GST-Law & Practice

2 MARKS QUESTIONS AND ANSWER

1. Define GST.

A GST is a single tax on the supply of goods and services, right from the manufacturer to the
consumer. It is an indirect tax which has replaced many indirect taxes in India such as the excise
duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th
March 2017 and came into effect on 1st July 2017.

2. Give the meaning of goods.

Goods are tangible items sold to customers, those are items that satisfy human wants and provide
utility, while services are tasks performed for the benefit of the recipients. Examples of goods are
automobiles, appliances, and clothing.

3. Define services.

The term 'services' has been defined under Section 2(88) of the Model CGST/SGST Act, as under:
“services'' means anything other than goods; Explanation: Services include intangible property and
actionable claim but does not include money.”

4. Define Revenue Neutral Rate.

Revenue neutral rate (RNR) is a structure of different rates established in order to match the
current revenue generation with revenue under GST. RNR calculation has to include the cascading
effect on certain goods having no excise or sales tax implications. In other words- the Revenue
Neutral Rate is a rate of GST at which the amount of taxes currently collected by the government
and the amount expected to be collected after GST remains the same.

5. What is a non-taxable supply?

“Non-taxable supply” means a supply of goods or services or both which is not liveable to tax under
the CGST Act or under the IGST Act. A transaction must be a „supply‟ as defined under the GST law
to qualify as a non-taxable supply under the GST.

6. Who is the supplier?

A supplier is a person or business that provides a product or service to another entity. The role of a
supplier in a business is to provide high-quality products from a manufacturer at a good price to a
distributor or retailer for resale.

7. What is open market value?

Open market value of a supply of goods or services or both means the full value in money,
(excluding GST & cess) where the supplier and the recipient of the supply are not related and price
is the sole consideration, to obtain such supply at the same time when the supply being valued is
made.
8. Define Recipient.

Section 2(93) of the CGST Act 2017, defines: Recipient is defined based on whether Consideration is
payable or otherwise. When a consideration is payable for the supply of goods or services, as is the
case in hand, the person who is liable to pay that consideration is the Recipient of such Supply. The
Statute is clear and unambiguous in defining the Recipient when a consideration is payable.

9. State the difference between debit note & credit note?

Debit Note is a document which reflects that a debit is made to the other party’s account. Credit
Note is an instrument used to inform that the other party's account is credited in his books. Thus
the distinction between a credit note and a debit note is that credit notes report money owed to a
customer due to a downward revision of an invoice, while debit notes record money owed to you
due to an upward revision in an invoice.

10. What is supplementary tax invoice?

A supplementary tax invoice is an invoice that a taxable person issues if any deficiency is found in a
tax invoice already issued by the said taxable person. It is also known as a debit note. It is used to
rectify the problems related to the original tax invoice under GST.

11. What is tax invoice?

Tax Invoice: Every registered taxable person under GST supplying Goods or services is required to
issue a tax invoice for all supplies affected. The word “Every registered Taxable person” clearly
specifies that issuing Tax Invoice is compulsory under GST law. However, government may notify
some other document for certain category of services. Eg. Bus ticket, Bank Voucher etc.

12. What is bill of supply?

A Bill of Supply is a document issued by GST Registered Businesses in place of a Tax Invoice. It is
used by Composition Vendors and businesses dealing with Exempted Goods.

13. What is refund under GST?

GST refund is a process in which, registered taxpayers can claim excess amount if they paid more
than the GST liability. They can claim after submitting a refund application with the necessary
details in the GST portal.

14. State the documents required for refund on account of export of goods.

Shipping Bill and EGM details.

15. What is electronic credit ledger?

'Electronic Credit Ledger' reflects the amount of eligible input tax credit claimed by the registered
person via GST returns i.e. Form GSTR-3B or auto-populated return Form GSTR-2B.
16. Mention the modes of payment in GST?

E-Payment (Internet Banking, Credit Card, Debit Card); Real Time Gross Settlement(RTGS)/
National Electronic Fund Transfer (NEFT); Over the Counter Payment in branches of Banks
Authorized to accept deposit of GST.

17. What is aggregate turnover?

“Aggregate Turnover” means value of all taxable supply (excluding the value of inward supply on
which tax is payable by a person on reverse charge basis), exempt supply, export of goods or
services or both and interstate supply of persons having the same permanent account number, to
be computed on all India basis but excludes central tax, state tax, union territory tax, integrated tax
& cess

18. What is threshold limit of exemption?

Less than Rs. 40 lakhs and Rs. Less than 20 lakhs for businesses in some special category states

19. What is the threshold limit for GST registration?

More than Rs. 40 lakhs (Rs. 20 lakhs for businesses in some special category states) are required to
register for GST.

20. Who is an exempted supplier?

A person who is supply of any goods or services or both which attracts nil rate of tax or which may
be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and
Services Tax Act, and includes non-taxable supply.

21. What is interstate supply?

Interstate supply is where the goods or services provider is in a different state or Union Territory,
and the place of supply is in a different state or Union Territory.

22. State any two types of registration.

i. Compulsory Registration

ii. Voluntary Registration

23. Define supply.

Supply should be of goods or services. · Supply should be taxable. · Supply should be made by a
taxable person. · Supply should be made within a taxable territory.

24. What is mixed supply?

A mixed supply is two or more independent products or services which are offered together as a
bundle but can also be sold separately. In a mixed supply, the item or service with the highest GST
rate is treated as the principal supply
25. Define Agriculturist.

As in farmer. a person who cultivates the land and grows crops on it agriculturists who adhere to
the organization's standards of organic farming.

26. Define the value of supply.

Section15(1): Value of supply shall be the Transactional Value which is the price actually paid or
payable for the supply of goods or services

27. What do you mean by transaction value?

Transaction value refers to the price actually paid or payable for the supply of goods and or
services where the supplier and the recipient are not related and price is the sole consideration for
the supply.

28. Define exempted supply.

“Exempt supply” means supply of any goods or services or both which attracts nil rate of tax or
which may be wholly exempt from tax under section 11.

29. What is returns?

A document that will contain all the details of your sales, purchases, tax collected on sales (output
tax), and tax paid on purchases (input tax).

30. What is refund under GST?

GST refund is a process in which, registered taxpayers can claim excess amount if they paid more
than the GST liability. They can claim after submitting a refund application with the necessary
details in the GST portal.

31. Who is distinct person?

Distinct persons are persons with different GSTINs belong to one legal entity (single PAN) situated
within the same State or in two different States or in a different country.

32. Give two examples of actionable claims.

i. An amount due under a policy of insurance

ii. An amount due under letter of credit

33. Who is a casual taxable person?

A person who supplies taxable goods or services occasionally in a taxable territory where he does
not have a fixed place of business.

34. Mention two items excluded in GST.

Fresh fruits, Fresh milk,

35. Give the meaning of Registration.

GST Registration of a business with the tax authorities implies obtaining a unique, 15-digit Goods
and Service Tax Identification Number (GSTIN) from the GST authorities so that all the operations
of and the data relating to the business can be collected and correlated.

36. What do you mean by cascading effects?

“cascading tax effect” means a tax on tax. It is a situation wherein a consumer has to bear the load of
tax on tax and inflationary prices as a result of it.

37. What is value of supply?

Value of supply is ascertained by the transaction value, which is defined as the price paid or payable
for the transaction when the supplier and the recipient are unrelated. The price is the sole
consideration of supply.

38. What is Input Tax Credit?

Input tax credit is the credit manufacturers received for paying input taxes towards inputs used in
the manufacture of products. Similarly, a dealer is entitled to input tax credit if he has purchased
goods for resale. All dealers are liable for output tax on taxable sales done in the process of his
business. With the help of input tax credit, he can offset the output tax against the input tax already
paid. Input tax credit is not applicable on all types of inputs. Each state has its own norms and
conditions in this regard and are applicable accordingly.

39. What is nil rated supply?

This type of supply attracts a GST of 0%. Input tax credit cannot be claimed on such supplies. Some
items which are nil rated include grains, salt, jiggery, etc.

40. What is Abatement?

Abatement means discount or reduction on service tax rate as notified by government abatement.
Example. General Rate of Service tax is 15% Suppose there is 60% abatement notified by
government

41. Meaning of monitory consideration?

Monetary consideration Monetary Consideration: It means payment made by way of cash, cheques,
credit card, bank transfer or deduction from bank account is called monetary consideration.

Example: a) Shri. Akash purchased a stationery items for ₹.3000. He paid the seller ₹.3000 in cash
b) Shri. Ashok purchased cloth ₹.10000 from a dealer. As he is not paid ₹.10000 by cash then he will
be using his credit card. In this situation credit card would be the consideration for his purchases.

42. E way bill

E-way bill is short for Electronic Way Bill. GST E-way bill is a document used to track goods in
transit introduced under the Goods and Service Tax. A taxable person registered. Under GST
involved in the transportation of goods with a value of over Rs. 50,000 must possess an E-way bill
generated on the GST Portal.
GSTN = Goods and service tax network

BRN= Business Registration Numbers

E – Payment (internet banking, credit card, debit card etc.) NEFT, RTGS