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Answer Paper

Indirect Tax Duration: 90

Details: Test - 2 Marks: 50

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Solution-1: As per section 12(14) of the IGST Act, 2017, the place of supply of advertisement
services to the Central Government, a State Government, a statutory body or a local authority
meant for the States or Union territories identified in the contract or agreement is taken as
being in each of such States or Union territories (where the advertisement is broadcasted/ run
/played/disseminated).

Therefore, in the given case, the place of supply of advertisement service is in the States of
Haryana, Punjab, Rajasthan, U.P and Kerala.

The value of the supply of such advertisement services specific to each State/Union territory is
in proportion to the amount attributable to the services provided by way of dissemination in
the respective States/Union territories determined in terms of the contract or agreement
entered in this regard.

In the absence of such a contract or agreement between the supplier and recipient of services,
the proportionate value of advertisement services attributable to different States/Union
territories (where the advertisement is broadcasted/run/played/disseminated) is computed in
accordance with rule 3 of the IGST Rules, 2017.

As per rule 3(f) of the IGST Rules, 2017, in the case of advertisement on television channels, the
amount attributable to the value of advertisement service disseminated in a State shall be
calculated based on the viewership of such channel in such State, which in turn, shall be
calculated in the following manner, namely: -

(i) the channel viewership figures for that channel for a State or Union territory shall be
taken from the figures published in this regard by the Broadcast Audience Research
Council;
(ii) the figures published for the last week of a given quarter shall be used for calculating
viewership for the succeeding quarter;
(iii) where such channel viewership figures relate to a region comprising of more than one
State or Union territory, the viewership figures for a State or Union territory of that
 region, shall be calculated by applying the ratio of the populations of that State or Union
territory, as determined in the latest Census, to such viewership figures;
(iv) the ratio of the viewership figures for each State or Union territory as so calculated, when
applied to the amount payable for that service, shall represent the portion of the value
attributable to the dissemination in that State or Union territory.

Therefore, value of supply attributable to 'Haryana', 'Punjab', 'Rajasthan', 'UP' and 'Kerala', will
be computed as under:

(2 marks)

Viewership figures of Zee Viewership ratio Zee Proportionate value of

News' channel as provided News channel in the advertisement services
States by the Broadcast Audience state Haryana, (Punjab Haryana, (Punjab and
Research Council in the last and Rajasthan) and UP Rajasthan) and UP and
week of June 20XX and Kerala Kerala
20,00,000 X 1/4 =
Haryana
100,000 1 500,000
Punjab + 20,00,000 X 2/4 =
Rajasthan 200,000 2 10,00,000
UP +
Kerala 100,000 1 20,00,000 X 1/4 =500,000

(2 marks)

Population ratio in Proportionate value of

Population as the States 'Punjab advertisement services in
States
per latest census and Rajasthan and the States 'A', 'B', 'C', 'D' &
(in crores) 'UP' & 'Kerala' 'E

Haryana 100 500,000

 10,00,000 X 9/10 =
Punjab 360 9,00,000
Punjab: Rajasthan = 10,00,000 X 1/10 =
Rajasthan 40 180:20 = 9:1 100,000
UP 200 UP : Kerala = 100:25 500,000 X 4/5 =4,00,000
Kerala 50 = 4:1 500,000 X 1/5 =100,000

(1 marks)

Since, there are five different places of supply in the given case, 'NDTV channel will have to
issue five separate invoices for each of the States namely, 'Haryana', 'Punjab', 'Rajasthan', 'UP'
& 'Kerala' indicating the value pertaining to that State. The GST liability of Zee news channel
will, therefore, be worked out as under:

Computation of GST liability of 'NDTV News’

Proportionate value CGST@

States 9% of advertisement CGST@ 9% SGST@ 9% IGST@ 18%
services

Haryana 500,000 45,000 45,000

Punjab 900,000 162,000

Rajasthan 100,000 18,000

UP 400,000 72,000

Kerala 100,000 18,000

 (2 marks)

Only in case of supply of services in State 'Haryana', the location of supplier (State 'Haryana')
and the place of supply are in the same State, hence the same is an intra-State supply in terms
of section 8(1) of the IGST Act, 2017 and is thus, liable to CGST and SGST. In all the remaining
cases of supply of services, the location of the supplier (State 'Haryana') and the places of
supply (States 'Punjab', 'Rajasthan', 'UP' & 'Kerala') are in two different States, hence the same
are inter-State supplies liable to IGST [Section 7(1 )(a) of the IGST Act, 2017 read with section 5(
1) of that Act].

Solution- 2: When goods are sent on approval, then this transaction is not treated as 'supply' at
that moment. Transaction is treated as supply post acceptance of goods by the consignee.
Accordingly, Invoice for such supply shall be raised at that point of time.

However. Sec 31(7) of CGST Act provides that invoice shall be raised on/before earlier of the
time of supply of such goods or 6 months from the date of removal of such goods.

Thus, in case supplier sends the goods for approval and such goods are not approved by the
consignee within 6 months from the date of removal of goods by the supplier, the supplier has
to raise the invoice upon expiry of 6 months. Further, the moment such invoice is raised, GST
liability will arise as and when the invoice is issued for such goods, time of supply will arise as
per Sec 12(2) of CGST Act.

Keeping in mind the above legal provisions, time of supply as per Sec 12 shall be following
under the different given situations:

Acceptance by Last date 6 months

TOS as per
S.No. buyer- creating DOI for issue of from DOP
sec 12(2)
supply invoice removal
1. 5-Dec-19 15-Dec-19 5-Dec-19 1-jun-2020 25-Dec- 5-Dec-2019
 2019
2. 15-Dec-19 15-Dec-19 15-Dec-19 1-jun-2020 30-Dec- 15-Dec-
2019 2019
3. 25-Jul-2020 25-Jul-20 25-Jul-2020 1-jun-2020 30-July- 1-Jun-2020
2020

(2 marks each)

Solution-3:

Supply to Y ltd (Rs.) Z ltd. (Rs.)

Nature of supply Intra- state Inter- state
Taxable value of supply of 26,80,000 5,00,000
goods
GST payable
- IGST @18% of Rs. - 90,000
5,00,000
- CGST @9% of Rs. 2,41,200 -
26,80,000
- SGST @9% of Rs. 2,41,200 -
26,80,000

(1 marks)

Computation of GST payable from cash ledger [Sec 49(5) + Sec 49-A + Sec 49-B+ Rule 88-A:

ITC ITC Liability 1stAdj Next Adj Next Adj Balance Balance
 amount (IGST ITC) (CGST (SGST to pay in ITC
ITC) ITC) cash
IGST 92,000 90,000 90,000 - - Nil Nil
CGST 9,00,000 2,41,200 2,000 2,39,200 N.A Nil 6,60,800
SGST 9,00,000 2,41,200 N.A N.A 2,41,200 Nil 6,58,800

(4 marks)

Note: On purchase of Honda city car, input tax credit is not available as such ITC is blocked as
per provisions of sec 17(5).

Solution-4: Place of supply will be determined as follows:

1. Punjab to Mumbai air ticket- This service is pertaining to transportation of passengers, it is

covered by section 12(9) of IGST act. If the recipient is a registered person place of supply of
service is the location of recipient of service. ABC Limited is registered in Punjab, place of
supply of services is in Punjab, location of supplier is in Punjab, consequently it is intra- state
supply.
(2 marks)

2. Conference participation- Training services are covered by section 12 (5) of IGST Act. If the
recipient is a registered person, place of supply of service is the location of recipient of
service. ABC ltd is registered in Punjab. Place of supply of service is in Punjab, Location of
supplier is in Mumbai (it is assumed that Oxford school has taken registration in Mumbai as
a non-resident taxable person). Consequent it is inter- state supply.
(2 marks)
3. Lodging Accommodation- It is covered by section 12(3) (b) of IGST Act. Place of supply of
service is the hotel building (in Mumbai). Location of supplier is in Mumbai. It is, therefore,
intra- state supply.

Mumbai- Punjab return ticket- As discussed above, place of supply is in Punjab. Location of
supplier is in Mumbai Consequently it is inter- state supply

(2 marks)

Solution-5:

Computation of transaction value in accordance with section 15 of CGST Act, 2017

Particular Value Value

30,80,000
1) Goods sold 30,00,000
2) Municipal tax and freight & insurance (Note 1) 50,000
3) Weighment charges paid to third party (Note 2) 30,000
( 2 marks)
2,00,000
1) Consideration received from sale of goods 2,00,000
2) Subsidiary received from Govt. of India (Note 3) Nil
3) Subsidiary received from Khalsa aid. (Note 3) Nil
( 2 marks)
97,000
1) MRP of Goods sold to king XI Punjab 1,00,000
2) Trade discount (2% of 1,00,000) (2000)
3) Discount paid as per contract terms (1% of 1,00,000) (Note (1000)
4)
( 2 marks)
 40,000
1) OMV od such supply ( means good) (Note 5) 40,000
2) Cash paid to vendor Nil
( 2 marks)
1,000
1) Goods sold to his mother (Note 6) 1,,000
( 2 marks)

7,00,000
1) Good exported to another country (10,000*70) (Note 7) 7,00,000
( 1 marks)
Value of transaction 41,21,000

Further default of payment by consumer is not affect any transaction hence default of payment
by KKR shall not result in any reduction in transaction value

( 1 marks)

Note:

1) As per Section 15(2) (A), any taxes, cesses, fee charged underany other law (Other than
GST laws), and charged separately then it should become part of transaction value. As
per sec 15(2) (c), any incidental expenses, including commission and packing, charged by
the supplier to recipient shall be part of transaction value. Hence freight and
commission shall be part of transaction value.
2) As per section 15(2)(B), any amount that supplier is liable to pay but paid by recipient of
the supply and supplier has not included such value in price actually paid by recipient
then such value shall be part of transaction value.
3) As per section 15(2)(E) any subsidies directly linked to price, excluding subsidiary
provide by central government and state government shall be include in transaction
value. Hence subsidiary by government is not include in transaction value. Further
 subsidiary provide by khalsa aid is not included in transaction value as it is not directly
related to transaction
4) As per section 15(1) and 15(3), trade discount shall not be part of transaction value and
Further any discount which is specified at time of contract shall be exclude from part of
transaction value
5) As per rule 27 of CGST valuation rules,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 under clause (a), be the sum total of
consideration in money and any such further amount in money as is equivalent to the
consideration not in money, if such amount is known at the time of supply; Hence
transaction shall be 40,000 which OMV of such supply.
6) As per section 15 (1), value of supply shall be transaction value if transaction not done
between related party and money is not a sole considerations for such supply. Mother is
covered in related party definition hence for valuation of transaction, rule 28 shall
applied.As per rule 28, the value of the supply of goods or services or both between
distinct persons as specified in sub-section (4) and (5) of section 25 or where the
supplier and recipient are related, other than where the supply is made through an
agent, shall-a) be the open market value of such supply;Provided further that where the
recipient is eligible for full input tax credit, the value declared in the invoice shall be
deemed to be the open market value of the goods or services hence in this case, mother
is also registered person and related person hence she eligible for full ITC on same
thereforevalue of 1000 specified in invoice shall be treated as transaction value.
7) If the consideration for supply of goods is received in foreign currency, for purpose of
conversion of foreign currency, rate notified by CBIC shall be used.

Solution-6:
(i) At any stage, but before September of the next financial year, supplier can upload the
invoice and pay duty and interest on such missing invoices in his GSTR-3B of the month in which
he had earlier failed to upload the invoice. The recipient shall be eligible to reduce his output
tax liability to the extent of the amount in respect of which the supplier has rectified the mis-
match. The interest paid by the recipient at the time of reversal will also be refunded to the
recipient by crediting the amount in corresponding head of his electronic cash ledger.

(ii) As per Section 39(9), provides for correction in the returns on account of Omission of wrong
particulars filed other than as a result of audit/inspection/scrutiny/enforcement, the assessee
can rectify such omissions/incorrect particulars in the returns. In the month/quarter in which
such omission/ incorrect particulars are noticed, the due tax and interest shall be payable
thereon.

Multiple Choice Solutions:

(4 * 2 marks)

Que No. Answers Reason

1. D The purchase value of goods reprocessed from a defaulting borrower,

Who is not registered, for the purpose of recovery of loan shall be
deemed to purchase value of such goods reduced by 5% for every
quarter or part or quarter between date of purchase to date of disposal
(here quarter shall count from 15 –Aug-19 to 1oct-20) and any part of
quarter shall count as complete quarterwhich is equal to 6 quarter
therefore. Purchase value will be 5,00,000-30%(5%*6)=3,50,000/
2 B As per section 12(2) of CGST act, the TOS shall be the earlier of following
dates-

Date of issue of invoice or last date on which he is required to issue

under section 31 I.e. date of delivery

Date on which payment receives with respect to supply.

In the given case invoice is required to be issued on 5th November 2018.

Thus TOS is 5th November 2018.

3. C Value of
Particular Service liability

A)single insurance premium on sale of

composite insurance policy( 10%
premium) 100,000 12,000

b)20 lakhs from pure term policy 2,000,000 240,000

C) Composite insurance policy

and Premium received in first year 500,000 60,000

C) Composite insurance policy

and Subsequent year premium 375,000 45,000

D) Insurance policy specify the

Insurance amount 400,000 48,000

AMT 3,375,000 405,000

4 C For purposes of determination of TOS, the date of payment is considered

 to be earlier of the date of receipt of payment In bank account or date of
entry In books of accounts. 'Thus, in instance case, the date of receipt of
payment In bank on 28th July, 2019.

In this case, the payment has been received prior to date of invoice.
Thus, this Is case of receipt of advance by the supplier.

However, in view of relevant notification issued u/Sec 148, advances

shall not give rise to time of supply for supplier of goods (other than
composition supplier). In given case, invoice being issued upto removal of
goods, time of supply shall be the date of Invoice, I.e., 1st Aug, 2019.

5 D POS is determined in accordance with Section 13(5)- but since service

provided at more than 1 location, thus section 13(7) is also considered.

6. B “output tax” in relation to a taxable person, means the tax chargeable

under this Act on taxable supply of goods or services or both made by
him or by his agent but excludes tax payable by him on reverse charge
basis. Hence output ax shall be 30 lacs.

7. C POS is Pune by applying section 13(4), services supplied in relation to an

immovable property, including services supplied in this regard by expert
and estate agents.

8. C Annual return is not required to fill by NRTP and person who is registered
as tax deductor