CA FINAL NEW COURSE

INDIRECT TAX LAWS

Test-4 Chapter- 17,18,19,21,22,23

Total Marks 55

MCQs

1. Ms. Reena Banerji is engaged in retail business of selling mobile phones in the State of
West Bengal. She has affected supplies to the customers in the State of Uttar Pradesh and
Haryana. Her total turnover during the financial year ending 31st March, 20x1 IS Rs 18,00,000.
Owing to low profit margins in the business, she has decided to shut down the business in
April 20X1. The proper officer has collected evidence of the inter-state sale of mobile phones
effect ted by Ms. Reena Banerjee during the FY ending 31st March 20X1. Now, the proper
officer 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

2. The Seized goods, documents or books can be retained by such officer for any long,
whether he requires it or not. Comment.

a) Yes, he can do so u/s 67(3)

b) No, he can’t do so.
c) Yes, he can do so with permission of the assesses.

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 d) No, he can retain them only for so long as he requires for carrying out inspection only.

3. Where the service of Notice or issuance of order is stayed by a Court order, can the period
of such stay be excluded in computing the period specified in sub-sections (2) and (10) of
section 73 or in sub sections(2) and (10) of section74?

a) Yes, period of stay can be excluded

b) No, period of stay cannot be excluded
c) At proper officer’s discretion
d) None of the above

4. Shagun started supply of goods in Vasai, Maharashtra from 01.01.20X1. Her turnover
exceeded Rs 40 lakh on 25.01.20X1. 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 31.03.20X1, if the tax evaded by her, as on said date, on account of failure to
obtain registration is Rs 1,26,000:

a) Rs 10,000
b) Rs 1,26,000
c) Rs 12,600
d) None of the above

5. 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 bench of the
Appellate Tribunal

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(iii) For a matter involving substantial question of law Choose the most appropriate option.

a) (i) and (ii)

b) (i) and (iii)
c) (ii) and (iii)
d) (i), (ii) and (iii)

6. State whether following statements are true or false w.r.t. provisions relating to advance
ruling.

(i) Questions on which the advance ruling can be sought under the CGST Act, 2017 include
rate of tax applicable to a particular supply.

(ii) Rectification of order of advance ruling is not possible once the Authority for Advance
Ruling has passed the order.

(iii) The Authority for Advance Ruling shall pronounce its ruling within 90 days from the date
of receipt of application.

(iv) Authority for Advance Ruling may accept application even if the question raised in the
application is already pending or decided in any proceedings of the applicant under any of the
provisions of the CGST Act, 2017.

(v) 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 facts, fraud or
misrepresentation of facts.

Choose the most appropriate option.

a) False, False, True, False, True

b) False, True, True, False, True
c) True, True, False, False, True
d) False, False, False, False, True

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7. The fee for filing an appeal before AAAR by the applicant is:

a) Rs 25,000/- under CGST Act

b) Rs 25,0000/- under SGST Act
c) Rs 10,000/- each under CGST and SGST Act
d) Rs 25,000/- under any of the above Act

8. When Commissioner is not required to serve fresh notice 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)

9. Dharampal & Co., registered under GST in Rajasthan, issued an invoice of Rs 5,00,00,000
(excluding GST) to Popatlal & Co. without supplying any goods or services, at the advice of its
accountant – Mr. Sudhanshu. GST @ 18% was charged in this invoice. Popatlal & Co. availed
the ITC on the basis of said invoice and utilised it in the same month. Determine the amount
of penalty leviable in this case.

a) Dharampal & Co.: Rs 90,00,000; Popatlal & Co.: Rs 90,00,000; Mr. Sudhanshu: Nil
b) Dharampal & Co.: Rs 90,00,000; Popatlal & Co.: Rs 90,00,000; Mr. Sudhanshu: Rs
90,00,000
c) Dharampal & Co.: Nil; Popatlal & Co.: Nil; Mr. Sudhanshu: Rs 90,00,00
d) Dharampal & Co.: Rs 10,000; Popatlal & Co.: Rs 10,000; Mr. Sudhanshu: Nil

10. A copy of order passed by the Appellate Authority shall be sent to:

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 a) Adjudicating authority
b) Appellant
c) Jurisdictional commissioner of CGST, SGST/UTGST
d) All of the above

(10 x 1 = 10 marks)

Q-1 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.

(4 marks)

Q-2 Explain the situation in which access to business premises is allowed under section 71. Also,
list the records which are to be produced during access to business premises.

(4 marks)

Q-3 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.

(4 marks)

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Q-4 Mangeshwar, registered under the CGST Act, 2017 has made a breach in payment of tax
amounting to Rs 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 impossible.

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.

Mangeswar 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 party 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.

(6 marks)

Q-5 In an order dated 20.08.20XX issued to GH (P) Ltd., the Joint Commissioner of CGST has
confirmed a CGST demand of Rs 280 crore. The company is disputing the entire demand of
CGST and wants to know how much pre-deposits it has to make under 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?.

(6 marks)

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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 apprehensive 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’s to the goods supplied by him in Delhi.
Whether Sambhav can do so?
(6 marks)

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Q-7 Department initiated prosecution proceedings against a taxable person who had evaded
GST of Rs 4.2 crores. He has approached the Commissioner with a request for compounding the
offence. After considering the request, the commissioner has directed him to pay an amount of
Rs 2.5 crores as compounding amount. Indicate the minimum and maximum limits for
compounding amount. Is the amount fixed by the commissioner in this case within the limits
prescribed under the law? What is the consequence of the decision of the commissioner
allowing the request for compounding the offence?

(5 marks)

Q-8 Anirudh Ltd. is registered in Telangana and paid IGST on a transaction considering the same
to be inter-state supply on the basis that the customer is situated in Delhi.

However, GST authorities have raised a dispute and have issued a show cause notice that since
the services are rendered within Telangana, it is an intra-state supply leviable to CGST and
SGST. Anirudh Ltd. has lost the case before the proper officer and also in first appeal before the
Departmental Appellate Authority.

Advise Anirudh Ltd. regarding the following:

(i) Can Anirudh Ltd. file an appeal against the order of the first Appellate Authority? If yes,
before which forum can Anirudh Ltd. file the said appeal?
(ii) Once a valid appeal is filed by Anirudh Ltd. before the appropriate forum, can the
authorities insist Anirudh Ltd. to deposit the CGST and SGST which the authorities are
claiming that Anirudh Ltd. ought to have paid but has not paid.
(iii) If Anirudh Ltd. loses at the 2nd appellate stage as well, is there any other Statutory forum
available for Anirudh Ltd. to file another appeal? If yes, before which forum?
(iv) Assuming Anirudh Ltd. loses at all levels, would there be any interest liability on Anirudh
Ltd? (6 marks)

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