hotel in Udaipur, Rajasthan for the wedding of his daughter
in the month of October. The advance amount of ` 5,00,000 for booking the hotel was paid by
way of online payment from the current account of Advance Traders in July. The hotel charged
GST on such booking at the rate of 28% (CGST @ 14% and SGST @ 14% or IGST @ 28%,
as the case may be) on the amount received as advance and issued a receipt voucher.
d. Advance Traders made a supply of goods worth ` 25,00,000 during the month of July. Out of the
aforesaid supply, goods worth ` 5,00,000 were not liable to GST. However, Advance Traders
inadvertently charged GST on such goods and collected the same from the customers.
e. Due to clerical error, Advance Traders made a deposit in minor head penalty of the major head
IGST for an amount of ` 3,00,000. There is no liability of interest on any IGST liability and the
amount is lying as unutilized on GST portal.
The balance of input tax credit as on 1st July for the firm is nil for all the registrations.
GST is applicable in the aforesaid case scenario at the following rates unless otherwise specified:
CGST - 9%, SGST - 9%, IGST - 18%.
All the amounts given above are exclusive of GST, wherever applicable. Basis the aforesaid case
scenario, please answer the following questions:
1. Compute the GST liability to be discharged from electronic cash ledger for the month of July by

Advance Traders. For computing this liability, consider that there is no adjustment regarding
amount provided in point e. above:
(a) ` 5,76,000
(b) ` 4,36,000
(c) ` 3,96,000
(d) ` 4,86,000
2. Amount of input tax credit available to Advance Traders against the hotel booking expense
shall be Would there be any change if the hotel is located outside Rajasthan?
(a) Nil. There will be no change even if hotel is located outside Rajasthan
(b) ` 70,000 as CGST and ` 70,000 as SGST. No credit would be available, had the hotel been located
outside Rajasthan.
(c) ` 70,000 as CGST and ` 70,000 as SGST. IGST of ` 1,40,000 would be available, had the hotel been
located outside Rajasthan.
(d) Nil. IGST of ` 1,40,000 would be available, had the hotel been located outside Rajasthan.
3. What is the time limit for issuance of show cause notice where GST is collected on supplies
which are not liable to GST?
(a) Within 2 years and 9 months from due date of filing annual return for the financial year.
(b) Within 4 years and 6 months from due date of filing annual return for the financial year.
(c) No time limit to issue the show cause notice
(d) No show cause notice to be issued. The tax amount shall be refunded to the customers if the
customer demands the same.
4. Advance Traders claimed refund of amount paid erroneously in the minor head penalty of major
head IGST. The authorities rejected the refund claim. Advance Traders filed a civil suit
before the jurisdictional magistrate. Choose the correct answer:
(a) The jurisdictional magistrate can direct the authorities to process the refund amount.
(b) The jurisdictional magistrate can redirect the matter for fresh assessment of refund claim.
(c) The jurisdictional magistrate can order provisional refund and initiate the re - assessment
proceedings.
(d) The jurisdictional magistrate cannot pass any order regarding the refund claim.
5. Advance Traders wants to utilize the amount paid erroneously in the minor head penalty of
the major head IGST against its tax liability to be discharged in cash. Please select the
correct option:
(a) The amount can be utilized only for discharging penalty amount under any head.
(b) The amount can be utilized only for discharging liability of IGST under any minor head.
(c) The amount can be utilized for discharging liability under any minor head or major head.

(d) The amount can be utilized only for discharging penalty amount related to IGST.
Ans: 1. (d)
2. (a)
3. (c)
4. (d)
5. (c)
6. Rajul Associates has been issued a show cause notice (SCN) on 31.12.2021 under section 73(1)
on account of short payment of tax during the period between 01.07.2017 and 31.12.2017. It has
been given an opportunity of personal hearing on 15.01.2022.
Advice Rajul Associates as to what should be the written submissions in the reply to the show
cause notice issued to it.
Ans: The written submissions in reply to SCN issued to Rajul Associates are as follows:
i. The show cause notice (SCN) issued for normal period of limitation under section 73(1) is
not sustainable.
ii. The SCN under section 73(1) can be issued at least 3 months prior to the time limit
specified for issuance of order under section 73(10). The adjudication order under section
73(10) has to be issued within 3 years from the due date for furnishing of annual return for
the financial year to which the short-paid tax relates to.
The due date for furnishing annual return for a financial year ison or before the 31st day of
December following the end of such financial year [Section 44]. Thus, SCN under section 73(1)
can be issued within 2 years and 9 months from the due date for furnishing of annual return for
the financial year to which the short-paid tax relates to.
iii. 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.
iv. 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).
7. Anant & Co. self-assessed its tax liability as ` 90,000 for the month of April, but failed to
make the payment.
Subsequently the Department initiated penal proceedings against Anant & Co. for recovery of
penalty under section 73 for failure to pay GST and issued show cause notice on 10th August which
was received by Anant & Co. on 14th August.
Anant & Co. deposited the tax along with interest on 25th August and informed the department
on the same day.
Department is contending that he is liable to pay a penalty of ` 45,000 (i.e. 50% of ` 90000).

Examine the correctness of the stand taken by the Department with reference to the provisions of
the CGST Act. Explain the relevant provisions in brief.
Ans: Due date for payment of tax for the month of April is 20th May.
As per section 73, where self-assessed tax is not paid within 30 days from due date of
payment of such tax, penalty equivalent to 10% of tax or ` 10,000, whichever is higher, is
payable. Thus, option to pay tax within 30 days of issuance of SCN to avoid penalty, is not
available in case of self-assessed tax.
Since in the given case, Anant & Co. has not paid the self-assessed tax within 30 days of due
date [i.e. 20th May], penalty equivalent to:
(i) 10% of tax, viz., ` 9,000 (10% of ` 90,000) or
(ii) ` 10,000,
whichever is higher, is payable by him. Thus, penalty payable is ` 10,000.
Hence, the stand taken by the Department that penalty will be levied on Anant & Co. is correct,
but the amount of penalty of ` 45,000 is not correct.
8. Under GST law, time-limit for issuance of show cause notice in case of non-payment of ITC is
on account of reasons other than fraud, wilful misstatement or suppression of facts, etc. is:
(a) 2 years and 9 months from the due date of filing Annual Return for the Financial Year to
which the demand pertains.
(b) 3 years from the due date of filing Annual Return for the Financial Year to which the demand
pertains.
(c) 4 years and 6 months from the due date of filing Annual Return for the Financial Year to
(d) 5 years from the due date of filing Annual Return for the Financial Year to which the demand
pertains.
Ans: (a) 2 years and 9 months from the due date of filing Annual Return for the Financial
Year to which the demand pertains.
9. Time-limit for issuance of show cause notice under GST law in case of any amount collected as
tax, but not paid to the Central Government is:
(a) 2 years and 9 months from the due date of filing Annual Return for the Financial Year to
(b) 3 years from the due date of filing Annual Return for the Financial Year to which the demand
pertains.
(c) 4 years and 6 months from the due date of filing Annual Return for the Financial Year to
Ans: (d) None of the above

Chapter 20– Liability to pay in certain Cases
1. Who shall be liable to pay the tax, interest or penalty due up to the time of such
transfer of business?
A. Transferor
B. Transferee
C. Transferor and transferee jointly and severally
Ans: c. Transferor and transferee jointly and severally
2. Who shall be liable to pay the tax, interest or penalty with effect from the date of
transfer of business?
A. Transferor
B. Transferee
C. Transferor and transferee jointly and severally
Ans: b. Transferee
3. When two or more companies are amalgamated, the liability to pay tax on supplies
between the effective date of amalgamation order and the date on amalgamation order
would be on:
A. Transferee
B. Respective companies
C. Any one of the companies
Ans: a. Transferee

4. In case of amalgamation between two companies, such companies shall be treated as
two distinct companies till–
A. Till the date of the Court order
B. Till the effective date of merger
C. Till the date of cancellation of registration
Ans: a. Till the date of the Court order
5. Within how much time the Commissioner is required to notify the liquidator of the
amount payable in respect of tax, interest or penalty?
A. One month
B. Two months
C. Three months
D. Four months
Ans: c. Three months
6. Who shall be liable to pay the dues of tax, interest and penalty of the private company
in case of its winding up whether before or after its liquidation?
A. Shareholders
B. Every person who is director at the time of winding up of the company shall jointly
and severally be liable.
C. Every person who was director of the company at time during the period, for which the
tax was due, shall jointly and severally be liable.
D. Liquidator
Ans: c. Every person who was director of the company at time during the period, for
which the tax was due, shall jointly and severally be liable
7. The director shall not be liable under section 88 if he proves to the satisfaction of the
Commissioner that such non recovery is not attributed to any gross neglect,
misfeasance or breach of duty in relation to the affairs of the company. Comment.
A. Correct
B. Incorrect

Ans: a. Correct
8. If the estate or any portion of the estate of a taxable person is under the control of
the Court of Wards, Administrative General etc., and the tax due from such taxable
person is liable to be paid by-
A. Court of Wards.
B. Taxable Person
C. Legal representative of taxable person
Ans: a. Court of Wards
9. Within how much time the retiring partner is required to make intimation to the
Commissioner?
A. 15 days
B. 1 month
C. 45 days
D. 2 months
Ans: b. 1 month
10. The liability of the retiring partner shall continue until the date __________ if such
partner fails to intimate the Commissioner within the prescribed time limit.
A. Of full recovery of the dues
B. Of his retirement
C. On which such intimation is received by the Commissioner
D. On which the retiring partner sends his intimation
Ans: d. On which the retiring partner sends his intimation
11. Who shall be liable to pay tax, interest or penalty in case of partition of HUF or AOP?
A. Only Karta or head of AOP
B. All the members of HUF or AOP jointly or severally
C. Only major members

D. All members except Karta
Ans: b. All the members of HUF or AOP jointly or severally
12. In case of reconstitution of partnership firm who will be liable to pay tax, interest or
penalty?
A. All the partners of the firm prior to the date of reconstitution and after the date of
reconstitution hall be jointly and severally
B. All the partners of the firm prior to the date of reconstitution shall be jointly and
severally
C. All the partners of the firm after the date of reconstitution shall be jointly and
severally
Ans: a. All the partners of the firm prior to the date of reconstitution and after the
date of reconstitution shall be jointly and severally
13. In case of discontinuance of the AOP, the liability of the member exists in respect of
the tax dues imposed__________
A. Prior to the date of discontinuance
B. After the date of discontinuance
C. Both prior and after the date of discontinuance
Ans: c. Both prior and after the date of discontinuance

ADDITIONAL QUESTIONS FOR PRACTICE
Q.1 Discuss the liability to pay in case of an amalgamation/merger under section 87 of the CGST
Act,2017.
ANS : Section 87 of the CGST Act, 2017 stipulates that when two or more companies are amalgamated
or merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take
effect from a date earlier to 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 d ate of the order,
then such transactions of supply and receipt shall be included in the turnover of supply or
receipt of the respective companies and they shall be liable to pay tax accordingly.
Not with standing 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 of the said order. The registration certificates of the said companies shall be
cancelled with effect from the date of the said order
Q.2 Avataar Industries, a registered person under GST, has sold whole of its business to Rolex
Manufacturers. Determine the person liable to pay GST, interest or any penalty under GST law
[determined before sale, but still unpaid] due from Avataar Industries upto the time of such
transfer.
Ans: 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 any penalty due from
the taxable person upto 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.

Q.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 his legal
representative.
Ans: 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 his 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.
Q.4 What happens to the GST liability when the estate of a taxable person is under the control of
Court of Wards?
Ans: 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 Court of Wards/Administrator General/Official
Trustee/Receiver or Manager appointed under any order of a Court, 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.
Q.5 Explain the provisions relating to liability for GST in case of company in liquidation (section 88).
Ans: The provisions relating to liability for GST in case of company in liquidation provided under section
88 are:-
➢ Where any company is being wound up whether under the orders of a court or Tribunal or
otherwise, every person appointed as a 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 of amount 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.
Q.6 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/ lGST/ SGST Act.
Ans: 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].
Q.7 Mohandas has supplied goods to Karamchand, under his own invoice, on behalf of his principal
Krishnadev. Which of the following statements is correct?
(a) Mohandas shall be jointly and severally liable to pay the GST payable on such goods.
(b) Krishnadev shall be jointly and severally liable to pay the GST payable on such goods.
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Ans: (c) Both (a) and (b)
Q.8 Which of the following statements are true in case of retirement of a partner from the firm, under
GST law?
(a) Retiring partner and not the firm shall intimate the date of his retirement to the Commissioner.
Retiring partner shall be liable to pay tax, interest or penalty due up to the date of such
intimation.
(b) The firm and not the retiring partner shall intimate the date of retirement of such partner to the
Commissioner. Retiring partner shall be liable to pay tax, interest or penalty due up to the date of
such intimation.

(c) Either retiring partner or the firm, shall intimate the date of retirement of such partner to the
his retirement, whether determined or not, on that date.
(d) Either retiring partner or the firm, shall intimate the date of retirement of such partner to the
such intimation.
Ans: (c) Either retiring partner or the firm, shall intimate the date of retirement of such partner
to the Commissioner. Retiring 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.

Chapter 21 – Appeals and Revision
Q 1. Does CGST law provide for any appeal to a person aggrieved by any order or decision passed against
him by an adjudicating authority under the CGST Act? Explain the related provisions under the
CGST Act.
Ans: Yes. Any person aggrieved by any order or decision passed by an adjudicating authority under the
CGST Act has the right to appeal to the Appellate Authority under section 107. The appeal should
be filed within 3 months from the date of communication of such order or decision. However,
the Appellate Authority has the power to condone the delay of up to 1 month in filing the appeal
if there is sufficient cause for the delay. The appeal can be filed only when the admitted liability
and 10% of the disputed
tax amount is paid as pre-deposit by the appellant.
However, no appeal can be filed against the following orders in terms of section 121:-
• An order of the Commissioner or other authority empowered to direct transfer of
proceedings from one officer to another officer;
• An order pertaining to the seizure or retention of books of account, register and other
documents; or
• An order sanctioning prosecution under the Act; or
• An order passed under section 80 (payment of tax in instalments).
Q 2. Describe the provisions relating to Departmental appeal to Appellate Authority under section 107
of the CGST Act.
Ans: Section 107(2) provides that Department can file a “review application/appeal” with the Appellate
Authority.
The Commissioner may, on his own motion, or upon request from the SGST/UTGST Commissioner,
examine the record of any proceedings in which an adjudicating authority has passed any
decision/order to satisfy himself as to the legality or propriety of the said decision /order. The
Commissioner may, by order, direct any officer subordinate to him to apply to the Appellate
Authority within 6 months from the date of communication of the said decision/order for the
determination of such points arising out of the said decision/order as may be specified him.
The AA can condone the delay in filing of appeal by 1 month if it is satisfied that there was
sufficient cause for such delay [Section 107(4)]. Such application shall be dealt with by the AA
as if it were an appeal made against the decision/order of the adjudicating authority [Section
107(3)]. There is no requirement of making a pre-deposit in case of departmental appeal.

Q 3. Specify the amount of mandatory pre-deposit which should be made along with every appeal
before the Appellate Authority and the Appellate Tribunal. Does making the pre-deposit have any
impact on recovery proceedings?
Ans: Refer relevant para in Main Book
Q 4. With reference to section 108, elaborate whether a CGST/SGST authority can revise an order passed
by his subordinates.
Ans: Section 2(99) defines “Revisional Authority” as an authority appointed or authorised under the CGST Act
for revision of decision or orders referred to in section 108.
Section 108 of the Act authorizes such “revisional authority” to call for and examine any order
passed by his subordinates and in case he considers the order of the lower authority to be erroneous
in so far as it is prejudicial to revenue and is illegal or improper or has not taken into account certain
material facts, whether available at the time of issuance of the said order or not or in consequence
of an observation by the Comptroller and Auditor General of India, he may, if necessary, can revise
the order after giving opportunity of being heard to the noticee. The “revisional authority” can also
stay the operation of any order passed by his subordinates pending such revision.
The “revisional authority” shall not revise any order if-
(a) The order has been subject to an appeal under section 107 or under section 112 or under section
117 or under section 118; or
(b) The period specified under section 107(2) has not yet expired or more than three years have
expired after the passing of the decision or order sought to be revised.
(c) The order has already been taken up for revision under this section at any earlier stage.
(d) The order is a revisional order
Q 5. The Appellate Tribunal has the discretion to refuse to admit any appeal. Examine the correctness
of the above statement.
Ans: The statement is partially correct. Though the Appellate Tribunal does have the power to refuse to
admit an appeal, it cannot refuse to admit ANY appeal. It can refuse to admit an appeal where
• the tax or input tax credit involved or

• the difference in tax or the difference in input tax credit involved or
• the amount of fine, fees or penalty determined by such order,
does not exceed Rs. 50,000.

Q 6. Hariharan had filed an appeal before the Appellate Tribunal against an order of the Appellate
Authority where the issue involved related to place of supply. The order of Appellate Tribunal is also
in favour of the Department. Hariharan now wants to file an appeal against the decision of the
Appellate Authority as he feels the stand taken by him is correct.
You are required to advise him suitably with regard to filing of an appeal before the appellate forum
higher than the Appellate Tribunal.
Ans: As per section 117(1) of the CGST Act, an appeal against orders passed by the State Bench or
Area Benches of the Tribunal lies to the High Court if the High Court is satisfied that such an
appeal involves a substantial question of law.
However, appeal against orders passed by the National Bench or Regional Benches of the Tribunal
lies to the Supreme Court and not High Court. As per section 109(5) of the CGST Act, only the
National Bench or Regional Benches of the Tribunal can decide appeals where one of the issues
involved relates to the place of supply.
Since the issue involved in Hariharan’s case relates to place of supply, the appeal in his case
would have been decided by the National Bench or Regional Bench of the Tribunal. Thus,
Hariharan will have to file an appeal with the Supreme Court and not with the High Court.
Q 7. Mr. A had filed an appeal before the Appellate Tribunal against an order of the Appellate Authority
where the issue involved related to place of supply. The order of Appellate Tribunal is also in
favour of the Department. Mr. A now wants to file an appeal against the decision of the
Appellate Authority as he feels the stand taken by him is correct. You are required to advise him
suitably with regard to filing of an appeal before the appellate forum higher than the Appellate
Tribunal.
Ans: As per section 117(1) of the CGST Act, 2017, an appeal against orders passed by the State Bench
or Area Benches of the Tribunal lies to the High Court if the High Court is satisfied that such an
appeal involves a substantial question of law. However, appeal against orders passed by the National
Bench or Regional Benches of the Tribunal lies to the Supreme Court and not High Court. As
per section 109(5) of the Act, only the National Bench or Regional Benches of the Tribunal can
decide appeals where one of the issues involved relates to the place of supply. Since the issue
involved in Mr. A’s case relates to place of supply, the appeal in his case would have been decided
by the National Bench or Regional Bench of the Tribunal. Thus, Mr. A will have to file an
appeal with the Supreme Court and not with the High Court.
Q 8. With reference to the provisions of section 120 of the CGST Act, 2017, list the cases in which
appeal is not to be filed.
Ans: Following are the cases:

• The Board may, on the recommendations of the GST Council, issue orders or instructions
or directions fixing monetary limits for regulating filing of appeal or application by the CGST
officer.
• Non-filing of appeal/application by a CGST officer on account of such monetary limits fixed
by the Board shall not preclude such officer from filing appeal or application in any other
case involving the same or similar issues or questions of law.
• No person, who is a party in application or appeal can contend that the CGST Officer has
acquiesced in the decision on the disputed issue by not filing an appeal or application (on
account of monetary limits).
• The Appellate Tribunal or Court hearing such appeal or application shall have regard to
circumstances for non-filing of appeal or application by the CGST officer on account of
monetary limits fixed by the Board.
Chapter 21 – Appeals & Revision
1. What is the time limit provided for filing an appeal to an Appellate Authority?
A. 3 months from issue of order
B. 3 months from communication of order
C. 1 month from receipt of order
D. Cannot file an appeal
Ans: b. 3 months from communication of order
2. What is the further extension in terms of time period provided to an appellant for filing an
appeal to an Appellate Authority?
A. 15 days
B. 1 month
C. 1.5 months
D. 2 months
Ans: b. 1 month

3. What is the time limit provided to the commissioner to get an appeal filed against
any order passed or proceedings carried under an Adjudicating Authority under the Act?
A. 3 months
B. 4 months
C. 5 months
D. 6 months
Ans: d. 6 months
4. The adjudicating authority determined Rs. 50 lakh as tax, interest and penalty to be
payable by Mr. X on account of wrong availment of input tax credit. Mr. X wants to
prefer an appeal before the first Appellate Authority against such orders. Out of Rs. 50
lakh, Mr. X admitted Rs. 15 lakh as his liability and wants to litigate for Rs. 35 lakh.
Calculate the amount of pre-deposit to be paid by Mr. X.
A. Rs. 18,50,000/-
B. Rs. 22,00,000/-
C. Rs. 50,00,000/-
D. Rs. 15,00,000/-
Ans: a) Rs. 18,50,000/-
5. What is the time period provided for filing memorandum of cross objection by such
person against whom an appeal has been preferred?
A. Within 30 days of notice received
B. Within 45 days of notice received
C. Within 60 days of notice received
Ans: b. Within 45 days of notice received

6. Who can file an appeal before the Appellate Authority against the ruling of the authority?
A. Any taxable person
B. Jurisdictional officer or the aggrieved applicant
C. Any person concerned belonging to same industry as that of the applicant
D. Any of the above
Ans: b) Jurisdictional officer or the aggrieved applicant
7. What are the instances under which an appeal can be heard by a single member of the
Bench?
A. Tax or Input Tax Credit amount involved in appeal does not exceed INR 5 lakhs
B. Difference in the tax or ITC amount does not exceed INR 5 lakhs
C. Fine, fee or Penalty determined in an order appealed against does not exceed INR 5 lakhs
D. Any of the above
Ans d. Any of the above
8. Whom shall a person appeal if aggrieved by the order of decision of National or Regional
Benches of Appellate Tribunal?
A. Supreme Court
B. High Court
C. District Court
Ans: a. Supreme Court
9. What are the instances under which an appeal shall be refused to be admitted by the
Appellate Tribunal?
A. Where amount of tax or ITC involved is less than INR 50,000/-
B. Where amount of difference in tax or ITC is less than INR 50,000/-
C. Where amount of fine, Fee, Penalty, determined in an order is less than INR 50,000/-

D. Any of the above
Ans: d. Any of the above
10. Who shall a person appeal if aggrieved by the order of decision of High Court?
A. Supreme Court
B. High Court
C. District Court
Ans: a. Supreme Court
11. The Appellate Authority or the Appellate Tribunal shall not take any additional evidence
produced unless the adjudicating Authority or an officer authorised in this behalf by the
said authority has been allowed a reasonable opportunity ______________
a. To examine the evidence or documents or to cross-examine any witness produced by the
appellant.
b. To produce any evidence or any witness in rebuttal of the evidence produced by the
appellant under sub-rule
c. Either (a) or (b)
d. None of the above
Ans: c. Either (a) or (b)
12. What is the time period prescribed to the Appellate Authority to decide an appeal under
the Act?
A. 6 months
B. 1 year
C. 2 years
D. 3 years

Ans: b. 1 year
13. What is the time period provided within which a retired officer of commercial tax
department of any State Government or Union Territory or of board cannot represent
himself as an authorized representative?
A. 6 months
B. 1 year
C. 2 years
D. 3 years
Ans: b. 1 year
14. What is non-appealable order or decisions?

a. An order of the Commissioner or other Authority empowered to direct transfer of
proceedings from one officer to another officer.
b. An order pertaining to the seizure or retention of books of account, registered and
other documents.
c. An order sanctioning prosecution under this Act.
d. All of the above
15. What are the instances under which an order passed by the Appellate Tribunal could be
amended by the Tribunal itself?
A. Where any error is apparent from record
B. If any error is brought to its notice by the Commissioner or Commissioner of State tax or
the Commissioner of the Union Territory tax or the other party to the Appeal
C. Both (a) & (b)
Ans: c. Both (a) & (b)

16. Which of the following can be considered as the authorized representatives
for the purposes of this Act?
A. A CA/CS with a valid certificate of practice
B. A Lawyer practicing in any court in India
C. A retired officer of the Tax Department of any State Government or of the Excise Dept.
whose rank was minimum Group-B gazetted officer.
D. All of the above
1. An appeal to the High Court can be filed under the CGST Act, 2017 in the following cases:
(i) By a person aggrieved against the order passed by the State bench or Area bench of the
Appellate Tribunal.
(ii) By a person aggrieved against the order passed by the National bench or Regional be nch of the
Appellate Tribunal.
(iii) For matter involving substantial question of law.
(iv) All of the above.
Choose the correct option from the following:
(a) (i) and (ii)

(b) (i) and (iii)
(c) (ii) and (iii)
(d) (iv)
Ans: (i) and (iii)
2. In an order dated 20.08.20XX issued to GH (P) Ltd., the Joint Commissioner of CGST has
confirmed a CGST demand of ` 280 crore. The company is disputing the entire demand of CGST
and wants to know how much pre-deposit it has to make under the CGST Act, 2017 for filing
an appeal before the Appellate Authority against the order of the Joint Commissioner.
Assuming that the Appellate Authority also confirms the order of the Joint Commissioner and
the company wants to file an appeal before the Appellate Tribunal against the order of the
Appellate Authority, how much pre-deposit it has to make under the CGST Act, 2017 for
filing the said appeal?

Ans: Section 107(6) of the CGST Act, 2017 provides that no appeal shall be filed with the Appellate
Authority unless the applicant has paid in full, such part of the amount of tax, interest, fine, fee
and penalty arising from the impugned order, as is admitted by him and a sum equal to 10% of
the remaining amount of tax in dispute arising from the said order subject to a maximum of ` 25
crore. Thus, the amount of pre-deposit for filing an appeal with Appellate Authority cannot exceed
` 25 crore.
Thus, in the given case, the amount of pre-deposit for filing an appeal with the Appellate Authority
against the order of Joint Commissioner, where entire amount of tax is in dispute, is:
(i) ` 28 crore [10% of the amount of tax in dispute, viz. ` 280 crore] or
(ii) ` 25 crore,
whichever is less.
= ` 25 crore.
Further, section 112(8) of the CGST Act, 2017 provides that no appeal shall be filed with the
Appellate Tribunal unless the applicant has paid in full, such part of the amount of tax,
interest, fine, fee and penalty arising from the impugned order, as is admitted by him and a sum
equal to 20% of the remaining amount of tax in dispute, in addition to the amount paid as pre -
deposit while filing appeal to the Appellate Authority, arising from the said order subject to a
maximum of ` 50 crores.
Thus, in the given case, the amount of pre-deposit for filing an appeal with the Appellate Tribunal
against the order of the Appellate Authority, where entire amount of tax is in dispute , is:
(i) 56 crores [20% of the amount of tax in dispute, viz. ` 280 crores] or` 50 crores,
whichever is less.
= ` 50 crores.
3. With reference to the provisions of section 121 of the CGST Act, 2017, specify the orders against
which no appeals can be filed.
Ans: As per section 121 of the CGST Act, 2017, no appeal shall lie against any decision taken or order
passed by a CGST officer if such decision taken or order passed relates to any one or more of the
following matters, namely:—
(a) an order of the Commissioner or other authority empowered to direct transfer of proceedings
from one officer to another officer; or
(b) an order pertaining to the seizure or retention of books of account, register and other
documents; or
(c) an order sanctioning prosecution under the CGST Act, 2017; or
(d) an order passed under section 80 of the CGST Act, 2017 (payment of tax in instalments).

4. Enumerate any four orders against which appeal cannot be filed under the CGST Act 2017
Ans: As per section 121 of the CGST Act, 2017, no appeal shall lie against any decision taken or order
passed by a CGST officer if such decision taken or order passed relates to any one or more of
the following matters, namely:
(i) an order of the Commissioner or other authority empowered to direct transfer of proceedings
from one officer to another officer; or
(ii) an order pertaining to the seizure or retention of books of account, register and other
documents; or
(iii) an order sanctioning prosecution under CGST Act; or
(iv) an order passed under section 80 of the CGST Act (payment of tax in instalments).
5. Briefly explain whether an appeal could be filed before the Appellate Authority against order of
Authority for Advance Ruling (AAR), with reference to sections 100 and 101 of the CGST Act, 2017.
Ans: Yes, the concerned officer, jurisdictional officer or applicant aggrieved by any advance ruling may
appeal to the Appellate Authority for Advance Ruling (AAAR) within 30 days [extendible by another
30 days] from the date on which such ruling is communicated to him in the prescribed form and
manner.
The AAAR must pass an order confirming or modifying the ruling appealed against within a period
of 90 days of the filing of an appeal, after hearing the parties to the appeal.
If members of AAAR differ on any point referred to in appeal, it shall be deemed that no advance
ruling can be issued in respect of the question under appeal. A copy of the advance ruling pronounced
by the AAAR is sent to applicant, concerned officer, jurisdictional officer and to the Authority. (MAY
19 OLD QB )
6. Explain the provisions relating to rectification of error apparent on the face of record under section
161 of the CGST Act, 2017.
Ans: Section 161 of the CGST Act, 2017 lays down that any authority, who has passed/issued any order,
notice, decision, certificate or any other document, may rectify any error which is apparent on the
face of record, in such documents, either on its own motion or where such error is brought to its
notice by any officer appointed under GST law or by the affected person.
Such rectification of errors which is apparent on the face of record, in such documents, is to be
made within a period of three months from the date of issue of such document. Such rectification
cannot be done after a period of 6 months from the date of issue of such document.
However, where rectification is purely in the nature of correction of a clerical/arithmetical error,
arising from any accidental slip/omission, then the limitation period does not arise. Principles of
natural justice should be followed by the authority carrying out such rectification, if it adversely
affects any person.

7 Rupam wishes to file an appeal to Appellate Tribunal. In which of the following cases, the
Appellate Tribunal cannot refuse to admit his appeal?
i. Amount of tax/ ITC or difference in tax/ difference in ITC involved exceeds Rs. 50,000
ii. Amount of fine, fee or penalty determined by the order exceeds Rs. 50,000
iii. Amount of tax/ ITC or difference in tax/ difference in ITC involved is Rs. 50,000
iv. Amount of fine, fee or penalty determined by the order is Rs. 50,000
v. Amount of tax/ ITC or difference in tax/ difference in ITC involved is less than 50,000
vi. Amount of fine, fee or penalty determined by the order is less than Rs. 50,000
(a) i. and ii.
(b) i. and iii.
(c) ii. and iv.
(d) v. and vi.
Ans: i. and ii.
8. Mr. A, a sole proprietor, has to appear before the Appellate Authority. He decides to appear by
an authorized representative. Which of the following persons can be appointed as ‘authorized
representative’ of Mr. A under GST law?
(a) Sohan, his son, who has been dismissed from a Government service lately.
(b) Rohan, a Company Secretary, who has been adjudged insolvent.
(c) Mukul, a practicing High Court advocate.
(d) All of the above.
Ans: Mukul, a practicing High Court advocate.
9. With reference to section 108 of the CGST Act, 2017, elaborate whether a CGST/SGST authority
can revise an order passed by his subordinates.
Ans: Section 2(99) of the CGST Act, 2017 defines “Revisional Authority” as an authority appointed or
authorised under the CGST Act for revision of decision or orders referred to in section 108 of the
CGST Act, 2017.
Section 108 of the CGST Act, 2017 authorizes such “Revisional Authority” to call for and
examine any order passed by his subordinates and in case he considers the order of the
lower authority to be erroneous in so far as it is prejudicial to revenue and is illegal or
improper or has not taken into account certain material facts, whether available at the time
of issuance of the said order or not or in consequence of an observation by the Comptroller
and Auditor General of India, he may, if necessary, can revise the order after giving
opportunity of being heard to the noticee. The “revisional authority” can also stay the operation
of any order passed by his subordinates pending such revision.

The “revisional authority” shall not revise any order if-
(a) the order has been subject to an appeal under section 107 or under section 112 or under section
117 or under section 118; or
(b) the period specified under section 107(2) has not yet expired or more than three years have
expired after the passing of the decision or order sought to be revised.
(c) the order has already been taken up for revision under this section at any earlier stage.
the order is a revisional order.
10. In an order dated 20th August issued to GH (P) Ltd., the Joint Commissioner of CGST has confirmed
IGST demand of ` 280 crore. The company is disputing the entire demand of IGST and wants to
know the amount of pre-deposit it has to make under the IGST Act for filing an appeal before the
Appellate Authority against the order of the Joint Commissioner.
Assuming that the Appellate Authority also confirms the order of the Joint Commissioner and the
company wants to file an appeal before the Appellate Tribunal against the order of the Appellate
Authority, determine the amount of pre-deposit to be made by the company for filing the said appeal.
Ans: Section 107(6) read with section 20 of the IGST Act provides that no appeal shall be filed with the
Appellate Authority unless the applicant has paid in full, such part of the amount of tax, interest,
fine, fee and penalty arising from the impugned order, as is admitted by him and a sum equal to
10% of the remaining amount of tax in dispute arising from the said order subject to a maximum
of ` 50 crore. Thus, the amount of pre-deposit for filing an appeal with Appellate Authority cannot
exceed ` 50 crore (for tax in dispute) where IGST demand is involved.
In the given case, the amount of pre-deposit for filing an appeal with the Appellate Authority against
the order of Joint Commissioner, where entire amount of tax is in dispute, is:
(i) ` 28 crore [10% of the amount of tax in dispute, viz. ` 280 crore]
or
(ii) ` 50 crore,
whichever is less.
= ` 28 crore.
Further, section 112(8) provides that no appeal shall be filed with the Appellate Tribunal unless the
applicant has paid in full, such part of the amount of tax, interest, fine, fee and penalty arising
from the impugned order, as is admitted by him and a sum equal to 20% of the remaining amount
of tax in dispute, in addition to the amount paid as pre-deposit while filing appeal to the Appellate
Authority, arising from the said order subject to a maximum of ` 100 crores.
Thus, in the given case, the amount of pre-deposit for filing an appeal with the Appellate Tribunal
against the order of the Appellate Authority, where entire amount of tax is in dispute, is:
(i) ` 56 crores [20% of the amount of tax in dispute, viz. 280 crores]
or
(ii) ` 100 crores, whichever is less.
= ` 56 crores.

11. Pursuant to audit conducted by the tax authorities under section 65, a show cause notice was issued
to Home Furnishers, Surat, a registered supplier, alleging that it had wrongly availed the input tax
credit without actual receipt of goods for the month of July. In the absence of a satisfactory reply
from Home Furnishers, Joint Commissioner of Central Tax passed an adjudication order dated 20th
August (received by Home Furnishers on 22nd August) confirming a tax demand of ` 50,00,000 (i.e.,
CGST 25,00,000 and SGST 25,00,000) and imposing a penalty of equal amount under section 122.
Home Furnishers does not agree with the order passed by the Joint Commissioner. It decides to file
an appeal with the Appellate Authority against the said adjudication order. It has approached you
for seeking advice on the following issues in this regard:
(1) Can Home Furnishers file an appeal to Appellate Authority against the adjudication order
passed by the Joint Commissioner of Central Tax? If yes, till what date can the appeal be
filed?
(2) Does Home Furnishers need to approach both the Central and State Appellate Authorities for
exercising its right of appeal?
(3) Home Furnishers is of the view that there is no requirement of paying pre-deposit of any kind
before filing an appeal with the Appellate Authority. Give your opinion on the issue.
Ans: (1) An appeal against a decision/order passed by any adjudicating authority under the CGST Act or
SGST Act/ UTGST Act is appealable before the Appellate Authority [Section 107(1)]. Thus, Home
Furnishers can file an appeal to Appellate Authority against the adjudication order passed by the
Joint Commissioner of Central Tax.
Further, such appeal can be filed within 3 months from the date of communication of such
decision/order [Section 107(1)]. Thus, Home Furnishers can file the appeal to Appellate Authority on
or before 22nd November. Further, the Appellate Authority can also condone the delay in filing of
appeal by 1 month if it is satisfied that there was sufficient cause for such delay [Section 107(4)].
(2) GST law makes provisions for cross empowerment between CGST and SGST/UTGST officers to
ensure that a proper officer under the CGST Act is also treated as the proper officer under the
SGST/UTGST Act and vice versa. Thus, a proper officer can issue orders with respect to both, the
CGST as well as the SGST/UTGST laws.
GST law also provides that where a proper officer under one Act (say CGST) has passed an order,
any appeal/review/ revision/rectification against the said order will lie only with the proper officers
of that Act (CGST Act). Accordingly, if any order is passed by the proper officer under a SGST Act,
any appeal/ review/ revision/ rectification against the said order will lie only with the proper officer
under that SGST Act. Thus, Home Furnishers is required to file an appeal only with the Central Tax
Appellate Authority [Section 6 of CGST Act].
(3) Home Furnishers’ view is not correct in law. Section 107(6) provides that no appeal shall be
filed before the Appellate Authority, unless the appellant has paid—
(a) full amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted
by him; and

(b) a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned order
subject to a maximum of ` 25 crore*.
*Equivalent amount is required to be deposited with respect to SGST liability.
Since in the given case, Home Furnishers disagrees with the entire tax demanded, it has to make a
pre-deposit of 10% of the amount of tax in dispute arising from the impugned order, i.e., 10% of `
50,00,000 which is ` 5,00,000 (i.e. ` CGST 2,50,000 and SGST ` 2,50,000).
15. XY Company received an adjudication order passed by the Assistant Commissioner of Central Tax on
1st November under section 73 wherein it was decided as follows:
CGST+SGST due ` 6,00,000
Interest @ 18% p.a. for number of delayed days
Penalty ` 60,000
The taxpayer filed an appeal before the Appellate Authority on 26th November.
Determine the amount of pre-deposit to be made by the company for filing the appeal.
Whether your answer would be different if the taxpayer appeals only against part of the demanded
amount say ` 4,00,000 and admits the balance liability of tax amounting to ` 2,00,000 and
proportionate penalty arising from the said order?
Ans: Section 107(6) provides that no appeal shall be filed before Appellate Authority, unless the appellant
pays*:-
(a) in full, tax, interest, fine, fee and penalty arising from impugned order, as is admitted by him;
and
(b) 10% of remaining tax in dispute arising from the impugned order subject to a maximum of ` 25
crore, in relation to which the appeal has been filed.
*Equivalent amount is required to be deposited with respect to SGST liability.
Thus, in Case-I, XY Company has to make a pre-deposit of 10% of ` 6,00,000, which is ` 60,000 (i.e.
CGST ` 30,000 and SGST ` 30,000) assuming that XY Company disagrees with the entire tax
demanded.
However, when XY Company admits the liability of only ` 2,00,000 (CGST + SGST) and disputes the
balance tax demanded of ` 4,00,000, it has to make a pre-deposit of:
(i) ` 2,00,000 + ` 20,000 [proportionate penalty on tax admitted] + interest @ 18% p.a. payable on
the tax admitted for the period of delay, and
(ii) 10% of ` 4,00,000 which is ` 40,000.

16. Briefly examine whether the appeal/review application filed in the following independent cases is
within the time limit prescribed under the GST law:-
(i) The adjudicating authority issued the adjudication order on 23rd April and the same is
communicated to the taxpayer - Mr. X - on 28th April. Mr. X, aggrieved by the order of the
adjudicating authority filed an appeal to the Appellate Authority on 26th July.
(ii) The adjudicating authority passed the order on 3rd March (communicated same day to the
Commissioner). The Commissioner directs his subordinate officer to file a review application
with the Appellate Authority. The subordinate officer filed the review application on 23rd
September.
Ans: (i) A person aggrieved by any decision/order of an adjudicating authority can file an appeal to the
Appellate Authority within 3 months from the date of communication of such decision/order. The
Appellate Authority can condone the delay in filing of appeal by 1 month if it is satisfied that there
was a sufficient cause for such delay [Section 107 of the CGST Act, 2017].
In view of the aforesaid provisions, in the given case, the relevant date for computing the period of
3 months (for filing the appeal to Appellate Authority) is 28th April (date of communication of
order) and not 23rd April. Accordingly, an appeal can be filed by Mr. X to Appellate Authority within
3 months from the date of communication of order (28th April), i.e. 28th July.
Thus, Mr. X has filed the appeal within the time limit prescribed under the GST law.
(ii) The Commissioner may, by order, direct any officer subordinate to him to apply to the Appellate
Authority within 6 months from the date of communication of the decision/ order for the
determination of such points arising out of the said decision/ order as may be specified by him.
The Appellate Authority can condone the delay in filing of appeal by 1 month if it is satisfied that
there was sufficient cause for such delay [Section 107 of the CGST Act, 2017].
In the present case, the Commissioner directs his subordinate officer to file a review application with
the Appellate Authority. The subordinate officer should have filed the said application till 3rd
September (i.e. within 6 months from the date of communication of order). However, the subordinate
officer filed the application on 23rd September, i.e. after the expiry of period of 6 months from the
date of communication of order. Thus, in the given case, appeal has not been filed within the time
limit prescribed under the GST law.
However, Appellate Authority can condone delay in filing of appeal upto 3rd October (up to 1 month)
if it is satisfied that there was sufficient cause for such delay.
Q.17 State whether following statements are true or false:

i. Any person aggrieved by any decision or order passed by an adjudicating authority under the
CGST Act, 2017 may appeal to such Appellate Authority as may be prescribed within 3 months from
the date on which the said decision or order is communicated to him.
ii. No appeal shall be filed to Appellate Authority unless the appellant has paid sum equal to twenty
five percent of the remaining amount of tax in dispute arising from the said order, in relation to
which appeal is filed.

iii. Adjournment of appeal shall not be granted more than three times to a party during hearing of the
appeal.
iv. The Appellate Authority shall have the power to refer back the case to adjudicating authority that
passed the said decision or order.
(a) True, True, True, False
(b) False, True, True, False
(c) True, False, True, False
(d) False, False, False, True
Ans: (c) True, False, True, False

Chapter 22 – Advance Ruling
Q 1. Which are the matters enumerated in Section 97 for which advance ruling can be sought?
Ans: Refer Para 2 in Main Book
Q 2. What is the objective of having a mechanism of Advance Ruling?

Ans: The broad objectives for setting up a mechanism of Advance Ruling are:
• provide certainty in tax liability in advance in relation to an activity proposed to be
undertaken by the applicant;
• attract Foreign Direct Investment (FDI)
• reduce litigation
• pronounce ruling expeditiously in a transparent and inexpensive manner
Q 3. To whom will the Advance Ruling be applicable?

Ans: An advance ruling pronounced by AAR or AAAR shall be binding only on the applicant and on the
concerned officer or the jurisdictional officer in respect of the applicant. This clearly means that
an advance ruling is not applicable to similarly placed other taxable persons in the State. It is only
limited to the person who has applied for an advance ruling.
Q 4. What is the time period for applicability of Advance Ruling?

Ans: The law does not provide for a fixed time period for which the ruling shall apply. Instead, it has been
provided that advance ruling shall be binding till the period when the law, facts or circumstances
supporting the original advance ruling have not changed.
Q 5. Can an advance ruling given be nullified?

Ans: Refer Para 8 in Main Book
Q 6. Ranjan intends to start selling certain goods in Delhi. However, he is not able to determine (i) the
classification of the goods proposed to be supplied by him [as the classification of said goods has been
contentious] and (ii) the place of supply if he supplies said goods from Delhi to buyers in U.S.
Ranjan’s tax 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 the 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 the goods supplied by him in Delhi. Whether Sambhav can do so?
Ans: Answers to above mentioned Questions are given below:
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 questions/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 questions/matters on which
advance ruling can be sought under section 97(2). Further, section 96 of the CGST Act, 2017
provides that AAR constituted under the provisions of an SGST Act/UTGST Act shall be deemed
to be the AAR in respect of that State/Union territory under CGST Act also.
Thus, AAR is constituted under the respective State/Union Territory Act and not the central
Act. This implies that ruling given by AAR will be applicable only within the jurisdiction of the
concerned State/Union territory.
It is also for this reason that the questions on determination of place of supply cannot
be raised with the AAR. Hence, Ranjan cannot seek the advance ruling for determining the place
of supply of the goods proposed to be supplied by him.
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/question, it will be
binding till the time the law, facts and circumstances supporting the original advance ruling remain
same.

IV.No, the tax 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.
Such appeal must be filed within 30 days from the receipt of the advance ruling. The
Appellate Authority may allow additional 30 days for filing the appeal, if it is satisfied that there
was a sufficient cause for delay in presenting the appeal.
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. It 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 the goods supplied by him in Delhi.
Chapter 22– Advance Ruling

1). Which of the following may make an application for Advance Ruling?
A. Jurisdictional Officer
B. Applicant
C. Both Applicant & Jurisdictional Officer
D. Proper officer
Ans:- b. Applicant
2). The AAR shall comprise of:

A. One member from amongst the officers of Central tax and one member from amongst
the officers of State tax/Union Territory tax.
B. One sitting High Court Judge.
C. (a) & (b)
D. (a) and (b)
Ans. a) One member from amongst the officers of Central tax and one member from
amongst the officers of State tax/Union Territory tax.

3). Under which of the following matters Advance Ruling can be sought,
A. E-way bill requirements
B. Input credit admissibility of tax paid
C. Transitional credits specified in chapter XX
D. All of the above
Ans:- b. Input credit admissibility of tax paid
4). What is the time period within which the application made to the authority be
withdrawn?
A. 10 days of date of application
B. 10 days of date of first hearing
C. 30 days
D. No provision of withdrawal
Ans:- d. No provision of withdrawal
5). A copy of Advance Ruling signed and certified shall be sent to _____________.
A. Applicant
B. Concerned Officer
C. Jurisdictional Officer
D. All of the above
6). When can the AAR reject the application for the advance ruling?
A. Issue raised is already decided in case of the applicant under this Act
B. Issue raised is already pending in case of the applicant under this Act
C. Both (a) & (b)
Ans:- c. Both (a) & (b)
7). What is the condition under which the Advance Ruling shall not be binding?
A. Applicant is unsatisfied with the ruling
B. Ruling is general in nature
C. Change in law or facts

Ans:- c. Change in law or facts
8). When can the Authority declare the advance ruling pronounced as void?
A. If ruling is obtained by suppression of material facts
B. If the applicant is in the business of supplies on which clarification has been sought
C. If the applicant does not engage in the business of supplies after 6 months of
obtaining the ruling
D. If a Supreme Court judgment is pronounced on the same issue and the judgment is
exactly the opposite of the clarification issued under the ruling
Ans:- a. If ruling is obtained by suppression of material facts
9). Who can apply for rectification of error on record?

A. Applicant
B. Concerned officer or Jurisdictional Officer
C. Advance Ruling Authority or the Appellate Authority on its own accord can rectify the
error
D. All of the above
10). The fee for filing an appeal before AAAR by the applicant is:
A. Rs. 25000/- under CGST Act
B. Rs. 25000/- under SGST Act
C. Rs. 10000/- each under CGST and SGST Act
D. Rs. 25000/- under any of the above Act
Ans: c. Rs. 10000/- each under CGST and SGST Act
11). The fee for filing an application for Advance Ruling is:
A. Rs. 5000/- under CGST Act
B. Rs. 5000/- under SGST Act
C. Rs. 5000/- each under CGST and SGST Act
D. Rs. 10000/- under any of the above Act
Ans:- c. Rs. 5000/- each under CGST and SGST Act

1) State whether following statements are true or false w.r.t. provisions relating to Advance Ruling.
a) Questions on which the advance ruling can be sought under this Act, include rate of tax
applicable to a particular supply and place of supply.
b) Rectification of advance ruling is not possible once the Authority for Advance Ruling has
passed the orders.
c) The Authority for Advance Ruling shall pronounce its ruling within 90 days from the
date of receipt of application.
d) Authority for Advance Ruling may accept application even if the question raised in
the application is already pending or decided in any proceedings under any of the
provisions of the CGST Act, 2017 qua the applicant.
e) Authority for Advance Ruling may, by order, declare such advance ruling void ab -
initio if it finds out that such ruling is obtained by suppression of material fac ts,
fraud or misrepresentation of facts.
Choose from following options:
a) False, False, True, False, True
b) False, True, True, False, True
c) True, True, False, False, True
d) False, False, False, False, True
ANS: False, False, True, False, True
Q.2 Jain Bhagwan (P) Ltd. deals in supply of air conditioners (ACs). It also undertakes installation
of ACs at the premises of the client. The company has provided the following details for the
month of February:
Date Transaction
2nd February Supply and installation of 10 ACs at the newly established office of M/s
Ram Mohan & Associates, a CA firm, registered under GST in New
Delhi. The company charged ` 21,000 per AC from the CA firm.
15th February Service of installation of 15 ACs at Mr. varun mansion in chandigarh
Varun is an individual and is unregistered. The company has charged
` 2,000 per installation. The company forgot to issue the invoice for the
service. However, payment was received in advance on 13th February.
20th February Received advance of ` 2,00,000 from Sunshine Ltd. for installation of AC
at its factory in Bawana, Delhi on 28th February. The invoice is issued

on the date of provision of service, i.e., on 28th February. The client is
registered under GST in New Delhi.
Other relevant information:
1. Standard price charged:
Air Conditioner: ` 20,000 per piece
Service of installation of air conditioner: ` 2,000 per installation
AC + Installation: ` 21,000 per piece
2. Applicable rate of taxes:
Date of transaction Applicable rate of GST on Applicable rate of GST on

supply of air conditioner supply of service of
installation of air conditioner
Before 22nd February 18% 5%
On or after 22nd February 12% 12%
3. Jain Bhagwan (P) Ltd. is registered under GST in Delhi.
4. One order for supply of 100 ACs in Hongkong has been received by the company. The company
is unable to determine the time and value of supply for this supply.
Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos. 1.1. to 1.4. as follows:-
1.1. What rate of tax should the company charge on supply made to M/s Ram Mohan & Associates?
(a) 18%
(b) 5%
(c) 18% on AC value and 5% on installation value
(d) 12%
1.2. What is the time of supply of service provided to Mr. Varun?
(a) 15th February

(b) 16th February
(c) 13th February
(d) 14th February
1.3. Sunshine Ltd. contended that GST should be charged @ 12% since supply is made after
change in rate of tax. Advise whether the contention of Sunshine Ltd. is valid as per GST law.
(a) No. Since payment has been received before the change in rate of tax, old rate shall be
applicable.
(b) Yes. Since provision of service and issue of invoice is after the change in rate of tax, new
rate shall be applicable.
(c) No. Since time of supply shall be earlier of date of receipt of payment and date of issue of
invoice, old rate shall be applicable.
(d) Yes. Since provision of service is after change in rate of tax, new rate shall be applicable.
Date of invoice is not relevant.
1.4. Since Jain Bhagwan (P) Ltd. is unable to determine the time and value of supply of air
conditioners to be supplied in Hongkong, it decides to seek the advance ruling in the given
case.
Which of the following statements are true in this regard?
(a) Jain Bhagwan (P) Ltd. can seek advance ruling to determine the time and value of supply
of air conditioners. After seeking advance ruling, if it is aggrieved with the finding of the
Authority for Advance Ruling (AAR), it can also file an appeal with Appellate Authority for
Advance Ruling (AAAR).
(b) Jain Bhagwan (P) Ltd. can seek advance ruling to determine the time of supply of air
conditioners, but advance ruling cannot be sought for determining the value of supply of air
conditioners. Order of AAR is final and cannot be appealed against.
(c) Jain Bhagwan (P) Ltd. cannot seek advance ruling to determine the time and value of
supply of air conditioners.
(d) Jain Bhagwan (P) Ltd. can seek advance ruling to determine the time and value of supply
of air conditioners. Order of AAR is final and cannot be appealed against. (MTP-Nov 21)

Ans: 1.1 (a) 18%
1.2 (c) 13th February
1.3 (b) Yes. Since provision of service and issue of invoice is after the change in rate of tax,
new rate shall be applicable.
1.4 (a) Jain Bhagwan (P) Ltd. can seek advance ruling to determine the time and value of
supply of air conditioners. After seeking advance ruling, if it is aggrieved with the finding of
the Authority for Advance Ruling (AAR), it can also file an appeal with Appellate Authority for
Advance Ruling (AAAR).

Chapter 23 – Offences and Penalties
Q 1. What are the various type of offences which may be committed by a taxable person liable
to penalty? What is the quantum of penalty for an offence mentioned under section 122(1)?
Ans: Refer Section 122 in main book
Q 2. Is there any penalty prescribed for a person other than the taxable person?
Ans: Yes, Section 122(3) provides for levy of penalty extending to Rs.25,000/- for any person
who-
• aids or abets any of the 21 offences,
• deals in any way (whether receiving, supplying, storing or
transporting) with goods that are liable to confiscation,
• receives or deals with supply of services in contravention of the Act,
• fails to appear before an authority who has issued a summon,
• fails to issue any invoice for a supply or account for any invoice in his books of
accounts.
Q 3. Mr. X, an unregistered person under GST purchases the goods supplied by Mr. Y who is a
registered person without receiving a tax invoice from Mr. Y and thus helps in tax evasion
by Mr. Y. What disciplinary action may be taken by tax authorities to curb such type of
cases and on whom?
Ans: Both Mr. X and Mr. Y will be offender and will be liable to penalty as under:
Mr. X – Penalty under section 122(3) which may extend to Rs. 25,000/-;
Mr. Y – Penalty under section 122(1), which will be higher of following, namely
(i) Rs. 10,000/- or
(ii) 100% of tax evaded.
Q 4. Suppose, in the above case, a disciplinary action is taken against Mr. X and an adhoc penalty
of ` 20,000/- is imposed by issue of SCN without describing contravention for which penalty
is going to be imposed and without mentioning the provisions under which penalty is going
to be imposed. Should Mr. X proceed to pay for penalty or challenge SCN issued by departmen
Ans: The levy of penalty is subject to a certain disciplinary regime which is based on jurisprudence,
principles of natural justice and principles governing international trade and agreements.
Such general discipline is enshrined in section 126 of the Act. Accordingly—
• no penalty is to be imposed without issuance of a show cause notice and proper hearing in
the matter, affording an opportunity to the person proceeded against to rebut the allegations
levelled against him,
CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 23.1

• the penalty is to depend on the totality of the facts and circumstances of the case,
the penalty imposed is to be commensurate with the degree and severity of breach of the
provisions of the law or the rules alleged,
• the nature of the breach is to be specified clearly in the order imposing the penalty,
• the provisions of the law under which the penalty has been imposed is to be specified.
Since SCN issued to Mr. X suffers from lack of clarity about nature of breach which has taken
place and about provision of law under which penalty has been imposed, SCN issued by
department may be challenged.
Q 5. 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. 1,26,000
Ans: Where the aggregate turnover of a supplier making supplies from a State /UT exceeds Rs. 20
lakh in a financial year, he is liable to be registered in the said State/UT. The said supplier
must apply for registration within 30 days from the date on which he becomes liable to
registration. However, in the given case although Shagun became liable to registration on
25/01/20XX, she didn’t apply for registration within 30 days of becoming liable to registration.
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. 1,26,000 in the given case)
Whichever is higher,
Thus, the amount of penalty that can be imposed on Shagun is Rs. 1,26,000
Q 6. Examine the implications as regards the bailability and quantum of punishment on

prosecution, in respect of the following cases pertaining to the period December, 2017 under
CGST Act, 2017;
I. 'M' collects Rs. 245 lakh as tax from its clients and deposits Rs. 241 lakh with the Central
Government. It is found that he has falsified financial records and has not maintained proper
records.
II. 'N' collects Rs. 550 lakh as tax from its clients but deposits only Rs. 30 lakh with the Central
Government. Further, the amount of Rs. 520 lakh collected as tax is not paid to the
Government beyond 3 months from the due date of payment of tax.
What will be the implications with regard to punishment on prosecution of 'M' and 'N' for the
offences? What would be the position, if 'M' and 'N' repeat the offences?

It may be assumed that offences are proved in the court.
Ans: The answer to above questions are given below:
i. As per section 132(1)(d)(iii) of the CGST Act, 2017, failure to pay any amount collected
as tax beyond 3 months from due date of payment is punishable with specified imprisonment
and fine provided the amount of tax evaded exceeds at least Rs. 100 lakh. Therefore, failure
to deposit Rs. 4 lakh collected as tax by ‘M’ will not be punishable with imprisonment.
Further, falsification of financial records by ‘M’ is punishable with imprisonment up to 6
months or with fine or both vide section 132(1)(f)(iv) of the CGST Act, 2017 and the said
offence is bailable in terms of section 132(4) of the CGST Act, 2017 assuming that
falsification of records is with an intention to evade payment of tax due under the CGST
Act, 2017.
ii. Failure to pay any amount collected as tax beyond 3 months from due date is punishable with
imprisonment upto 5 years and with fine, if the amount of tax evaded exceeds Rs. 500
lakh in terms of section 132(1)(d)(i) of the CGST Act, 2017.
Since the amount of tax evaded by ‘N’ exceeds Rs. 500 lakh (Rs. 550 lakh - Rs. 30 lakh),
‘N’ is liable to imprisonment upto 5 years and with fine. Further, the imprisonment shall be
minimum 6 months in the absence of special and adequate reasons to the contrary to be
recorded in the judgment vide section 132(3) of the CGST Act, 2017. Such offence is non-
bailable in terms of section 132(5) of the CGST Act, 2017.
If ‘M’and ‘N’ repeat the offence, they shall be punishable for second and for every subsequent
offence with imprisonment upto 5 years and with fine in terms of section 132(2) of the CGST
Act, 2017. Such imprisonment shall also be minimum 6 months in the absence of special and
adequate reasons to the contrary to be recorded in the judgment.

Chapter –23 Offences & Penalties
1. Any registered person supplying goods on which tax not paid or short paid or input
tax credit wrongly availed for any reason, other than the reason of fraud or any wilful
misstatement or suppression of facts to evade tax, shall be liable to pay a penalty of
A. Rs. 10000
B. 10% of the tax due from such person
C. (a) or (b), whichever is lower
D. (a) or (b), whichever is higher
Ans: d. (a) or (b), whichever is higher
2. Any registered person supplying goods on which tax is not paid or short paid or input
tax credit wrongly availed for any reason of fraud or any wilful misstatement or
suppression of facts to evade tax, shall be liable to pay a penalty of
A. Rs. 10000
B. Tax due from such person
Ans: d. (a) or (b), whichever is higher
3. Any person who aids or abets any of the offences specified u/s 122(1) shall be liable
to a penalty
A. Up to 5000
B. Up to 10000
C. Up to 15000
D. Up to 25000
Ans: d. Up to 25000

4. A breach shall be considered a ‘minor breach’ if the amount of tax involved is
A. < Rs. 1000
B. < Rs. 3000
C. < Rs. 5000
D. < Rs. 10000
Ans: c. < Rs. 5000
5. Any person, who contravenes any of the provisions of this Act or any rules made there
under for which no penalty is separately provided for in this Act, shall be liable to
penalty which may extend to
A. Rs. 5000
B. Rs. 10000
C. Rs. 20000
D. Rs. 25000
Ans d. Rs. 25000
6. After detention or seizure, if the owner comes forward for payment, the goods and
conveyance shall be released on payment of an amount equal to __________ in
case of exempted goods.
A. 2% of the value of goods
B. Rs. 25000
Ans: c. (a) or (b), whichever is lower
7. After detention or seizure, if the owner does not come forward for payment, the goods
and conveyance shall be released on payment of an amount equal to __________ in
case of exempted goods.
A. 5% of the value of goods
B. Rs. 25000

Ans: c. (a) or (b), whichever is lower
8. Redemption fine in lieu of confiscation shall not exceed

A. Rs. 10000
B. The taxable value of goods
C. The market price of the goods confiscated, less the tax chargeable thereon
D. The amount of tax payable on goods
Ans: c. The market price of the goods confiscated, less the tax chargeable thereon
9. Mr. A fails to appear before the officer of central tax even after the issue of summon
for appearance to give evidence or produce a document in an enquiry. He shall be
liable to a penalty __________ u/s 122(3) of CGST Act.
A. < Rs. 10000
B. < Rs. 5000
C. < Rs. 20000
D. < Rs. 25000
Ans: d. < Rs. 25000
10. ABC Ltd. supplies taxable services worth Rs. 120000 and charged IGST @ 18% i.e. to
Mr. Y without issuing any invoice. It shall be liable to a penalty of ____________
u/s 122(1) of CGST Act.
A. Rs. 10000
B. Rs. 21600
C. Rs. 120000
Ans: b. Rs. 21600
11. ABC & Co., a partnership firm committed an offence. Who shall be liable for the
same?
A. All the partners
B. All the partners unless they prove offence committed without their knowledge
C. All the employees

Ans: b. All the partners unless they prove offence committed without their knowledge
12. What happens after the offence has been compounded?

A. Proceeding shall be continued
B. Proceedings, if initiated shall be dropped
C. Person has to pay all the pending dues
D. All of the above
Ans: b. Proceedings, if initiated shall be dropped
13. ___________ includes intention, motive, knowledge of a fact, and belief in, or reason
to believe, a fact.
A. The state of mind
B. The wrong action
C. The culpable mental state
D. Any of the above
Ans: c. The culpable mental state
14. Mr. A has opened up a new branch office. In this office is he required to display his
GSTIN? What shall be the penalty in case he doesn’t display the same?
A. Yes, penalty of maximum Rs. 25000
B. Yes, no penalty
C. No, no penalty
D. Yes, no penalty as only the head office needs to display the GSTIN
Ans: a Yes, penalty of maximum Rs. 25000
15. Is there any time limit in which the release of the detained or seized goods can be
sought?
a. Yes, after the payment of tax & penalty within 07 days of the date of detention of
goods
b. Yes, after the payment of tax & penalty within 15 days of the date of detention of
goods
c. No, there is no such limit
d. No, they will only be released on the Court order

Ans: a. Yes, after the payment of tax & penalty within 07 days of the date of detention of
goods
16. Shagun started supply of goods in Vasai, Maharashtra from 01.01.20XX. Her turnover
exceeded ` 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 under section 122(1) of the CGST Act, 2017 on
31.03.20XX, if the tax evaded by her, as on said date, on account of failure to obtain
registration is ` 1,26,000:
A. ` 10,000
B. ` 1,26,000
C. ` 12,600
Ans: b. ` 1,26,000
17. In the proposed return system, if the tax liability increases more than ---through
amended return, higher late fees are payable.
A. 5%
B. 10%
C. 25%
D. 30%
Ans: b. 10%
18. All exporters registered under GST can export goods or services without payment of
IGST, on execution of LUT, except those who have been prosecuted for offence under
any law where tax evade exceeds------?.
A. `. 100 lakhs
B. `. 150 lakhs
C. `. 200 lakhs
D. `. 250 lakhs
Ans: d. `. 250 lakhs

19. In which of the following cases, compounding of offence is not allowed under section
138 of CGST Act, 2017?
(i) a person who has been allowed to compound once in respect of any of the
offences specified in
clauses (a) to (f) of section 132(1).
(ii) a person who has been allowed to compound once in respect of any offence,
other than those in clause (i) in respect of supplies of value upto one crore rupees.
(iii) a person who has been accused of committing an offence under this Act which
is
also an offence under any other law for the time being in force.
(iv) a person who has been convicted for an offence under this Act by a Court.
A. (I), (iii), (iv)
B. (ii), (iii)
C. (ii), (iii), (iv)
D. All of the above
Ans: a. (I), (iii), (iv)
Q,1 Mr. Topinath, an unregistered person in Delhi, who has an aggregate turnover of` 16 lakh sells
mobile phones to Mr. Gopinath, a person registered under GST in Uttar Pradesh. Whether any
penalty is leviable on Mr. Topinath, for such supply and if yes, what is the max imum amount
of penalty that can be levied on Mr. Topinath:-
(a) No penalty since there is no default on part of Mr. Topinath as his turnover is below
threshold limit.
(b) Yes; an amount equivalent to the tax evaded or ` 10,000/-, whichever is lower.
(c) Yes; an amount equivalent to the turnover or ` 10,000/-, whichever is higher.
(d) Yes; an amount equivalent to the tax evaded or ` 10,000/-, whichever is higher.
ANS: Yes; an amount equivalent to the tax evaded or ` 10,000/-, whichever is high
Q2. Answer the following questions:

(1) Radhaswamy owns and supplies certain goods costing ` 30,00,000 in a conveyance hired from
Manikaran Transporters. Market value of said goods is
` 40,00,000 and tax chargeable thereon is ` 4,80,000.

The goods supplied by Radhaswamy and the conveyance [owned by Manikaran Transporters] used
for carriage of such goods are confiscated since Radhaswamy has supplied said goods in
contravention of the provisions of the CGST Act, 2017 with an intent to evade payment of tax.
However, the proper officer intends to give an option to Radhaswamy and Manikaran
Transporters to pay in lieu of confiscation, a fine leviable under section 130 of the CGST, Act,
2017.
Determine the maximum amount of the fine in lieu of confiscation on:
(a) the goods liable for confiscation.
(b) the conveyance used for carriage of such goods.
Raghuraman is a registered supplier in Madhya Pradesh. He failed to pay the GST amounting to
` 7,400 for the month of January, 20XX. The proper officer imposed a penalty on Raghuraman
for failure to pay tax. Raghuraman believes that it is a minor breach and in ac cordance with
the provisions of section 126 of the CGST Act, 2017, no penalty is imposable for minor breaches
of tax regulations. Examine the correctness of Raghuraman’s claim.
Ans: (1) (a) In case of goods liable for confiscation, the maximum amount of fine leviable
in lieu of confiscation in terms of first proviso to section 130(2) of the CGST Act, 2017
is the market value of the goods confiscated, less the tax chargeable thereon.
Therefore, in the given case, maximum fine leviable:
= ` 40,00,000 - ` 4,80,000 = ` 35,20,000
(b) In case where conveyance used for carriage of such goods is liable for confiscation, the
maximum amount of fine leviable in lieu of confiscation in terms of third proviso to section
130(2) of the CGST Act, 2017 is equal to tax payable on the goods being transported thereon.
Therefore, in the given case, maximum fine leviable = ` 4,80,000
(2) No, Raghuraman’s claim is not tenable in law. Section 126(1) of the CGST
Act, 2017 provides that no officer shall impose any penalty under CGST Act, 2017, inter alia, for
minor breaches of tax regulations or procedural requirements. Further, explanation to section
126(1) of the CGST Act, 2017 stipulates that a breach shall be considered a ‘minor breach’
if the amount of tax involved is less than ` 5,000.
In the given case, breach made by Raghuraman is not a ‘minor breach’ since the amount
involved is not less than ` 5,000. So, penalty is imposable under the CGST Act, 2017.
Q.3 XYZ carries goods from Vadodara to Pune. The value of the goods is ` 80,000 which are
chargeable to tax @ 18% IGST and in transit, proper officer intercepted the same under
section 68 of the CGST Act, and found contravention.
Calculate the penalty payable under section 129 of CGST Act, 2017:
• If XYZ comes forward for payment of tax and penalty,
• If XYZ does not come forward for payment of tax and penalty

Ans: The penalty payable under section 129 of the CGST Act, 2017 is
1. 100% of the tax payable on goods detained or seized where the owner of the goods comes
forward for payment of tax and penalty;
2. 50% of the value of the goods reduced by the tax amount paid thereon where the owner of
the goods does not come forward for payment of tax and penalty.
By virtue of section 20 of the IGST Act, 2017 provisions of penalty payable under section 129
of the CGST Act, 2017 apply in case of IGST as well. However, where the penalty is leviable
under the CGST Act, 2017 and the SGST/UTGST Act, 2017, the penalty leviable under the IGST
Act, 2017 shall be the sum total of the said penalties. Therefore, penalty payable under IGST
Act, 2017 is double the penalty payable under section 129 of the CGST Act, 2017.
Therefore, in the given case the penalty payable will be computed as under:
If XYZ1 comes forward for payment of tax and penalty –
= ` 80,000 × 18% (9% CGST and 9% SGST/UTGST) × 100%
= ` 14,400
If XYZ does not come forward for payment of tax and penalty
= [` 80,000 × 100% (50% under CGST plus 50% under SGST/UTGST)] – [` 80,000 × 18%]2
= ` 80,000 - ` 14,400
= ` 65,600
Note: In the above answer, the penalty payable has been computed in accordance with the
provisions of the IGST Act, 2017 as tax chargeable on the goods is IGST. However, the question
can also be answered on the basis of the provisions of section 129 of the CGST Act, 2017
(MAY 19 QP NEW)
Q.4 From the following details, calculate the amount to be paid, for release of goods detained
or seized under section 129 of the CGST Act, 2017, if owner of the goods does not come
forward for payment of applicable tax and penalty Details are as follows:
Particulars Amount (`)
Value of goods 30,00,000
Applicable GST on such goods 5,40,000
GST already paid on such goods 3,60,000
Would your answer be different if goods were exempted from GST and value remains the
same namely ` 30,00,000?
Ans: If owner of the goods does not come forward for payment of applicable tax and penalty,
the amount to be paid for release of goods detained or seized under section 129 of the
CGST Act, 2017 is applicable GST and penalty equal to 50% of the value of the goods
reduced by the tax amount paid thereon.

Therefore, in the given case, the amount payable = [` 5,40,000 + 50% of ` 30,00,000] –
` 3,60,000 = ` 16,80,000
However, in case of exempted goods, amount to be paid for release of goods detained is
equal to 5% of the value of goods or ` 25,000, whichever is less.
= 5% of ` 30,00,000 or ` 25,000, whichever is less
= ` 1,50,000 or ` 25,000, whichever is less
= ` 25,000
Q.5 Sukanya, a registered supplier, failed to pay the GST amounting to Rs. 5,000 for the month
of January, 20XX. The proper officer imposed a penalty on Sukanya for failure to pay tax.
Sukanya believes that it is a minor breach and in accordance with the provisions of section
126 of the CGST Act, 2017, no penalty is imposable for minor breaches of tax regulations.
In this regard, which of the following statements is true?
a) Penalty is leviable on Sukanya since the breach is considered as a ‘minor breach’ only if
amount of tax involved is less than Rs. 5,000
b) Penalty is not leviable on Sukanya since the breach is considered as a ‘minor breach’ if
amount of tax involved is upto Rs. 5,000
c) Penalty is leviable on Sukanya since the breach is considered as a ‘minor breach’ only if
amount of tax involved is Nil.
d) None of the above.
Ans : Penalty is leviable on Sukanya since the breach is considered as a ‘minor breach’ only if
amount of tax involved is less than Rs. 5,000
Q.6 Mr. X, an unregistered person under GST purchases the goods supplied by Mr. Y who is a
registered person without receiving a tax invoice from Mr. Y and thus helps in tax evasion
by Mr. Y. What disciplinary action may be taken by tax authorities to curb such type of
cases and on whom?
Suppose, in the above case, a disciplinary action is taken against Mr. X and an adhoc
penalty of Rs. 20,000/- is imposed by issue of SCN without describing contravention for
which penalty is going to be imposed and without mentioning the provisions under which
penalty is going to be imposed. Should Mr. X proceed to pay for penalty or challenge SCN
issued by department?
Ans: Both Mr. X and Mr. Y will be offender and will be liable to penalty as under:
Mr. X – Penalty under section 122(3) which may extend to Rs. 25,000/-;

Mr. Y – Penalty under section 122(1), which will be higher of following, namely (i) Rs.
10,000/- or (ii) 100% of tax evaded.
The levy of penalty is subject to a certain disciplinary regime which is based on jurisprudence,
principles of natural justice and principles governing international trade and agreements.
Such general discipline is enshrined in section 126 of the Act. Accordingly—
(i) no penalty is to be imposed without issuance of a show cause notice and proper hearing
in the matter, affording an opportunity to the person proceeded against to rebut the
allegations levelled against him,
(ii) the penalty is to depend on the totality of the facts and circumstances of the case,
the penalty imposed is to be commensurate with the degree and severity of breach of the
provisions of the law or the rules alleged,
(iii) the nature of the breach is to be specified clearly in the order imposing the penalty,
(iv) the provisions of the law under which the penalty has been imposed is to be specified.
Since SCN issued to Mr. X suffers from lack of clarity about nature of breach which has
taken place and about provision of law under which penalty has been imposed, SCN issued
by department may be challenged.
Q.7 Mangeshwar, registered under the CGST Act, 2017 has made a breach in payment of tax
amounting to ` 6,100. Assessing Authority has imposed a penalty as per law applicable to the
breach. Invoking the provisions of section 126, Mangeshwar argues that it is a minor breach
and therefore, no penalty is imposable.
In another instance, Mangeshwar has omitted certain details in documentation that is not
easily rectifiable. This has occurred due to the gross negligence of his accountant and he
makes a plea that he was unaware of it and therefore, no penalty should be levied.
Mangeshwar voluntarily writes accepting a major procedural lapse from his side and requests
the officer to condone the lapse as the loss caused to the revenue was not significant.
Also a lapse on the part of Mangeshwar has no specific penalty provision under the CGST
Act, 2017. He is very confident that no penalty should be levied without a specific provision
under the Act.
Discuss what action may be taken by the Assessing Authority under law for each of the
above breaches.
Ans: As per section 126(1) of the CGST Act, 2017, no penalty shall be leviable under the Act for
minor breaches of tax regulations. In terms of Explanation (a) to section 126(1), a breach
shall be considered as “minor breach”, if tax involved is less than ` 5,000. Therefore, breach
made by Mangeshwar is not a ‘minor breach’ since the amount involved is not less than `
5,000. So, penalty is imposable.

Any omission or mistake in documentation which is easily rectifiable and made without
fraudulent intent/gross negligence is not liable for penalty in terms of section 126(1) of the
CGST Act, 2017.However, penalty is imposable in the present case, since the omission in the
documentation is not easily rectifiable and has occurred due to gross negligence.
As per section 126(5) of the CGST Act, 2017, where there is a voluntary disclosure of breach,
prior to its discovery by the officer, the proper officer may consider this fact as a mitigating
factor when quantifying the penalty. Since Mangeshwar has voluntarily disclosed the breach
of procedural requirement to the officer, the proper officer may consider this fact as a
mitigating factor when quantifying the penalty. Therefore, the quantum of penalty will depend
on the facts and circumstances of the case.
As per section 125 of the CGST Act, 2017, when no specific penalty has been specified for
contravention of any of the provisions of the Act or any rules made there under, it shall be
liable to a penalty which may extend to ` 25,000. Therefore, general penalty upto`25,000 may
be imposed on Mangeshwar.
8. Whether action can be taken for transportation of goods without valid documents or if goods are
attempted to be removed without proper record in books? If yes, explain the related provisions
under the CGST Act, 2017.
Ans: Yes, action can be taken for transportation of goods without valid documents or if goods are
attempted to be removed without proper record in books. If any person transports any goods or
stores any such goods while in transit without the documents prescribed under the Act or
supplies or stores any goods that have not been recorded in the books or accounts maintained
by him, then such goods shall be liable for detention along with any vehicle on which they are
being transported [Section 129 of CGST Act].
Where owner comes forward: - Such goods shall be released on payment of the applicable tax
and penalty equal to 100% of the tax payable on such goods or upon furnishing of security
equivalent to the said amount. In case of exempted goods, penalty is 2% of value of goods or
`25,000/- whichever is less.
Where owner does not come forward: - Such goods shall be released on payment of the
applicable tax and penalty equal to 50% of value of goods reduced by the tax amount paid
thereon or upon furnishing of security equivalent to the said amount. In case of exempted goods,
penalty is 5% of value of goods or ` 25,000/- whichever is less.
9. From the details given below, determine the maximum amount of fine in lieu of confiscation
leviable under section 130 of CGST, Act, 2017 on:
(i) The goods liable for confiscation.
(ii) On the conveyance used for carriage of such goods.
Details are as follows:

Cost of the goods for owner excluding GST 15,00,000
Market Value of Goods 20,00,000
GST on such goods 3,60,000
You are also required to explain relevant legal provisions in brief.
Ans: (i) As per section 130(2) of the CGST Act, 2017, in case of goods liable for confiscation, the
maximum amount of fine leviable in lieu of confiscation is the market value of the goods
confiscated, less the tax chargeable thereon.
Therefore, the fine leviable = ` 20,00,000 - ` 3,60,000 = ` 16,40,000
The aggregate of fine and penalty shall not be less than the amount of penalty leviable under
section 129(1).
(ii) In case of conveyance used for carriage of such goods and liable for confiscation, the
maximum amount of fine leviable in lieu of confiscation is equal to tax payable on the goods
being transported thereon [Third proviso to section 130(2) of the CGST Act, 2017].
Therefore, the fine leviable = ` 3,60,000
10. What are cognizable and non-cognizable offences under section 132 of CGST Act, 2017?
Ans: As per section 132(5) of CGST Act, 2017, following offences are cognizable offences, provided
amount of tax evaded or input tax credit wrongly availed/ utilised or refund wrongly taken >` 5
crores, namely:
(a) Supply without issuance of invoice with the intention to evade tax
(b) Issuance of any invoice/ bill without supply leading to wrongful availment/ utilisation of ITC
or refund of tax
(c) Availment of ITC using invoice/ bill against which no supplies have been made
(d) Failure to pay the amount collected as tax to the Government beyond a period of 3 months
from the due date of payment.
Further, section 132(4) of CGST Act, 2017 provides that all offences specified under section 132
are non-cognizable offences except the cognizable offences.
11. Where an offence under the GST law is committed by a taxable person being a trust, who are
deemed to be guilty of the offence and under what circumstances? When do the relevant
provisions become inapplicable in respect of individuals concerned with the trust?
Ans: Section 137 of the CGST Act, 2017 stipulates that where an offence under the GST law is
committed by a taxable person being a trust, the managing trustee shall be deemed to be
guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Further, where it is proved that the offence committed by the trust has been committed –
• with the consent or connivance of, or

• is attributable to any negligence on the part of any other individual concerned with the
trust,
he shall also be deemed to be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
The relevant provisions will become inapplicable in respect of individuals concerned with the
trust, if they prove that the offence was committed without their knowledge or that they had
exercised all due diligence to prevent the commission of such offence.
12 Disha Enterprise Pvt Ltd. is a financial service company having its offices in Kolkata, West
Bengal and Mumbai, Maharashtra. The company is registered under GST in both the States. The
company operates through two segments (a) banking & insurance services and (b) advisory &
consulting services. The aggregate turnover of the company during the previous year was (i) ₹
80 lakh in West Bengal & (ii) ₹ 60 lakh in Maharashtra.
Disha Enterprise Pvt Ltd. is a financial service company having its offices in Kolkata, West
Bengal and Mumbai, Maharashtra. The company is registered under GST in both the States. The
company operates through two segments (a) banking & insurance services and (b) advisory &
consulting services. The aggregate turnover of the company during the previous year was (i) ₹
80 lakh in West Bengal & (ii) ₹ 60 lakh in Maharashtra.
The bouquet of services provided under each of the two segments are as follows:
Banking & insurance services Advisory & consulting services
Insurance agent services Company/LLP/Society formation
Recovery agent services Return filing
Direct Selling Agent (DSA) services Detailed Project Report (DPR)
(sale of banking products) preparation
Business promotion/ product marketing/ exhibition etc.
The company has carried out following transactions during the month of September:
(Amount in ₹ excluding GST)
Particulars Kolkata office Mumbai
office
Sale and purchase of foreign currency Refer Note 3 Refer Note 3
Commission received from Nautiyal Insurance 90,000 70,000
Company/ ADFC Life Insurance Company
Commission received as DSA from ICIDI Bank for 48,000 50,000
opening bank account/credit card & loan products
Commission received from private banks for acting as 1,20,000 1,50,000
recovery agent

Professional fee received for the formation of a 80,000 40,000
company/LLP/society [Refer Note 2]
Professional fee received for GST/ TDS return filing 65,000 75,000
Participation fee received from customers for the 50,00,000 4,00,000
business exhibition organised by the company (held in Russia) (held at
[Refer Note 1] Chennai)
[Refer Note
1]
Legal fee paid to Mr. Sundaram - an advocate 10,000 15,000
Payment made for security services (by way of supply 25,000 25,000
of security personnel) received (Globe Security Pvt
(M/s X & Co,
Ltd.) a partnership
firm,
registered
under GST)
Notes:
1. The participation fee of ₹ 50,00,000 received by the company is in respect of a business
exhibition organized at St. Petersburg, Russia under the theme “Indian Traditional Fair” in which
10 Indian companies (all registered under GST) had participated. A participation fee of ₹ 5 lakh
from each Indian company was collected for providing them a stall, furniture & other amenities
at St. Petersburg, Russia.
The participation fee of ₹ 4,00,000 is in respect of a business exhibition organized by the company
at Chennai, in which 100 Indian companies had participated.
2. Out of the professional fee of ₹ 80,000 received by Kolkata office for the formation of a
company/LLP/society, ₹ 15,000 was towards reimbursement claimed from client. It was separately
mentioned in the invoice indicating that it was deposited with registrar of companies (ROC).
3. Following purchase & sale of foreign currency was made by the company during the month
of September:
(a) Kolkata office had purchased USD 10,000 from M/s Moneywise (a FOREX dealer) @ ₹ 74
per USD on 10th September. The RBI reference rate on that day was ₹ 73 per USD.
(b) Mumbai office had sold USD 5,000 to M/s Money Matters (a FOREX dealer) on 15th
September @ ₹ 73.20 per USD. RBI reference rate for USD on that day is not available.
4. In an order dated 14th September issued to Disha Enterprise Pvt Ltd., the Joint Commissioner
of CGST, Mumbai has raised a demand of ₹ 600 crore on Mumbai office in respect of an inter-
State transaction. The company is disputing the entire demand & wants to file an appeal before
the Appellate Authority against the order of Joint Commissioner.
5. The Kolkata office of the company had received ₹ 1 lakh on 22nd April as an advance from
Ganesh Flour Mill Pvt Ltd., a client, for preparation of DPR. However, tax collected on the same
from the client has not yet been deposited with the Central Government.

All the amounts given above are exclusive of GST wherever applicable (unless otherwise specified).
There is no other outward or inward supply transaction apart from the aforesaid transactions in
the relevant period. Based on the facts of the case scenario given above, choose the most
appropriate answer to Q. Nos. 1. to 5. below:-
1. Determine the value of taxable supply in respect of sale and purchase of foreign currency by
Kolkata office and Mumbai office of the company as per rule 32(2)(a) of the CGST Rules, 2017.
(a) Kolkata office ₹ 7200, Mumbai office ₹ 3,660
(b) Kolkata office ₹ 10,000, Mumbai office ₹ 3,660
(c) Kolkata office ₹ 7,20,000, Mumbai office ₹ 3,66,000
(d) Kolkata office ₹ 7,30,000, Mumbai office ₹ 3,66,000
2. The value of taxable supply received by Mumbai office in the month of September on which tax
is payable under reverse charge is _____________.
(a) ₹ 15,000
(b) ₹ 25,000
(c) ₹ 40,000
(d) ₹ 2,70,000
3. The value of taxable outward supply made by Kolkata office in the month of September on which
Disha Enterprise Pvt Ltd. is liable to pay tax under forward charge is ________________.
(a) ₹1,78,000
(b) ₹ 2,78,000
(c) ₹ 2,65,000
(d) ₹ 1,13,000
4. The maximum amount of pre-deposit that Disha Enterprise Pvt. Ltd. can be asked to deposit
under the IGST Act, 2017 for filing of an appeal before the Appellate Authority is ___________.
(a) ₹ 30 crores
(b) ₹ 60 crores
(c) ₹ 25 crores
(d) ₹ 50 crores
5. The maximum penalty prescribed under section 122 of the CGST Act, 2017 for failure of Kolkata
Office to deposit the tax collected on the advance received from Ganesh Flour Mill Pvt Ltd. is
___________.
(a) ₹ 18,000
(b) ₹ 25,000
(c) ₹ 10,000
(d) ₹ 10,000 or tax evaded, whichever is higher.

Ans:
1. (b)
2. (c)
3. (a)
4. (d)
5. (d)
13 ABC Ltd. is a Public Sector Undertaking (PSU) engaged in the business of generation of electricity
from conventional & non-conventional sources. The Government of India holds 75% equity in the
said company & balance equity is held by institutional and domestic investors. The company has
taken separate registration under GST in each State where it has business operations. The company
has its head office (HO) in Delhi & its power plants are located in the States of Bihar, Odisha
& Chhattisgarh.
Following transactions were carried out by the company during the month of February:
(Amount in ₹)
Particulars Delhi H.O Bihar plant Odisha plant Chhattisgarh plant
Sale of electrical energy to --- 2,50,00,000 3,50,00,000 4,50,00,000
DISCOM
Bank interest received on 18,00,000 3,00,000 5,00,000 8,00,000
saving bank account &
fixed deposit
House rent recovered from 55,000 30,000 25,000 40,000
the employees for
residential accommodation
provided to them
Rent collected from bank, 48,000 15,000 12,000 16,000
ATM, post office & shops
located in office premises
Sale of iron/ metal scrap - 85,000 45,000 65,000
(excluding TCS @ 1% as
per the Income-tax Act,
1961
Other Income 2,50,000 - - 45,000
Note:
(a) Other income of Delhi H.O. amounting to ₹ 2,50,000 is in respect of bond money recovered from
an ex-employee who had resigned from the service of ABC Ltd. prior to completion of the period
specified in the bond, viz., 2 years.
(b) Other income of ₹ 45,000 of Chhattisgarh plant is in respect of penalty recovered from a
contractor for delay in supply of material.

In addition to above information, following transactions were also carried out during the month of
February:
(1) A supply order for stationery items was awarded by Delhi H.O. to M/s Stationery Mart, New
Delhi for ₹ 3,36,000 (including GST @ 12%) in January.
The vendor supplied stationery items worth ₹ 44,800 (including GST@ 12%) & issued the tax
invoice in February. Delhi H.O. had made the payment of the said bill in February. The remaining
amount was paid in April on supply of balance items.
(2) Odisha plant purchased office furniture for ₹ 2,80,000 during February from an unregistered
dealer. Rate of GST on said furniture item is 18%.
(3) A Board meeting for raising term loan for project expansion was held in February. The Delhi H.O.
paid ₹ 20,000 each as sitting fee to 4 independent directors who attended the meeting.
(4) For safety & security of its H.O. & power plants, the company has engaged private security as
well as CISF. Following payments were made in February, in respect of bills issued in the month
of January:
Particulars Delhi H.O. Bihar plant Odisha plant Chhattisgarh
plant
CISF --- 10,00,000 8,00,000 14,00,000
(paid on 07th (paid on 15th (paid on 05th
February) February) February)
ABS Security 5,00,000 - - -
Services Pvt Ltd. (paid on 11th February)
(5) The Bihar plant purchased a machinery in February from M/s Sahoo Enterprises, Patna (not
registered under GST) for ₹ 86,000. Full payment was made in February. Rate of GST on the
said machinery is 18%.
All the amounts mentioned above are excluding GST, wherever applicable (unless otherwise specified).
Nos. 6. to 10. below:
6. The value of taxable supply on which GST is payable by Delhi H.O. under forward charge, for the
month of February is ___________.
(a) ₹ 21,78,000
(b) ₹ 2,98,000
(c) ₹ 22,33,000
(d) ₹ 3,78,000
7. The value of taxable inward supply on which GST shall be payable under reverse charge by Bihar
power plant is __________.
(a) ₹ 11,80,000
(b) ₹ 10,00,000
(c) ₹ 10,86,000
(d) ₹ 10,30,000
8. The value of supply on which TDS under section 51 of the CGST Act, 2017 shall be deducted by
Delhi H.O. while making payment to M/s Stationery Mart in February is ___________.
(a) ₹ 40,000
(b) ₹ 44,800
(c) ₹ 3,00,000
(d) TDS is not applicable since payment made in February is less than ₹ 2,50,000.
9. Which of the following statements is true with regard to the penalty of ₹ 45,000 recovered by
Chhattisgarh plant from the contractor for delay in supply of material?
(a) Fine/ penalty levied by a PSU is an exempt supply under section 11 of the CGST Act, 2017.
(b) It is a supply of services as stipulated in Schedule II of the CGST Act, 2017.
(c) It is neither a supply of service nor supply of goods as it is covered under Schedule III of the
CGST Act, 2017.
(d) It is not a supply at all under section 7 of the CGST Act, 2017.
10. What is the value of supply on which GST is payable by Odisha plant on sale of scrap?
(a) ₹ 45,000
(b) ₹ 45,450
(c) Sale of scrap is an exempt supply under GST. It is subject to TCS under the Income-tax Act,
1961.
(d) Sale of scrap is neither a supply of service nor supply of goods as it is covered under Schedule
III of the CGST Act, 2017.
Ans:
6. (b)
7. (b)
8. (a)
9. (b)
10. (a)

14. Minimum and maximum limit for amount for compounding of offences under section 138 of the
CGST Act, 2017 are:
(a) Minimum: Higher of 50% of tax involved, or ` 10,000; Maximum: Higher of 150% of tax involved,
or ` 30,000
(b) Minimum: Lower of 50% of tax involved, or ` 10,000; Maximum: Higher of 150% of tax involved,
or ` 30,000
(c) Minimum: Higher of 50% of tax involved, or ` 10,000; Maximum: Lower of 150% of tax involved,
or ` 30,000
(d) Minimum: Lower of 50% of tax involved, or ` 10,000; Maximum: Lower of 150% of tax involved,
or ` 30,000
Ans: (a) Minimum: Higher of 50% of tax involved, or ` 10,000; Maximum: Higher of 150% of tax
involved, or ` 30,000
15. Answer the following questions:

(i) Nirmal Private Limited, registered in Vasai, Maharashtra, is engaged in supply of taxable goods
and services. In the month of April, it sold goods worth ` 5,00,000 (excluding GST) to Suraksha
Enterprises and collected tax @ 28% on said goods from the buyer. However, the actual rate of
tax appliable in the given case was 18%. Nirmal Private Limited deposited the tax @ 18% on
these goods to the Government
on the due date and retained the remaining tax collected. Determine the amount of penalty, if
any, that may be imposed on Nirmal Private Limited in the month of October in the given case
ignoring interest payable, if any.
(ii) Bindusar, Chief Executive Officer of Ashoka Solutions Ltd., is issued a summon to appear before
the central tax officer to produce the books of accounts of Ashoka Solutions Ltd. in an inquiry
conducted on said company. Determine the amount of penalty, if any, that may be imposed on
Bindusar, if he fails to appear before the central tax officer. (RTP- Nov 21)
Ans: (i) Section 122(1)(iv) of the CGST Act, 2017 stipulates that a taxable person who collects any
tax in contravention of the provisions of the CGST Act, but fails to pay the same to the
Government beyond a period of 3 months from the date on which such payment becomes due
shall be liable to pay a penalty of:
(a) ` 10,000 or
(b) an amount equivalent to the tax evaded
whichever is higher.
In the given case, since Nirmal Private Limited has collected tax at a wrong rate (i.e. 28%), but
fails to deposit the full tax collected to the Government i.e. it deposits only tax @ 18% thereby
retaining the remaining tax collected, the amount of penalty that can be imposed on Nirmal
Private Limited is as follows:

(a) ` 10,000 or
(b) an amount equivalent to the tax evaded [` 50,000 (` 5,00,000× 28%) - (` 5,00,000× 18%)],
whichever is higher, i.e. ` 50,000.
(ii) 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 ` 25,000. Therefore, penalty
upto ` 25,000 can be imposed on Bindusar, in the given case.

C 24 Exemptions under GST
Q1. “Chanakya Academy” is registered under GST in the State of Uttar Pradesh. The
Academy runs the following educational institutions:
(i) ‘Keshav Institute of Technology’ (KIT), a private engineering college in Ghaziabad. KIT
also runs distance learning post graduate engineering programmes. Exams for such
programmes are conducted in select cities at centres appointed by the KIT. All the
engineering courses including the distance learning post graduate engineering programme
run by KIT are recognised by the law [The All India Council for Technical Education
(AICTE)].
(ii) ‘Little Millennium’, a pre-school in Lucknow.
(iii) Bright Minds’, a coaching institute in Kanpur. The Institute provides coaching for
Institute of Banking Personnel Selection (IBPS) Probationary Officers Exam.
(iv) ‘Spring Model’ a higher secondary school affiliated to CBSE Board.
The Academy provides the following details relating to the expenses incurred by the various institutions
run by it during the period April 20XX to September 20XX:
Table 1
S. Particulars KIT Little Bright Spring
No. Millennium Minds Model
(₹ ) (₹ ) (₹ ) (₹ )
(i) Printing services for printing the 2,50,000 1,50,000 2,00,000
question papers (paper and content
are provided by the Institutions)
(ii) Paper procured for printing the 4,30,000 2,58,000 3,44,000
question papers
(iii) Honorarium to paper setters and 5,00,000
examiners (not on the rolls of the
Institution)
(iv) Rent for exam centres taken 8,00,000 1,00,000
on rent like schools etc., for
conducting examination

(v) Subscription for online educational 4,00,000 80,000 2,20,000 2,40,000
journals
[Little Millennium has taken the
subscription for online periodicals on
child development and
experiential learning]
(vi) Hire charges for buses used to 4,80,000 5,50,000 1,30,000 7,50,000
transport students and faculty from
their residence to the institutions
and back
(vii) Catering services for running a 3,20,000 2,60,000 1,80,000 5,00,000
canteen in the campus for students
(Catering services for KIT
include a sum of ₹ 60,000 for
catering at a student event
organised in a banquet hall outside
the campus)
(viii) Security and housekeeping services 6,00,000 4,00,000 3,75,000 4,65,000
for the institution(s) (Security and
housekeeping services for Spring
Model include a sum of ₹ 80,000
payable for security and
housekeeping at the student event
organised in a banquet hall outside
the campus)
The academy further provides the following details relating to the receipts of the various
institutions run by it during the period April 20XX to September 20XX:
Table 2
S. Particulars KIT Little Bright Spring Model
No. Millennium Minds
(₹ ) (₹ ) (₹ ) (₹ )
(i) Tuition fee 35,00,000 15,00,000 20,00,000 25,00,000
(ii) Transport fee charged from 5,00,000 6,00,000 1,30,000 8,50,000
students
With the help of the above details –
(i) determine the amount of GST payable, if any, on goods and services received during
April 20XX- September 20XX by the various educational institutions run by the
‘Chanakya Academy’;

(ii) compute net GST liability of the ‘Chanakya Academy’ payable from the Electronic Cash Ledger,
for the period April 20XX to September 20XX.
All the amounts given above are exclusive of taxes, wherever applicable. Notes:
(i) Rate of GST on goods is 12%, catering service is 5% and on other services is 18%.
(ii) Wherever relevant, all the conditions necessary for availing the IT C have been complied with.
Ans: (i) Notification No. 12/2017 CT(R) dated 28.06.2017 (hereinafter referred to as exemption
notification) which exempts various services from GST leviable thereon exempts select services
provided to an educational institution.
Here, the “educational institution” means an institution providing services by way of,-
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law
for the time being in force;
(iii) education as a part of an approved vocational education course;
The select services which are exempt when provided to an educational institution are-
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the Central Government,
State Government or Union territory;
(iii) security or cleaning or house-keeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution;
(v) supply of online educational journals or periodicals
However, the services mentioned in points (i), (ii) and (iii) are exempt only when the same are
provided to an educational institution providing services by way of pre- school education and
education up to higher secondary school or equivalent.
Also, the supply of online educational journals or periodicals are not exempt from GST when
provided to-
(i) pre-school education and education up to higher secondary school or equivalent; or
(ii) education as a part of an approved vocational education course.
In the given case, all the engineering courses including the distance learning post graduate engineering
program run by KIT are recognized by the law [The All India Council for Technical Education
(AICTE)]. Therefore, since KIT imparts education as a part of a curriculum for obtaining a
qualification recognized by the Indian law, the same is an educational institution in terms of the
exemption notification.
Similarly, Liitle Millennium and Spring Model, being a pre-school and a higher secondary school
respectively are also educational institutions in terms of the exemption notification.
However, Bright Minds, being a coaching centre, training candidates to secure a banking job, is not
an educational institution in terms of the exemption notification. Hence, none of the select services
(mentioned above) will be exempt when provided to Bright Minds.
In the light of the foregoing provisions, the amount of GST payable on goods and services received

by these educational institutions during April 20XX- September 20XX is computed as under:
Particulars KIT Little Bright Spring
Millennium Minds Model
(₹ ) (₹ ) (₹ ) (₹ )
Printing services for printing the Exempt 27,000 Exempt
question papers (paper and [Services [1,50,000 x
content are provided by the provided to 18%]
Institutions) educational
institution in
relation to
conduct of
examination]
Paper procured for printing the 51,600 30,960 41,280
question papers – [Supply of [4,30,000 x [2,58,000 x [3,44,000 x
12%]
select services to 12%] 12%]
educational institutions is
exempt and not supply of goods
to such educational institutions]
Honorarium to paper setters and Exempt[Servi
examiners (not on the rolls of the ces provided
educational institution) to educational
Institution in
Relation to
Conduct of
examination]
Rent for exam centres taken on Exempt 18,000
rent like schools [Services [1,00,000 x
etc., for conducting provided to 18%]
examination educational
institution in
Relation to
Conduct of
examination]
Subscription for online Exempt 14,400 39,600 4,320
educational journals [Little [80,000 x [2,20,000 x [2,40,000 x
Millennium has taken the 18%] 18%] 18%]
subscription for online periodicals

on child development and
experiential learning]
Hire charges for buses used to 86,400 Exempt 23,400 Exempt
transport students and faculty [4,80,000 x [1,30,000 x
from their residence to the 18%] 18%]
institutions and back
Catering services for running a 16,000 Exempt 9,000 Exempt
canteen in the campus for [3,20,000 x [1,80,000 x
Students 5%] 5%]
Catering service provided to
pre- school and the higher
secondary school is exempt
irrespective of whether the same
is provided within or outside the
premises of the pre-school and the
higher secondary
school
Security and housekeeping 1,08,000 Exempt 67,500 14,400
services for the institution(s) [6,00,000 x [3,75,000 x [80,000 x
Security and housekeeping service 18%] 18%] 18%]
provided to pre- school and the
higher secondary school for the
student event organised in a
banquet hall will be taxable as
only the security and housekeeping
service provided within the
premises of the pre- school and
the higher secondary school are
exempt.
Total GST payable on goods and 2,62,000 14,400 2,15,460 60,000
services received by the
educational institutions
(ii) (1) Sl. No. 66 of Notification No. 12/2017 CT(R) dated 28.06.2017 also exempts services
provided by an educational institution to its students, faculty and staff. All the
educational institutions run by the Chanakya Academy except Bright Minds are
educational institutions in terms of the exemption notification (as explained under point
(i) above). Therefore, the education services and the transport services provided by KIT,
Little Millennium, and Spring Model to its students will be exempt from GST under Sl. No.

66 of the exemption notification. Thus, only the educational services provided by Bright
Minds will be liable to GST @ 18%.
(2) No input tax credit (ITC) will be availed on inputs and input services used in providing
exempt education services, i.e. education services by KIT, Little Millennium, and Spring
Model. Only Bright Minds will be entitled to avail ITC on inputs and input services
used in providing taxable education services. However, ITC on outdoor catering services
will be blocked in terms of section 17(5)(b)(i) of the CGST Act, 2017.
(3) Since there are no common inputs and input services being used for providing taxable
and exempt services, the need for reversal of ITC attributable to exempt supplies
will not arise.
In the light of the foregoing provisions, the net GST liability of Chanakya Academy, which will
comprise of only the tax liability of Bright Minds, is computed as under:
Particulars Bright Minds
(₹ )
Tuition fee 20,00,000
Transport fee charged from students 1,30,000
Value of output supply taxable @ 18% 21,30,000
GST liability @ 18% 3,83,400
Less: ITC [Total tax payable by Bright Minds on the service
received by it as computed in point (i) above less the tax payable on
catering charges (₹ 2,15,460 - ₹ 9,000)] 2,06,460
Net GST payable from Electronic Cash Ledger 1,76,940
Q.2 Shiva Medical Centre, a Multi-speciality hospital, is a registered supplier in Mumbai. It hires senior
doctors and consultants independently, without entering into any employer- employee agreement
with them. These doctors and consultants provide consultancy to the in-patients - patients who
are admitted to the hospital for treatment – without there being any contract with such patients.
In return, they are paid the consultancy charges by Shiva Medical Centre.
However, the money actually charged by Shiva Medical Centre from the in-patients is higher than
the consultancy charges paid to the hired doctors and consultants. The difference amount retained
by the hospital, i.e. retention money, includes charges for providing ancillary services like nursing
care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight,
blood pressure, etc.
Further, Shiva Medical Centre has its own canteen – Annapurna Bhawan - which supplies food
to the in-patients as advised by the doctor/nutritionists as also to other patients (who are not
admitted) or their attendants or visitors.
The Department took a stand that senior doctors and consultants are providing services to Shiva

Medical Centre and not to the patients. Hence, their services are not the health care services and
must be subject to GST. Further, GST is applicable on the retention money kept by Shiva Medical
Centre as well as on the services provided by its canteen - Annapurna Bhawan alleging that such
services are not the health care services.
You are required to examine whether the stand taken by the Department is correct provided the
services provided by Shiva Medical Centre are intra-State services.
Ans: As per Notification No. 12/2017 CT (R) dated 28.06.2017, services by way of health care services
by a clinical establishment, an authorised medical practitioner or para-medics are exempt from
GST.
Health care services have been defined to mean any service by way of diagnosis or treatment or
care for illness, injury, deformity, abnormality or pregnancy in any recognized system of
medicines in India and includes services by way of transportation of the patient to and from
a clinical establishment, but does not include hair transplant or 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.
Circular No. 32/06/2018 GST dated 12.02.2018 has clarified that in view of the above definition,
it can be inferred that hospitals also provide healthcare services. The entire amount charged by
them from the patients including the retention money and the fee/payments made to the
doctors etc., is towards the healthcare services provided by the hospitals to the patients and
is exempt from GST. In view of the same, GST is not applicable on the retention money kept by
Shiva Medical Centre.
The circular also clarified that services provided by senior doctors/ consultants/ technicians
hired by the hospitals, whether employees or not, are also healthcare services exempt from
GST. Hence, services provided by the senior doctors and consultants hired by Shiva Medical
Centre, being healthcare services, are also exempt from GST.
The circular further explained 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 not applicable on the food supplied by Annapurna Bhawan to in-patients as
advised by doctors/nutritionists while other supplies of food by it to patients (not admitted)
or their attendants/visitors are taxable.
Q.3 Which of the following activity is taxable under GST?

(i) Supply of food by a hospital to patients (not admitted) or their attendants or visitors.
(ii) Transportation of passengers by non-air-conditioned railways

(iii) Services by a brand ambassador by way of folk dance performance where consideration charged
is Rs. 1,40,000.
(iv) Transportation of agriculture produce by air from one place to another place in India
(v) Services by way of loading, unloading, packing, storage or warehousing of rice
(vi) Service provided by GTA where consideration charged for transportation of goods for a single
carriage is Rs. 900
(a) (i), (v), (vi)
(b) (iii), (iv), (v)
(c) (i), (iii), (iv)
(d) (iv), (v)
Ans : (i), (iii), (iv)
Q.4 State which of the following statement is correct:

(i) Services by any artist by way of performance in folk or classical art forms of music, dance, or
theatre as a brand ambassador if the consideration charged for such performance is not more
than Rs. 150,000/- is exempt.
(ii) Services of life insurance business under Life micro-insurance product as approved by the
Insurance Regulatory and Development Authority, having minimum amount of cover of Rs.
2,00,000/- is exempt
(iii) Service by an acquiring bank, to any person in relation to settlement of an amount upto Rs.
2,500/- in a single transaction transacted through credit card, debit card, charge card or other
payment card service is exempt.
(iv) Services provided by a goods transport agency by way of transport in a goods carriage of,
goods, where gross amount charged for the transportation of goods on a consignment
transported in a single carriage is Rs. 2250/-, is exempt.
Your options are-
(a) (i)
(b) (ii), (iii)
(c) (ii), (iii), (iv)
Ans : None of the above
Q.5 Which of the following statement(s) is/are correct?

(i) Special exemption under section 25 of the Customs Act is granted by issuing a notification;
(ii) General exemption under section 25 of the Customs Act is granted by issuing an order;

(iii) Special exemption is required to be published in official gazette;
(iv) General exemption is not required to be published in official gazette.
(a) All of above

(b) None of above
(c) Both (i) and (ii)
(d) (ii) and (iv)
Ans : None of above
Q.6 Determine whether GST is payable in case of each of the following independent services provided
by the registered persons:
Markanday College - Rs. 80,000. Markanday College provides education as a part of a
curriculum for obtaining an engineering degree recognised by law.
(2) Bus fees collected from students by Starward College - Rs. 3,500 per month. Starward College
provides education as a part of a curriculum for obtaining an engineering degree recognised by
law.
(3) Housekeeping service provided in the Smart Kids school, a play school by M/s. Spick & Span -
Rs. 25,000 per month.
Global link supplied ''Tracing Alphabets", an online educational journal, to Kidzee School - Rs.
4,000. The Kidzee School used the same for its students of UKG class.
Ans: As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided by an educational
institution to its students, faculty and staff are exempt from GST. Educational Institution has
been defined to mean, inter alia, an institution providing services by way of education as a part of
a curriculum for obtaining a qualification recognised by any law for the time being in force.
Since Markanday College provides education as a part of a curriculum for obtaining an engineering
degree recognised by law, the services provided by it to its staff by way of conducting personality
development course would be exempt from GST.
(2) As Starward College is an educational institution, the transport services provided by it to its
institution, by way of, inter alia, house-keeping services performed in such educational
institution are exempt from GST. However, such an exemption is available only when the said
services are provided to a pre-school education and a higher secondary school or equivalent.
Therefore, house-keeping services provided to Smart Kids Play School would be exempt from GST.

institution by way of supply of online educational journals or periodicals is exempt from GST.
However, such an exemption is available only when the said services are provided to an
educational institution providing education as a part of a curriculum for obtaining a qualification
recognised by any law for the time being in force.
Therefore, GST is payable in case of supply of online journal to students of UKG class of Kidzee
School.
Q7. Mr. Khiladi Kumar, is the Managing Director of Khiladi Equipments (P) Ltd. The Company has
offices and factories in Mumbai and is registered under GST. Mr. Khiladi Kumar, has decided
to send food grains and other relief materials worth ₹ 50,00,000/- and₹ 20,00,000
respectively through railway and airways to the cyclone hit victims in Kerala in the month of
November, 20XX. The Company has contacted Super Airlines and Indian Railways to transport
the materials from Mumbai to Kerala and price for the same has been determined as
₹10,00,000/- by air and ₹50,000/- by railways, excluding taxes. Mr. Khiladi Kumar, seeks your
help to determine what amount of GST is to be paid to Super Airlines and Indian Railways if
applicable GST rate is 18%.
(a) Super Airlines: ₹ 1,80,000/-; Indian Railways: NIL
(b) Super Airlines: ₹ 1,80,000/-; Indian Railways: ₹ 9,000
(c) Super Airlines: Nil; Indian Railways: ₹ 9,000/-
(d) Super Airlines: Nil; Indian Railways: Nil
Ans: Super Airlines: ₹ 1,80,000/-; Indian Railways: NIL
Q8. Determine taxable value of supply under the GST law with respect to each of the following
independent services provided by the registered persons:
M.V. College - ₹ 10,000.
(2) Bus fees collected from students by M.V. College - ₹ 2,500 per month.
(3) Housekeeping service provided by M/s. Clean well to Himavarsha Montessori school, a play
school - ₹ 25,000 per month.
(4) Info link supplied ''Tracing Alphabets", an online educational journal, to students of UKG class
of Sydney Montessori School - ₹ 2,000.
Ans: (1) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided by an
educational institution to its students, faculty and staff are exempt from GST.
Educational Institution has been defined to mean, inter alia, an institution providing

services by way of education as a part of a curriculum for obtaining a qualification
recognised by any law for the time being in force.
Assuming that M. V. College provides education as a part of a curriculum for obtaining a
qualification recognised by a law, the services provided by it to its staff by way of
conducting personality development course would be exempt from GST.
(2) As assumed above that M. V. College provides education as a part of a curriculum for
obtaining a qualification recognised by a law, the transport services provided by it to its
(3) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an
educational institution, by way of, inter alia, house-keeping services performed in such
educational institution are exempt from GST. However, such an exemption is available
only when the said services are provided to a pre-school education and a higher
secondary school or equivalent.
Therefore, house-keeping services provided to Himavarsha Montessori Play School would
be exempt from GST on the presumption that housekeeping services have been
performed in such play school itself.
(4) As per Notification No. 12/2017 CT (R) dated 28.06.2017, services provided to an
educational institution by way of supply of online educational journals or periodicals is
exempt from GST. However, such an exemption is available only when the said services
are provided to an educational institution providing education as a part of a curriculum
for obtaining a qualification recognised by any law for the time being in force.
Therefore, supply of online journal to students of UKG class of Sydney Montessori School
will not be exempt from GST. Hence, the taxable value in this case will be ₹ 2,000.
Q9. 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 20XX:
Particular Rs
Renting of residential dwelling for use as a residence 18,00,000
Renting of rooms for pilgrims (Charges per day ₹ 1,200) 8,00,000
Renting of rooms for devotees (Charges per day ₹ 750) 6,00,000
Renting of kalyanamandapam (Charges per day ₹ 15,000) 12,00,000
Renting of halls and open space (Charges per day ₹ 7,500) 10,75,000
Renting of shops for business (Charges per month ₹ 9,500) 4,75,000
Renting of shops for business (Charges per month ₹ 12,000) 7,50,000

Compute the total taxable value of supply for the month of August 20XX assuming that the above
amounts are exclusive of GST and the rooms/ Kalyan Mandapam/ Halls/ Open space/ shops owned
by the trust are located within the precincts of the religious place meant for general public.
Ans: Notification No. 12/2017 CT (R) dated 28.06.2017/Notification No. 9/2017 IT (R) dated
28.06.2017[exemption notification] provides exemption to renting of precincts of a religious place
meant for general public, owned/managed by, inter alia, an entity registered as a charitable trust
under section 12AA of the Income-tax Act. However, exemption is not available if:
(i) charges for rented rooms are ₹ 1,000 per day or more;
(ii) charges for rented community halls, Kalyan mandapam, open area are₹10,000 per day or
more;
(iii) charges for rented shops are ₹10,000 per month or more.
In view of the aforesaid provisions, value of supply of Sarva Sugam Charitable Trust for August,
20XX has been computed as under
Computation of value of supply of Sarva Sugam Charitable Trust for August, 20XX
Renting of residential dwelling for use as residence Nil
[Exempt vide exemption notification]
Renting of rooms for pilgrims* 8,00,000
[Since charges per day are not below ₹1,000]
Renting of rooms for devotees Nil
[Since charges per day are below ₹1,000]
Renting of Kalyana Mandapam 12,00,000
[Since charges per day are not below ₹10,000]
Renting of halls and open spaces Nil
[Since charges per day are below ₹ 10,000]
Renting of shops for business Nil
[Since charges per month are below ₹10,000]
Renting of shops for business 7,50,000
[Since charges per month are not below ₹ 10,000] nt (₹)
Value of taxable supply 27,50,000
Note: It is also possible to take a view that renting of rooms for pilgrims/devotees is a charitable
activity relating to advancement of religion. In that case, said activity will be exempt under Entry 1
of Notification No. 12/2017 CT (R) dated 28.06.2017 (in case services are intra-State
supplies)/Entry 14(b) of Notification No. 9/2017 IT (R) dated 28.06.2017 (in case services are
inter-State supplies).

Q.10 Mr. Happy has a huge residential property located at a prime location in Mumbai, Maharashtra. He has
let out the 1st and 2nd floor to Mr. Peace for residential purposes in April. Mr. Peace surrenders his
tenancy rights to Mr. Serene for a tenancy premium of ₹ 10,00,000 on 1st June. Mr. Serene has also
paid the applicable stamp duty and registration charges on transfer of tenancy rights. Moreover, Mr.
Serene has agreed to pay a monthly rent of ₹ 1,00,000 to Mr. Happy from June.
Determine the taxability of the transaction(s) involved in the given case, for the month of June.
Ans: Circular No. 44/2018 CT dated 02.05.2018 clarifies that the activity of transfer of tenancy right
against consideration [i.e. tenancy premium] is squarely covered under supply of service liable to GST.
It is a form of lease or renting of property and such activity is specifically declared to be a service in
Schedule II i.e. any lease, tenancy, easement, licence to occupy land is a supply of services.
Although stamp duty and registration charges have been levied on such transfer of tenancy rights, it
shall be still subject to GST. Merely because a transaction/supply involves execution of documents
which may require registration and payment of registration fee and stamp duty, would not preclude
them from the ‘scope of supply’ and from payment of GST.
The transfer of tenancy rights cannot be treated as sale of land/ building in Schedule III. Thus, it is
not a non-supply under GST and consequently, a consideration for the said activity shall attract levy
of GST. 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. Hence, in the given case,
the tenancy premium of ₹ 10,00,000 received by Mr. Peace for surrendering his tenancy rights to Mr.
Serene is liable to GST.
The circular further clarifies that since renting of residential dwelling for use as a residence is exempt
[Entry 12 of Notification No. 12/2017 CT (R) dated 28.06.201732], grant of tenancy rights in a
residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is
exempt. Consequently, monthly rent ₹ 1,00,000 received by Mr. Happy from Mr. Serene is exempt.
Q.11 Examine whether the following independent intra-State services are exempt from GST:
(b) Minimum balance charges collected by Dhanvarsha Bank from current account and saving
account holders.
Ans: 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) are
exempt from GST vide exemption notification.
However, service charges/ fees, documentation fees, broking charges, administrative charges, entry
charges or such like fees or charges collected over and above interest on loan, advance or a deposit
are not exempt and liable to GST.
In view of the above, minimum balance charges collected by Dhanvarsha Bank from current
account and saving account holders are not exempt and are liable to GST.

Q.12 Indian Institutes of Management (IIM), Indore organizes a placement drive for the students
studying in the campus. Many multinational companies register for the placement program and pay
the registration fee of ₹ 1,00,000. IIM, Indore is of the view that such consideration received from
multinational companies for participating in the placement program is exempt from GST. Explain
whether the view taken by IIM, Indore is correct.
Ans: Indian Institutes of Management Act, 2017 (IIM Act, 2017) empowers IIMs to (i) grant degrees,
diplomas, and other academic distinctions or titles, (ii) specify the criteria and process for
admission to courses or programmes of study, and (iii) specify the academic content of
programmes. Resultantly, all the IIMs fall under purview of “educational institutions” as they
provide education as a part of a curriculum for obtaining a qualification recognized by law for the
time being in force.
Further, the services provided by an educational institution to its students, faculty and staff are
exempt from GST vide exemption notification.
However, in the given case, services have been provided by the educational institution (viz. IIM,
Indore), to the multinational companies. Therefore, the same is not exempt from GST.
Q.13 India Corporations Ltd., a Public Sector Undertaking (PSU), has taken loan from a banking
company - Wellness Bank. The loan was guaranteed by the Central Government. India Corporations
Ltd. defaulted in the repayment of such loan. Examine whether the services of guaranteeing of
loan by the Central Government, in the given case, is liable to GST.
Ans: Services supplied by Central Government, State Government, Union territory to their undertakings or
Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings
or PSUs from the banking companies and financial institutions are exempt from GST vide
exemption notification.
In the present case, Central Government has guaranteed the loan taken by India Corporations Ltd.
[a PSU], from Wellness Bank, [a banking company]. Consequently, services provided by the Central
Government, in the form of guarantee of loan, are exempt from tax.
Q.14 British High Commission, chief diplomatic mission of the United Kingdom in India, is providing
advisory services to the students willing to travel to UK for further studies. The mission has
organized a seminar for such students and a registration fee of ₹ 5,000 per student has been
charged from the students for the same. You are required to determine whether the advisory
services provided by British High Commission are liable to GST.
Ans: Services by a foreign diplomatic mission located in India are exempt from GST vide exemption
notification. Hence, in the given case, advisory services by British High Commission located in
Delhi to the students are exempt from GST.

Q.15 Bhushan Biomedical Waste Ltd. is providing service of bio-medical waste treatment to Vishudhi
Pharma Company. For such services, Bhushan Biomedical Waste Ltd. has charged a fixed sum on
monthly basis. Whether the service provided by Bhushan Biomedical Waste Ltd. is exempt under
GST?
Ans: Services provided by operators of the common bio-medical waste treatment facility to a clinical
establishment by way of treatment or disposal of bio-medical waste or the processes incidental
thereto are exempt GST vide exemption notification. Further, the term “clinical establishment”
means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name
called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place
established as an independent entity or a part of an establishment to carry out diagnostic or
investigative services of diseases
In the present case the bio-medical waste treatment services are being provided to a pharma
company. The definition of term “clinical establishment” does not cover a pharma company within
its purview. Therefore, services provided by Bhushan Biomedical Waste Ltd. to Vishudhi Pharma
Company are not exempt from GST.
Q.16 Mr. Nagarjun, a registered supplier of Chennai, has received the following amounts in respect of
the activities undertaken by him during the month of September:
S. No. Particulars Amount (₹)
(i) Amount charged for service provided to recognized sports body as 50,000
selector of national team.
(ii) Commission received as an insurance agent from insurance company. 65,000
(iii) Amount charged as business correspondent for the services provided to 15,000
the urban branch of a nationalized bank with respect to savings bank
accounts.
(iv) Service to foreign diplomatic mission located in India. 28,000
(v) Funeral services. 30,000
He received the services from unregistered goods transport agency for his business activities and
paid freight of ₹ 45,000 (his aggregate turnover of previous year was ₹ 9,90,000).
Note: All the transactions stated above are intra-State transactions and also are exclusive of GST.
You are required to calculate gross GST liability (ignoring ITC provisions) of Mr. Nagarjun for the
month of September assuming that the rate of GST, wherever applicable, is 18% except the GTA
services where the rate of GST is 5%. Working notes should form part of your answer.

Ans: Computation of gross GST liability of Mr. Nagarjun
Particulars Value (₹) GST (₹)
Supplies on which Mr. Nagarjun is liable to pay GST under
forward charge
Amount charged for service provided to recognized sports body as 50,000 9,000
selector of national team [Note 1]
Commission received as an insurance agent from insurance Nil Nil
company [Note 2]
Amount charged as business correspondent for the services 15,000 2,700
provided to the urban branch of a nationalised bank with respect
to savings bank accounts [Note 3]
Services provided to foreign diplomatic mission located in India 28,000 5,040
[Note 4]
Funeral services [Note 5] Nil Nil
Supplies on which Mr. Nagarjun is liable to pay GST under
reverse charge
Services received from GTA [Note 6] 45,000 2,250
GST payable 18,990
Notes:
(1) Services provided to a recognized sports body by an individual only 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 vide exemption notification. Thus, service
provided as selector of team is liable to GST.
(2) Commission for providing insurance agent’s services is liable to GST. However, the tax payable
thereon is to be paid by the recipient of service i.e., insurance company, under reverse charge
in terms of Notification No. 13/2017 CT (R) dated 28.06.2017. Thus, Mr. Nagarjun will not
be liable to pay GST on such commission.
(3) Services provided by business correspondent to a banking company with respect to accounts
in its rural area branch are exempt from GST vide exemption notification. Thus, such services
provided in respect of urban area branch will be taxable.
(4) While services provided by a foreign diplomatic mission located in India are exempt from GST
vide exemption notification, services provided to such mission are taxable.
(5) Funeral services being covered in Schedule III of CGST Act are not a supply and thus, are
outside the ambit of GST.
(6) GST on services provided by a GTA (not paying tax @ 12%) to, inter alia, a registered person
is payable by the recipient of service i.e., the registered person, under reverse charge in

terms of Notification No. 13/2017 CT (R) dated 28.06.2017. The turnover of previous year is
irrelevant in this case.
Q.17 Vividh Pvt. Ltd. is a supplier of goods and services at Bangalore, registered in the State of
Karnataka, having turnover of ₹ 200 lakh in the last financial year. It has furnished the following
information for the month of June.
excluding GST
Services provided by way of a labour contract for 1,30,000
repairing a single residential unit otherwise than as a part of residential complex
Fee received from students of a competitive exam training academy run by 5,40,000
Vividh Pvt. Ltd.
4 buses each with a seating capacity of 72 passengers given on hire to State 6,00,000
Transport Undertaking
Rent paid to Local Municipal Corporation for premises taken on rent for 2,50,000
competitive exam training academy
Goods transport services received from GTA, tax is payable on such services @ 1,80,000
12%
Compute gross GST liability (ignoring ITC provisions) of Vividh Pvt. Ltd. for the month of June
assuming that the above amounts are exclusive of GST and rate of GST, wherever applicable, is
18% unless otherwise mentioned.
Ans: Computation of gross GST liability of Vividh Pvt. Ltd.
Particulars Value of GST @ 18%
supply (₹) (₹)
Services provided by way of labour contracts for repairing a single 1,30,000 2,34,000
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 vide exemption notification. Labour contracts
for repairing, are thus, taxable.]
Fee received from students of competitive exam training academy 5,40,000 97,200
[Fee received from students of competitive exam training academy
is taxable as it is not an educational institution since competitive
exam training does not lead to grant of a recognized qualification]
Buses each with seating capacity of 72 passengers given on hire 6,00,000 Nil
to State Transport Undertaking

[Services by way of giving on hire to a state transport undertaking
(STU), a motor vehicle meant to carry more than 12 passengers,
are exempt from GST vide exemption notification.]
Services on which tax is payable under reverse charge:
Rent paid to Local Municipal Corporation 2,50,000 45,000
[GST is payable under reverse charge in case
of renting of immovable property services supplied by a local
authority to a registered person.]
GTA services availed 1,80,000 Nil
[Since GTA is paying tax @ 12%, tax is payable under forward
charge by GTA only and not by Vividh Pvt. Ltd.]
Gross GST payable 3,76,200
NOV 21
Q.18 The Resident Welfare Association (RWA) of Kutumb Housing Society is registered under GST in the
State of Mahrashtra. There are 100 three BHK flats and 100 four BHK flats in the society. It
received/paid the following amounts (excluding GST, wherever applicable) in the months of January
and February:
Particulars January (₹) February (₹)

Maintenance charges per flat received from 7,000 7,000
all 3 BHK flat owners
Maintenance charges per flat received from 10,000 10,000
all 4 BHK flat owners
Interest received on the fixed deposit with 5,00,000 5,00,000
Dhansukh Bank
Generator purchased for the power back-up 1,00,000
of 4 BHK flats
Taps, pipes, other sanitary fittings purchased 50,000
for 3 BHK flats
Determine the net GST liability to be paid for the months of January and February, assuming that the
GST rate is 18% on all inward and outward supplies.
(a) January - ₹ 1,71,000; February - ₹ 1,62,000
(b) January - ₹ 1,80,000; February - ₹ 1,62,000
(b) January - ₹ 1,80,000; February - ₹ 1,80,000
(d) January - ₹ 1,71,000; February - ₹ 1,80,000

Ans: 11. (b)
Q.19 Parikshit Ltd., engaged in providing a bouquet of services, is registered under GST law. It furnishes the
following information for the month of March in relation to various services provided by it:
Particulars ₹
Fees from prospective employers for campus interview in its college 5,20,000
Five buses each with seating capacity of 40 passengers given on hire to 6,50,000
State Transport Undertaking
Receipts of 'Shiny', a commercial coaching institute providing coaching in 1,82,000
the field of commerce (a certificate was awarded to each trainee after
completion of the training)
Interest received on fixed deposits of the company with Dhanvarsha Bank 6,50,000
Receipts from running a Boarding School (including receipts for providing 39,00,000
residential dwelling service of ₹ 18,20,000)
Receipts of 'Sikshit Samudai' - an Industrial Training Institute (ITI) 2,60,000
affiliated to the National Council for Vocational Training (NCVT). Courses
run by said ITI are in designated trades
Receipts of 'Pratibha Institute', an institute registered with Directorate 1,30,000
General of Employment and Training (DGET), Union Ministry of Labour
and Employment, running a Modular Employable Skill Course (MESC)
approved by the National Council for Vocational Training (NCVT)
Professional services provided to foreign diplomatic mission located in 1,04,000
India
Compute the GST payable by Parikshit Ltd. assuming that all the above receipts are exclusive of GST
wherever applicable and the rate of GST applicable on all the supplies is 18%
Ans: Computation of GST payable by Parikshit Ltd. for the month of March
Particulars Value (₹) GST @ 18% (₹)
Fees from prospective employers for campus interview in 5,20,000 93,600
its college
[Taxable since such services are not specifically exempt]
Five buses each with seating capacity of 40 passengers Nil Nil
given on hire to State Transport Undertaking
[Services by way of giving on hire to a State transport
undertaking (STU), a motor vehicle meant to carry more
than 12 passengers, are exempt vide Notification No.
12/2017 CT(R) dated 28.06.2017 (hereinafter referred to
as exemption notification).]

Receipts of Shiny– a coaching institute 1,82,000 32,760
[Services provided by an educational institution to its
students, faculty and staff are exempt vide exemption
notification. However, coaching institute is not an
educational institution.]
Interest received on fixed deposits of the company with Nil Nil
Dhanvarsha Bank
[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) are exempt vide exemption
notification.]
Receipts from Boarding School including receipts for Nil Nil
residential dwelling service
notification. Boarding School providing education up to
higher secondary school or equivalent is an educational
institution since it provides composite supply of
education service coupled with other services like
providing dwelling units for residence and food wherein
the principal supply is supply of education service.]
Receipts of Sikshit Samudai Nil Nil
notification. Sikshit Samudai is an educational institution
running approved vocational education course.]
Receipts of 'Pratibha Institute' running Modular Nil Nil
Employable Skill Course
notification. Pratibha Institute is an educational
institution running approved vocational education course.]
Professional services provided to foreign diplomatic 1,04,000 18,720
mission located in India
[While services provided by a foreign diplomatic mission
located in India are exempt from GST vide exemption

notification, no such exemption is available to the
services provided to such mission.]
GST payable 8,06,000 1,45,080
Q.20 Arijit Singh a famous Bollywood singer who belongs to Mumbai is going to perform a live
concert in Delhi on 26th Jan 2021 at Firoz shah kotla stadium. Patanjali Ayurved ltd a well know
Indian company registered in New Delhi approached the manager of Arijit Singh to sponsor
the event. Contract for sponsorship services has been agreed at the following terms and
conditions: -
Complete event will be sponsored by Patanjali & the total expenditure incurred will
be ₹30 lakhs on the event. Break up of the cost is as follows:
a. Stage creation and lighting payment to a Superb event managers Pvt ltd - ₹ 5 lakhs (Rate of GST
– 18%)
b. Music arrangement payments to Musica Pvt Ltd for arranging musicians and sound systems - ₹ 10
lakhs. (GST rate – 12%)
c. Sitting arrangements expenses (including snacks and meals) for audience - ₹ 2 Lakhs.
d. Payment to Lovely Singh pvt ltd security services for maintaining the decorum of the event - ₹ 4
Lakhs. (GST rate- 18%)
e. Payment to local authorities hiring charges of stadium - ₹ 2 Lakhs. (GST rate – 18%)
f. Printing and marketing charges of hoardings, banners, and flexes in the city to Flexon ltd - ₹5
Lakhs (GST rate – 5%)
g. Payment of an award given to the lucky winner of a contest to be held at the event by hands of
Mr. Arijit Singh - ₹ 1 Lakhs.
h. Payment to GTA ₹ 1 lakh for transporting some goods to stadium. (Service is taxable @5% &
GTA has not availed ITC)
i. Since the event is financed by Patanjali in return their company logo will be marketed at every
place in the event – (Rate of GST on sponsorship service is 18%)
Observing the technicalities and complexities of the transactions Accountant of Mr. Arijit Singh
and Patanjali has approached you for expert services. You as a qualified Chartered Accountant
advise on the taxability, issuance of invoice, place of supply of the transaction and calculate
GST liability and ITC of Patanjali and Mr. Arijit Singh.
Ans: 1. Charge of GST
Firstly, as per section 9(3) of CGST act in case of Sponsorship services provided by any
person to a body corporate or partnership firm recipient is liable to pay the tax on reverse
charge basis. Therefore, in the present case Mr. Arijit Singh is a service provider as he is
allowing Patanjali Ltd to market their brand in his event & Patanjali is service recipient and in
lieu of that they are financing the complete event of singer. Hence in this scenario Patanjali

shall be liable for discharging the liability of GST on sponsorship services on amount of ₹30
lakhs @18%. Also, on the services of GTA availed (Refer Note 4). Total GST amount payable
under RCM will be ₹ 5,45,000 (2,72,500+2,72,500).
2. Invoice
Mr. Arijit Singh will raise invoice indicating RCM on the same.
3. Exemption
As per Entry No. 53 of the exemption Notification No. 12/2017- Central Tax (Rate) dated
28-06-2017 the following sponsorship services are exempt from GST.
Services by way of sponsorship of sporting events organised –
(a) by a national sports federation, or its affiliated federations, where the participating teams or
individuals represent any district, State, zone or Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games
Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special
Olympics Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.
No exemption will be available in the present case as the same is not covered in above definition.
4. Place of supply Considering the supplier as well as the recipient are located in India, the place of
supply of sponsorship services would be the location of the recipient (registered person) as per
Section 12(2)(a) of the IGST Act, 2017. The place where the event which was sponsored has been
held is not relevant.
5. Computation of ITC of Patanjali
Sr no Particulars Amount (₹) CGST SGST
1 Payment to Superb ltd 5,00,000 45,000 45,000
2 Musica Ltd 10,00,000 60,000 60,000
3 Siting arrangement expenses (Note 1) 2,00,000 - -
4 Security services (Note 2) 4,00,000 36,000 36,000
5 Hiring charges to local authorities (Note 3) 2,00,000 18,000 18,000
6 Printing charges 5,00,000 12,500 12,500
7 GTA services (Note 4) 1,00,000 2,500 2,500
Total 30,00,000 1,74,000 1,74,000

Notes
1. Payment of sitting arrangement, snacks and meals amounts are made to local unregistered vendors
hence not liable to GST.
2. Reverse charge shall be applicable in security services if its provided by any per other than body
corporate to a registered person located in the taxable territory. In the present case security
services are provided by a body corporate lovely Singh pvt ltd hence forward charge is applicable in
the same
3. Services provided by a local authority to a business entity excluding renting of immovable
property is covered under reverse charge mechanism. In the present case forward charge is
applicable as stadium which is an immovable property is rented to a business entity Patanjali by
local authority. 4. In case of GTA services of 5% rate is applicable to GTA and he is not availing
ITC then reverse charge is applicable on the transaction.
Q.21 Which of the following activity is liable to GST?

(i) Supply of food by a hospital to patients (not admitted) or their attendants or visitors
(ii) Transportation of passengers by non-air-conditioned railways
(iii) Services by a brand ambassador by way of folk-dance performance where consideration
charged is ₹ 1,40,000
(iv) Transportation of agriculture produce by air from one place to another place in India
(v) Services by way of loading, unloading, packing, storage or warehousing of rice
(vi) Service provided by GTA where consideration charged for transportation of goods for a single
carriage is ₹ 900
(a) (i), (v), (vi)
(b) (iii), (iv), (v)
(c) (i), (iii), (iv)
(d) (iv), (v)
Ans: (c) (i), (iii), (iv)
Q.22 Which of the following activities are not exempt from GST?
(i) Religious pilgrimage organised by Todarmal Charitable Trust.
(ii) Services provided by a business facilitator to an insurance company in an urban area
(iii) Milling of paddy into rice.
(a) (i), (ii)
(b) (i), (iii)
(c) (ii), (iii)
(d) (i), (ii), (iii)
Ans: (d) (i), (ii), (iii)

Q.23 Which of the following statements are true?
1. Services provided by Government ITIs to individual trainees are exempt from GST.
2. Services provided by the State Governments and Private Service Providers by way of
transportation of patients in ambulance are exempt from GST.
3. Services of renting of shops in a hospital are exempt from GST being health care services.
4. Services provided by police to PSUs are taxable.
(a) 1., 2. & 4.
(b) 2., 3. & 4.
(c) 3. & 4.
(d) 1., 2., 3. & 4.
Ans: (a) 1., 2. & 4.
Q.24 Dev Bhoomi Rice (P) Ltd., a registered person under GST, is providing services of processing of
milling of paddy into rice, loading, unloading, packing, storage and warehousing of rice in the State
of Chhattisgarh.
The company has made following supplies during the tax period of April to September:
(i) Loading and unloading of rice: ₹ 50,00,000.
(ii) Packing and warehousing of rice: ₹ 30,00,000.
(iii) Processing services of milling of paddy into rice: ₹ 1,00,00,000.
Determine the amount of GST payable on the above supplies assuming that the applicable rate of
tax is 5% and amounts given herein are exclusive of GST.
(a) ₹ 32,40,000
(b) ₹ 9,00,000
(c) ₹ 5,00,000
(d) Nil
Ans: (c) ₹ 5,00,000
Q.25 A Municipal Corporation has invited online bids for maintenance of bus stops for a period of one
year from 1st January to 31st December. The work involves composite supply of goods and services
wherein the supply of services is the principal supply. The value of goods constitutes 25% of the
total value of composite supply.
Mr. Kumar, Managing Director of Khiladi Contractors (P) Ltd., located and registered under GST in
Gujarat, wants to bid for the same. He seeks your opinion to determine the taxability of the above
supply to quote the best price. Choose the correct option.
(a) Not leviable to tax
(b) GST payable
(c) Exempt

Ans: (c) Exempt
Q.26 Mr. Happy Singh is a resident of Chandigarh. The marriage of his daughter, Khushi Kaur, has been
finalized with Mr. Lovely Singh, a NRI settled in Canada. The marriage is scheduled on 14th
February in Chandigarh. Mr. Happy Singh wants to send 5,000 marriage invitation cards to all his
relatives and friends to attend the marriage. He has to send the invitation by speed post. He is
not sure about the taxability of speed post services under GST regime. He seeks your help in
determining the applicability of GST on speed post. Choose the correct option.
(a) GST payable
(b) Non-taxable
(c) Exempt
Ans: (a) GST payable
Q.27 Mr. Kumar is the Managing Director of Khiladi Equipments (P) Ltd. The company is located and
registered under GST in Mumbai, Maharashtra. Mr. Kumar has decided to send food grains and
other relief materials worth ₹ 50,00,000 and ₹ 20,00,000 through railway and airways respectively,
to the cyclone hit victims in Kerala in the month of November. The company has contacted Super
Airlines and Indian Railways to transport answer the materials from Mumbai to Kerala and price
for the same has been determined as ₹ 10,00,000 by air and ₹ 50,000 by railways excluding taxes.
Mr. Kumar seeks your help to determine what is the amount of GST payable by Super Airlines and
Indian Railways, if applicable GST rate is 18% and the amounts given above are exclusive of GST,
wherever applicable.
(a) Super Airlines: ₹ 1,80,000; Indian Railways: Nil
(b) Super Airlines: ₹ 1,80,000; Indian Railways: ₹ 9,000
(c) Super Airlines: Nil; Indian Railways: ₹ 9,000
(d) Super Airlines: Nil; Indian Railways: Nil
Ans: (a) Super Airlines: ₹ 1,80,000; Indian Railways: Nil
Q.27 Mr. Pandey is an ambulance driver who lives in NCT of Delhi. He provides driving services to
Preeti Heart and Lung Institute (PHLI) - a super specialty hospital registered under GST in Delhi
- for a consideration of ₹ 25,000 per month.
Mr. Pandey was instructed to pick up a patient in Gurugram to PHLI. While going from Delhi to
Gurugram, he picked up 5 passengers for transportation in the ambulance from Delhi to Gurugram
and charged ₹ 500 each from them.
You are required to ascertain the taxability of transport services provided by Mr. Pandey in the
ambulance from Delhi to Gurugram under the CGST Act, 2017:

(a) Taxable supply
(b) Exempt supply
(c) Not a supply
Ans: (a) Taxable supply
Q.28 State which of the following statements is incorrect:

(i) Services by any artist by way of performance in folk or classical art forms of music, dance, or
theatre as a brand ambassador if the consideration charged for such performance is not
more than ₹ 150,000 is exempt.
(ii) Services of life insurance business under Life micro-insurance product as approved by the
Insurance Regulatory and Development Authority, having minimum amount of cover of₹
2,00,000 is exempt.
(iii) Service by an acquiring bank, to any person in relation to settlement of an amount upto ₹
2,500 in a single transaction transacted through credit card, debit card, charge card or
other payment card service is exempt.
(iv) Services provided by a goods transport agency by way of transport in a goods carriage of,
goods, where gross amount charged for the transportation of goods on a consignment
transported in a single carriage is ₹ 2,250, is exempt.
Your options are-
(a) (i)
(b) (ii), (iii)
(c) (ii), (iii), (iv)
(d) (i), (ii), (iii), (iv)
Ans: (d) (i), (ii), (iii), (iv)
Q.29 Shree Ram Seva Trust, registered under GST, is a charitable institution registered under section
12AA of the Income-tax Act, 1961. It has organized a skill development programme relating to
persons over the age of 65 years residing in a well-planned city, in the month of April. It has received
following amounts under the programme:

Subscription fees for the programme 50,000
Sponsorship fees received from Mahesh Enterprises – a sole proprietorship 1,00,000
firm
Consideration for supply of goods 3,00,000

Besides, the trust has received the donations of ₹ 2,00,000 in April. Hanuman, accountant of
Shree Ram Seva Trust, is not able to determine the taxability of the above amounts received under
GST law. He seeks your expertise in determining the same.
Determine the value of taxable supply of Shree Ram Seva Trust, for the month of April assuming
that the amounts given above are exclusive of GST, wherever applicable.
(a) Nil
(b) ₹ 6,50,000
(c) ₹ 6,00,000
(d) ₹ 4,50,000
Ans: (d) ₹ 4,50,000
Q.30 Happy Singh is the lawful owner of a residential house situated in Chandigarh. The property has
four floors constructed on it. Out of the four floors in his house, first and second floor are self-
occupied and third and fourth floor have been let out for residential purposes. Ratanjot Singh, who
is a tenant on third floor, has surrendered his tenancy rights to Parminder Singh for a tenancy
premium of ₹ 5,00,000 on 1st June. Parminder Singh has paid the applicable stamp duty and
registration charges on transfer of tenancy rights. Moreover, Parminder Singh will pay a monthly
rent of ₹ 50,000 to Happy Singh from June.
Determine the value of taxable supply, in the given case, for the month of June assuming that the
amounts given above are exclusive of GST, wherever applicable.
(a) Happy Singh: ₹ 5,50,000; Ratanjot Singh: Nil
(b) Happy Singh: Nil; Ratanjot Singh: ₹ 5,00,000
(c) Happy Singh: ₹ 50,000; Ratanjot Singh: Nil
(d) Happy Singh: ₹ 50,000; Ratanjot Singh: ₹ 5,00,000
Ans: (b) Happy Singh: Nil; Ratanjot Singh: ₹ 5,00,000
Q31 XYZ Logistics Limited (XLL) is into warehousing and logistics business. It has two Container
Freight Stations (CFS): one at Inland Container Depot (ICD) Dadri, Uttar Pradesh and other at
ICD Tughlakabad, Delhi. XLL is also engaged in the business of freight forwarding and multimodal
transportation. Intermittently, XLL also deals in trading of goods, primarily in export to countries
outside India. XLL started its operations on 30th June by setting up head/ corporate office in
Gurgaon, Haryana for trading of goods and two CFS at U.P. and Delhi. Services as well as invoicing
to customers was done from Delhi and U.P. unit only. Top management was placed at the head
office for the management of the company.
The aggregate turnover of the XXL delhi unit crossed ` 20 lakh on 31st October. It applied for GST
registration for Delhi on 25th November. Registration was granted on 7th December. GST in respect
of stock of goods at Delhi as on 30th October was ` 50 lakh, on 25th November was ` 40 lakh and
on 7th December was ` 20 lakh. The primary business of XLL is container handling service of
import/export containers. In July next year, a shipper placed a work order on XLL for handling of

an export container from ICD Tughlakabad to Dubai UAE, through Nhava Sheva seaport in Mumbai.
XLL was responsible for stuffing goods in containers at ICD, assisting in obtaining customs
clearance, and transportation of goods from ICD to seaport. XLL requested the customer to issue
e-way bill for the movement of customs sealed containers from ICD to seaport as the value of
goods in container exceeded ` 50,000. However, the customer denied issuing e-way bill stating that
the responsibility to issue the same is on the person who arranges the transport of goods.
Consequently, the management of XLL issued e-way bill with the assistance of a consultant.
There is a green cess that is applicable on the goods handled through CFS for exports outside
India. XLL as a policy deposits green cess with the Government in the name of the cus tomer and
recovers such cess at actuals from the customer. Few customers of XLL are based out of Nepal &
Bhutan. It provides container handling services for their containers/ cargo which are in transit to
Nepal or Bhutan. It receives consideration from Nepal/ Bhutan customers in INR (`). All the above
amounts are exclusive of GST, wherever applicable. Subject to the information given above, assume
that all the other conditions necessary for availing ITC have been fulfilled. Based on the facts of
the case scenario given above, choose the most appropriate answer to Q. Nos. 2.1. to 2.5.:-
2.1. Which of the following statements is correct regarding eligibility of ITC on opening stock at the
time of new registration?
(a) XLL can avail credit of ` 50 lakh.
(b) XLL can avail credit of ` 40 lakh.
(c) XLL can avail credit of ` 20 lakh.
(d) XLL cannot avail credit on opening stock.
2.2. Which of the following statements is correct regarding GST registration by XLL?
(a) XLL was liable for registration of only Delhi unit.
(b) XLL was liable for registration of Delhi and UP units.
(c) XLL was liable for registration of Delhi, UP and Haryana units.
(d) XLL was liable for normal registration at Delhi and UP unit, and ISD registration at Haryana unit.
2.3. Which of the following statements is correct regarding generation of e-way bill for movement from
ICD Tughlakabad to Nhava Sheva seaport in Mumbai?
(a) E-way bill was not required to be generated since goods were being transported from ICD to
seaport.
(b) E-way bill was mandatorily required to be generated irrespective of the value of the goods being
transported as such goods were being transported from ICD to seaport.
(c) E-way bill was required to be generated since the value of goods being transported
exceeded ` 50,000.
(d) E-way bill was rightfully issued by XYZ Logistics Limited being the transporter of goods.
2.4. Which of the following statements is correct regarding value of container handling services

provided by the company?
(a) Value of the taxable container handling services should exclude transportation cost and
green cess.
(b) Value of the taxable container handling services should exclude green cess but include
transportation cost.
(c) Value of the taxable container handling services should exclude transportation cost but
include green cess.
(d) Value of the taxable container handling services should include transportation cost and
green cess.
2.5. Which of the following statements is correct regarding invoicing to Nepal/ Bhutan customers?
(a) GST is not chargeable on container handling services provided to Nepal/ Bhutan customers
as the place of supply of such services is outside India.
(b) GST is not chargeable on container handling services provided to Nepal/ Bhutan customers
as the same qualifies as export of service.
(c) GST is not payable on container handling services provided to Nepal/ Bhutan customers as
the supply of services associated with transit cargo to Nepal and Bhutan are exempt
services.
(d) GST is chargeable on container handling services provided to Nepal/ Bhutan customers. (MTP-Nov
21)
Ans: 2.1 (a) XLL can avail credit of ` 50 lakh.

2.2 (c) XLL was liable for registration of Delhi, UP and Haryana units.
2.3 (a) E-way bill was not required to be generated since goods were being transported from
ICD to seaport.
2.4 (b) Value of the taxable container handling services should exclude green cess but
include transportation cost.
2.5 (c) GST is not payable on container handling services provided to Nepal/ Bhutan customers as
the supply of services associated with transit cargo to Nepal and Bhutan are exempt
services.

GST Question Bank May 22 by CA Yachna Mutha Bhurat

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GST Question Bank May 22 by CA Yachna Mutha Bhurat

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GST QUESTION BANK

By CA Yachana Mutha Bhurat

GST and custom GST Revision

1. GST IN INDIA - AN INTRODUCTION 1.1 – 1.15

2. SUPPLY UNDER GST 2.1 – 2.26

3. LEVY AND COLLECTION OF TAX 3.1 – 3.9

4. REVERSE CHARGE MECHANISM 4.1 - 4.13

5. COMPOSITION SCHEME 5.1 - 5.24

6. TIME OF SUPPLY 6.1 - 6.26

7. VALUE OF SUPPLY 7.1 - 7.58

8. INPUT TAX CREDIT 8.1 - 8.83

9. JOB WORK 9.1 - 9.9

10. REGISTRATION 10.1 - 10.29

11. PLACE OF SUPPLY 11.1 - 11.40

12. IMPORT AND EXPORT UNDER GST 12.1 - 12.9

13. ACCOUNTS AND RECORDS; E-WAY BILL 13.1 – 13.18

14. TAX INVOICE, CREDIT AND DEBIT NOTES 14.1 - 14.10

15. PAYMENT OF TAX 15.1 – 15.39

16. RETURNS UNDER GST 16.1 – 16.18

17. ASSESSMENT AND AUDIT 17.1 - 17.12

19. DEMANDS & RECOVERY 19.1 - 19.16

20. LIABILITY TO PAY IN CERTAIN CASES 20.1 - 20.8

21. INSPECTION 21.1 - 21.17

22. OFFENCES & PENALTIES 22.2 - 22.9

23. APPEALS & REVISION 23.1 - 23.23

24. EXEMPTIONS UNDER GST 24.1-24.29

List II (referred to State List III (referred as the

3. Explain the concept of “Dual GST” (ICAI Material)

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 1

6. Write a short note on GST Council. (RTP ICAI)

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 2

7. Following Intra State Supply made by following persons:

Transaction 2: Supply of goods/services by B to C – Value addition @ 20%

Computation of CGST, SGST payable by B to Government

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 3

8. Following Inter State Supply made by following persons:

Particulars Amount (In Rs.)

Value charged for Supply of Goods / Services 10000

• Transaction 2: Supply of Goods / Services by “A” of State 1 to “B” of State 2 – Value

Add: IGST @ 18 % 2160

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 4

Particulars Amount (In Rs.)

IGST Payable 2160

• Transaction 3: Supply of goods/services by B of “State 2” to C of “State 2” –

Computation of CGST, SGST Payable to Government by “B”.

Particulars Amount (In Rs.)

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 5

Revenue to Revenue to Revenue to

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 6

Multiple Choice Questions: (MCQs)

Q 1. GST Stands for:

Ans: d: Goods and Services Tax

Q 2. In India GST became effective from

Ans: c; 1 July 2017

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Q 4. Which of the following tax is not subsumed in GST?

Ans: b: Basic Customs Duty (BCD)

Q 5. For the purpose of GST, which constitution amendment was passed?

Ans: a; Constitution (101st Amendment) Act, 2016

Ans: b; GSTIN (Based on PAN)

Q 7. Newly Article empowering president to constitute of GST Council?

CA Yachana Mutha Bhurat 09669357770 gst.yachana@gmail.com 1. 8

Q 8. Who shall be the Chairman of the GST Council?