CA FINAL NEW COURSE

INDIRECT TAX LAWS

Test-3 CH -8, 14, 15, 16, 24

Total Marks 60

MCQs

1. Grand Foods is engaged in supplying restaurant service in Delhi. In the preceding financial
year, it has an aggregate turnover of Rs. 95 lakh from restaurant service and Rs. 5 lakh
from supply of farm labour and has earned a bank interest of Rs. 10 lakh. Which of the
following statements are true in the given case?
(1) Aggregate turnover of Grand Foods, For determining eligibility for composition
scheme, in the preceding FY is Rs. 90 lakh.
(2) Aggregate turnover of Grand Foods, for determining eligibility for Composition
scheme, in the preceding FY is Rs. 100 lakh.
(3) Aggregate turnover of Grand Foods, for determining eligibility form composition
scheme, in the preceding FY is Rs. 110 lakh.
(4) Supply of farm labour and supply of service of extending loans/deposits does not
make Grand Foods ineligible for composition scheme.
(5) Supply of services other than restaurant service – supply of farm labour and supply of
service of extending loans/deposits – by Grand Foods makes it ineligible for
composition scheme.

(a) (1) and (4)

(b) (2) and (4)
(c) (1) and (5)
(d) (3) and (5)

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2. Refund amount is credited to _______, if the amount is refundable and to _______, if the
amount is not refundable.
(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.

3. 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 April 20x1, 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 April 20x1. The
returns for the month of April 20x1 were duly filed in time, i.e. within the due date of 20th
May,20x1.
The last date upto which the taxpayer can claim refund of input tax credit on account of
interred duty structure is:
(a) 20th April, 20,2
(b) 20th May, 20x2
(c) 31st March, 20x3
(d) 20th April, 20x1

4. Lex Corp. (P) Ltd. is a manufacturer of fruit juices registered under GST. 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, Hammer Industries
(P) Ltd. These raw materials are sent directly from the place of business of supplier to the
premises of job worker. Lex Corp. (P) Ltd. booked input tax credit on purchase of such
items.
The following transactions took place in this regard:

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 Value of goods Input tax paid Date of Date of receipt Date of goods
sent to job on such goods purchase of of goods by received back
worker goods by Lex Hammer from Hammer
Corp. (P) Ltd. Industries (P) Industries (P)
Ltd. Ltd.
Rs. 50,000 Rs. 6,000 10.07.2020 15.07.2020 12.07.2021
Rs. 2,00,000 Rs. 24,000 25.09.2020 27.09.2020 13.10.2021
Rs. 8,00,000 Rs. 96,000 22.12.2020 25.12.2020 16.08.2022
Rs.10,00,000 Rs. 1,20,000 21.01.2021 25.01.2021 23.01.2022
Rs. 3,50,000 Rs. 42,000 24.02.2021 26.02.2021 28.02.2022

Determine the total amount to be added to the output tax liability of Lex Corp. (P) Ltd. In
case of violation of provisions of section 143 of the CGST Act, 2017 in different point of
times assuming that there was no extension granted by the Commissioner in terms of
proviso to section 143(1) in any of the above cases.
(a) Rs. 2,88,000 + Interest @ 18%
(b) Rs. 2,88,000 + Interest @ 24%
(c) Rs. 1,62,000 + Interest @ 24%
(d) Rs. 1,62,000 +Interest @ 18%

5. Calculate the amount of eligible ITC?

Particulars Amount(Rs.)
Purchase of mobile phones for employees to be used for business 20,000
purposes
Taxes paid on telephone expenses 5,000
Taxes paid on security services availed by registered person for this 18,000
factory
Motor vehicle purchased for employees to be used for personal as 1,50,000

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 well as business purpose
Motor vehicle purchased for transportation of goods within the 2,00,000
factory of registered person
Taxes paid on food expenses incurred by registered person for his 2,000
employees
Rent-a-cab facility given to employees as it is obligatory for the 36,000
employer to provide it under an applicable law
Taxes paid on purchase of cement and other material for renovation 16,000
of the office room (no capitalized)

(a) Rs. 2,95,000

(b) Rs. 4,47,000
(c) Rs. 2,43,000
(d) Rs. 2,59,000

6. Who is responsible for accountability for any contravention under this Act?
(a) Principal
(b) Job-worker
(c) Manufacturer
(d) No-body

7. Refunds would be allowed on a provisional basis in case of refund claims on account of

zero rated supplies of goods and / or services made by registered persons. At what
percentage, would such provisional refunds be granted?
(a) 70%
(b) 65%
(c) 80%
(d) 90%

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8. Can the time limit specified in sec 143 be extended by the commissioner for period of 3
year in case of capital goods?
(a) Yes, it can be extended
(b) Yes, it can be extended, but only for period of 2 years
(c) No, it can not be extended
(d) None of the above

9. The Head Office of XYZ Ltd. Is registered as Input Service Distributor in Delhi. Its Branch
Office in Mumbai is engaged in the supply of readymade garments. The Head Office
received an invoice from software Solution (P) Ltd. Registered in Delhi for software
maintenance service. However, the software is used in Branch Office in Mumbai. Tax
invoice indicates amount as CGST: Rs. 25,000/- and SGST: Rs. 25,000/-. Calculate the
amount of tax to be distributed by Head Office to its Branch Office.
(a) IGST: Rs. 25,000/-
(b) CGST: Rs. 25,000/-; SGST: Rs. 25,000/-
(c) CGST: Rs. 25,000/-
(d) IGST: Rs. 50,000/-

10. M/s. Sunlight Associates, is a management consultancy firm located in Delhi and has
certain foreign clients to whom the firm provides business support services. In regard to
one of the foreign client, Certain services were rendered in the month of January, 2018
and the invoice was duly raised. The firm undertakes such export of services against
Letter of Undertaking, i.e. without payment of intergrated tax. However, it is likely that
the payment against such invoice would not be received till March, 2019. Is M/s. Sunlight
Associates, required to pay intergrated tax on such transaction if the payment is not
received till March, 2019? In case intergrated tax is payable, is M/s. Sunlight Associates,
entitled to claim refund on this account? State which of the following option is correct

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 (a) Intergrated tax is payable by M/s. Sunlight Associates, but refund of payment of such tax
is not allowed
(b) Integrated tax is payable by the foreign client and M/s. Sunlight Associates can claim ITC
of such payment made.
(c) Intergrated tax is payable by M/s. Sunlight Associates, and refund of payment of such
tax is allowed
(d) Integrated tax is not payable and refund of accumulated ITC is allowed.

(10 x 1 = 10 marks)

Q-1 XYZ Pvt. Ltd. is a manufacturing company registered under GST in the state of Uttar
Pradesh. It manufacture 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 withdrawal on the same date.

The turnover (exclusive of taxes) of ‘Alpha’, ‘Beta’ and ‘Gama’ in the month of October, 20XX
was Rs. 9,00,000, Rs. 10,00,000 and Rs. 6,00,000.

XVZ Pvt. Ltd. has furnished the following details:

S. No. Particulars Price (Rs.) GST (Rs.)

a. Machinery ‘U’ purchased on 1.10.20XX for being used in 2,00,000 36,000
manufacturing all the three products.
b. Machinery ‘V’ Purchased on 1.10.20XX for being used in 1,00,000 18,000
manufacturing product ‘Alpha’ and ‘Gama’
c. Machinery ‘W’ Purchased on 1.10.20XX for being exclusively 3,00,000 54,000
used in manufacturing product ‘Beta’
d. Machinery ‘X’ purchased on October I, three years before 5,00,000 90,000
1.10.20XX for being exclusively used in manufacturing
product ‘Gama’. From 1.10.20XX such machinery will also be
used for manufacturing product ‘Beta’

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 e. Machinery ‘Y’ purchased on October I, four years before 4,00,000 72,000
1.10.20XX for being exclusively used in manufacturing
product ‘Beta’. From 1.10.20XX, such machinery will also be
used for manufacturing product ‘Gama’.
f. Machinery ‘Z’ purchased on October I, Two years before 3,00,000 54,000
1.10.20XX for being used in manufacturing the entire three
products.
g. Raw material used for manufacturing ‘Alpha’ purchased on 1,50,000 27,000
05.10.20XX
h. Raw material used for manufacturing ‘Beta’ purchased on 2,00,000 36,000
10.10.20XX
I. Raw material used for manufacturing ‘Gama’ purchased on 1,00,000 18,000
15.10.20XX

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.

(7 Marks)

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Q-2 Whether service of short-term accommodation, conferencing, banqueting etc. Provided to
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
term of section 8(2) read with section 12(3) (c)? Examine.

(5 Marks)

Q-3 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 product 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:

Product Turnover (Rs) Output GST ITC availed (Rs.) Input GST
Rates rates
A 5,00,000 5% 54,000 18%
B 3,50,000 5% 54,000 18%
C 1,00,000 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 unutilized input tax
credit shall be allowed under said section.

(6 Marks)

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Q-4 Alok Pvt. Ltd., a registered manufacturer, sent steel cabinets worth Rs. 50 Lakh 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 Alok Pvt. Ltd.

The metal frame is to be supplied by M/S Prem Tools. M/s Prem Tools has agreed to a
consideration of Rs. 5 Lakh for the entire mounting activity including the supply of metal frame.

During the course of mounting activity, metal waste is generated which is sold by M/S. Prem
tools for Rs. 45,000. 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
service as 18%, you are required to compute GST Liability of M/S. Prem tools. Also, give reason
(s) for inclusion or exclusion of the value of cabinets in the job charges for the purpose of
payment of GST by M/S Prem Tools.

(5 Marks)

Q-5 Input Service Distributor (ISD) of a company is registered separately in the state of Kerala
and is distributing input tax credit (ITC) to other units in the company. Following details are
furnished for a particular month, and you are required to help the ISD department in
distributing the ITC to other units that are carrying on manufacturing, supplying goods and
services to customers.

S. No. Particulars Amounts in

lakhs (Rs.)
Turnover in the relevant month of each of the units:
1 Mumbai (Maharashtra) 12.00
2 Bangalore (Karnataka) 60.00

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 3 Hyderabad (Andhra Pradesh ) 36.00
4 Trivandrum (Kerala) 72.00
5 Total ITC available during the month with the ISD (includes 48.00
CGST/SGST/&IGST) on account of supplies received during the
month.
6 From the above, ITC exclusive to Bangalore unit, available as IGST 12.00
credit
7 From the above, ITC exclusive to Trivandrum and Hyderabad units 6.00
(CGST and SGST of Rs. 3.00 lakh each)
8 Rest of the credit available is allocable as common credit to all the
units and is received from local suppliers in Kerala
9 Basic value of a debit note received, during the month, in respect of a 50.00
previous supply, with rate of tax @12% IGST being charged and
shown separately
10 Total value in the credit note received, during the month, applicable 118.00
exclusively to Kerala unit, taxed at the rate of 9% CGST and 9% SGST,
which is charged and indicated separately.

Also make your comment regarding the amount of ITC in credit notes, if exceed the ITC from
invoices and debit notes in a particular month for all or any of the units.

(7 Marks)

Q-6 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 filling the bill of entry for import of goods.

Examine whether the view taken by AXT Ltd. is correct. (5 Marks)

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Q-7 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 Particular Rs.
(i) Export of product ‘A’ to UK for $10,000. Assessable value under customs 7,00,000
in Indian rupees.
[Export duty is levied on product ‘A’ at the time of exports. further,
value of like goods domestically supplied by the similarly placed supplies
is Rs. 6,00,000]
(ii) Domestic supplies of taxable product ‘B’ during the period [excluding 10,00,000
tax @5%]
[inputs used in manufacturing of such goods are taxable @18%]* not
notified as a product, in respect of which refund of unutilized ITC shall
not be allowed under section 54(3) (ii)
(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 (value of like goods domestically 6,00,000
supplied by the similarly placed supplier is Rs. 5,00,000)

The ITC available for the above tax period is as follow:

S. No. Particulars Rs.

(i) On inputs (including Rs. 50,000 on export of exempt supplies) 3,50,000
(ii) On capital goods 1,20,000
(iii) On input services (including Rs.18,000 on outdoor catering) 2,00,000

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Determine the maximum amount of refund admissible to Kailash Global (P) Ltd. for the given
Tax period.

(7 Marks)

Q-8 Mr. Ajay Singhania (Surat) owner of Raymond sent some fabrics to Mr. Manish Malhotra
(Mumbai) for converting fabrics into shirts. Goods worth Rs. 10 Lakhs have been sent to Mr.
Manish on 01/10/2023. Mr Manish carried out job work process on such goods and returned
those goods in the form of shirts to Mr. Singhania on 30/09/24. The total job work charges
amounted to Rs. 2 Lakhs.

Based on the above given facts answer the following questions

i. Is it compulsory to take registration for a principle as well as job worker if aggregate

turnover of principal and job worker does not exceed Rs. 20 Lakhs?
ii. Whether principal can supply goods directly from job worker’s place of business to its
ultimate customer? And if yes, whether the supply will be regarded as having been made
by the principal or by the job worker?
iii. Whether e-way bill is required to be generated in case of job work?
iv. What are the provisions with respect to Time & value of supply in the hands of job worker
and issuance of invoices by the job worker?
v. What are the tax implications if extension has been granted by the commissioner u/s 143
for a further period of one year?

(8 Marks)

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