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GST 1

GST QUESTION BANK BY JAGAT KHICHA SIR

INDEX
SERIAL NO. CONTENTS PAGE NO.
1. GST IN INDIA: - AN INTRODUCTION 2-12
2. COMPOSITION SCHEME ( SEC. 10 ) 13-49
3. SUPPLY 50-60
4. SCOPE OF SUPPLY 61-75
5. SUPPLY UNDER GST 76-81
6. CHARGE OF GST 82-84
7. COMPOSITE OR MIXED SUPPLY 85-90
8. REGISTRATION 91-128
9. VALUE OF SUPPLY 129-219
10. TAX INVOICE 220-233
11. TIME OF SUPPLY 234-272
12. INPUT TAX CREDITS 273-342
13. JOB WORK 343-348
14. PAYMENT OF TAX 349-376
15. PLACE OF SUPPLY 377-424
16. IMPORT AND EXPORT UNDER GST 425-431
17. RETURNS 432-438
18. EXEMPTIONS UNDER GST 439-535
19. REFUNDS 536-554
20. DEMAND & RECOVERY 555-579
21. APPEALS AND REVISIONS 580-596
22. ACCOUNTS AND RECORES; E-WAY BILL 597-608
23. INSPECTION, SEARCH, SEIZURE AND ARREST 609-611
24. LIABILITY TO PAYTAX IN CERTAIN CASES 612-618
25. OFFENCES AND PENALTIES 619-640
26. MISCELLANEOUS, ASSESSMENT & AUDIT 641-654
27. COMPUTATION OF GST LIABILITY 655-743
28 ADVANCE RULING 744-750

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GST 2

GST IN INDIA: - AN INTRODUCTION

QUS. List some of the benefits that GST to accrues to the economy.

ANS- GST accrues following benefits to the economy:

(a) Creation of unified national market: GST has made India a common market with common tax rates and
procedures. Further, it has removed the economic barriers resulting in an integrated economy at the
national level.

(b) Boost to ‘Make in India' initiative: GST has given a major boost to the ‘Make in India' initiative of the
Government of India by making goods and services produced in India competitive in the national as well as
international market. This will make India a manufacturing hub.

(c) Enhanced investment and employment: The subsuming of major Central and State taxes in GST,
complete and comprehensive set-off of input tax on goods and services and phasing out of Central Sales Tax
(CST) has reduced the cost of locally manufactured goods and services. Resultantly, the competitiveness of
Indian goods and services in the international market has increased which has given boost to investments
and Indian exports. With a boost in exports and manufacturing activity, more employment is likely to be
generated and GDP is likely to be increased.

QUS. Explain with the help of examples how a particular transaction of goods and services is taxed simultaneously
under Central GST (CGST) and State GST (SGST)?

ANS- The Central GST and the State GST is levied simultaneously on every intra-State supply of goods or services
or both made by registered persons except the exempted goods and services as well as goods and services
which are outside the purview of GST. Further, both are levied on the same price or value. The same can be
better understood with the help of following examples:

Example I: Suppose that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of steel in
Uttar Pradesh supplies steel bars and rods to a construction company which is also located within the same

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GST 3
State for, say 100, the dealer would charge CGST of ₹ 10 and SGST of ₹ 10 in addition to the basic price of the
goods. He would be required to deposit the CGST component into a Central Government account while the
SGST portion into the account of the concerned State Government (viz. U.P.). It is important to note that he
might not actually pay ₹ 20 (₹ 10 + ₹ 10) in cash as he would be entitled to set-off this liability against the
CGST or SGST paid on his eligible purchases (inputs, input services and capital goods) assuming that all his
purchases are intra-State. However, for paying CGST, he would be allowed to use only the credit of CGST
paid on his purchases while for U.P. GST he can utilize the credit of U.P. GST alone. In other words, CGST
credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.

Example II: Suppose, again the rate of CGST is 10% and that of SGST is 10%. When an advertising company
located in Mumbai supplies advertising services to a company manufacturing soap also located within the
State of Maharashtra for, let us say ₹ 100, the ad company would charge CGST of ₹ 10 as well as
Maharashtra GST of ₹ 10 at the basic value of the service. He would be required to deposit the CGST
component into a Central Government account while the Maharashtra GST portion into the account of the
Maharashtra Government. He might not actually pay ₹ 20 (₹ 10+₹ 10) in cash as it would be entitled to set-
off this liability against the CGST or SGST paid on his eligible purchases (say, of inputs such as stationery,
office equipment, services of an artist etc.) assuming that all his purchases are intra- State. However, for
paying CGST, he would be allowed to use only the credit of CGST paid on its purchase while for Maharashtra
GST, he can utilise the credit of Maharashtra GST alone. In other words, CGST credit cannot, in general, be
used for payment of SGST. Nor can SGST credit be used for payment of CGST.

QUS. Why was the need to amend the Constitution of India before introducing the GST?

ANS- Earlier, the fiscal powers between the Centre and the States were clearly demarcated in the Constitution
with almost no overlap between the respective domains. The Centre had the powers to levy tax on the
manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the
States had the powers to levy tax on the sale of goods. In the case of inter- State sales, the Centre had the
power to levy the Central Sales Tax but the tax was collected and retained entirely by the States. As for
services, it was the Centre alone that was empowered to levy service tax.

Introduction of the GST necessitated the amendments in the Constitution so as to simultaneously empower

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GST 4
the Centre and the States to levy and collect this tax. The Constitution of India was amended by the
Constitution (101st Amendment) Act, 2016 for this purpose. Article 246A of the Constitution introduced
thereby empowered the Centre and the States to simultaneously levy and collect the GST.

QUS. GST is a destination-based tax on consumption of goods or services or both. Discuss the validity of the
statement.

ANS- The given statement is valid. GST is a destination-based tax on consumption of goods or services or both.
GST is known as destination-based tax since the tax would accrue to the taxing authority which has
jurisdiction over the place of consumption which is also termed as place of supply.

For example, if A in Delhi produces the goods and sells the goods to B in Haryana. In this case, the tax would
accrue to the State of Haryana and not to the State of Delhi. On the other hand, under pre-GST regime,
origin-based taxation was prevailing in such cases. Under origin-based taxation, the tax used to accrue to the
State from where the transaction originated. In the given case, under origin-based taxation, the central sales
tax would have been levied by Centre and collected by the State of Delhi and not by the State of Haryana.

QUS. 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,

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GST 5
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.

QUS. 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.

QUS. Which are the commodities which have been kept outside the purview of GST? Examine the status of
taxation of such commodities after introduction of GST?

ANS- Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016 defines the
Goods and Services tax (GST) as a tax on supply of goods or services or both, except supply of alcoholic liquor
for human consumption. Therefore, alcohol for human consumption is kept out of GST by way of definition
of GST in the Constitution. Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed
diesel, natural gas and aviation turbine fuel have temporarily been kept out of the purview of GST; GST
Council shall decide the date from which they shall be included in GST. The erstwhile taxation system
(CST/VAT & central excise) still continues in respect of the said commodities.

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GST 6

QUS. A dual GST has been implemented in India. Elaborate.

ANS- A dual GST has been implemented in India with the Centre and States simultaneously levying it on a common
tax base. The GST levied by the Centre on intra-State supply of goods and / or services is called the Central
GST (CGST) and that levied by the States/ Union territory is called the State GST (SGST)/ Union GST (UTGST).
Similarly, Integrated GST (IGST) is levied and administered by Centre on every inter-State supply of goods
and/or services.

India is a federal country where both the Centre and the States have been assigned the powers to levy and
collect taxes through appropriate legislation. Both the levels of Government have distinct responsibilities to
perform according to the division of powers prescribed in the Constitution for which they need to raise
resources. A dual GST, therefore, keeps with the Constitutional requirement of fiscal federalism.

QUS. Discuss Article 269A pertaining to levy and collection of GST on inter-State supply.

ANS- Article 269A of the Constitution stipulates that Goods and Services Tax on supplies in the course of inter-
State trade or commerce shall be levied and collected by the Government of India and such tax shall be
apportioned between the Union and the States in the manner as may be provided by Parliament by law on
the recommendations of the Goods and Services Tax Council.

Here, supply of goods, or of services, or both in the course of import into the territory of India shall be
deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
The amount so apportioned to a State shall not form part of the Consolidated Fund of India. Where an
amount collected as IGST has been used for payment of SGST or vice versa, such amount shall not form part
of the Consolidated Fund of India/State respectively. This is to facilitate transfer of funds between the Centre
and the States.

Parliament is empowered to formulate the principles for determining the place of supply, and when a supply
of goods, or of services, or both takes place in the course of inter-State trade or commerce.

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GST 7

QUS. Discuss Article 246A which grants the power to make laws with respect to Goods and Services Tax.

ANS- Article 246A stipulates that Parliament, and, the Legislature of every State, have power to make laws with
respect to goods and services tax imposed by the Union or by such State.
Parliament has exclusive power to make laws with respect to goods and services tax where the supply of
goods, or of services, or both takes place in the course of inter-State trade or commerce.

However, in respect to petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
gas and aviation turbine fuel, the aforesaid provisions shall apply from the date to be notified by the
Government on the recommendations by the GST Council.

QUS. "State Government has exclusive power to notify a transaction to be supply of goods or services." Discuss
the correctness of the statement.

ANS- The said statement is not correct. State Government can notify a transaction to be supply of goods or
services but only on the recommendations of the GST Council. Further, Central Government, on the
recommendations of the GST Council, can also notify an activity to be the supply of goods and not supply of
services or supply of services and not supply of goods or neither a supply of goods nor a supply of services.

QUS. Enumerate any five matters on which the GST Council may make recommendations under Article 279A of
the Constitution of India.

ANS- The matters on which the GST Council may make recommendations under Article 279A of the Constitution of
India are as under:
(i) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be
subsumed in GST;
(ii) the goods and services that may be subjected to, or exempted from GST;
(iii) model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-State
trade or commerce and the principles governing the place of supply;
(iv) the threshold limit of turnover below which goods and services may be exempted from GST;

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GST 8
(v) the rates including floor rates with bands of GST;
(vi) any special rate or rates for a specified period, to raise additional resources during any natural calamity
or disaster;
(vii) special provision with respect to Special Category States
(viii) the date on which the GST be levied on petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel.
(ix) any other matter relating to the GST, as the Council may decide.

QUS. Who are the members of the GST Council? Enumerate any two recommendations that can be made by the
GST Council.

ANS- 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 recommendations that can be made by GST Council are as under: -

(i) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be
subsumed in GST;
(ii) the goods and services that may be subjected to, or exempted from GST;
(iii) model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-State
trade or commerce and the principles governing the place of supply;
(iv) the threshold limit of turnover below which goods and services may be exempted from GST;
(v) the rates including floor rates with bands of GST;
(vi) any special rate(s) for a specified period, to raise additional resources during any natural
calamity/disaster;
(vii) special provision with respect to Special Category States;
(viii) the date on which the GST be levied on petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel;
(ix) any other matter relating to the GST, as the Council may decide.

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GST 9

QUS. Why was there a need for making a constitutional amendment for introduction of GST? Discuss significant
provisions of Constitution (101st Amendment) Act, 2016.

ANS- There was a need for making constitutional amendment for introduction of GST so as to enable integration
of the central excise duty, additional duties of customs, State VAT and certain State specific taxes and service
tax into a comprehensive Goods and Services Tax and to empower both Centre and the States to
simultaneously levy and collect it.

The significant provisions of Constitution (101st Amendment) Act, 2016 are as under: -
(i) Concurrent powers on Parliament and State Legislatures to make laws governing taxes on goods and
services.
(ii) Levy of IGST on inter-State transactions of goods and/or services to be levied and collected by the Central
Government and apportioned between the Union and States in the manner provided by Parliament by law
as per the recommendation of the GST Council.
(iii) Principles for determining the place of supply and when a supply takes place in the course of inter-
State trade/commerce shall be formulated by the Parliament, by law.
(iv) GST will be levied on all supply of goods and services except alcoholic liquor for human consumption.
(v) On the following products, GST shall not be levied till a date to be notified on the recommendations of
the GST Council:
• Petroleum Crude
• High Speed Diesel
• Motor Spirit (commonly known as Petrol)
• Natural Gas
• Aviation Turbine Fuel
(vi) The Union Government shall retain the power to levy duties of excise on the aforesaid products
besides tobacco and tobacco products manufactured or produced in India.
(vii) President is empowered to constitute a joint forum of the Centre and States namely, Goods & Services
Tax Council (GST Council).
(viii) The Union Finance Minister is the Chairman of GST Council and Ministers in charge of Finance/Taxation
or any other Minister nominated by each of the States & UTs with Legislatures are its members. Besides, the

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GST 10
Union Minister of State in charge of Revenue or Finance is also its member.
(ix) The function of the GST Council is to make recommendations to the Union and the States on important
issues like tax rates, exemptions, threshold limits, dispute resolution etc.
(x) The provisions relating to GST Council came into force on 12th September, 2016. President constituted
the GST Council on 15th September, 2016.
(xi) The concept of ‘declared goods of special importance’ under the Constitution is done away with. Earlier,
certain restrictions were placed on the powers of States in regard to tax on such goods.
(xii) Transitional provisions to take care of any inconsistency with respect to any law relating to tax on goods
or services or both, in force in any State. Such tax to continue to be in force until amended or repealed or
until expiration of one year from commencement of GST, whichever is earlier.

QUS. Write a short note on various Lists provided under Seventh Schedule to the Constitution of India.

ANS- The constitutional provisions in India on the subject of distribution of legislative powers between the Union
and the States are defined under several articles; the most important in this regard being specifically under
articles 245 & 246 of the Constitution of India. The Seventh Schedule to the Constitution of India defines and
specifies allocation of powers and functions between Union & States. It contains three lists; i.e. 1) Union List,
2) State List and 3) Concurrent List.

Union List
The Union List is a list of 98 (Originally 97) numbered items as provided in the Seventh Schedule to the
Constitution of India. The Union Government or Parliament of India has exclusive power to legislate on
matters relating to these items.

State List
The State List is a list of 61 (Originally 66) items in the Schedule Seven to the Constitution of India. The
respective state governments have exclusive power to legislate on matters relating to these items.

Concurrent List
There are 52 (Originally 47) items currently in the list: This includes items which are under joint domain of
the Union as well as the respective States.

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GST 11

QUS. Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws.

ANS- Before implementation of GST we have Excise Duty, Service Tax and Customs as Indirect Taxes in India at
Central Level.
Coming to States every state had its own VAT Laws (Value Added Tax).
In pre-GST regime you will not get credit of Interstate purchases in any State because Inter State purchases
will be dealt by CST (Central State Tax).
As there are many laws governing a single transaction and we could not get credit of Tax paid in One law in.
other law.
But after GST Implementation all these laws were subsumed in to GST Except Customs duty, we will be
getting credit of all the taxes paid from the stage of Purchase of Raw Material to Stage of Finished Goods

QUS. Discuss the dual GST model as introduced in India.

ANS- Many countries in the world have a single unified GST system i.e. a single tax applicable throughout the
country. However, in federal countries like Brazil and Canada, a dual GST system is prevalent whereby GST is
levied by both the federal and state or provincial governments. In India, a dual GST is proposed whereby a
Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the
taxable value of every transaction of supply of goods and services.

QUS. List the Central and State levies which have been subsumed in GST in India.

ANS- Central Indirect Taxes:

Following Central Indirect Taxes and Levies would be subsumed in GST:
• Central Excise Duty
• Additional Excise Duties
• Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955
• Service Tax
• Additional Customs Duty commonly known as Countervailing Duty
• Special Additional Duty of Customs

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GST 12
• Central Surcharges and Cess, so far as they relate to the supply of goods and services.

State Indirect Taxes:

Following State Indirect Taxes and Levies would be subsumed in GST:
• State Value Added Tax/Sales Tax
• Entertainment Tax (other than the tax levied by the local bodies)
• Central Sales Tax (levied by the Centre and collected by the States)
• Octroi and Entry Tax
• Purchase Tax.
• Luxury Tax
• Taxes on lottery
• Betting and gambling
• State cess and surcharges insofar as they relate to supply of goods and services.

The above taxes are directly relatable to the supply of goods and services and fall in the supply chain from
the point of procurement of the raw material to the consumption of the goods and services by the end
customer

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GST 13

COMPOSITION SCHEME ( SEC. 10 )

QUS.1 MN Ltd. has two registered business verticals in the State of Haryana. Its aggregate turnover during the
previous financial year for both the business verticals was ` 62 lakh. It wishes to opt for composition levy for
one of the verticals in the current year and wants to continue with registration and pay taxes at
the merit rate for the second vertical. Can MN Ltd. do so? Explain with reason.

ANS- As per proviso to section 10(2) of the CGST Act, 2017, where more than one registered persons are
having the same PAN issued under the Income-tax Act, 1961, the registered person shall not be eligible to
opt for the composition scheme unless all such registered persons opt to pay tax under
Composition scheme.

In the given case, since MN Ltd. has two business verticals (they are not separate entities under Income-
tax Act, 1961), they would be registered under the same PAN. Therefore, MN Ltd. cannot opt for
composition levy for only one of the business verticals and pay tax under regular scheme for other business
vertical.

QUS.2 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 financial year 2018-19 is
150 lakh. It opted for composition levy in the year 2019-20 and paid tax for the quarter ending September,
2019 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- 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

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GST 14

Jammu and Kashmir , Himachal pradesh & Assam], may opt for composition scheme.

However, he shall not be eligible to opt for composition scheme if, interalia, he is engaged in making any
inter-State outward supplies of goods.

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 FY 2019 -20 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.

QUS.3 Prem is running a consulting firm and also a fancy store, registered under the same PAN number. Turnover
of the fancy store is`65,00,000 and receipt of consultancy firm is 10,00,000 in the preceding financial year.

You are required to provide answers with supporting explanatory note for each answer to the following
questions:
(i) Is Prem eligible for composition scheme under CGST Act ?
(ii) Whether it is possible for Prem to opt for composition scheme only for fancy store?
(iii) If Prem is running a restaurant with turnover of ` 65,00,000 instead of consultancy firm as well as a fancy
store, would he be eligible for composition scheme?

ANS-(i) YES, Prem is eligible for composition scheme as his A.T.O of preceding PY doesn’t exceed 1.5 crore.

(ii) No, it is not possible for Prem to opt for composition scheme only for fancy store. All the registrations under
the same PAN have to opt for composition scheme in terms of proviso to section 10(2) of the CGST Act,
2017.

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GST 15

(iii) YES, Prem is eligible for composition scheme if he is running a restaurant with turnover of ` 65,00,000
instead of consultancy firm as well as fancy store. Section 10(1) of the CGST Act, 2017provides that an
eligible registered person whose aggregate turnover in the preceding financial year did not exceed`1.5 crore
may opt to pay tax under composition levy.

QUS.4 M/s Heeralal and Sons registered in Karnataka has opted to avail the benefit of composition scheme. It has
furnished the following details for the tax period ended on 30-06-2019.

Sr. No. Items

(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 total GST (No need for bifurcation between CGST and SGST) to be
paid by the firm for the tax period ended on 30-06-2019 in following independent situations:
(i) M/sHeera lal and Sons is a Manufacturer
(ii) M/sHeera lal and Sons is aTrader

ANS- Computation of amount payable under composition scheme

(i) If M/s Heeralal and Sons is a manufacturer:
Tax is to be paid @ 1% (CGST+ SGST) of the turnover in the State as under: 1% of 32,00,000
[`15,00,000 + 17,00,000] = 32,000

(ii) If M/s Heeralal and Sons is a trader:

Tax is to be paid @ 1% (CGST+ SGST) of the turnover of taxable supplies of goods in the State asunder:
1% of ` 15,00,000= `15,000

QUS.5 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,

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GST 16

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 financialyear.

ANS- As per section 10 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 compositionlevy.
(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, newly inserted section 10(2A) provides an option to a registered person, who is not eligible to

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GST 17

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 taxable 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 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. 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, in
the current financial year, M/s Devlok can supply repair services up to a value of `13 lakh [10% of `130
lakh or `5 lakh, whichever is higher] 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.

Further, the benefit of concessional tax payment under 10(2A) is available in case of a registered person
whose aggregate turnover in the preceding financial year does not exceed ` 50 lakh.

Thus, in view of the above- mentioned provisions, M/s Indra& bro cannot avail the benefit of concessional

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GST 18

tax payment as its aggregate turnover in the preceding financial year is more than ` 50 lakh.

(d) An exclusive service provider can opt for the composition scheme 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 restaurantservice.
Since M/s Him Naresh is exclusively engaged in supply of services other than restaurant services, it is not
eligible for composition scheme 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 services
other than restaurant services, M/s Him Naresh is entitled to avail benefit of concessional payment of
tax under section 10(2A).

QUS.7 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 oftaxes) and stock
(exclusive of taxes):

Particulars Turnover for the quarterended Turnover for the quarterended

30.06.20XX (`) 30.09.20XX (`)
‘P’ 40,00,000 30,00,000
‘Q’ 64,65,000 13,00,000

Particulars Stock as on 30.06.20XX (`) Stock as on 30.09.20XX (`)

‘P’ 25,00,000 10,00,000
‘Q’ 10,00,000 2,00,000

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GST 19

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 ` 3,00,000, which was purchased in the April
month of the preceding financial 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:

Sr.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 10thday of each month. Also, assume that the goods for
which the freight is paid on 10thday of the month are transported
between 11thto 20thday of the month.

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GST 20

Special packing charges paid to a Packing Company, having expertise

in such specialized packing, during the period January 20XX –
October 20XX.
The packing charges are paid for the goods which are transported
between 11thto 20thday of the month (as mentioned in point (i)
above).The goods are packed on 10thday and then transported from
11thday onwards. Assume equal amount of packing charges are paid
each month on the 9thday 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 [` 75 lakh in
case of Special Category States except Jammu and Kashmir, Himachal pradesh & Assam}

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 CompensationCess.

In the given case, the firm is registered under the composition scheme in the State of Maharashtra. The
aggregate turnover of the firm exceeds ` 1.5 crore on 03.10.20XX [aggregate of both taxable and exempt
turnover from 01.04.20XX to 03.10.20XX, i.e.

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GST 21

` 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) from03.10.20XX.
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 Quarterd

30.06.20XX 30.09.20XX 31.12.20XX
(`) (`) (`)
Turnover of ‘P’ 40,00,000 30,00,000 1,75,000
(Taxable supplies) [1,00,000+ 31,250 + 43,750]

CGST @ 0.5% [A1] 20,000 15,000 875

SGST @ 0.5% [B1] 20,000 15,000 875

Inward supply on Nil [Paid on 10thday for

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GST 22

which tax is payable 60,000 [(1,40,000/7) x 3] 60,000 [(1,40,000/7) x 3] goods transported

under reverse charge between 11thto 20thday
[Service of goods of the month, so the same
transportati on will be assessed under
availed from a GTA Regular scheme]
@5%]
CGST @ 2.5% [A2] 1,500 1,500 -
SGST @ 2.5% [B2] 1,500 1,500 -
Total CGST [A1 + A2] 21,500 16,500 875
Total SGST [B1 + B2] 21,500 16,500 875

Total CGST liability for the period from 38,875 [21,500 + 16,500 + 875]
01.04.20XX to 02.10.20XX
Total SGST liability for the period from 38,875 [21,500 + 16,500 + 875]
01.04.20XX to 02.10.20XX

QUS.8 Keeping all the facts and figures of Q.7unchanged, 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 Date of purchase Value (`) GST (`)

goods owned by the firm

Computers 01.02.20XX 2,00,000 36,000

Printers January 1, two years prior to 80,000 14,400
01.01.20XX
Motor cycle used by the staff 23.09.20XX 85,000 15,300

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GST 23

for collecting payments from the

debtors
Furniture & fixtures 12.06.20XX 4,00,000 72,000
Air conditioner used in the 15.10.20XX 2,00,000 36,000
office
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 in put 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 th e 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 asunder:

Particulars Amount (`)

A. ITC oninputs
Stock of taxable inputs as on 30.09.20XX [Since no tax is paid on exempt 10,00,000
purchases, there does not arise any question of availing ITC on the same. Hence,
stock of only taxable inputs are considered]

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GST 24

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 the suppliers 50,400
ITC of SGST @ 9% 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-

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GST 25

(i) further supply of such vehicles,

(ii) transportation of passengers,
(iii) imparting training on driving, flying, navigating such
vehicles and
(2) for transportation ofgoods.
Since B & D Company is a trader and it does not use the
motor cycle for transportation of goods, ITC thereon will not
beavailable]
Furniture and Fixtures [` 72,000 – (5% x 3 quarters)] ÷ 2 30,600 30,600

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 [` 9,000 – (5% x 4 quarters)] 3,600 3,600
÷2
ITC to be claimed on capital goods 48,600 48,600

Total ITC on inputs and capital goods credited to Electronic 99,000 99,000
Credit Ledger on02.10.20XX [50,400 + 48,600] [50,400 + 48,600]

OUS.9 Keeping all the facts and figures of Q.7and Q.8 unchanged, compute the GST liability of B & D Company
payable from Electronic Credit Ledger and/or Electronic Cash Ledger, as the case may be, for the period
covered under regular scheme.

ANS- Output tax liability of B & D Company under regular scheme

From 03.10.20XX, firm will pay tax under regular scheme on monthly basis in terms of sub-sections (1) and
(7) of section 39 of the CGST Act, 2017 and will be eligible to avail ITC on inputs held in stock and capital
goods as on 02.10.20XX in terms of section 18 of the CGST Act, 2017 as also on goods and services procured

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GST 26

on or after 03.10.20XX and used in the course or furtherance of business in accordance with section 16 of
the CGST Act, 2017. However, since common input services and capital goods are used in effecting taxable
supplies as well as exempt supplies, ITC attributable to the exempt supplies will need to be added to the
output tax liability of the month of October, 20XX in terms of section 17(2) read with rules 42 and 43 of the
CGST Rules, 2017 respectively. Further, since all the sales are made within the State (eastern part of
Maharashtra), CGSTand SGST@ 9% each will be payable on the outward supplies.

The tax liability for the month of October, 20XX under regular scheme will be computed as under-

Particulars Value (`) CGST (`) SGST (`)

Tax on outward supply of ‘P’ 6,25,000 56,250 56,250
Taxable supplies from 03.10.20XX to 31.10.20XX
chargeable to CGST and SGST 9% each [` 8,00,000
(Refer Working Note4)]

Tax on inward supplies attracting reverse charge 20,000 500 500

GTA services availed chargeable to CGST and SGST
@ 2.5% each (` 1,40,000 / 7)

ITC reversal on input services [Refer Working Note 363 363

1below]

ITC reversal on capital goods [Refer Working Note 126 126

2below]

Total GST liability 57,239 57,239

Less: ITC [Refer Working Note 3 below] 56,739 56,739
Less: Tax paid in cash 500 500
As per section 49(4) of the CGST Act, 2017 amount
available in the electronic credit ledger may be

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GST 27

used for making payment towards output tax.

However, tax payable under reversecharge is not
an output tax in terms of section 2(82) of the
CGST Act, 2017. Therefore, taxpayable under
reverse charge cannot be set off against the input
tax credit and thus, will have to be paid incash.

Working Note 1

Particulars Value(`) CGST(`) SGST(`)

CGST & SGST @ 2.5% each paid under reverse 20,000 500 500
charge on freight paid to GTA on 10.10.20XX (for
the goods transported between 11.10.20XX &
20.10.20XX) will be available as ITC under regular
Scheme
CGST & SGST @ 9% each paid to Packing Agency 30,000 2,700 2,700
on 09.10.20XX (for specialized packing to be
carried out on 10.10.20XX on goods to be
transported between 11.10.20XX & 20.10.20XX)
will be available as ITC under regular scheme.

Total common credit 3,200 3,200

Common credit on input services attributable to 363 363
exempt supplies (rounded off)
Common credit on input services availed during
the period under regular scheme x (Exempt
turnover made during the period under regular
scheme / Total turnover during the period under
regularscheme) = ` 3,200 x ` 80,000/ ` 7,05,000
Turnover of ‘Q’ (exempt turnover) from

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GST 28

03.10.20XX to 31.10.20XX - ` 80,000 [Refer

Working Note 4] Total turnover from 03.10.20XX
to 31.10.20XX-` 7,05,000 [Refer Working Note 4]

Working Note 2

Particulars CGST @ 9% SGST @ 9%

(`) (`)
ITC claimed on capital goods on 02.10.20XX 48,600 48,600

Air conditioner used in the office purchased on 18,000 18,000

15.10.20XX
Common ITC [Since all the capital goods are used for 66,600 66,600
effecting both taxable and exempt supplies, the entire
ITC on capital goods is common]

Common credit for a tax period 1,110 1,110

[Common credit ÷ 60] (roundedoff)

Common credit on capital goods attributable to 126 126

exempt supplies (rounded off)
Common credit on capital goods during the period
under regular scheme x (Exempt turnover made
during the period under regular scheme / Total
turnover during the period under regular scheme) = `
1,110 x ` 80,000/ ` 7,05,000

Working Note 3

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GST 29

Particulars CGST (`) SGST (`)

ITC on inputs and capital goods claimed on 02.10.20XX 99,000 99,000
ITC on air conditioner used in the office purchased on 18,000 18,000
15.10.20XX
ITC on freight paid to GTA 500 500
ITC on packing charges 2,700 2,700
Total ITC available with the firm 1,20,200 1,20,200

Working Note 4

Particulars Total turnover for the month ofOctober, Turnover in the month of October
20XX* (`) under regular scheme
[03.10.20XX-31.10.20XX] (`)
‘P’ 8,00,000 [(10,00,000 – 3,60,000) x 125%] 6,25,000 [8,00,000 – 1,00,000 –
31,250 – 43,750]

‘Q’ 1,00,000 [(2,00,000 – 1,20,000) x 125%] 80,000 [1,00,000 – 3,000 –2,000

– 15,000]

Aggregate 9,00,00 7,05,000

0
Turnover 0

Note - Turnover for October, 20XX will be computed as under:

*Turnover = Cost of goods sold** × 125% (20% margin on sales = 25% margin on cost)
**Cost of goods sold = Stock as on 30.09.20XX less stock as on 31.10.20XX (since no purchases are made
after September, 20XX)

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QUS.10 M/s X Ltd. being a manufacturer of laptops has four factories in Chennai, Salem, Coimbatore and Madurai.

Place P.Y. Turnover ` in lakhs (Including Taxes @18%)

Chennai 57.91
Salem 62.00
Coimbatore 8.00
Madurai 10.00
Chennai –II 23.60
Total 161.51

Is M/s X Ltd. eligible for composition levy in the current year?

ANS- Aggregate turnover = 161.51 x 100/118 = 136.87 lakh

Note: Since, aggregate turnover in the preceding financial year does not exceed ` 1.5 crore, M/s X Ltd. is

QUS.11 M/s Paul Ltd. being a trader of laptops has two units in Chennai and in Mumbai.

Place P.Y. Turnover ` in lakhs (Excluding taxes)

Chennai 52.00
Mumbai 12.00

You are required to answer the following:

(a) Is M/s Paul Ltd. is eligible for composition levy in the current year?
(b) If so, can M/s Paul Ltd. opt composition scheme for Chennai location and normal scheme for Mumbai?
(c) Need to give separate intimations for opting composition scheme in each State.

ANS- (a) Yes. M/sPaul Ltd. is eligible to avail the composition scheme in both the states namely Tamil Nadu and
Maharashtra. Since, M/s Paul Ltd. has same PAN, and his aggregate turnover does not exceeds rupees

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GST 31

1.5 crore, it is eligible for composition levy, even though the company has multiple registrations under GST.

(b) No. M/s Paul Ltd. can not opt composition scheme for one location and normal scheme for another
location. Where more than one registered persons are having the same Permanent Account Number (issued
under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-
section (1) of Section 10 of CGST Act, 2017 unless all such registered persons opt to pay tax under tha tsub-
section.

(c) Any State or Union Territory shall be deemed to be intimation in respect of all other places of business
registered on the same Permanent Account Number (PAN).

QUS.12 Hotel King Pvt. Ltd.provider of restaurant services in New Delhi. They also serve beer, whisky and soon.
Turnover in the preceding previous year is `67 lakhs. Is Hotel King Pvt. Ltd. eligible for composition scheme in
the current year?

ANS- Hotel King Pvt. Ltd., is not eligible for composition scheme. Since they are supplying the product, which is not
levied to GST (namely beer, whisky).

QUS.13 Mr. A of Chennai is a retailer dealing with cell phones. He supplies goods to the person located in Chennai
and Pondicherry. Aggregate turnover in the preceding financial yearis` 45lakhs. Mr. A wants to opt for
composition scheme in the current financial year. Advise

ANS- No. When the person makes inter-state supply of goods, benefit of composition scheme is prohibited.
Therefore, Mr. A will not be entitled to the benefit of composition scheme.

QUS.14 Peter England is a trader who sells his ready-made clothes online on Amazon India (an Electronic Commerce
Operator). He received an order for ` 12, 00,000 in the previous year. Peter England also supplied goods from
there out lets. Aggregate turnover of the company in the previous year was ` 21,00,000.Is Peter England
eligible for composition scheme?

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GST 32

ANS- No. Peter England engaged in making supply of goods through an electronic commerce operator who is
required to collect tax at source under section 52 of CGST Act, 2017. Hence, Peter England is not eligible for
composition scheme.

QUS.15 Hot Breads Pvt. Ltd is the supplier of bakery products registered in the current financial year (2019-20)
w.e.f. 1st Oct 2019. Answer the following:
(a) Is Company eligible for CompositionScheme?
(b) If so company wants to pay tax @ 1% being a trader. However, the Deputy Commissioner of Central Tax
contended that the assessee is liable to pay tax @ 5% under the Food and Restaurant Services category?
Advise.

ANS- (a) Hot Breads Pvt. Ltd. is eligible for composition levy in the current year.

(b) The supply of food and restaurant services category is the only service included under the composition
scheme. For a business to be categorised as food and restaurant services, there needs to be an element of
service involved.
In the given case, supply of bakery products, there is only a supply of goods i.e. food items but there is no
element of supply of service. Hence supply of bakery products is eligible to pay GST @.05%, under the
Traders category and not Food and Restaurant Services category.
Therefore, department’s contention is not correct.

QUS.16 Hotel King Pvt. Ltd. is a registered person under GST. P.Y. turnover was ` 100 lakhs. Applicable GST 18%.
Inputs cost ` 7,80,000 (exclusive of GST 18%). Profit margin is 40% on cost. Find the invoice price and advice
the best option to pay tax if any. There is no opening balance and closing balance for the tax period.

ANS- Composition Levy

Particulars Value in `
Cost of
inputs 7,80,000
Add: GST 18% on inputs 1,40,400

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Total Cost 9,20,400

Add: Profit margin 40% 3,68,160
Invoice Price 12,88,560
CGST 2.5% 32,214
SGST 2.5% 32,214
Total GST Liability 64,428

Normal Provision
Particulars Value in `
Cost of input 7,80,000
Add: GST 18% on inputs Not Cost
Total Cost 7,80,000
Add: Profit margin 40% 3,12,000
Add: GST 18% CGST & SGST 1,96,560
Invoice Price 12,88,560
CGST 9% SGST 9%
Output Tax 98,280 98,280
Less: ITC -70,200 -70,200
Net Liability 28,080 28,080
Total Tax is ` 56,160

QUS.17 A person is liable to be registered on 1st Oct 2019 and he has applied for registration on 17th Nov 2019 .
Registration granted on 20th Nov 2017.
What is the effective date of registration if he wants to opt composition levy.

ANS- The effective date of registration will be the date of grant of registration.
As a result effective date of registration will be effective date for opting for composition scheme (i.e. 20th
Nov 2019)

QUS. Mr. Sitaram is running a consulting firm and also a readymade garment show room, registered in same PAN.

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Turnover of the showroomis` 60 lakh and receipt of the consultancy firm is`12 Lakh in the preceding financial
year.

You are required to answer the following:

a) Is Mr. Sitaram eligible for Composition Scheme?

b) Whether it is possible for Mr. Sitaram to opt for composition only for Showroom?
c) Rework, if Mr. Sitaram is running a restaurant as well as readymade garment show room, whether he
is eligible for composition?

QUS.18 Mr. Rahim is dealer who is selling taxable goods, exempted goods and non-taxable goods (i.e. Liquor). His
turnover in the preceding financial year is ` 35 lakh, ` 10 lakh, ` 15 lakh goods which are leviable to GST,
exempted and non-taxable respectively. Whether Mr. Rahim is eligible for Composition Scheme?

ANS- If a person is selling the goods , which are not leviable to tax under GST ,then he is not eligible to opt for.
composition scheme
In this case even though the aggregate turnover not exceeds 1.5 crore, Mr.Rahim is not eligible for
composition Scheme.

QUS.19 Mr. H registered in Hyderabad, who is selling goods from Telangana to Tamil Nadu. Turnover of Mr. H is 73
Lakh in the preceding financial year. Whether Mr. H is eligible for Composition?
Whether your answer will change if Mr. H is making purchase from Tamil Nadu and selling goods in
Telangana?

ANS- Mr. H is not eligible for composition as he is making inter state outward supply.
If Mr. H is making purchase from Tamil Nadu then he is eligible for composition scheme as there is restriction
on outward inter state supply not on inward inter state supply.

QUS.20 M/s X Pvt.Ltd. ,is a manufacturer having two units namely Unit–A in Andhra Pradesh and another Unit–B
In Tamil Nadu. Total turnover of two units in last Financial Year was ` 95 lakh (` 10 lakh of Unit – A + ` 85 lakh

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of Unit –B).
Total turnover of two units in the second quarter of this financial year was`15lakh (`5 lakh of Unit–A +`10 lakh
of Unit –B). Applicable rate of CGST 9% and SGST 9%. Find the Net liability of X Pvt.Ltd. Note: M/s X Pvt. Ltd.,
is not availing input tax credit.

ANS- Since, the company is not availing the benefit of input tax credit the said company can pay GST under
composition levy under sec. 10(1) of the CGST Act, 2017.

Applicable rate of CGST 1% and SGST 1%.

Unit Location Turnover in the. Turnover in 2nd Total tax (@2%)

Previous F.Y Quarter of the F.Y.
.5% .5%
CGST SGST
A Andhar Pradesh 10 lakh 5 lakh 2,500 2,500
B Tamil Nadu 85 lakh 10 lakh 5,000 5,000

QUS.21 A Ltd. a manufacturing concern of Rajasthan having aggregate turnover of 120 lakhs in financial year 2019-
20 has opted for composition scheme
The breakup of supplies are as follows-

Particulars Amount ( in ₹)
(1) Intra State Supplies of Goods X chargeable@5%GST 30,00,000
(2) Intra State Supplies made which are chargeable to GST at Nil rate 18,00,000
(3) Intra state supply of services chargeable with 5%GST 600,000
(4) Interest earned on fixed deposits 8,00,000
(5) Intra state supplies which are wholly exempt under Section 11 of CGST 2,40,000
Act,2017
(6)Value of inward supplies on which tax payable under RCM(GST Rate 5%) 500,000

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(7) Intra State Supplies of Goods Y chargeable@18%GST 30,00,000

Also determine composition tax liability if A Ltd.is a trader.

ANS- The composition tax liability of A Ltd.shall be as under-

(1) Computation of Aggregate Turnover and composite tax (amount in ₹)

Particulars Manufacturer Trader
1. Intra State Supplies of Goods X chargeable @ 5% GST 30,00,000 30,00,000
2. Supplies made which are chargeable to GST at Nil 1800000 -
rate
3. Intra state supply of services chargeable with 5%GST 6,00,000 6,00,000
4. Interest earned on fixed deposits excludible -
5. Supplies which are wholly exempt under 2,40,000 -
Section 11 of CGS Act,2017
6. Value of inward supplies on which tax payable Nil Nil
under RCM (GST Rate 5%) (not to be included)
7. Intra State supplies of goods Y chargeable @ 18% 30,00,000 30,00,000
GST
Aggregate turnover 94,40,000 66,00,000
Rate of composite tax 1% 1%
Total Composite tax (A) 94,400 66,000

(2) Tax payable under reverse charge basis (amount in ₹):

Value of Inward supplies on which tax payable under RCM Rate of GST 5,00,000 5,00,000
Tax payable under RCM Total tax 5% 5%
Liability (A+B) (B) 2500 2500
119400 91000

Working Note: As per second proviso to Section 10(1) to provide that a composition supplier may supply

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services of value not exceeding 10% of the turnover in the preceding financial year in a state or union
territory or ₹ 5 Lacs whichever is higher. Thus, A Ltd can supply services to the extent of 10% of ₹ 120 Lakhs,
i.e 12 Lakhs.

Besides this CGST (Removal of Difficulties Order), 2019 Order No. 1/2019-CT dated 01.02.2019 (explanation
to section 10) has been issued to provide that the supply of exempt services by way of extending deposits,
loans and advancesin so far as the consideration is represented by way of interest or discount, shall not be
taken into account-

i) For determining the eligibility for composition scheme under proviso to Section 10(1) (which allows
provision of services upto 10% of turnover in a State or Union Territory in the preceding financial year , or ₹
500000, whichever is higher)

ii) In computing aggregate turnover in order to determine eligibility for composition scheme & for
determination of tax liability also.

Since the value of services provided excluding interest earned on deposits is ₹ 600000 which is within the
limit of ₹ 12 lakhs, hence A Ltd is eligible for composition scheme

Interest earned on fixed deposits is exempt from tax vide Entry 27 of Notification No. 12/2017- CT (Rate).
The same shall not be taken into account for calculating tax liability in case of manufacturer & trader also as.

QUS.22 Mr.A Retailer who keeps no inventories, presents the following estimated information for the year-
1. Purchase of goods: ₹ 50 lakhs (GST @ 5 % )
2. Sales (at fixed selling price inclusive of all taxes): ₹ 60 lakhs (GST on sales @ 5%)

Discuss whether he should opt for composition scheme if composite tax is 1% of turnover.
Expenses of keeping detailed statutory records required under the GST Laws will be ₹ 1, 20,000Pa., which
shall get reduced to ₹ 50,000 if composition scheme is opted for. Other expenses are ₹ 3,00,000 pa.

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ANS- The cost to the ultimate consumer under two schemes is as under:

Particulars Normal GST Composition

Scheme Scheme
Cost of goods Sold (* No credit under Composition Scheme, hence, 50,00,000 52,50,000
cost of goods sold will be higher)
Add: Cost of maintaining records 1,20,000 50,000
Add: Normal Expenses 3,00,000 3,00,000
Total Cost 54,20,000 56,00,000
Sales (inclusive of all taxes) 60,00,000 60,00,000
Less: Tax (GST= ₹ 60 Lakhs * 5 / 105); (Composite tax= 60 lakhs * 2,85,714 60,000
1%)
Sales (net of taxes) 57,14,286 59,40,000
Profit of the dealer (Sales, net of taxes – Total Costs) 2,94,286 3,40,000

Conclusion: It is apparent that while cost of ultimate consumer, in both the cases remains the same, the
profit of the dealer opts for composition scheme. Hence, composition scheme should be opted.

QUS.23 Sagar and Co. is engaged in supplying management consultancy services in Rajasthan. In the preceding
financial year, it has a turnover of ₹ 45 lakhs from the management consultancy services. Further it has also
earned a bank interest of ₹ 10 Lakhs from the fixed deposits. Sagar& Co. wishes to opt for presumptive levy
under 10(2A) in the current year. You are required to advice Sagar and Co. on the same.

ANS- As per EXPLANATION TO SECTION 10(2A), a registered person claim the benefit of this presumptive scheme
provided his aggregate turnover in the preceding financial year did not exceed ₹ 50 Lakhs.

In computing the aggregate turnover in order to determine eligibility of a registered person tax under this
notification, value of supply of exempt services by way of extending deposits, loans or advances in so far as
the consideration is represented by way of interest or discount, shall not be taken into account.

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Thus, in computing the aggregate turnover in order to determine the eligibility of Sagar& Co. for
presumptive scheme, value of supply of exempt services being bank interest shall not be taken into
account. Thus, the aggregate turnover of Sagar& Co., is ₹ 45 Lakhs (turnover from management consultancy
services).

From the aforesaid discussion, it can be inferred that Sagar and Co., is eligible for presumptive scheme for
services suppliers.

QUS.24 Mr. X started profession of Architect w.e.f. 01.04.2020.His value of intra state taxable supplies upto 30th
September 2020 was ₹ 20 lakhs,. He applied for registration on 1st October, 2020 and opted for
presumptive scheme for service supplier in registration application and was granted application as per
provisions of GST Laws. He made intra- state taxable supplies of ₹ 35 lakhs for the quarter ending
31.12.2020. You are required to determine his presumptive tax liability under 10(2A) for the period
01.04.2020 to 31.12.2020.

ANS- As per 10(2A), if registered person is eligible to take the benefit of this notification, he shall pay GST at the
rate of 6% (3% CGST and 3% SGST/UGST) on his aggregate turnover i.e. “ First supplies of goods or services
or both upto ₹ 50 lakhs.

“First Supplies of goods and services or both” shall for the purpose of determination of tax payable under
this notification shall not include the supplies from the first day of April of a financial year to the date from
which he become liable for registration under the act.

Thus, where supplier has taken the GST registration for the first time, the presumptive tax at the rate of 6%
shall be payable on the supplier made by him only after the date of registration. Thus, the amount of
composition tax liability under 10(2A) will be ₹ 30,00,000 * 6% = ₹ 1,80,000.
GST ON 5,00,000 @ NORMAL RATE OF GST ON ARCHITECT SERVICES i.e 18 % =90,000

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QUS.25 Shubhlaxmi foods is engaged in supplying restaurant service in Maharashtra. In the preceding financial year,
it has a turnover of ₹ 90 Lakhs from the restaurant services and ₹ 10 lakhs from the supply of farm labour in
said state. Further, it has also earned a bank interest of ₹ 10 lakhs from the fixed deposits.

Shubhlaxmi Foods wishes to opt for composition scheme in the current year. You are required to advice
Shubhlaxmi foods on the same.

Would your answer be different if Shubhlaxmi foods is engaged in milling of poddy into rice on job work
basis instead of supply of farm labour and the turnover from the said activity is ₹ 9 lakhs ?

ANS- As per Section 10(1) of the CGST Act, 2017, a registered person, whose aggregate turnover in the preceding
financial year does not exceed ₹ 1.5 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.

As per order no. 1/2019, any person rendering services as a part of the savings and investments practice, by
way of extending deposits, loans and advances, in so far as the consideration is represented by way of
interest and discount will not be ineligible to opt for composition scheme.

The above stated order also clarified that value of supply of exempt services by way of extending deposits,
loans or advances, in so far as the consideration is represented by way of interest and discount shall not be
taken into account-
1. For determining the eligibility for composition scheme under second proviso to sub section (1) of
Section 10;
2. In computing aggregate turnover in order to determine eligibility for composition scheme & for
determination of tax liability also.

In the given case, Shubhlaxmi Foods is engaged in supplying restaurant services in Maharashtra. In the
preceding Financial year ,it has a turnover of ₹ 90 lakhs from the restaurant services, 10 lakh from the
supply of farm labour in said state and it has also earned a bank interest of ₹ 10 Lakh therefore ATO will be 1

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crore hence she is eligible to opt for composition scheme.

Answer will not change in case Shubhlaxmi foods is engaged in milling of poddy into rice on job work basis
instead of supply of farm labour.

QUS.26 Mr. Rajbeer, a registered person at Delhi, is in the business of selling goods relating to interior decoration
under the firm name M/s. Rajbeer & Sons. He has opted for composition scheme for the Financial Year (FY)
2018-19.

His turnover for FY 2018-19 is ` 80 lakh and is expected to achieve ` 130 lakh in FY 2019-20. Discuss whether
M/s Rajbeer & Sons can still enjoy the benefits of composition scheme in FY 2019-20.

His son Karan wants to start business of providing services relating to interior decoration, after completing
post-graduation course in interior decoration under same firm name M/s Rajbeer & Sons with effect from
01.04.2019 and wants to enjoy the benefits of composition scheme under GST.
Advise Mr. Rajbeer and his son Karan. (Nov 19 Exam)

ANS. 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 may opt for composition scheme, provided he is, inter
alia, engaged in supply of goods and/or restaurant service.

However, a person who opts for composition scheme is permitted to supply services other than restaurant
service of value not exceeding 10% of turnover in a State/UT in the preceding financial year or ` 5 lakh,
whichever is higher.

In the given case, M/s. Rajbeer & Sons*, engaged in business of selling goods relating to interior decoration,
is eligible for composition scheme in FY 2019-20 since its aggregate turnover in preceding FY (viz. ` 80 lakh)
does not exceed ` 1.5 crore.

If Karan wishes to start the business of providing services relating to interior decoration under the same

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firm name M/s Rajbeer & Sons, the sole proprietorship needs to be first converted into a partnership firm.
Further, new GST registration under the new PAN is required to be obtained.

In such a case, the firm can provide services relating to interior decoration up to a value of
` 5 lakh (10% of zero turnover of last year or `5 lakh, whichever is higher) to continue enjoying the benefit of
composition scheme in FY 2019-20.

*It has been assumed that M/s Rajbeer & Sons is a sole proprietorship.

QUS.27 (i) Examine whether the suppliers are eligible for composition levy under section 10 of the CGST Act in the
following independent cases in the beginning of 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
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 alongwith

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providing hair styling services in the current financial year? (RTP Nov 20)

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:
(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.

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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)
and(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

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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.

QUS.28 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-

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Sept and Oct-Dec.

Note: The rates of tax on architectural services are CGST- 9% and SGST-9%. (RTP Nov 20)

ANS- 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-

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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.

QUS. Bansal and Chandiok started a partnership firm of Chartered Accountants in Jaipur (Rajasthan) on 1st April.
The firm specializes in providing audit services to Banks in Rajasthan. It provided the following details of its
turnover:

Quarter Amount (in `)

Apr-Jun 10 lakh
Jul-Sep 20 lakh

It crossed the threshold limit of ` 20 lakh on 1st August. Bansal and Chandiok wishes to opt to pay tax at
concessional rate under section 10(2A). Examine whether the firm is eligible for this scheme? If yes, then
determine the tax payable by it in quarters (i) Apr-Jun & (ii) Jul-Sep?

ANS- The composition scheme under sub-sections (1) and (2) of section 10 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, Bansal and Chandiok 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) 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.

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In the given case, Bansal and Chandiok 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).

Tax payable by the firm is as follows:

(i) Apr-Jun quarter: Tax payable by the firm in first quarter is nil since the firm’s turnover *` 10 lakh] has
not yet exceeded the threshold limit of `20 lakh (viz. the threshold limit applicable for registration in the
State of Rajasthan).

(ii) July-Sep quarter: While computing the tax payable by the firm in second quarter, the turnover from 1st
April to the date from which he becomes liable for registration under the Act is to be excluded. Tax
payable will be computed as under-

Total Turnover ` 30,00,000/-

Less: Threshold limit for registration ` 20,00,000/-
Taxable Turnover ` 10,00,000/-
Tax @ 6% ` 60,000/-*
*CGST = ` 30,000 and SGST = ` 30,000

QUS. Mr. Yash, doing business in the State of Kerala, commenced his business in the month of April 2020 and
provides the following further information.

(i) His intra-State turnover for the first two quarters was as follows:
April, 2020 - June, 2020 - ` 20 lakh
July, 2020 - September, 2020 - ` 100 lakh

(ii) In each of the quarters, exempt supply made by him was 25% of the total turnover for the said quarter.
(iii) Since the product supplied by him was eligible for composition scheme, he opted for registration

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under composition scheme with effect from 1st July, 2020.

You are required to compute the tax payable by Mr. Yash under GST laws from the above information:
(i) If he is a manufacturer
(ii) If he is a trader (5 Marks)

ANS- As per section 10 of the CGST Act, 2017 read with rule 7 of the CGST Rules, 2017, a registered person
opting for composition levy for goods pays tax at the rates mentioned below during the current FY, in lieu
of the tax payable by him under regular scheme:

Manufacturers, other than 1% (½% CGST+ ½% SGST/UTGST) of the turnover in the

manufacturers of notified goods State/ Union territory
Trader 1% (½% CGST+ ½% SGST/UTGST) of turnover of taxable
supplies of goods & services in the State/ Union territory

Turnover prior to getting registered will not be considered for determining the turnover in a State/Union
Territory.

(i) If Mr. Yash is a manufacturer

CGST = ` 100 lakh x 0.5% = ` 50,000
SGST = ` 100 lakh x 0.5% = ` 50,000

(ii) If Mr. Yash is a trader

CGST = ` 75 lakh (as 25% of turnover is exempt) x 0.5% = ` 37,500
SGST = ` 75 lakh (as 25% of turnover is exempt) x 0.5% = ` 37,500

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SUPPLY

QUN.1 “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 elements 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 publishers or the person who owns the
usage rights to the intangible inputs while the physical inputs including paper used for printing belong to
the printers, 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.

QUS.2 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 taxable products. The firm also provides taxable
Consultancy services.

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Mr. Rajesh Surana has provided the consultancy service to his brother - Mr. Akhilesh Surana (located in USA)
without any consideration. The products manufactured by Mr. Akhileshare similar to the ones
manufactured by Mr. Rajesh Surana. Mr. Surana charges Rs. 3,00,000 for providing similar consultancy
services to other independent customers located in USA. Compute the GST liability, if any, in the given case
assuming the rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.

ANS- Consultancy service to Mr. AkhileshSurana (located in USA) has been provided without any consideration.
Activity without consideration is not a supply in terms of section 7(1)(a) of the CGST Act, 2017. However,
Schedule I to the CGST Act, 2017 enlists the activities to be treated as supply even if made without
consideration. Accordingly, Para 2. Of Schedule I treats 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 as a supply even if made without consideration.

However, a brother who is not dependant on the person supplying the service, does not come within the
purview of term family as defined under section 2(49) of the CGST Act, 2017 and hence, is not a related
person. Therefore the provision of service to an independent brother without any consideration will not fall
under para 2. Of the Schedule I to CGST Act, 2017. Hence, the activity is not a supply and is thus, not liable
to any tax.

QUS.3 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
or services or both, shall be treated to be a supply of goods or services or both in the course of inter-State
trade orcommerce.
However as per para 7 of schedule III of section 7(2)(a) above transactions are neither supply of goods nor
suply of service.

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QUS.4 Mrs. Pragati received legal advice for the personal problems & paid 1,000 pound as a legal fees to Miss.
Unnati of U.K. (London). Explain whether the above activity of import of service would amount to supply
under section 7 of the CGST Act, 2017? If in above case both of them are real sisters & no consideration is
paid then will it change your answer? Further in the above case both of them are real sisters & Mrs. Pragati
receives legal advice for her business & she didn't paid any consideration then what will be your answer?

ANS- As per Section 7(l)(b), the term 'supply' includes import of services for a consideration whether or not in the
course or furtherance of business. Thus, legal advice received by Ms. Pragati for her personal services for a
consideration will be covered under the ambit of supply.

As per Section 7(l)(c) read with Schedule I, Import of services by person from a related person or from any
of his other establishments outside India, in the course or furtherance of business will be treated as supply.

In this case though Pragati and Unnati are real sisters but not related person (not wholly & mainly
dependent), legal service received will not be covered under the ambit of supply, since the said services are
not received by her from related person & not in course or furtherance of business.

In case Mrs. Pragati receives legal advice from her real sisters but not related person (not wholly & mainly
dependent),for her business without consideration, it will not be covered under the ambit of supply as per
Section 7(l)(c) read with Schedule I of CGST Act, 2017.

QUS.5 Scope of supply : Examine whether the following activities would amount to supply under section 7 of the
CGST Act:
(1) Hitkari Charitable Trust, a trust engaged in providing medical relief free of cost, donates books and
stationery to children living in slum area.

(2) Karishma Manufacturers have a factory in Jaipur and 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.

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(3) 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 regardto his family dispute.

Would your answer be different if in the above case, Manan has taken advice in respect of his business unit
in Delhi?

ANS- (1) 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.

(2) 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 of Karishma Manufacturers are establishments of two distinct persons.
Therefore, supply of goods from factory to depot without consideration, but in course of or in furtherance
of business, is supply under Section 7 of the CGST Act.

(3) Schedule I of CGST Act, provides that import of services by person from a related person located outside
India, without consideration is treated as supply if it is provided in the courseor furtherance of business. In
the given case, Manan has received legal consultancy from his father free of cost in a personal matter and
not in course or 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 not be treated as supply under Section 7 of the CGST Act as the same are provided in

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course or furtherance of business though not received from a related person.

QUS.6 Super Engineering Works Ltd., a registered supplier, is engaged in providing expert maintenance and repair
services for large power plants that are in the nature of immovable property, situatedall over India. The
company has its Head Office at Chennai, Tamil Nadu and branch offices in other States. The work is done in
the following manner.

(i) 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 equipments, consumables, tools, parts etc. To
handle a wide variety of repair work.

(ii) 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.

(iii) In some cases, a stand-alone machine is also sent to the client’s premises in such truck for carrying out
the repair work.

(iv) 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.

(v) Sometimes the truck is sent to the company’s own location in other State(s) from where it is further sent
to client locations for repairs.

Work out the GST liability [CGST &SGST or IGST, as the case may be] of Super Engineering Works Ltd.,
Chennai on the basis of the facts as described, read with the following data for the month of January 20XX.

S. No. Particulars Rs.

A Truck sent to own location in Karnataka
(i) Value of items contained in the truck -Rs. 3,00,000
(ii) Value of truck - Rs.19,00,000

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B. Truck sent to a client location in Karnataka for carrying out
repairs. Stand- alone machine is also sentin the truck to client
location forrepairs
(i) Value of items contained in the truck– Rs. 3,45,000
(ii) Value of stand-alone machine - Rs.2,96,000
(iii) Value of truck - Rs.21,50,000
(Billing for repairs to be done afterwards depending upon the actual items used)
C. Truck sent to a client location in Tamil Nadu for carrying out repairs
(i) Value of items contained in the truck-Rs.5,56,000
(ii) Value of truck - Rs.30,56,000
(Billing for repairs to be done afterwards depending upon the actual items used)
D. Invoices raised for repair work carried out in Karnataka 90,00,000
*including the invoice for repair work done in ‘B’+ -
E. Invoices raised for repair work carried out in Tamil Nadu 18,00,000
*including the invoice for repair work done in ‘C’+

All the given amounts are exclusive of GST, wherever applicable. Assume the ratesof taxes to be asunder:

Items used for repairs

CGST – 6% SGST – 6% IGST – 12%
Container truck, Stand-alone machines
CGST – 2.5% SGST – 2.5% IGST – 5%
Works contract for repairs and maintenance of immovable property
CGST – 9% SGST – 9% IGST – 18%
You are required to make suitable assumptions, wherever necessary.

ANS- Computation of GST Liability of Super Engineering Works Ltd., Chennai for the month of January20XX

Sr.No. Particulars Rs.

A. Items sent in container truck to own location in Karnataka - IGST @ 12% 36,000
[Note 1]

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Container truck sent to own location in Karnataka [Note 2]
B. Stand-alone machine sent in container truck to clientlocation in
Karnataka, for carrying out repairs [Note 3]
Container truck sent to client location in Karnataka [Note 3]
Items sent in container truck to client location in Karnataka, for carrying out
repairs [Note4]
C. Container truck sent to client location in Tamil Nadu [Note 3]
Items sent in container truck to client location in TamilNadu, for carrying
out repairs [Note4]
D. Invoices raised for repair work carried out in Karnataka: IGST @ 18% [Note 5 16,20,000
and Note 6]
E. Invoices raised for repair work carried out in Tamil Nadu: CGST 9% + SGST 9% 3,24,000
[Note 5 and Note 7]
Total GST liability 19,80,000

Notes: (1) Movement of goods without any consideration 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 value 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 proviso to the same rule.)
In the given case-
• the location of the supplier is in Chennai (Tamil Nadu); and
• the place of supply of items contained in the truck is the location of such goods at the time at which the
movement of goods terminates for delivery to the recipient i.e., Karnataka 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.

(2) As per section 25(4) of the CGST Act, 2017, a person who has obtained more than one registration,

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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 ‘distinctpersons’.

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 para2.

However, in view of the GST Council’s recommendation, it has been clarified that the inter-State movement
of various modes of conveyance between ‘distinct persons’ as specified in section 25(4), not involving
further supply of such conveyance, including trucks carrying goods or passengers or both; or for repairs and
maintenance, may be treated ‘neither as a supply of goods nor supply of service’ and therefore, will not be
leviable to IGST. Applicable CGST/SGST/IGST, however, shall be leviable on repairs and maintenance done
for such conveyance [CircularNo. 1/1/2017 IGST dated 07.07.2017].

(3) Supply of goods without consideration is deemed to be a supply inter alia when the goods are supplied
to a ‘distinct person’. However, in this case, stand- alone machine and container truck are moved 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 toGST.

(4) 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 suchcontract.
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 repairs. Hence, the
contract is that of a workscontract.

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 the CGST Act,2017.

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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 property in goods is incidental to a 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 charged to tax at that point oftime.

(5) 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 totaxaccordingly.

(6) In the givencase-

i. the location of the supplier is in Chennai (Tamil Nadu);and
ii. 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., Karnataka 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 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.

(7) 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.

QUS. Determine whether the following supplies amount to composite supplies

a. A hotel provides 4 days-3 nights 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,

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(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’.

QUS. State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule II of the CGST Act
a) Renting of immovable property.
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.
c) Transfer of right in goods without transfer of title in goods.
d) Transfer of title in goods under an agreement which stipulates that property shall pass at a future date.

ANS- a) Supply of services

b) Supply of goods
c) Supply of services
d) Supply of goods

QUS. Examine whether the following activities would amount to supply under section 7 read with Schedule I of
the CGST Act:
a. 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.

b. Raman is an architect 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.

c. Would your answer be different if in the above case, Raman has taken advice in respect of his business
unit in Chennai?

ANS- a. Title as well as possession both have to be transferred for a transaction to be considered as a supply of

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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.

b. 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.
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. Consequently, services provided
by Raman’s brother to him would not be treated as supply under section 7 of the CGST Act read with
Schedule.

c. 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.

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SCOPE OF SUPPLY

QUSITION ANSWER
1. Business dealings - Section 7(l)(a): An electronics Yes. As per Section 7(l)(a) of CGST Act,
dealer sells a laptop for ` 50,000 to earn a profit. 2017, Supply includes all forms of supply of
Does it qualify as a supply. goods or services or both such as sale, transfer,
barter, exchange, license, rental, lease or
disposal made or agreed to be made for a
consideration by a person in the course or
furtherance of business. Hence, in the above
case it will be treated as supply and liable to
GST.

2. Import of service : Mr. X (an unregistered person) Yes. As per Section 7(l)(b) of CGST Act, 2017,
plans to pursue his higher education in US. He Supply includes import of services for a
receives career consultancy services from a US consideration whether or not in the courseor
based consultant for ^ 5,00,000. Does it qualify as a furtherance of business. Hence, in the above
supply? case it will be treated as supply.

3. Permanent transfer of business assets : XYZ & Co. a Yes. As per Section 7(l)(c) read withSchedule I
manufacturer of goods donated old computers to of CGST Act, 2017, Permanent transfer or
Charitable Schools on account of renovation of disposal of business assets
office. The company has taken input tax credit on where input tax credit has been availedshall
the computers so donated. Does it qualify as a be treated as supply even if made without
supply? consideration. Hence, donation of old
computers to charitable schools shall qualify as
supply since input tax credit has been availed
by. XYZ & Co

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4. Transactions between related persons : Happy Yes. As per Section 7(l)(c) read withSchedule
Ltd. Provides management consultancy services of CGST Act, 2017, Supply of goods orservices
without charge to Joy Ltd in which Happy Ltd.has Between related persons is treated as supply
controlling rights.The said consultancy has been even if it is without consideration. As per
provided for benefit of entire group. Does it qualify Explanation to Section 15 of CGST Act, 2017,
as a supply ? Persons shall be deemed to be "relatedpersons"
If "one of them directly orindirectly
controls the other". Since Happy Ltd. has
controlling rights of Joy Ltd., they will be
treated as related person and the said
transaction will qualify as supply.

5. Transaction between employer and employee : XYZ Yes. As per Section 7(l)(c) read with
Ltd. gives gift worth `5,00,000 to an employee. Does Schedule I of CGST Act, 2017, Supply of
it qualify as a supply? Would your answer be goods or services between related persons is
different if gifts of ` 45,000 has been given to the treated as supply even if it is without
employee? consideration when made in course or
furtherance of business. As per Explanation to
Section 15 of CGST Act, 2017, persons shall be
deemed to be "related persons" if such
persons are employer and employee. Thus,
gift to an employee worth ` 5,00,000 will
qualify as supply and such supply would be
leviable to GST. If gift of ` 45,000 is given
instead of ` 5,00,000, the same will not
qualify as supply since it has been specifically
provided that gifts not exceeding ` 50,000 in
value in a financial year by an employer to an
employee shall not be treated as supply of
goods or services or both.

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6. Transaction between Principal & Agents: ABC Yes. As per Section 7(l)(c) read withSchedule I
Motors Ltd. engages Sunshine Cars Ltd. as an agent of CGST Act, 2017, Supply of goods by a
to sell cars on its behalf. principal to his agent where the agent
For the purpose, ABC Motors Ltd. Has supplied undertakes to supply such goods on behalf of
200 cars to the showroom of Sunshine Cars Ltd. the principal shall be treated as supply even if
located in Rajasthan. Does it qualify as supply? made without consideration. In view of the
same supply of cars by ABC Motors Ltd. to
Sunshine Cars Ltd. will qualify as supply.

7. Import of service from HO : ABC Associates Yes. As per Section 7(l)(c) read with
received management consultancy services from its Schedule I of CGST Act, 2017, Import of
head office located in Malaysia. The head office has services by a person from a related
rendered such services free of cost to its branch Person or from any of his other
office. Does it qualify as supply? establishments outside India, in the course
or furtherance of business will be treated as
supply even if made without Consideration
Thus ,management consultancy services
received by ABC Associates will qualify as
supply even though the head office has not
charged anything from it and will be liable to
GST.

8. Import of service for personal use : Archean Yes. As per Section 7(l)(b) of CGST Act, 2017,
Constructions Ltd. (a registered taxable person) Importation of services for a consideration
receives architectural design supplied by a foreign whether or not in the course or furtherance of
architect to design a residential house to be built in business is covered under supply. In theabove
Hyderabad for a consideration of ` 50,00,000. case it will be treated as supply and will be
Does it qualify as supply? liable to GST.

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9. Business : Mr. B, a famous actor, recorded a song Yes. Any activity undertaken in course/ for
sung by him for a music company and sold the audio furtherance of business would constitute a
CD. The Consideration for such sale was to be Supply. Since 'business' includes vocation, sale
donated to a Charitable Trust - 'Being Human'. Of goods or service even as a vocation is a
Will the sale of CD to music company by the actor Supply under GST. Hence, the sale of CD to
qualify as supply? Music company by the actor will qualify as
Supply.

10. Transaction in Securities :XYZ Ltd was No. Transaction in securities is neithersupply
amalgamated with ABC Ltd. On account of of goods nor services. Securities areexcluded
amalgamation Mr. X a shareholder received from the definition of both goods as well as
10,000 shares of ABC Ltd. In exchange of 5,000 services. Hence, such transaction will not
shares of XYZ Ltd. qualify as supply.
Does it qualify as supply?

11. Actionable claims : Sahara Ltd., an NBFC No. Actionable claims are covered in
transfers bad loans (unsecured) to Vasooli Capital definition of goods. However, Schedule III
Advisors Ltd. Does it qualify as supply? excludes actionable claims other thanlottery,
gambling and betting from the scope of supply.
Transfer of unsecured loans, therefore, would
not amount to supply.

12. Inter branch transaction : XYZ Ltd. having Yes. As per Section 7(1) (c) read with Schedule
head office in Mumbai (Maharashtra) supplied of CGST Act, 2017, Supply of goods or services
goods worth ` 10,00,000 to its branch office in or both between distinct persons as specified
Jaipur (Rajasthan). Does it qualify as supply? in Section 25, when made in the course or
furtherance of business will be treated as
supply even if made without consideration.

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As per Section 25(5) of CGST Act, 2017,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
for the purposes of this Act.
Hence, branch transfer of goods worth `
10,00,000 from Maharashtra to Rajasthan will
qualify as supply.

Que - 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.

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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%.

QUS. 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
ScheduleI 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

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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
of the CGST Act.

QUS. 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 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

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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)].

QUS. Shivaji Pvt. Ltd., 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.
For a given month, the receipts (exclusive of GST) of Shivaji Pvt. Ltd. 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
Compute the GST payable by Shivaji Pvt. Ltd. for the given month. Assume the rates of GST to be as under:
Hiring out of excavators – 12%

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Supply of manpower services and soil-testing and seismic evaluation services - 18%

ANS-1 Computation of GST payable by Shivaji Pvt. Ltd.

Particulars Value Rate of GST GST

Received ( ) payable(`)
Hiring charges for excavators 18,00,000 12% 2,16,000
Service charges for supply of manpower For 20,000 12% 2,400
operation of excavators [Refer Note 1]
Service charges for soil testing and 2,50,000 18% 45,000
seismic evaluation [Refer Note 2]
GST liability 2,63,400

Notes: 1. Since the excavators are invariably 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) wherein
the principal supply is the hiring out of the excavator.

As per section 8(a), 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%.

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 18%.

QUS. 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.

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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.

QUS. Angad Private Ltd. is engaged in the business of distribution of construction material. As an incentive, Angad
Private Ltd. pays an amount of `75,000 to its employees upon achieving a specified sales target. The
incentive is part of the salary of the employees and applicable tax is deducted at source as per relevant
income tax provisions. Angad Private Ltd. is of the view that GST is not leviable on such incentive paid to the
employees. Whether the view taken by Angad Private Ltd. is correct?

ANS- Yes, Angad Private Ltd.’s view is correct. In terms of section 7(2) read with Schedule III of the CGST Act,
services by an employee to employer in the course of or in relation to his employment shall not be treated
as supply under GST. Further, the amount paid as incentive by Angad Private Ltd. is not in the nature of gift,
and thus, is not covered under Schedule I of the CGST Act. In fact, in the given case, the incentive is part of
the salary and is directly linked to the sales target. Therefore, the services provided by the employees in
return of the incentive given to them shall not be treated as a “supply”.
In the light of above discussion, GST is not leviable on the incentive paid by Angad Private Ltd. to employees.

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QUS. 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 section7(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.

QUS. 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.

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QUS. Rob Shareholding Ltd., an approved intermediary, has entered into a transaction wherein certain securities
were to be lent to Dhandhan Bank, under Securities Lending Scheme, 1997. Dhandhan Bank shall pay
specified lending fee against such lending of securities to it. Explain the taxability of transactions involved in
the Securities Lending Scheme, 1997.

ANS- Securities Lending Scheme, 1997 (hereafter referred to as SLS) facilitates the lending and borrowing of
securities. Securities are neither covered in the definition of goods nor covered in the definition of services.
Therefore, a transaction in securities which involves disposal of securities is not a supply in GST and hence
not taxable.

However, SLS doesn’t treat lending of securities as disposal of securities and therefore is not excluded from
the definition of services. The lending fee charged from the borrowers of securities has the character of
consideration and is taxable under GST. Apart from above, the activities of the intermediaries facilitating
lending and borrowing of securities for commission or fee are also taxable separately [Circular No.
19/38/2019 GST dated 11.10.2019].

QUS. Krishnadev is a trader based in India. Ramakrishna, brother of Krishnadev, is located in China and is also
engaged in business of trading of goods. Krishnadev places an order with Ramakrishna for procurement of
certain goods from local market in China. Before the shipment of goods from China to India, Krishnadev sold
such goods to Christiano, a trader located in Brazil. The goods were subsequently shipped from China to
Brazil. Comment on the taxability of transaction between Krishnadev and Christiano under GST in India.

ANS- The transaction between Krishnadev and Christiano is in the nature of merchant trading. As per Schedule III
of the CGST Act,transactions involving sale of goods from a place in non-taxable territory to another place in
non- taxable territory, without such goods entering into India, shall not be treated as supply under GST.
Therefore, the transaction between Krishnadev and Christiano shall not be treated as supply and is thus not
leviable to GST.

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QUS. 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.

QUS. 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

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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 28.06.2017], 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.

QUS. (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

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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

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SUPPLY UNDER GST

QUS.1 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

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, 2017 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.

QUS.2 Agrawal Carriers is a Goods Transport Agency (GTA) which is 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

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transportation of goods by road.

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. 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, 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 per son for a single price where such supply does not constitute
a composite supply [Section 2(74) of the CGST Act, 2017].

The various intermediary and ancillary services provided by GTA 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. 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 Aggarwal Carriers, such service would
form part of the GTA service, and thus will be composite supply, and not a mixed supply even though a
single price is charged for the supply.

Further, if such incidental services are provided as separate services and are billed separately, whether in
the same invoice or separate invoices, they will be treated as separate supply and not composite supply and
there being no single price, the supply will also not be treated as mixed supply – in terms of Q. 6 of the CBIC
FAQs on Transport & Logistics1.

In case where incidental services are provided as separate services and are billed separately, whether in the
same invoice or separate invoices, it is also possible to take a view that they need not be treated as
separate supply, but part of composite supply. Further, there being no single price, the supply will not be

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treated as mixed supply.

QUS. Mrs. Kajal, a registered supplier of Jaipur (Rajasthan), has made the following supplies in the month of
January, 20XX:

(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 to her brother for his son’s 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 from Mrs. Kajal's godown at Jaipur to the Function
Garden, Ajmer.

Mrs. Kajal has paid the cost of transportation of chairs and coolers to an unregistered Goods Transport
Agency (GTA) [located in the State of Rajasthan] @ ` 20 (exclusive of GST) for each chair and each cooler
and in turn, has charged ` 20 only for each chair and each cooler from Function Garden for transportation
of the same.

Interest of ` 6,400 (inclusive of GST) was collected by Mrs. Kajal in January from Ram Fancy Store, Kota for
the payment received with a delay of 30 days.
Assume rates of GST to be as under:-

Sr. No. Particulars Rate of Rate of Rate of

CGST(%) SGST(%) IGST (%)
1. Laptop 9 9 18

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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
7. Service of renting of chairsand coolers 6 6 12
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, 20XX.

ANS- Computation of GST liability of Mrs. Kajal for the month of January, 20XX

Sr.No. Particular 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 ` 6,400 charged for delayed

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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

[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 managementservices provided free of Nil Nil

cost to brother for his son’s 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.] [Note-1]

(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.]

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[Note-2]

(vi) Transportation of chairs and coolers by GTA 30,000 750 750

[GST on GTA services availed is payable under (20 ×1,500)
reverse charge mechanism since GST is payable
@ 5%. Being an intra-State supply,CGST and SGST
will be chargeable @ 2.5% each.]
Total GST liability 91,250 91,250 9,900

Note: 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.

QUS.3 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

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CHARGE OF GST

QUS. Panini Private Limited agrees to sponsor a sports event organized by Pink City Club in Jaipur. Panini Private
Limited has paid an amount of `50,00,000 for such sponsorship of the sports event. Consequently, said
event was named after the brand name of Panini Private Limited. Examine who is the person liable to pay
tax in the given case.

ANS- Notification no 13/2017 CT (R) dated 28.06.2017 as amended (herein after referred to as reverse charge
notification), provides that sponsorship services provided by any person to a body corporate or partnership
firm located in the taxable territory, shall be liable to GST under reverse charge in the hands of recipient.

In the present case, Pink City Club is the supplier of sponsorship services which is receiving the
consideration in the form of sponsorship fee of ` 5,00,000 from Panini Private Limited, against the provision
of sponsorship service. Since the recipient of sponsorship services- Panini Private Limited is a body
corporate, the tax on said services is payable by the recipient - Panini Private Limited, under reverse charge.

QUS. 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

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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.

QUS. 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 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

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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.

QUS. 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 liable to pay GST in this case?

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 of passengers 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.

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COMPOSITE OR MIXED SUPPLY

QUS.1 Sharma Carriers is a Good Transport Agency engaged in transportation of goods by road. As per the general
business practice, Sharma carriers also provides intermediary and ancillary services like loading /unloading,
packing/unpacking, transhipment and temporary warehousing in relation to transportation of goods by
road.

With reference to the provisions of GST law, analyse whether such services are to be treated as part of the
GTA services, being a composite supply or as mixed supply.

ANS- 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, 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 [Section 2(74) of the CGST Act,2017].

The various intermediary and ancillary services provided by GTA 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. 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 Sharma Carriers, such service would
form part of the GTA service, and thus will be composite supply, and not a mixed supply even though a
Single price is charged for thesupply.

Further, if such incidental services are provided as separate services and are billed separately, whether in
the same invoice or separate invoices, they will be treated as separate supply and not composite supply and

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there being no single price, the supply will also not be treated as mixed supply

In case where incidental services are provided as separate services and are billed separately, whether in the
same invoice or separate invoices, it is also possible to take a view that they need not be treated as
separate supply, but part of composite supply. Further, there being no single price, the supply will not be
treated as mixed supply.

QUS.2 XYZ Ltd. a manufacturer of cosmetic products supplied a package consisting of hair oil (GST Rate- 18%), sun
screen cream (GST Rate - 28%), shampoo (GST Rate - 28%) and hair comb (GST Rate - 12%). The price per
package is ` 500 (exclusive of taxes). 10,000 packages were supplied by the company to its dealers.
Determine the nature of supply and its tax liability.

ANS- This supply would be regarded as mixed supply, since in this case each of the goods in the package have
individual identity and can be supplied separately, but are deliberately supplied conjointly for a single
consolidated price. The tax rates applicable in case of mixed supply would be the rate of tax attributable to
that one supply (goods, or services) which suffers the highest rate of tax from amongst the supplies forming
part of the mixed supply.

Therefore, the package will be chargeable to 28% GST. The tax liability will be arrived as under :

Value of taxable supply per package ` 500

No. of packages 10,000
Total Taxable Value of supply ` 50,00,000
Applicable GST Rate 28%

QUS.3 Jaskaran, a registered supplier of Delhi, has made the following supplies in the month of January, 20XX:

Sr.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

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toy balloons]
(ii) 10 generators hired out to Morarji Banquet Halls, Chandigarh [including cost 2,50,000
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 eleder son’s business inaugural
function in Delhi and quality is not available.][Cost of providing said services
is ‘ 55,000, but the open market value of such services and of services of like
Kind

*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 asunder:

Goods/services supplied CGST SGST IGST

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%

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ANS- Computation of GST liability of Jaskaran for the month of January, 20XX

Particulars CGST (`) SGST (`) IGST (`)

Supply of 20,000 packages to Sukhija 1,09,526
Gift Shop, Punjab [6,08,475
[Note-1] × 18%]
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 customers [Note-3] Nil Nil Nil
Catering services provided free of cost 5,445 5,445
for elder son’s business inaugural [60,500 × [60,500 ×
function in Delhi [Note-3] 9%] 9%]
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 theCGST Act, 2017. Thus, penalty of ` 10,000
[considered as inclusive of GST] collected from Sukhija Gift Shop for the delayed payment will be included

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in the value of supply. The total value of supply is ` 6,08,475 [` 6,00,000 + (` 10,000 ×100/118)]

2. 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.

3. 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 thesame.

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

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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.

5. 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.

QUS. XYZ Ltd. has obtained a loan from a foreign bank. The company does not have an account with the foreign
bank from whom it has taken the loan. Whether RCM liability under GST laws should be discharged in this
regard for import of services received in relation to the loan?
Provide relevant legal provisions in support of your answer. (4 Marks)

ANS- Yes. RCM liability needs to be discharged on such services.

The place of supply of services supplied by a banking company in case where either supplier or recipient is
located outside India is location of supplier provided said services are supplied to an account holder,
otherwise the place of supply is the location of the recipient.

Accordingly, in the given case, the place of supply is the location of recipient – XYZ Ltd., i.e., India.

Since the supplier is outside India and recipient and place of supply are in India, said service qualifies as
import of services which in turn, is considered as inter-State supply.

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REGISTRATION

QUS.1 Rajesh Dynamics, having its head office in Chennai, carries on the following activities with respective
turnovers in a financial year:

Supply of petrol at Chennai 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 2,00,000
Value of branch transfer from Chennai to Bengaluru without 1,50,000
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 ` 20,00,000 either at Chennai or
Bengaluru 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 `
Supply of petrol at Chennai [Being a non-taxable supply, it is an exempt 18,00,000
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

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Supply of transformer oil at Chennai 2,00,000

Value of branch transfer from Chennai to Bengaluru without payment of 1,50,000
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

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.

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.

However, 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.

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QUS.2 Pari & Sons is an unregistered dealer. On 10th August, 2017 aggregate turnover of Pari & Sons exceeded `
40,00,000. 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- 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 ` 20/40 lakh.

Section 25(1) of the CGST Act, 2017 provides that a supplier whose aggregate turnover in a financial year
exceeds ` 20/40 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.

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].

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
(01.092017), on or before 01.10.2017.
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QUS.3 With the help of the following information in the case of M/s Jayant Enterprises, Jaipur (Rajasthan) for the
year 2019-20, determine the aggregate turnover for the purpose of registration under the CGST Act, 2017.

Sr.No Particulars Amount (`)

(i) Sale of diesel on which Sale Tax (VAT) is levied by Rajasthan 1,00,000
Government
(II) Supply of goods, after completion of job work, from the place 3,00,000
of 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
(V) Outward supply on which GST is to be paid by recipient under 1,00,000
reverse charge.

You are required to provide reasons for treatment of various items given above. All the above amounts are
excluding GST.

ANS- Computation of aggregate turnover of M/s Jayant Enterprises for the FY 2019- 20

Particulars `
Supply of diesel on which Sales Tax (VAT) is levied by Rajasthan 1,00,000
Government [Note-1]
Supply of goods, after the completion of job work, from the place of Nil
Jayant 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 Rajasthan[Note-4] Nil
Outward supply on which GST is to be paid by recipient under reverse 1,00,000
charge [Note-5]
Aggregate turnover 7,00,000

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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 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 read with Notification No. 10/2019 CT dated 07.03.2019 inter alia
provides that every supplier who is engaged in intra-State supply of goods & services 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 `20,00,000.

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 & in respect
of supplier of service.

The applicable turnover limit for registration, in the given case, will be ` 20 lakh as Rajasthan is not a Special
Category State. Although, the aggregate turnover of M/s Jayant Enterprises does not exceed ` 20 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.

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The above solution has been worked out on the assumption that supply to another place of business is
without consideration (as per general business practices).

QUS.4 Happy Ltd. located at Alwar (Rajasthan), exclusively manufactures and sells the product "Shine & Shine",
which is exempt from GST. Happy Ltd. sells "Shine & Shine" only within Rajasthan. The turnover of Happy
Ltd. in the previous year was ` 60 lakhs. Happy Ltd. purchased additional machinery (Capital Goods) for
manufacturing "Shine & Shine" on 1st April, 2018. The invoice for supply of machinery also was issued on 1st
April, 2018. The purchase price of the machinery was `25 lakh exclusive of CGST and SGST @12% (6% + 6%).
On 1st December, 2018 exemption available on the product "Shine & Shine" was withdrawn by the Central
Government and CGST and SGST @18% (9% + 9%) was imposed thereon. The turnover of Happy Ltd. on
30th September, 2018 was ` 45 lakh.

Examine the issue and provide the answers (with supporting explanatory note for each answer) to the
following:
(i) Does Happy Ltd. have to register under CGST Act, 2017 ?
(ii) Can Happy Ltd. take Credit of tax paid on the machinery purchased ? If yes, what is the amount of Input
Tax Credit (ITC) that canbeavailed ?

ANS- (i) 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:-
`10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
20 lakh for the States of States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana
And Uttarakhand.
` 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:-

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(iii)` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(iv)` 20 lakh for the rest of India.

However, a person exclusively engaged in making exempt supplies is not liable to registration in terms of
section 23(1) of CGST Act, 2017.

In view of combined reading of above provisions, although the ‘aggregate turnover’ of Happy Ltd. exceeds
the applicable threshold limit of ` 40 lakh on 30.09.2018 [` 45 lakh], it was not required to be registered till
30.11.2018 as it supplied only exempted goods till that day. Therefore, Happy Ltd. needs to register within 30
days from 01.12.2018 (the date on which its supplies became taxable) as its turnover had already exceeded
the threshold limit of ` 20/40 lakh on 01.12.2018.

(ii) As per section 17 of the CGST Act, the input tax credit (ITC) on capital goods used or intended to be used
exclusively for effecting exempt supplies is disallowed. However, where an exempt supply by a registered
person becomes a taxable supply, such person gets entitled to take proportionate ITC on such capital goods
in terms of section 18(1)(d) of CGST Act, 2017. Thus, a non-registered person cannot take ITC on capital
goods under this provision.

Further, a person who has applied for registration within thirty days from the date on which he becomes
liable to registration and has been granted such registration is also not entitled to take ITC on capital goods
held with him on the day immediately preceding the date from which he becomes liable to pay tax in terms
of section 18(1)(a) of CGST Act,2017.

In the given case, Happy Ltd. is not registered at the time when its exempt supply becomes taxable. Thus,
the company cannot take proportionate ITC on capital goods as mentioned above. Further, the company will
also not be entitled for credit on capital goods held with it when it applies for registration in the prescribed
manner.

QUS.5 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

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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 ` 45lakh.

(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) 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 asunder:-

(i)` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(ii)` 20 lakh for the rest of India
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.

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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 theCGST 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.

QUS.6 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 Uttarakhand Tripura

Pradesh
(`)* (`)* (`)*

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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
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 asunder:-

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(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 HimachalPradesh 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 [Note-1]
Intra-State sale of non-taxable goods - 21,00,000 40,000
[Note- 2]
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.

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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 ` 10lakh.

(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.

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QUS.7 SNP Pvt. Ltd., Coimbatore exclusively manufactures and sells product ‘Z’ which is exempt from GST vide
notifications issued under relevant GST legislations. The company sells ‘Z’ only within Tamil Nadu. 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 01.07.20XX. The purchase
price of the capital goods was ` 20 lakh exclusive of GST @18%.

However, effective from 01.11.20XX, exemption available on ‘Z’ 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 ` 41 lakh.

(a) The Board of Directors of SNP Pvt. Ltd. wants to know whether they have to register under GST?

(b) In case in the above question, SNP Pvt. Ltd. is already registered with respect to certain taxable supplies
being made by it along with manufacture of exempt product ‘Z’, other facts remaining the same, can it take
input tax credit on additional machinery purchased exclusively for manufacturing ‘Z’ ? If yes, then how much
credit can be availed?

Advice SNP Pvt. Ltd. on the above issues with reference to the provisions of GST law.

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.

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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

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 CGST Act,
2017.

In the given case, the turnover of the company for the half year ended on 30.09.20XX is ` Rs 41 lakh which is
more than the threshold limit of ` 40 lakh. Therefore, as per section 22 of CGST Act 2017, the company will
be liable to registration. However, since SNP 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 `20 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 ‘Z’ 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.

Further, the company cannot avail exemption of ` 40 lakh from 01.11.20XX 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).

(b) Rule 43(1)(a) of the CGST Rules, 2017 disallows input tax credit on capital goods used or intended to be
used exclusively for effecting exempt supplies

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However, as per section 18(1)(d) of the CGST Act, 2017, where an exempt supply of goods and/or services by
a registered person becomes a taxable supply, such person gets 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 relatable to such
exempt supply and on capital goods exclusively used for such exempt supply on the day immediately
preceding the date from which such supply becomes taxable.

Rule 40(1)(a) of the CGST Rules, 2017 lays down that the credit on capital goods can be claimed after
reducing the tax paid on such capital goods by 5% per quarter of a year or part thereof from the date of
the invoice.

Therefore, in the given case, SNP Pvt. Ltd. could not claim credit on machinery till the time the supply of
product ‘Z’ for which said machinery was being used was exempt. However, it can claim credit from
31.10.20XX - the day immediately preceding the date from which the supply of product ‘Z’ became taxable
(01.11.20XX).

The credit will be available for the remaining useful life of the machinery and will be computed as follows:

Date of purchase of machinery 01.07.20XX

Date on which credit becomes eligible 31.10.20XX
Number of quarters for which credit is to bereduced 2 (including part of quarter)
GST paid on machinery [` 20,00,000 x 18%] ` 3,60,000
Credit to be reduced [` 3,60,000 x 5% x 2] ` 36,000
Amount of credit that can be taken [` 3,60,000 – ` 36,000] ` 3,24,000

QUS.8 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.

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Determine whether Rishabh Enterprises is liable to be registered under GST law with the help of the
following information:

Particulars February March

(`)* (`)*
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
* excluding GST
You are required to provide reasons for treatment of various items given above.

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.

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In the given question, since Rishabh Enterprises is engaged in making taxable supply of service from
Maharashtra which is not a specified Special Category State, the threshold limit for obtaining registration is `
20 lakh.

The threshold limit is not reduced to ` 10 lakh in this case, as sale of alcoholic liquor for human consumption
from Uttarakhand (one of the specified Special Category States) are non-taxable supplies in terms of section
9(1) of CGST Act, 2017.

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 in to accountfor 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

Particulars Turnoverof Cumulative
February (`) Turnover of
February &March(`)
Serving of cooked food and cold drinks/non alcoholic 5,50,000 12,00,000
beverages in restaurant in Maharashtra [`5,50,000 +` 6,50,000]
Add: Sale of alcoholic liquor for human consumption in 5,00,000
Uttarakhand[Note-1]
Add: Interest received from banks on the Fixed 1,00,000 2,00,000
Deposits [Note-2] [` 1,00,000 +1,00,000]

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Add: Supply of packed food items from restaurant in 1,50,000 3,50,000

Maharashtra [` 1,50,000 +` 2,00,000]
Aggregate Turnover 8,00,000 22,50,000

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 consumptionin Uttarakhand, being a non-taxable supply, is an exempt
supply and is, therefore, includible while computing the aggregateturnover.

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.

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.

QUS.9 AB Pvt. Ltd., Pune provides house-keeping services. The company supplies its services exclusively through an
e-commerce website owned and managed by Hi-Tech Indya Pvt. Ltd., Pune. The turnover of AB Pvt. Ltd. in
the current financial year is ` 18 lakh.

Advise AB Pvt. Ltd. as to whether they are required to obtain GST registration. Will your advice be any
different if AB Pvt. Ltd. sells readymade garments exclusively through the e - commerce website owned and
managed by Hi-Tech IndyaPvt.Ltd.?

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:-

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(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.

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 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.

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 Hi-Tech 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).

Notification No. 17/2017 CT (R) dated 28.06.2017 issued under section 9(5) specifies services by way of
house-keeping, except where the person supplying such service through ECO is liable for registration under
section 22(1), as one such service where the ECO is liable to pay tax on behalf of the suppliers.

In the given case, AB Pvt. Ltd. provides house-keeping services through an ECO. It is presumed that Hi-Tech
Indya is an ECO which is required to collect tax at source under section 52. However, house-keeping services
provided by AB Pvt. Ltd., which is not liable for registration under section 22(1) as its turnover is less than `

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20 lakh, is a service notified under section 9(5). Thus, AB 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, AB 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. Therefore, in the second case,
AB Pvt. Ltd. will not be entitled for threshold exemption and will have to compulsorily obtain registration in
terms of section24(ix).

• 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 ` 20 lakh [` 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.

QUS.10 (a) (i) Discuss the procedure for amendment of registration under CGST Act and rules there to?

ANS- (a) (i) The procedure for amendment of registration are contained in section 28 read with rule 19 of CGST
Rules. The significant aspects of the same are discussed here under:
1. Where there is any change in the particulars furnished in registration application/UIN application,
registered person shall submit an application in prescribed manner, within 15 days of such change, along
with documents relating to such change at the Common Portal.

2. In case of amendment of core fields of information, the proper officer may, on the basis of information
furnished or as ascertained by him, approve or reject amendments in the registration particulars in the
prescribed manner. Such amendment shall take effect from the date of occurrence of event warranting
Such amendment.

3. However, where change relates to non-core fields of information, registration certificate shall stand
amended upon submission of the application for amendment on the Common Portal.

4. Where a change in the constitution of any business results in change of PAN of a registered person, the

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said person shall apply for fresh registration. The reason for the same is that GSTIN is PAN based. Any change
in PAN would warrant a new registration.

QUS.11 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.

QUS.12 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 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) Ramlal, an agriculturist, for supply of produce out of cultivation of land amounting to Rs. 41 lakhs.

ANS- (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. 40 lakhs, he will not be liable for registration.

QUS.13 Mr. A of Rajasthan has effected following supplies within the State of Rajasthan. You are required to
determine whether he is required to obtain registration under GST law.

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Particulars
(1) Intra-State supply of goods agricultural produce grown out of 5,50,000
cultivation of land by family members
(2) Intra-State supply of goods which are wholly exempt from GST 6,00,000
u/s 11 of CGST Act,2017
(3) Intra-State supply of goods chargeable with GST @5% 8,50,000
(4) Intra-State supply of services which are wholly exempt from tax 50,000

ANS- Computation of Aggregate value of taxable supplies (amount in `):

(1) Intra-State supply of goods agricultural produce grown out of 5.50,000

cultivation of land by family members [WN-1]
(2) Intra-State supply of goods which are wholly exempt from GST 6,00,000
u/s of CGST Act, 2017 [WN-2]
(3) Intra-State supply of goods chargeable with GST @5% [WN-3] 8.50,000
(4) Intra-State supply of services which are wholly exempt from tax 50,000
[WN-4]
Total Value of supplies 20,50,000

Working Notes:(1) An agriculturalist is not liable to obtain registration under the Act to the extent of supply
of produce out of cultivation of land. Since Mr. A is engaged in supply of other goods and services also, he is
not covered under section 23. In such a case the aggregate turnover will include all supplies made by him
including supply of agricultural produce.

(2) Since he is engaged in intra state supply of both goods and services from Rajasthan, the applicable
threshold limit for registration will be ` 20 lakh.
Since the aggregate turnover exceeds ` 20,00,000, hence registration under GST law.

QUS.14 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.

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It has furnished the following details relating to the supply made at such multiple locations for the month of
June:-

Particulars Himachal Pradesh Uttarakh and Tripura

(`)* (`)* (`)*
Intra-State supply of taxable goods 22,50,000 - 7,00,00
Intra-State supply of exempted goods - - 6,00,00
Interest received from banks on the fixed - - 60,000
deposits
Intra-State supply 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.

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.
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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 Pradesh Uttarakhand Tripura

(`)* (`)* (`)*
Intra-State supply of taxable goods 22,50,000 - 7,00,000
Intra-State supply of exempted goods 6,00,000
Interest received from banks on the - - 60,000
fixed deposits [Note-1]
Intra-State supply of non-taxable - 21,00,000 40,000
goods [Note-2]
Aggregate Turnover 22,50,000 21,00,000 14,00,000

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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 5` 7,50,000 (computed on all India basis). The applicable
threshold limit of registration in this case is `10 lakh. Further, he is not liable to be registered in Uttarakhand
since he is not making any taxable supply from Uttarakhand

(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.

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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.

QUS.15 Dharma Dutta has taken voluntary registration and has not opted for the composition scheme of levy. He is
aggrieved by the cancellation of his registration under GST, although he is filing Nil returns, as he has not
conducted any business for the past 8 months. He wants to know the circumstances under which the proper
officer can cancel registration on his own. (Nov 19 exam)

ANS- GST registration may be cancelled suo moto by GST Officer if the registered person: -

(i) does not conduct any business from the place of business
(ii) violates the anti-profiteering provisions
(iii) issues invoice/bill without supply of goods / services
(iv) does not file his GST return for six months
(v) does not file his GST return consecutive tax periods if he has opted for composition levy
(v) has not commenced business within 6 months from date of registration
(vi) has obtained the registration by means of fraud, wilful mis-statement or suppression of facts.

Note: Any four points may be mentioned.

QUS.16 Pari & sons is an unregistered dealer on 10th Aug, 2019. Aggregate Turnover of Pari & sons exceeded Rs
20,00,000. The firm applied for registration on 27th Aug, 2019 and was granted registration certificate on 1st
Sep, 2019.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
(MTP Nov 20)

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ANS- 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 the threshold limit.

Section 25(1) of the CGST Act, 2017 provides that a supplier whose aggregate turnover in a financial year
exceeds the threshold limit 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).

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.

In the given case, since Pari & Sons have applied for registration on 27 .08.2019 which is within 30 days
From the date of becoming liable to registration (10.08.20 19), its effective date of registration is
10.08.2019.

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 one month from the date of issuance.

QUS.17 M/s Fly-by-Night, tour operators, availed input tax credit in respect of certain transactions where no such
supplier was existent or from a person not doing any business from the registered place of business.
Jurisdictional Deputy Commissioner of GST wants to restrict the utilization of the credit by M/s Fly-by-Night.
You have been approached by M/s Fly-by-Night to give your advice on the following questions raised by it:
(i) Is it possible for the Department to restrict the utilization of credit which is already availed?
If yes, under what circumstances this can be done by the Department? (Nov 20 exam)

ANS- (a) (i) Yes, it is possible for the Department to restrict the utilization of credit which is already availed if there
are reasons to believe that such ITC has been fraudulently availed or is ineligible.

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(ii) The restrictions can be imposed under the following circumstances: -

(a) ITC has been availed on the basis of tax invoices/valid documents -
• issued by a non-existent supplier or by a person not conducting any business from the registered place of
business; or
• without receipt of goods or services or both; or
• the tax in relation to which has not been paid to the Government

(b) Registered person availing ITC has been found non-existent or not to be conducting any business from the
registered place of business; or
(c) Registered person availing ITC is not in possession of tax invoice/valid.

QUS. Decide with reason whether the registration is required under CGST Act, 2017 in the following independent
cases:

(i) A casual taxable person (CTP) has provided inter-State supply of notified products being textiles hand
printing amounting to ` 19.25 lakh during the month of January, 2020. Those products were made by
craftsmen by both hand and machines equally. CTP had obtained PAN and generated e-way bill for supply.

(ii) Mr. Bantu of Delhi doing trading business across India and his intra-State turnover details are as below,
(1) Taxable supplies made from Delhi - ` 18 lakh.
(2) Exempt supplies made from Andhra Pradesh - ` 10 lakh.
(3) Both taxable and exempt supplies made from Tamil nadu - ` 5,00,000 and ` 6,00,000 respectively.
(Nov 20 exam)

ANS- A casual taxable person (CTP) is liable to be registered compulsorily under GST irrespective of the threshold
limit.

However, CTPs making inter-State taxable supplies of notified products, when madeby the craftsmen
Pre-dominantly by hand even though some machinery may also be used in the process, have been exempted

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from obtaining registration if their aggregate turnover does not exceed ` 20 lakh [` 10 lakh for specified
Special category States].

Since, in the given case, the notified products were made by craftsmen by both hand and machines equally,
they are not eligible for exemption and are required to obtain registration mandatorily.

QUS. SS Pvt. Ltd., Coimbatore exclusively manufactures and sells product ‘P’ which is exempt from GST vide
notifications issued under relevant GST legislations. The company sells product ‘ P’ only within Tamil Nadu
and is not registered under GST. Further, all the inward supply of the company are taxable under forward
charge. The turnover of the company in the previous year was Rs. 45 lakh. The company expects the sales to
grow by 30% in the current year. The company purchased additional machinery for manufacturing ‘ P’ on 1st
July. The purchase price of the capital goods was Rs. 30 lakh exclusive of GST @ 18%.

However, effective from 1st November, exemption available on ‘ P’ was withdrawn by the Central
Government and GST @ 12% was imposed thereon. The turnover of the company for the half year ended on
30th September was Rs. 45 lakh.

(i) Examine the above scenario and advise SS Pvt Ltd. whether it needs to get registered under GST.
(ii) If the answer to the above question is in affirmative, advise SS Pvt. Ltd. whether it can avail input tax
credit on the additional machinery purchased exclusively for manufacturing “ P”?

ANS- (i) 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 Rs. 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 the CGST Act,

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2017.

In the given case, the turnover of the company for the half year ended on 30th September is Rs. 45 lakh
which is more than the applicable threshold limit of Rs. 40 lakh. Therefore, as per above mentioned
provisions, the company should be liable to registration. However, since SS 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 Rs. 40 lakh. It is important to note here that in terms of section 2(6),
the aggregate turnover limit of Rs. 40 lakh includes exempt turnover also.

Therefore, turnover of ‘P’ prior to 1st November will also be considered for determining the limit of Rs. 40
lakh 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

(ii) 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, SS Pvt. Ltd. cannot avail credit for additional machinery purchased exclusively for manufacturing P as
input tax credit of only inputs is allowed when a person gets registered for the first time.

QUS. Casa Pacific, having its head office in Chennai, Tamil Nadu carries on the following activities with respective
turnovers in a financial year

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Rs.
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, Karnataka 1,50,000
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 Rs.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 Casa Pacific.
(ii) All conditions that fulfil the requirements for registration under CGST Act in the given circumstances.

ANS- 1. Computation of aggregate turnover of Casa Pacific:

Particulars Rs.
Supply of petrol at Chennai, Tamil Nadu [Being a non-taxable supply, it is an exempt 18,00,000
supply and thus, includible in aggregate turnover vide section 2(6) of the 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, Karnataka without 1,50,000
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

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Casa Pacific is not liable to be registered in Chennai, Tamil Nadu, if his aggregate turnover in a financial year
does not exceed Rs. 40 lakh. However, since Casa Pacific also makes taxable supplies from Manipur, a
specified Special Category State, the threshold exemption gets reduced to Rs. 10 lakh in terms of section
22(1) of the CGST Act, 2017. [Notification No.10/2019-CT dated. 07.03.2019].

Casa Pacific’s argument that it is not liable to registration since the threshold exemption of Rs. 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 Rs. 10 lakh and not Rs. 40 lakh and secondly, the same is
computed on all India basis and not State-wise.
Further, Casa Pacific 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, Casa Pacific 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

QUS. In the month of April 2020, Z started supply of goods in his proprietary firm and also set up a one- man
company named Z Ltd. He needs your assistance to work out his aggregate turnover for the purpose of GST
registration. The turnover details up to the month of July, 2020 are as under:

S.No. Particulars of supplies Amount (` in lakh)

i. Supplies of taxable goods of his firm 31.50
ii. Supplies of taxable goods to a 100% EOU of his firm 1.50
Iii Exports of taxable goods of his firm 2.60
iv. Exempt supplies of his firm 2.40
vi. Supplies of taxable goods by the one-man company set up in his 2.70
name
vii. Value of supplies on which Z is liable to pay tax under reverse 0.80
charge mechanism (RCM)

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Note: All his supplies are intra-State except export. (5 Marks)

ANS- Computation of aggregate turnover of proprietary firm of Z

Particulars ` (in lakh)4
Supplies of taxable goods 31.50
[Taxable supplies are included in aggregate turnover.]
Supplies of taxable goods to a 100% EOU 1.50
[Deemed exports being taxable supplies are included in aggregate turnover.]
Exports of taxable goods [Included in aggregate turnover.] 2.60
Exempt supplies 2.40
[Included in aggregate turnover.]
Supplies of non-taxable goods 3.00
[Exempt supplies are included in aggregate turnover. Exempt supplies include non-
taxable supplies also.]
Supplies of taxable goods by one-man company set up in Z’s name *Not included as -
one person company is a separate entity with separate PAN.]
Value of supplies on which Z is liable to pay tax under RCM -
[Value of inward supplies on which tax is payable on reverse charge basis are
excluded from the aggregate turnover.]
Aggregate turnover of proprietorship firm of Z 41.00
Computation of aggregate turnover of proprietary firm of Z
Supplies of taxable goods by one-man company set up in Z’s name 2.70
[Taxable supplies are included in aggregate turnover.]
Aggregate turnover of Z Ltd. 2.70

QUS. Raghuram Pvt. Ltd., Pune, Maharashtra, provides house-keeping services. The company supplies its services
exclusively through an e-commerce website owned and managed by Technosavvy Pvt. Ltd., Pune. The
turnover of Raghuram Pvt. Ltd. in the current financial year is ` 18 lakh.

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Advise Raghuram Pvt. Ltd. as to whether it is required to obtain GST registration. Will your advice be any
different if Raghuram Pvt. Ltd. sells readymade garments exclusively through the e-commerce website
owned and managed by Technosavvy Pvt. Ltd.?

ANS- As per section 22 of the CGST Act, 2017, 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 threshold limit in a financial year.

However, section 24 of the CGST Act, 2017 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
of the CGST Act, 2017, 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.

Section 2(45) of the CGST Act, 2017 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)
of the CGST Act, 2017 to mean the supply of goods or services or both, including digital products over digital
or electronic network. Since Technosavvy 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).

Notification No. 17/2017 CT (R) dated 28.06.2017 issued under section 9(5) of the CGST Act, 2017 specifies
services by way of house-keeping, except where the person supplying such service through ECO is liable for
registration under section 22(1), as one such service where the ECO is liable to pay tax on behalf of the
suppliers.

In the given case, Raghuram Pvt. Ltd. provides house-keeping services through an ECO. It is presumed that
Technosavvy Pvt. Ltd. is an ECO which is required to collect tax at source under section 52 of the CGST Act,
2017. However, house-keeping services provided by Raghuram Pvt. Ltd., which is not liable for registration
under section 22(1) of the CGST Act, 2017 as its turnover is less than ` 20 lakh, is a service notified under
section 9(5) of the CGST Act, 2017. Thus, Raghuram Pvt. Ltd. will be entitled for threshold exemption for

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registration and will not be required to obtain registration even though it supplies services through ECO.

In the second case, Raghuram 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. Therefore, in the
second case, Raghuram Pvt. Ltd. will not be entitled for threshold exemption and will have to compulsorily
obtain registration in terms of section 24(ix).

QUS. Determine the effective date of registration in following cases:

a. The aggregate turnover of Dhampur Footwear Industries of Delhi has exceeded the applicable
threshold limit of Rs. 40 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 architect in Lucknow. Its aggregate turnover exceeds Rs. 20 lakh on 25 th
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 the applicable threshold limit
[Rs. 40 lakh in this case] in a financial year [Section 22 read with Notification No. 10/2019 CT dated
07.03.2019]. Since in the given case, the turnover of Dhampur Industries exceeded Rs. 40 lakh on 1 st
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 CGST Rules, 2017]. Therefore, the effective date of registration is 1st September.

b. Since in the given case, the turnover of Mehta Teleservices exceeds the applicable threshold limit [Rs. 20
lakh] on 25th 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.

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QUS. 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.

QUS. 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
the applicable threshold limit during the financial year.

b. An agriculturist who is only engaged in supply of produce out of cultivation of land and its aggregate
turnover does not exceed the applicable threshold limit during the financial year.

ANS- a. Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds the
applicable threshold limit in a financial year. However, 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 applicable 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.

QUS. What are the advantages 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.

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• 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.

QUS. Determine the effective date of registration in following cases:

a. The aggregate turnover of Dhampur Footwear Industries of Delhi has exceeded the applicable threshold
limit of Rs. 40 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 architect 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 the applicable threshold limit [Rs. 40
lakh in this case] in a financial year [Section 22 read with Notification No. 10/2019 CT dated 07.03.2019].
Since in the given case, the turnover of Dhampur Industries exceeded Rs. 40 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 CGST Rules, 2017]. Therefore, the effective date of registration is 1st September.

b. Since in the given case, the turnover of Mehta Teleservices exceeds the applicable threshold limit [Rs. 20
lakh] on 25th 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.

QUS. In order to be eligible for grant of registration, a person must have a Permanent Account Number issued

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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.

QUS. 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
the applicable threshold limit during the financial year.
b. An agriculturist who is only engaged in supply of produce out of cultivation of land and its aggregate
turnover does not exceed the applicable threshold limit during the financial year.

ANS- a. Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds the
applicable threshold limit in a financial year. However, 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 applicable 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.

QUS. What are the advantages 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.

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VALUE OF SUPPLY

QUS.1 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 Rs. 68 per US $. RBI reference rate for US $
on that day is Rs. 68.60.
(ii) 2,000 US $ are sold to Menavati at the rate of Rs. 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 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:

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= 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 –

Sr.No. Currency exchanged Value of supply

1. Upto `1,00,000 1% of the gross amount ofcurrency exchanged OR
` 250 whichever is higher
2. Exceeding ` 1,00,000 and ` 1,000 + 0.50% of the (gross amount of currency
upto ` 10,00,000 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 i.e. 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/-

QUS.2 ABC Ltd., registered in 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 ` 42,00,000. However, the actual price at which the

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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:

• associated handling and loading charges of ` 10,000

• installation and commissioning charges of ` 1,00,000
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. Further, the company also provides an
extended two-year warranty on payment of additional charge of ` 3,00,000, to all its customers.

• 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 the discount given; and
• 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 ` 2,00,000 from its holding company DEF Ltd.

ABC Ltd. has supplied a machinery to D Pvt. Ltd. on August 1, 20XX at a price of 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
the charges for two-year extended warranty. Discount @ 2% was given to D Pvt. Ltd. as it agreed to make

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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:

Bottle cap making machine

CGST – 6% SGST – 6% IGST – 12%

Service of transportation of goods
CGST – 2.5% SGST – 2.5% IGST – 5%
Other services involved in the above supply
CGST – 9% SGST – 9% IGST – 18%

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.

Computation of GST liability of ABC Ltd.

Particulars (`)
Price of machine [Note 1] 40,00,000
Handling and loading charges [Note 2] 10,000
Installation and commissioning charges [Note 3] 1,00,000
Transportation cost [Note 4] Nil
Additional warranty cost [Note 5] 3,00,000
Grant from DEF Ltd. [Note 6] 2,00,000
Total price of the machine 46,10,000
Less: 2% cash discount on price of machinery =` 40,00,000 × 2% [Note 7] ( 80,000)
Taxable value of supply 45,30,000
Tax liability for the month of August 20XX [Note 11]
IGST @ 12% [Note 8 and Note 9] 5,43,600

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Tax liability for the month of October 20XX [Note 11]

Cash discount recovered [Note 10] 80,000
Cum-tax value of interest and cash discount [44,10,000 ×1 ÷100×3 + 80,000] 2,12,300
IGST = (` 2,12,300/112) x 12% 22,746
Total IGST payable on the machinery 5,66,346

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 ABC Ltd. and D 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 in the value of
supply in terms of section 15(2)(c) of CGST Act, 2017.

(3) 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.

(4) 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 (ABC 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 which will be paid by the customer.

(5) 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.

(6) 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.

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(7) Cash discount was deducted by ABC Ltd. upfront at the time of supply on August 1, 20XX and hence, the
same is excluded from the value of supply as it did not form part of the transaction value.

(8) In the given case-

• the location of the supplier is in Noida (UP); and
• the place of supply of machinery is the place of installation of the machinery i.e., Gurugram (Haryana) 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.

(9) 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.

(10) 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, cash 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 been considered as cum tax value on the logical assumption
that tax component could not be recovered from the client. Thus, tax payable thereon has to be computed
by making back calculations in terms of rule 35 of CGST Rules, 2017.

(11) It has been assumed that the invoice for the supply has been issued on August 1, 20XX, the date on
which the supply is made. Thus, the time of supply of goods is August 1, 20XX in terms of section 12(1)(a) of
the CGST Act, 2017.

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As per section 12(6) of the CGST Act, 2017, the time of supply in case of addition in value by way of interest,
late fee, penalty etc. for delayed payment of consideration for goods is the date on which the supplier
receives such addition in value. Thus, the time of supply of interest received and cash discount recovered on
account of delayed payment of consideration is 31st October, 20XX, the date when the full payment was
made. The supplier may issue a debit note for such interest and cash discount recovered.

QUS.4 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:

Sr.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 its Rudra 25,000
Logistics’ godown in Ahmedabad, Gujarat
(iv) Charges for transport of machine from Rudra Logistics’ Ahmedabad 28,000
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

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(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.?

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 not with standing 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-

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(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 Rudra Nil
Logistics’ godown in Ahmedabad, Gujarat
Add: Charges for transport of machine from Rudra Logistics’Ahmedabad Nil
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.

QUS.5 Kaya Trade Links Pvt. Ltd. is a registered manufacturer of premium ceiling fans. It sells its fans exclusively

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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 1st April 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.

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-

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(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.

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.

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 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:

Particulars Amount(`)
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 fans for the quarter July-September [`7,300 x 1,000] 73,00,000

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.
(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

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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%].

QUS.6 Laxmi Ltd. of Bhopal (Madhya Pradesh) is a supplier of machinery. Laxmi Ltd. has supplied machinery to PQR
Enterprises in Indore (Madhya Pradesh) on 1st October, 20XX. The invoice for supply has been issued on 1st
October, 20XX. Thus, the time of supply of machinery is 1st October, 20XX. Laxmi Ltd. and PQR Enterprise are
not related.

Following information is provided:

Basic price of machinery excluding all taxes but including design and engineering charges of ` 10,000 and
loading charges of ` 20,000 - ` 20,00,000.

Laxmi Ltd. provides 2 years free warranty for the machinery. Laxmi Ltd. also provides an extended one year
warranty on payment of additional charges of`1,00,000. The extended warranty is given by the manufacturer
at the time of supply of goods to the buyer and that the same is not available separately. PQR Enterprises
opted for one year warranty.
Laxmi Ltd. has collected consultancy charges in relation to pre-installation planning of ` 10,000 and freight
and insurance charges from place of removal to buyer's premises of `20,000.
Laxmi Ltd. received subsidy of ` 50,000 from Central Government for supplying the machinery to backward
region since receiver was located in a backward region. Laxmi Ltd. also received ` 50,000 from the joint
venture partner of PQR Enterprises for making timely supply of machinery to the recipient.

A cash discount of 1% on the basic price of the machinery is offered at the time of supply, if PQR Enterprises
agrees to make the payment within 30 days of the receipt of the machinery at his premises. Discount
@ 1% was given to PQR Enterprises as it agreed to make the payment within 30 days.

The machinery attracts CGST and SGST @ 18% (9% + 9%) and IGST @18%.

Compute the CGST and SGST or IGST payable, as the case may be, on the machinery.

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• Computation of GST payable

Particulars `
Price of the machinery [Note 1] 20,00,000
Add: Extended warranty cost [Note 2] 1,00,000
Consultancy charges in relation to pre-installation planning[Note 3] 10,000
Freight and insurance charges [Note 4] 20,000
Subsidy received from Central Government [Note 5] Nil
Receipts from Joint Venture of PQR Enterprises [Note 5] 50,000
Less: 1% discount on basic price* = ` 20,00,000 x 1% [Note 6] (20,000)
Value of supply 21,60,000
CGST @ 9% [Note 7] 1,94,400
SGST @ 9% [Note 7] 1,94,400

Notes: 1.Laxmi Ltd. and PQR Enterprises are not related and price is assumed to be the sole consideration for
the supply. Therefore, in terms of section 15(1) of the CGST Act, 2017, the value of the supply is the
transaction value i.e., price actually paid or payable for the machinery by PQR Enterprises.

Design and engineering charges are includible in the value of supply as 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 so
includible in terms of section 15(2)(c) of CGST Act, 2017.

Further, loading charges being incidental expenses charged by the supplier to the recipient of supply, are
includible in the value as per section 15(2)(c) of the CGST Act, 2017.

2. Supply of machinery (goods) with supply of ancillary services like extended warranty, is a composite supply
the principle supply of which is the supply of machinery. [Section 2(30) of the CGST Act, 2017 read with
section 2(90) of that Act]. Thus, value of such ancillary supply is includible in the value of composite supply.

3. 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.

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4. Supply of machinery (goods) with supply of ancillary services like freight and insurance is a composite
supply, the principle supply of which is the supply of machinery [Section 2(30) of the CGST Act, 2017 read
with section 2(90) of that Act]. Thus, value of such ancillary supply is includible in the value of composite
supply.

5. Subsidies provided by the Central Government and State Governments are not includible in the value of
supply in terms of section 15(2)(e) of the CGST Act, 2017. However, subsidy directly linked to the price
received from a non- Government body is includible in the value in terms of section 15(2)(e).

6. Cash discount has been given to PQR Enterprises upfront at the time of supply and thus, would have been
recorded 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.

• the location of the supplier is in Bhopal (Madhya Pradesh); 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., Indore (Madhya Pradesh) 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.

*Note: It is also possible to take a view that the basic price of the machinery is ` 19,70,000 [` 20,00,000 – `
10,000 – ` 20,000] and design and engineering charges and loading charges are added to such price. In that
case, 1% of discount amount will come out to be ` 19,700, value of supply would be` 21,60,300 and CGST and
SGST would be` 1,94,427 each.

QUS.7 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

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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.

Sr. No. Particulars Amount in `

(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.

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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 (85,500)
=`28,50,000 × 3% [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

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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

(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 dis-allowed unless the same is used for making outward taxable
supply of the same category or as an element of the taxable composite or mixed supply* [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

Note*In the above answer, it has been assumed that the basic price of the machine has been arrived at after
adjusting the subsidy and that the basic price is the price charged from the customer. Consequently, subsidy
received from State Government has not been reduced from the basic price of the machine while arriving at

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the taxable value of supply.

*It has been assumed that the food items are provided free of cost to the employees in the course of
employment.

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.

QUS.8 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.

(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

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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.

QUS.9 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

Sr. 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.

• 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.

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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 policy 10% of ` 1,00,00,000 10,00,000
Total value of supply 55,00,000

QUS.10 Vayu Ltd. provides you the following particulars relating to goods supplied by it to Agni Ltd.:
Particulars `
List price of the goods (exclusive of Taxes and discounts). 76,000
Special packing at the request of customer to be charged to the customer. 5,000
Duty levied by local authority on the sale of such goods. 4,000
CGST and SGST charged in invoice. 14,400
Subsidy received from a NGO (The price of ` 76,000 given above is after considering the 5,000
subsidy)

Vayu Ltd. offers 3% discount of the list price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supplies made by Vayu Ltd.

ANS- Computation of value of taxable supplies by Vayu Ltd.

Particulars
List price of the goods 76,000
Add: Special packing [Note 1] 5,000
Duty levied by local authority on sale of goods [Note 2] 4,000
CGST and SGST charged [Note 2] -
Subsidy received from a NGO [Note 3] 5,000

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Less: Discount offered = 3% of List price = (2,280)

`76,000 × 3% [Note-4]
Value of taxable supplies 87,720

Notes:1. Being incidental expenses charged by the supplier to the recipient of supply, packing charges are
includible in the value as per section 15(2)(c) of the CGST Act, 2017.

2. Taxes, duties, etc. levied under any law for the time being in force other than CGST, SGST/UTGST, IGST are
includible in the value as per section 15(2)(a) of CGST Act, 2017. Duty levied by local authority on sale of
goods has been assumed to be recovered from Agni Ltd. and not included in the list price of the goods.

3. Subsidy directly linked to the price received from a non-Government body is includible in the value in
terms of section 15(2)(e) of CGST Act, 2017.

4. Since discount is known at the time of supply, it is deductible from the value in terms of section 15(3)(a) of
CGST Act, 2017

QUS.11 Dushyant rents out a commercial building owned by him to Bharat for the month of December, for which he
charges a rent of `19,50,000. Dushyant pays the maintenance charges of 1,00,000 (for the December month)
as charged by the local society.These charges have been reimbursed to him by Bharat. Further, Bharat had
given ` 2,50,000 to Dushyant as interest free refundable security deposit.

Further, Dushyant has paid the municipal taxes of ` 2,85,000 which he has not charged from Bharat. You are
required to determine the value of supply and the GST liability of Dushyant for the month of December
assuming CGST and SGST rates to be 9% each.

Note: All the amounts given above are exclusive of GST.

ANS- Computation of the value of supply and the GST liability of Dushyant for the month of December

Particulars Amount(`)

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Rent of the commercial building 19,50,000

Maintenance charges paid to the local society, reimbursed by Bharat [Being 1,00,000
reimbursed by the tenant - Bharat, such charges ultimately form part of the rent paid by
Bharat to Dushyant and thus, will form part of the value]
Interest free refundable security deposit [Being refundable, the security deposit does Nil
not constitute consideration in terms of section 2(31) of the CGST Act, 2017 and thus,
, is not includible in the value]
Municipal taxes paid by Dushyant Nil
[Being an expenditure incurred by the supplier, the same is not includiblein the value since
such taxes are not charged to the recipient.]
Value of supply 20,50,000
CGST @ 9% 1,84,500
SGST @ 9% 1,84,500

QUS.12 Sacrosant Manufacturers Ltd., a manufacturer of bottle caps, is registered in Dhanbad (Jharkhand). It imports
a bottle caps making machine from Japan.

Sacrosant Manufacturers Ltd. avails the services of Jhumroo Logistics, a licensed customs broker in Kolkata
(West Bengal), in meeting all the legal formalities for getting the said machine cleared from the customs
station.

Sacrosant Manufacturers Ltd. also authorises Jhumroo 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 its
warehouse at Dhanbad. These expenses would be reimbursed by Sacrosant Manufacturers Ltd. to Jhumroo
Logistics on actual basis. In addition, Sacrosant Manufacturers Ltd. will also pay the agency charges to
Jhumroo Logistics for the services rendered by it.

Jhumroo Logistics raised an invoice in July as follows:

Sr.No. Particulars Amount* (`)

(i) Agency charges 5,00,000

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(ii) Customs duty on machine 3,80,000

(iii) Port charges 33,000
(iv) Dock dues 56,000
(v) Charges for transport of machine from Kolkata port, West Bengal to 48,000
Jhumroo Logistics’ godown in Asansol, West Bengal
(vi) Charges for transport of machine from Jhumroo Logistics’ Asansol 67,000
Godown to the warehouse of Sacrosant Manufacturers Ltd . in Dhanbad.
Jharkhand
(vii) Unloading of machine at Kolkata port, West Bengal 83,000
(viii) Hotel expenses 45,000
(ix) Travelling expenses 50,000
(x) Telephone expenses 2,000
*exclusive of GST, wherever applicable

Compute the value of supply made by Jhumroo Logistics with the help of given information. Would your
answer be different if Jhumroo Logistics charges ` 13,00,000 as a lump sum consideration for clearing the
imported machine from the customs station and bringing the same to the warehouse of Sacrosant
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,
Jhumroo Logistics has been authorised by the recipient of supply –
Sacrosant Manufacturers Ltd. - to incur, on its behalf, the expenses incurred in relation to clearance of the

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imported machine from the customs station and bringing the same to the warehouse of the recipient, i.e.
expenses mentioned in S.No. (ii) to (vii). Further, Jhumroo Logistics does not hold any title to said services
and does not use them for his own interest.

Lastly, Jhumroo Logistics receives only the actual amount incurred to procure such services in addition to
agency charges. Thus, Jhumroo Logistics qualifies as a pure agent.

Further, rule 33 of the CGST Rules, 2017 stipulates that not with standing 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
Jhumroo Logistics as a pure agent of Sacrosant Manufacturers Ltd. shall be excluded from the value of
supply.

Accordingly, value of supply made by Jhumroo Logistics will be computed as under:

Particulars Amount(`)
Agency charges 5,00,000
Add: Customs duty Nil
Add: Port charges Nil
Add: Dock charges Nil
Add: Charges for transport of machine from Kolkata port, West Bengal to its Jhumroo Nil
Logistics’ godown in Asansol, West Bengal

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Add: Charges for transport of machine from Jhumroo Logistics’ Nil

Asansol godown to the warehouse of Sacrosant Manufacturers Ltd.in
Dhanbad, Jharkhand
Add: Unloading of machine at Kolkata port, West Bengal Nil
Add: Hotel expenses 45,000
Add: Travelling expenses 50,000
Add: Telephone expenses 2,000
Value of supply 5,97,000

However, if Jhumroo Logistics charges ` 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 Sacrosant
Manufacturers Ltd., Jhumroo Logistics would incur expenses (ii) to (vii) for its own interest (as the agreement
requires it to get the imported machine cleared from the customs station and bring the same to the
Sacrosant Manufacturers Ltd.’s warehouse). Thus, Jumroo Logistics would not be considered as a pure agent
of Sacrosant Manufacturers Ltd. for said services.

Consequently, in that case, value of supply will be ` 13,00,000 in terms of section 15 of the CGST Act, 2017.

QUS.13 Surya Agencies has agreed to supply goods to customer's premises. Goods valued ` 80,000 are taxable @ 5%
IGST as it is an inter-State supply. It also pays freight and transit insurance of ` 12,000. GTA is a registered
entity and has charged GST (6% CGST and 6% SGST) under forward charge.
(i) Compute the invoice value of supply including IGST.
(ii) What will be the invoice value of supply including IGST, if the supply was under ex-factory basis instead of
door-delivery basis? (Nov 19 exam)

ANS- Computation of invoice value of supply

(i) When supplier agrees to supply the goods at customer’s premises, i.e. freight and transit insurance are
paid by the supplier, invoice value of supply will be computed as follows:

Particulars Amount (`)

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Value of goods supplied 80,000

Add: Freight and transit insurance 12,000
*Since the supplier has agreed to deliver the goods at the customer’s premises and
to pay for freight and insurance, the contract of supply becomes a composite supply,
the principal supply being the supply of goods.]
Total 92,000
Add: IGST @ 5% 4,600
[Being a composite supply, GST at the rate applicable for principal supply will be charged]
Invoice value of supply 96,600
Amount of freight and transit insurance (`12,000) given in the question is assumed to be exclusive of 12%
GST.

(ii) When supplier agrees to supply the goods on ex-factory basis, i.e. the buyer pays the freight and transit
insurance, invoice value of supply will be computed as follows:

Particulars Amount (`)

Value of goods supplied 80,000
Add: IGST @ 5% of ` 80,000 4,000
Invoice value of supply 84,000
Note: The above answer is based on the view that part (ii) of the question is an independent case and thus,
the information provided in the first paragraph of the question regarding payment of freight and transit
insurance by Surya Agencies does not apply to it. Moreover, when the contract is ex-factory, it implies that
the freight and insurance will be the buyer’s responsibility and seller will have no role, what so ever, in
delivering the goods to the customer’s premises.

Qus.14 Binaca Electronics Ltd. (herein after 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.

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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-

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(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.

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.

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 televisions supplied to Shah Electronics for the quarters of April-June and July-
September) provided Shah Electronic 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 [Note 1] 8,400
Add: Packing expenses [Note 2] 1,200
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-June [`9,600 x 750] 72,00,000

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, 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.

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(2) The value of supply includes incidental expenses like packing charges in terms of section 15(2)(c) of the
CGST Act.
(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

Particulars Amount(`)
Price at which the televisions are supplied to Shah Electronics [Note 1] 8,400
Add: Packing expenses [Note 2] 1,200
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-September [`8,760 x 87,60,000
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.

(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. The input tax credit to be reversed will work
out to be `1,51,200 [1,000 x (8,400 x 10%) x 18%].

Qus. X Ltd., a manufacturer of heavy machines registered at Mumbai (Maharashtra), supplied one machine to Y
Ltd. in Pune (Maharashtra) on 19.02.2020 under an invoice of the same date. Using the information given
below, compute the value of machine and the GST payable (CGST, SGST and IGST as the case may be) in cash

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for the month of February 2020 by X Ltd. with appropriate working notes

Assume rate of CGST, SGST and IGST on the machine to be 9%, 9% and 18% respectively.

Sr.No. Particulars Amount(`)

1 The basic price of the machine (exclusive of taxes and discount) 18,00,000
2 Trade discount is allowed at 10% on the basic price and is shown in the 1,80,000
invoice.
3 Secondary packing (in iron sheets) charged for safe transportation of the 30,000
machine on the request of buyer
4 Design and engineering charges of the machine paid by Y Ltd.to X Ltd. 90,000
5 Pre-delivery inspection charges paid by Y Ltd. to an independent agency 22,000
"Inspection India". In terms of the agreement for supply, it was the discretion
of the buyer 'Y Ltd.' To appoint, if it so desires, any agency for pre- delivery
inspection, and also to itself pay to such agency.
6 Interest amount paid by Y Ltd. for delay in payment of the machine, said 12,000
interest was paid by Y Ltd. in April 2020
INWARD SUPPLY: 10,000
IGST paid on food items for consumption by employees working in the
factory. The said food items are provided as per the declared company policy
which is duly informed to the employees while they are recruited and forms
part of their appointment letter, though there is no such obligation in law.

X Ltd. has no input tax credit balance at the beginning of February 2020. All the other conditions
necessary for availing the eligible input tax credit have been fulfilled. There is no other transaction of
supplies during the month of February 2020. X Ltd. and Y Ltd. arenot related persons.
Provide your answers with reasons and with reference to the provisions of law. (Jan 21 exam)

ANS- Computation of value of machine and GST payable in cash

Particulars Amount (`)

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Price of machine 18,00,000

Add: Secondary Incidental expenses including packing charged by the supplier to the 30,000
packing Design recipient of a supply and any amount charged for anything done by the
an Dengineering supplier in respect of the supply of goods at the time of, or before 90,000
charges delivery of goods are includible in the value of the supply.
Pre-delivery
inspection The amount incurred by the recipient of the supply is added only if the Nil
charges same was the liability of the supplier

Add: - Interest for delayed payment [12000/118%] 10169

[Interest for delayed payment is includible in the value of the machine.
Further, it has been assumed to be inclusive of GST.]
Less: Discount @ 10% on basic price (1,80,000)
[Discount is allowed as the same is given at the time of supply and is
shown in the invoice]
Value of the machine 17,50,169
Less: Interest for delayed payment liable to tax only on date of receipt (10169)
Taxable value of the machine in February, 2020 17,40,000
Tax liability for the month of February 1,56,600
CGST @ 9% 1,56,600
SGST@ 9%
[Since the movement of goods terminates for delivery to the recipient in
the same State, it is an intra-State supply.]
Less: ITC Nil
[ITC on supply of, inter alia, food and beverages is blocked if the
employer is not under a statutory obligation to provide the same
to its employees]
GST payable in cash 1,56,600
CGST @ 9% 1,56,600
SGST@ 9%

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Qus. M/s Global Travels is providing money changer and air travel agent services to various clients. From the
information provided below, you are required to calculate the value of taxable supply for the month of
March 2020:
(i) It had converted US $ 6,000 into Singapore dollar 9,000. RBI reference rate at that time was ` 72 per US $
and for Singapore dollar, it was ` 52.
(ii) It had booked domestic ticket value of ` 7,00,000 and international ticket value of ` 15,00,000.

Additional information:
The concern has not opted to value the money change under rule 32(2)(b) of the CGST Rules, 2017. Basic air
fare component under both domestic and international ticket value is 70% and 60% respectively.
(Nov 20 exam)

ANS- (i) Since in the given case, neither of the currencies exchanged is Indian Rupees, value of taxable supply, in
terms of rule 32(2)(a) of the CGST Rules, 2017, is 1% of lower of the following:
(A) US dollar converted into Indian rupees at RBI reference rate = US $ 6,000 × `72 = `4,32,000
(B) Singapore dollar converted into Indian rupees at RBI reference rate
= Singapore dollar 9,000 × `52 = ` 4,68,000
Value of taxable service for the month of March 2020 = 1% of `4,32,000 = `4,320

(ii) Computation of value of taxable supply

Particulars ` `
Basic fare in case of domestic bookings[` 7,00,000 x 70%] 4,90,000
Value of taxable supply @ 5% [A] [Rule 32(3) of the CGST 24,500
Rule,2017]
Basic fare in case of international bookings[` 15,00,000 x 60%] 9,00,000
Value of taxable supply @ 10% [B] 90,000
[Rule 32(3) of the CGST Rules, 2017]
Value of taxable supply [A] + [B] 1,14,500

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VALUE OF SUPPLY

QUS.1 From the following information determine the value of taxable supply as per provisions of Section 15 of the
CGST Act, 2017

Particulars Rs.
Contracted value of supply of goods (including GST @ 18%) 11,00,000
The contracted value of supply includes the following:

(1) Cost of primary packing 25,000

(2) Cost of protective packing at recipients request for safe transportation 15,000
(3) Design and engineering charges 85,000
Other information:
(i) Commission paid to agent by recipient on instruction of supplier 5,000
(ii) Freight and insurance charges paid by recipient on behalf of supplier 75,000

Give reasons with suitable assumptions where necessary.

ANS- Computation of value of taxable supply of goods

Particulars Rs. Rs.

Contracted value of supply of goods 11,00,000
(1) Cost of primary packing [WN-1] -
(2) Cost of protective packing at recipients request for safe [WN-1] -
Transportation [WN-2] -
(3) Design and engineering charges [WN-3] -
Add: Commission paid to agent by recipient on instruction of supplier [WN-3] 5,000
Freight and insurance charges paid by recipient on behalf of supplier
Cum tax value
Less: GST 18% [Rs. 11,80,000 x 18 ÷ 118] [WN-4] 75,000 80,000
11,80,000

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1,80,000
Value of taxable supply 10,00,000

Working Notes: For the purpose of determining the value of taxable supply, the following adjustments shall
be made -
(1) As per Section 15(2)(c) of CGST Act, 2017, cost of primary packing and protective packing at recipient’s
request for safe transportation charged by supplier from the recipient shall be included for determining the
value of taxable supply. Since it is already included in the value, no treatment is required.

(2) As per 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 shall be included in the value of
taxable supply. Hence design and engineering charges shall also be included in the value of taxable supply.
Since it is already included in the value, no treatment is required.

(3) As per Section 15(2)(b) of the CGST Act, 2017, 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 shall be included in the value of supply. Thus, commission paid to agent by
recipient on instruction of supplier and freight and insurance charges incurred by recipient on behalf of
supplier shall form part of value of taxable supply.

(4) As per Section 15(2)(a) of the CGST Act, 2017, value of supply shall not include any taxes or cesses levied
under CGST Act, SGST Act, UTGST Act and the GST(Compensation to States) Act, if charged separately by the
supplier.

QUS.2 From the following information determine the value of taxable supply as per provisions of section 15 of the
CGST Act, 2017?

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Particulars Rs.
Value of machine (including GST @ 12%) 15,00,000
The invoice value includes the following
(1) Taxes (other than CGST/SGST/IGST) charged separately by the supplier 15,000
(2) Weighment and loading charges 25,000
(3) Consultancy Charges in relation to pre-installation planning 10,000
(4) Testing Charges 2,000
(5) inspection Charges 4,500
Other information:
(i) Subsidy received from Central government for setting up factory in backward region 51,000
(ii) Subsidy received from third party for timely supply of machine to recipient 50,000
(iii) Trade discount actually allowed shown separately in invoice 24,000
Give reasons with suitable assumptions where necessary.

ANS- Computation of Value of taxable supply of goods:

Particulars Rs Rs.
Value of machine 15,00,000
Less:
(1) Taxes other than CGST/SGST/IGST charged separately by the supplier [WN-1] -
(2) Weighment and loading charges [WN-2] -
(3) Consultancy Charges in relation to pre-installation planning [WN-2] -
(4) Testing Charges [WN-2] -
(5) Inspection Charges charged before supply [WN-2] -
(6) Trade discount actually allowed shown separately in invoice [WN-3] -24,000
Add: Subsidy received from third party for timely supply of machine to [WN-4] 50,000
Recipient
15,26,000
Cum tax value 1,63,500
Less: GST @ 12% [Rs. 15,26,000 x 12 ÷ 112] [WN-5]

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Value of taxable supply 13,62,500

Working Notes: In given question, for purpose of determining the value of taxable supply of goods

1) As per Section 15(2)(a) of CGST Act, 2017, any duty, taxes, cesses, fees and other charges, charged
separately by supplier are to be included in value of taxable supply.

2) As per 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 shall he included in the value of
taxable supply. Hence, weighment and loading charges, consultancy charges, testing charges and inspection
charges shall also be included in the value of taxable supply.

3) As per Section 15(3)(a), the value of the supply shall not include any discount which is given before or at
the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply.
Hence, the same is deductible to arrive at value of taxable supply.

4) As per Section 15(2)(e), the value of supply shall include subsidies directly linked to the price excluding
subsidies provided by the Central Government and State Governments. Hence, subsidy received from third
party for timely supply of machine to recipient will be included in the value of taxable supply whereas
subsidy received from Central government for setting up factory in backward region shall not be included in
value of taxable supply.

5) As per Section 15(2)(a), value of supply shall not include any taxes or cesses levied under CGST/
SGST/UTGST/GST (Compensation to States) Act, if charged separately by the supplier.

QUS.3 Determine the value of taxable supplyas per Section 15 of the CGST Act, 2017 and the Rules thereof:

Rs.
Contracted sale price of goods (including CGST and SCST @5%) 10,56,000
The contracted sale price includes the following elements of cost:
(i) Cost of drawings and design 5,000

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(ii) Cost of primary packing 2,000

(iii) Cost of packing at buyers request 4,000
(iv) Freight and insurance upto place of supply 43,000
A discount of Rs. 6,000 was given by the supplier at the time of supply of goods. CGST
and SGST is levied @ 5%.

ANS- Computation of Value of taxable supply—

Particulars Rs. Rs.

Contracted sale price of goods 10,56,000
Discount [WN-2] 6,000 6,000
Cum tax value 10,50,000
Less: GST@5% [Rs. 10,50,000 x 5 ÷ 105] [WN-3] 50,000
Value of taxable supply 10,00,000

Working Notes: 1) As per 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 shall be included in the
value of taxable supply. Hence drawing and design charges, cost of packing (even at buyer’s request) shall
form a part of the transaction value of the supply. Since these are already included in the value of the goods,
hence, separate treatment is not required.

2)The value of supply shall not include any discount which is given before or at the time of supply. [Section
15(3)(a) of CGST Act, 2017]

3) The value of supply shall include any taxes, duties, cess, fees and charges levied under any law for the time
being in force other than the CGST Act, the SGST Act, the UTGST Act and the GST (Compensation to States)
Act, if charged separately by the supplier. [Section 15(2)(a) of CGST Act, 2017]

QUS.4 XYZ Pvt. Ltd. has provided the following particulars relating to goods sold by it to ABC Pvt. Ltd.

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Particular Rs.
List price of the goods (exclusive of taxes and discounts) 1,25,000
Tax levied by Municipal Authority on the sale of such goods 15,000
CGST and SGST chargeable on the goods 19,200
Packing charges (not included in price above) 15,500
XYZ Pvt. Ltd. received Rs. 9,500 as a subsidy from a Non-profit making organisation in respect of timely
supply of such goods. The price of Rs. 1,25,000 of the goods is after considering such subsidy. XYZ Ltd. offers
4% discount on the list price of the goods which is recorded in the invoice for the goods. Determine the value
of taxable supply made by XYZ Pvt. Ltd.

ANS- Computation of value of taxable supply:

Particulars Rs.
List price of the goods (exclusive of taxes and discounts) 1,25,000
Add: Tax levied by Municipal Authority on the sale of such goods [WN-1] 15,000
CGST and SGST chargeable on the goods [WN-1] -
Packing charges [WN-2] 15,500
Subsidy received from a non-Government body [Since subsidy is received from a non 9,500
Government body, the same is included in the value in terms of section 15(2)e)]
Total 1,65,000
Less: Discount @ 4% on 1,25,000 [WN-3] 5,000
Value of taxable supply 1,60,000

Working Notes: (1) The value of supply shall include any taxes, duties, cess, fees and charges levied under
any law for the time being in force other than the CGST Act, the SGST Act, the UTGST Act and the GST
(Compensation to States) Act, if charged separately by the supplier. [Section 15(2)(a) of CGST Act, 2017]

(2) 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 taxable supply. Hence, cost of packing shall form a
part of the transaction value of the supply. [Section 15(2)(c of Ct1ST Act, 2017]

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(3) The value of supply shall not include any discount which is given before or at the time of supply. [Section
15(3)(a) of CGST Act, 2017]

(4) The value of supply shall include subsidies directly linked to the price excluding subsidies provided by the
Central Government and State Governments. Hence, subsidy received from non-profit making organisation
for timely supply of goods will be included in the value of taxable supply. [Section 15(2)(e) of CGSTAct, 2017]

QUS.5 Floral Advertisers conceptualised and designed the advertising campaign for a new product launched by
Jupiter Stampings Pvt. Ltd. for a consideration of Rs. 25,00,000. Floral Advertisers owed Rs. 4,50,000 to one
of its vendors in relation to the advertising service provided by it to Jupiter Stampings Pvt. Ltd. Such liability
of Floral Advertisers was discharged by Jupiter Stampings Pvt. Ltd. Jupiter Stampings Pvt. Ltd. delayed the
payment of consideration and thus, paid Rs. 50,000 as interest. Determine the value of taxable supply made
by Floral Advertisers.

ANS- Computation of value of taxable supply:

Particular Rs.
Service charges 25,00,000
Payment made by Jupiter Stampings Pvt. Ltd to vendor of Floral Advertisers [Liability of 4,50,000
the supplier king discharged by the recipient, is includible in the value in terms of section
15(2)(b)]
Interest for delay in payment of consideration [Includible in the value in terms of section 50,000
15(2)(d)]
Value of taxable supply 30,00,000

QUS.6 Supreme Foods Pvt. Ltd. gets an order for supply of processed food from Hotelia Ltd.. Hotelia Ltd. wants the
consignment tested for gluten or specified chemical residues. Supreme Foods Pvt. Ltd. does the testing and
charges a testing fee of 15,000 from the Hotelia Ltd.. Supreme 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 its argument correct in the
light of section 15?

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ANS- Section 15(2) mandates the addition of certain elements to transaction value to arrive at taxable value.
Section 15(2) (c) 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.

Since Supreme Foods Pvt. Ltd. does the testing before the delivery of goods, the charges therefore will be
included in the taxable value. Therefore, Supreme Foods Pvt. Ltd.’s argument is not correct.
The testing fee of Rs. 15,000 should be added to the price to arrive at taxable value of the consignment.

QUS.7 Vikash Charitable Institution 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 1 lakh a year compared to 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- 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 charitable institution. 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.

QUS.8 An Indian company is required to pay Rs. 1,00,000 to a German company for technical knowhow. It deduced
Rs. 10,000 as income tax at source and paid Rs. 90,000 to the German company. On what amount the Indian
company will be liable to pay GST under reverse charge?

ANS- The above case falls within the purview of Section 15(2) (a) of CGST Act

Discussion- As per the above section any taxes, duties, cesses, fees and charges levied under any law for the
time being in force other than this Act, the State Goods and Services Tax Act, the union territory goods and
services tax act and the goods and services tax (Compensation to states) Act, if charged separately by the
supplier.

Conclusion- Hence, for GST purposes the value of taxable supplies shall be Rs. 100,000 including the TDS

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pertaining to income tax as this pertains to tax which is in force other than GST act and so the same shall be
included in assessing value of taxable supplies.

QUS.9 XYZ is manufacturer of tobacco and tobacco products, during the manufacturing process certain incidental
expenses have been incurred by XYZ 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,S00 and GST is to be levied @ 28%,
Compute the transaction value.

ANS- Computation of transaction value as per section 15 of CGST Act.

Particulars Rs.
Purchase value of tobacco 1,75,000
Add: incidental expenses 75,000
Excise duty (Note 1) 37,500
Transaction value 2,87,500
GST @ 28% 80,500

QUS.10 A manufacturer of machinery supplied a special machine to LM furnishers. Following details are provided in
relation to amounts charged:

Sr. No. Particulars Rs.

(i) Price of machinery excluding taxes (before cash discount) 6,00,000
(ii) Transit insurance 11,000
(iii) Packing charges 9,000
(iv) Extra charges for designing 20,000
(v) Freight 12,000

Charges mentioned in (ii) to (v) are not included in (i) above, other information furnished is
(a) Cash discount @ 2% on price of machinery has been allowed to the customer at the time of supply and
also recorded in invoice. (b) GST rate = 18%

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Calculate value of supply of the special machine.

ANS- Value of supply of the special machine

Particular Rs.
Price of machinery 6,00,000
Add: Transit insurance [Note 1] 11,000
Packing charges [Note 2] 9,000
Extra design charges [Note 3] 20,000
Freight [Note 1] 12,000
Total 6,52,000
Less: 2% cash discount on price of machinery [6,00,000x2%] [Note 4] 12,000

Notes: (1) The given supply is a composite supply involving supply of goods (special machine) and service
(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.

(2) 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.

(3) 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.

(4) 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.

QUS.11 A customer ‘A’ who had booked the flat and paid Rs. 15 lakhs, subsequently cancelled his booking. The
builder refunded Rs. 14.50 lakhs and kept Rs. 0.50 lakh as cancellation charges. Another customer had

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booked a flat, sold the flat to a third person and requested builder to transfer the flat in name of the new
buyer. The builder charged Rs. 50,000 as transfer charges. Is tax payable on these amounts?
Compute tax liability, if any.

ANS- Both the charges fall within the definition of ‘tolerating an act or situation’, which is defined as a ‘deemed
service'. Hence, these charges will be subject to tax at general rate i.e. @ 18%.

QUS.12 Y Ltd. provided works contract services ,as per following details:

Particulars Rs.
(i) Installation of machinery 2,00,000
(ii) Completion and finishing service plastering (of a building) 1,00,000
(iii) Repairs of machinery 50,000
(iv) Additions to damaged structure 2,50,000
(v) Installation of electrical fittings of immovable property 75,000

You are required to compute the taxable value of services and GST payable thereon for the month of
December, 2017 assuming rate of GST is 18%.

ANS- Computation of value of taxable supply of services and GST payable (amount in Rs.):

Particulars Rs.
(i) Installation of machinery 2,00,000
(ii) Completion and finishing service plastering (of a building) 1,00,000
(iii) Repairs of machinery 50,000
(iv) Additions to damaged structure 2,50,000
(v) Installation of electrical fittings of immovable property 75,000
Total Value of taxable supply 6,75,000
GST payable @ 18% 1,21,500

QUS.13 Distributive Trade Services M/s. XZ Ltd. a registered person, received the following sums (exclusive of taxes).

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Compute its GST liability if rate of CGST is 9% and SGST is 9% (Ignore threshold exemption) -
(1) Commission for acting as Clearing and Forwarding Agent: Rs. 3 lakhs;
(2) Commission for acting as Commission agent of agricultural produce: Rs. 14 lakhs;
(3) Commission for acting as Commission agent of consumers goods: Rs. 10 lakhs;
(4) Margin earned from trading in derivatives: Rs. 3 lakhs;
(5) Margin from trading in commodity futures: Rs. 4 lakhs.

ANS- Computation of Value of taxable supply and GST liability (amount in Rs.)

(1) Commission for acting as Clearing and Forwarding Agent — Taxable 3,00,000
(2) Commission for acting as Commission agent of agricultural produce NIL
[Exempt vide Entry No. 54 of Exemption Notification No. 12/2017-CT (Rate)]

(3) Commission for acting as Commission agent of consumers goods - Taxable 10,00,000

(4) Margin earned from trading in derivatives [Derivatives are covered in securities and NIL
are neither goods nor services and hence not taxable]
(5) Margin from trading in commodity futures [Commodity futures are covered in NIL
securities and are neither goods nor services and hence not taxable]
Total Value of taxable supply
CGST payable @ 9% 13,00,000
SGST payable @ 9% 1,17,000
1,17,00
Total GST payable 2,34,00

QUS.14 Food & Beverage services An air conditioned restaurant made a bill dated 1-10-2019, as follows - Charges for
food - Rs. 3,700. Cold drinks - Rs. 300. Service charges @ 10% of food charges Rs. 400. Calculate GST payable
if rate of CGST is 2.5% and SGST is 2.5%.

ANS- Computation of the value of taxable supply & GST payable (amount in Rs.)

Charges for food 3,700

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Cold drinks [Tax will be charged at the rate applicable to the restaurant] 300
Service charges [10% of Rs. (3,700 + 300) 400
Total Value of taxable supply 4,400
CGST payable @ 2.5% 110
SGST payable @ 2.5% 110
Total GST payable 220

QUS.15 Vayu Ltd. provides following particulars relating to goods supplied by it to Agni Ltd.:

Particulars `
List price of the goods (exclusive of Taxes and discounts). 76,000
Special packing at the request of customer to be charged to 5,000
the customer.
Duty levied by local authority on the sale of such goods. 4,000
CGST and SGST charged in invoice. 14,400
Subsidy received from a NGO (The price of ` 76,000 given 5,000
above is after considering the subsidy)
Vayu Ltd. offers 3% discount of the list price of goods which is recorded in the invoice for goods. Determine
the value of taxable supplies madeby VayuLtd.

ANS- Computation of value of taxable supplies by Vayu Ltd.

Particulars `
List price of the goods 76,000
Add: Special packing [Note 1] 5,000
Duty levied by local authority on sale of goods [Note 2] 4,000
CGST and SGST charged [Note 2] -
Subsidy received from a NGO [Note 3] 5,000
Less: Discount offered= 3% of List price = ` 76,000 × 3% [Note-4] 2,280
Value of taxable supplies 87,720

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Notes: (1) Being incidental expenses charged by the supplier to the recipient of supply, packing charges are
includible in the value as per section15(2)(c)

(2) Taxes, duties, etc. levied under any law for the time being in force other than CGST, SGST/UTGST, IGST
are includible in the value as per section 15(2)(a) of CGST Act, 2017. Duty levied by local authority on sale of
goods has been assumed to be recovered from AgniLtd. And not included in the list price of the goods.
(3) Subsidy directly linked to the price received from a non-Government body is includible in the value in
terms of section 15(2)(e) of CGST Act,2017.

(4) Since discount is known at the time of supply, it is deductible from the value in terms of section 15(3)(a)
of CGST Act,2017

QUS.16 Determine the value of supply and the GST liability, to be collected and paid by the owner, with the following
particulars:

`
Rent of the commercial building 18,00,000
Maintenance charges collected by local society from the owner and reimbursed by the tenant 2,50,000
Owner intends to charge GST on refundable advance, as GST is applicable on advance 6,00,000
Municipal taxes paid by the owner 3,00,000
GST rates applicable on renting of business premises is as follows: CGST 9% SGST 9%
Provide suitable explanations where required.

ANS- Particulars Amount (`)

Rent of the commercial buiding 18,00,000
Maintenance charges collected by the local society from the owner and reimbursed by 2,50,000
the tenant [Being reimbursed by the tenant,
Refundable advance [Being refundable, the advance is inthe nature of security deposit Nil
which does not constitute consideration in terms of section 2(31) of the CGST Act, 2017
and thus, is not includible in the value]
Municipal taxes paid by the owner [Being an expenditureincurred by the supplier, the Nil

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same is not includible in the value, assuming that such taxes are not charged to the
recipient.]
Value of supply 20,50,000
CGST @ 9% 1,84,500
SGST @ 9% 1,84,500
Note: Rent and maintenance charges are assumed to be exclusive of GST

QUS.17 Jaskaran, a registered supplier of Delhi, has made the following supplies in the month of January, 2020:

Particulars TO*
(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 2,50,000
[including cost of 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 T 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, 2020 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

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by Jaskaran through a Goods Transport Agency (GTA) who pays tax @ 12%.
(3) Assume the rates of GST to be as under:

Goods/ Services supplied CGST SGST IGST

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, 2020 (amount in `):

Particulars CGST SGST IGST

Supply of 20,000 packages to Sukhija Gift Shop, Punjab [ ` 6,08,475 * 1,09,52
18%] [WN-1]
Renting of 10 generators to Morarji Banquet Halls, Chandigarh 45,000
(`2,50,000 x 18%)[WN-2]
500 packages given as free gift to the customers [WN-3] Nil Nil Nil
Catering services provided free of cost for elder son's business inaugural
function in Delhi (CGST: 60,500 * 9%) (SGST: 60,500 x 9%) [WN-3] 5,445 5,445
Total GST liability (rounded off) 5,445 5,445 1,54,525

Working Notes: (1) Nature of supply - Mixed supply - Highest rate of tax applicable : 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

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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.

Penalty to be included in value of supply : 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 x 100/118)]

(2) Renting of generators along with their transportation - Principal supply is the renting of generator :
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).

Nature of supply - Inter-state 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.

(3) Supply without consideration : As per Section 7(l)(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.

Free gifts to unrelated customers - Not regarded as supply : 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

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under section 7. Consequently, no tax is leviable on the same.

Catering services to related person - Treated as supply : 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 -110% of cost: 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 x 110%]. Further, being an intra-State supply of
services, catering services are subject to CGST and SGST @ 9% each.

(4) GTA paying tax @ 12% - RCM not applicable : 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.

QUS.18 Raman Ltd., a registered supplier in Mumbai (Maharashtra), has supplied goods to Sahil Traders and Jaggi
Motors Ltd. located in Ahmedabad (Gujarat) and Pune (Maharashtra) respectively. Raman Ltd. has furnished
the following details for the current month :

S. No. Particulars Sahil Traders Jaggi Motors Ltd.

(Rs.) (Rs.)
(i) Price of the goods (excluding GST) 20,000 15,000
(ii) Packing charges 600
(iii) Commission 400
(iv) Weighment charges 1,000
(v) Discount for prompt payment (recorded in the invoice) 500

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Items given in points (ii) to (v) have not been considered while arriving at price of the goods given in point (i)
above. Compute the GST liability [CGST & SGST or IGST, as the case may be] of Raman Ltd. for the given
month. Assume the rates of taxes to he as under :

Particulars Rate of tax

Central tax (CGST) 9%
State tax (SGST) 9%
Integrated tax 18%
Make suitable assumptions, wherever necessary.

Note: The supply made to Sahil Traders is an inter-State supply. (RTP May, 2018)

ANS- Computation of GST liability :

Particulars Sahil Traders Jaggi Motors

(Rs.) Ltd. (Rs.)
Price of the goods 20,000 15,000
Add: Packing charges [WN-1] 600
Add: Commission [WN-1] 400
Add: Weighment charges [WN-1] - 1,000
Less: Discount for prompt pay ment (recorded in the invoice) [WN-2] - 500
Value of taxable supply 21,000 15,500
IGST payable @ 18% [WN-3] 3,780
CGST payable @ 9% [WN-4] 1,395
SGST payable @ 9% [WN-4] 1,395

Working Notes : (1) Incidental expenses, including commission and packing, charged by supplier to recipient
of supply is includible in the value of supply. Weighment charges are also incidental expenses, hence
includible in the value of supply [Section 15 of the CGST Act, 2017],

(2) Since discount is known at the time of supply, it is deductible from the value in terms of section 15 of the

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CGST Act, 2017.

(3) Since supply made to Sahil Traders is an inter-State supply, IGST is payable in terms of section 5 of the
IGST Act, 2017.

(4) Since supply made to Jaggi Motors Lid. is an intra-State supply, CGST & SGST is payable on the same.

QUS.19 Sincere Coaching Classes Ltd. a coaching centre is registered under GST. The details pertaining to the month
of July,2019 are as under :

Particulars Rs.
Free coaching rendered to a batch of 100 students (Value of similar services is
20,000)
Coaching fees collected from students for the classes to be held in July, 2019 17,70,000
Advance received from a college for teaching their students, on 30-07-2019.
However,Due to some unavoidable reasons, no coaching was conducted and the
advance money (including GSI’) was returned on 18-10-2019 3,54,000
Determine the GST liability for the month of July, 2019 and indicate the date by which GST has to be
deposited by the

ANS- Computation of GST liability of Sincere Coaching Classes Ltd. (amount in Rs.) :

Free coaching rendered Nil

Coaching fees collected from students [Rs. 17,70,000 × 18/118] 2,70,000
Advance received from a college [Rs. 3,54,000 × 18/118] [WN-2 & 3] [B] 54,000
Total GST liability (A + B) 3,24,000

Working Notes : (1) As per Section 7(1)(a), Supply should be made for a consideration. Therefore, since no
consideration is involved in case of free services, GST is not payable thereon.
(2) Since, services agreed to be provided are also chargeable to GST, advance received will also be liable to
GST. Advance received is taxable at the time when such advance is received [Section 13 of CGST Act, 2017],

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Advance received from a college for teaching their students will also be chargeable to GST. It is immaterial
that no coaching was conducted and the money was returned on 18-10-2019. The amount of GST included
in the amount refunded (Rs. 54,000) in the month of i.e. October, 2019 would be adjusted against GST liability
of subsequent periods.
The last date for making the payment of GST by Sincere Coaching Classes Ltd. for the month of July, 2019 is
20thAugust, 2019.

QUS.20 Mrs. Kajal a registered supplier of Jaipur (Rajasthan) has made the following supplies in the month of
January, 2020 :
(i) Supply of a laptop bag along with the laptop to a customer of Mumbai for Rs. 55,000 (exclusive of GST).

(ii) Supply of 10000 kits (at Rs. 50 each) amounting Rs. 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 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 Rs. 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 Rs. 80,000, but the open market value of such services and of
services of like kind and quality is not available.

(v) 1400 chairs and 100 coolers hired out to Function Garden, Ajmer (Rajasthan) for Rs. 3,30,000 (exclusive of
GST) including cost of transporting the chairs and coolers [Rs. 20 (exclusive of GST) for each chair and each
cooler] from Mrs. Kajal's godown at Jaipur in 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 Rs. 6,400 (inclusive of GST) was collected by Mrs. Kajal from Ram Fancy Store, Kota for the
pavment received with a delay of 30 days.

Assume rales of GST to be as under

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Sr. No. Particulars Rate of CGST (%) Rate of SGST (%) Rate ofIGST (%)
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
7. Service of Renting of Chairs and Coolers 6 6 12
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, 2020. (9 Marks, May 2019)

ANS- Computation of GST liability of Mrs. Kajal for the month of January, 2020 (amount in Rs.) :

Particulars CGST SGST IGST

Supply of a laptop hag along with the laptop to a customer of Mumbai - 9,900
[Rs.55,000 × 18%][WN-1]
Supply of 10000 kits (at Rs. 50 each) to Ram Laney Store in 70,700 70,700 -
Kota (Rajasthan) (CGST: Rs. 5,05,000 × 14%) (SGST: Rs. 5,05,000 × 14%)
[WN-2]
100 Kits given as free gift to the customers on occasion of[WN-3] Nil Nil Nil
Mrs. Kajal birthday
Event Management services provided free of cost for brother's Nil Nil Nil
son marriage function in Indore (Madhya Pradesh) [Rs. 88,000 × 5%] [WN-4]
Renting of 1400 chairs and 100 coolers to Function Garden, Ajmer 1.9,800 19,800 -
(Rajasthan) (CGST: Rs. 3,30,000 × 6%) (SGST: Rs. 3,30,000 × 6%) [WN-5]
GST liability under Reverse Charge :
Cost of transportation paid by Mrs. Kajal to unregistered GTA (CGST: Rs. 750 750
30,000 × 2.5%) (SGST: Rs. 30,000 × 2.5%) [WN-6]

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Total GST liability 91,250 91,250 9,900

Less: Input tax credit of tax paid on GTA services under reverse charge 750 750 -
mechanism
Net GST Liability 90,500 90,500 9,900

Working Notes : (1) Nature of supply - Composite supply - Rate of tax of principal supply shall be applicable :
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 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. Supply of a laptop bag along with the laptop to a customer is a composite
supply where the principal supply is supply of laptop and supply of laptop bag is incident or ancillary services.
Laptop bags are generally supplied with laptops for safety of laptop. Further, as per Section 8(a) of the CGST
Act, 2017, a composite supply comprising two or more supplies, one of which is a principal supply, shall be
treated as a supply of such principal supply. Thus, in the given case, supply of a laptop bag along with the
laptop treated as supply of laptop. Consequently, being an inter-State supply of goods, supply of a laptop bag
along with the laptop to a customer of Mumbai is subject to IGST @ 18%.

(2) Nature of supply - Mixed supply - Highest rate of tax applicable : 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 kits containing 1 hair oil, 1 beauty soup and 1 hair comb 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 kits is treated as supply of beauty soap [since it attracts the highest rate of
tax). Since the Location of supplier and place of supply is in Rajasthan, being an intra-State supply of goods,
supply of kits to Ram Fancy Store of Kota (Rajasthan) is subject to CGST and SGST @ 14% each.
Interest to be included in value of supply : 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, interest of Rs. 6,400 [inclusive of GST collected from Ram Fancy Store for the delayed

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payment will be included in the value of supply. The total value of supply is Rs. 5,05,000 [Rs. 5,00,000 + (Rs.
6,400 × 100/128)]

(3) Supply without consideration : 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.

(4) Event Management services free of cost for brother's son marriage - not to be regarded as supply :
Further, the event management services provided by Mrs. Kajal for her brother's son without consideration
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.

(5) Renting of 1400 chairs and 100 coolers along with their transportation - Principal supply is the renting of
chairs and coolers : Services by way of transportation of goods by road except the services of it Goods
Transportation Agency (GTA) are exempt vide Notification No. 9/2017-IT (R) dated 28- 06-2017. Since Mrs.
Kajal is not a GTA, transportation services provided by her are exempt from GST. However, since the chairs
and coolers 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
chairs and coolers.
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 chairs and coolers (principal supply).

Nature of supply - Intra-state supply : Consequently, being an intra-State supply of service, service of hiring
out the chairs and coolers to Function Garden of Ajmer (Rajasthan) is subject to CGST and SGST @ 6% each.
(6) Unregistered GTA - RCM applicable : 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

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road from a goods transport agency (GTA) provided such GTA has not paid GST @ 12%. Since in the given
case,Mrs. Kajal has received services from a Unregistered GTA, reverse charge provisions will be applicable.

QUS.21 Flowchem Palanpur (Gujarat) has made contract with R refinery Abu Road (Rajasthan) on 1st July, 2019 to
supply 10 valves on FOR basis for its project, with following rerms and conditions :

(1) List price per value Rs. 1,00,000, exclusive of taxes.

(2) The valves are of two stage third party inspection while manufacturing as required by R Refinery, and cost
of inspection, of Rs. 15,000 is directly paid by R Refinery to testing agency.
(3) As per the terms the special packing is to be done as required by R Refinery, the cost of which is
Rs.10,000.
(4) After making supply of valves, Flowchem has to arrange for erection and testing at site for commissioning.
Cost of erection etc. Is of Rs. 15,000.
(5) The supply was dispatched with Tax invoice on 20th July, 2019, which has reached the destination Abu-
Road on 21st July, 2019. The lorry-freight Rs. 5,000 has been paid by R Refinery directly to lorry driver.

Assume the CGST and SCST rates to be 9% each and IGST rate to be 18%. There are opening ITC of CGST Rs.
20,000 and SGST Rs. 20,000. All given amounts are exclusive of GST, wherever applicable.

It has also done the following local transactions during the month of July, 2019 on which it has paid CGST and
SGST as under:

Sr.No. Particulars Amt paid Amt paid

CGST(Rs.) SGST(Rs.)
1. It has acquired services of works contractor to erect foundation for fixing the 5,000 5,000
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 10,000 10,000
for the purpose of production facility
3. For the smooth and convenient communication purpose in its factory, it 5,000 5,000
has installed telecommunication tower of a mobile company (with due
permission) which have been provided to staff for factory work.

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4. Company has entered into an agreement with travel company to provide 2,500 2,500
(travel facility to its employees for providing home travel facility when they are
on leave.
5. It has entered into an agreement with fitness centre for providing its services 2,000 2,000
for its employees for their wellness after office hours
Work out the GST liability [CGST, SGST or IGST, as the case may be] of Flowchem Palanpur (Gujarat), for July,
2019 after making suitable assumptions, if any. (9 Marks, May 2019-NS)

ANS- Computation of GST liability of M/s Flowchem Palanpur. (amount in Rs.) :

List Price of Value [Rs. 1,00,000 × 10] [WN-1] 10,00,000

Third party inspection charges paid directly by R Refinery to testing agenev [WN-2] 15,000
Special packing charges [WN-3] 10,000
Erection and testing at site for commissioning. [WN-4] 15,000
transportation charges [WN-5] 5,000
Taxable value of supply of valves 10,45,000
Tax liability in respect of valves [IGST @ 18°/o] 1,88,100

Computation of GST to be deposited through electronic cash ledger :

Particulars Value of Eligible input tax credit

taxable CGST* SGST* IGST* Total
Supply (Rs.) (Rs.) (Rs.) (Rs.)
Inter-State sales in Rajasthan (Total output tax liability) 10,45,000 1,88,100 1,88,100
Less: Input tax credit —
Opening balance 20,000 20,000
Works contractor to erect foundation for fixing the 5,000 5,000
machinery to earth in the factory [Works contract
services when supplied for construction of plant and
machinery is eligible for input lax credit. For this purpose
"Plant and machinery'' means apparatus, equipment, and

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machinery fixed to earth 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]
Pipe line upto the gate of its factory to bring the water to - -
the factory for the purpose of production facility.
[Pipelines laid within the factory premises are covered in
the meaning of plant and machinery and eligible for
credit] [Pipe line is laid outside the factory premises are
not covered in the meaning of plant and machinery.] [It is
assumed that pipeline is laid outside the factory upto the
factory gate, hence credit is not admissible.]
Installation of telecommunication tower for staff. - -
[Telecommunication towers are not covered in the
meaning of plant and machinery, thus credit is not
available in respect of the same]
Leave travel facility to employees [Travel benefits - -
extended to employees on vacation such as leave or
home travel concession are blocked under Section 17(5)].
Health and fitness services to employees [Same is blocked - -
under Section 17(5)]
Less: Credit of CGST to be used for payment of IGST -25,000 (25,000) (25,000)
Less: Credit of SGST to be used for payment of IGST -25,000 (25,000) (25,000)
Net GST payable 1,38,100

Working Notes : (1) Value - Transaction value : The value of a supply is the transaction value i.e., the price
actually paid or payable since M/s. Flowchem and M/s. R refinery are not related and the price is the sole
consideration for the supply.

(2) Third party inspection charges : 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

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for the goods or services or both is 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.

(3) Special packing charges [Section 15(2)(c)] : 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.

(4) Erection, Commissioning and installation services is composite supply along with valves and taxable at
same rate as valves. The supply of valves is complete after erection, hence it is an act prior to delivery and
value thereof is included in the value of valves. Thus the same is includible as per the provisions of Section
15(2)(c) of the Act.

(5) Where the supplier agrees to deliver the goods at the buyer's premises and arranges for transport (FOR
contract), the contract of supply becomes a composite supply, the principal supply being the supply of goods.
Outward freight becomes part of the value of the composite supply and GST is payable thereon at the same
rateas applicable for the relevant goods. In this case the lorry freight paid directly by R refinery shall be
included in the value of supply, since the contract for delivery is on FOR basis.

(6) Month for which tax payable : The time of supply of goods is 20-07-2019 in terms of Section 12(1)(a) of
the CGST Act, 2017.

(7) Place of supply and nature of tax : In the given case — (i)the location of the supplier is in Palanpur
(Gujarat); and (ii) the place of supply of valves is i.e., Abu road (Rajasthan).

Therefore, the given supply is an inter-State supply as the location of the supplier and the place of supply are
indifferent States

Thus, the supply will be leviable to IGST in terms of Section 5(1) of the IGST Act, 2017.

QUS. 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

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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 wholeyear, 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.

QUS. 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 the supply of ‘y’ made by Gupta and Co. to State Marketing Corporation be valued for paying tax?

ANS- 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
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.

QUS. Easy Coupons Ltd. sells coupons that are redeemable against specified luxury food products at retail outlets.
Each coupon is sold for value of ` 900 but is redeemable for supplies worth ` 1000.
What is the value of supply of such coupon under GST law?

ANS- In terms of rule 32(6) 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 ` 900, its value is ` 1000.

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QUS. 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 law?

ANS- Since the supply is made to a distinct person, the same will be valued in accordance with rule 28 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.

QUS. 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.

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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 thanone 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.

QUS. Aviant Ltd., registered in Noida (Uttar Pradesh), is a supplier of machinery used for making bottle caps. The
supply of machinery is effected as under:

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- 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 ` 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, Aviant Ltd. charges from the customer the following incidental
expenses:
• associated handling and loading charges of ` 10,000
• installation and commissioning charges of ` 1,00,000

- 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 Aviant Ltd. through a third-party
service provider [Goods Transport Agency (GTA)]. The customer enters into a separate service contract with
the and pays the freight directly to it.

- 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 the discount (no separate amount of GST is recovered) given; and
• charges simple interest @ 1% per month or part of the month (no separate amount of GST is recovered) 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, Aviant Ltd. receives a price linked subsidy of ` 2,00,000 from its holding
company Diligent Ltd.
Aviant Ltd. has supplied a machinery to an unrelated party, Daffodil Pvt. Ltd. on 1st August at a price of `
40,00,000 (excluding all taxes). Invoice was issued on 1st August by Aviant Ltd. The corporate office of
Daffodil Ltd., which is at New Delhi, has entered into contract with Aviant Ltd. for supply of machinery.

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However, the machinery has been installed at Daffodil Pvt. Ltd’s registered manufacturing unit located in
Gurugram (Haryana). Daffodil Pvt. Ltd. has paid the freight directly to the GTA. Discount @ 2% on the price of
machinery excluding taxes was given to Daffodil Pvt. Ltd. as it agreed to make the payment within 15 days.
However, Daffodil Pvt. Ltd. paid the consideration on 31st October.

Assume the rates of taxes to be as under:

Bottle cap making machine
CGST – 6% SGST – 6% IGST – 12%
Service of transportation of goods
CGST – 2.5% SGST – 2.5% IGST – 5%
Other services involved in the above supply
CGST – 9% SGST – 9% IGST – 18%
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 Aviant Ltd.

Particulars (`)
Price of machine [Note 1] 40,00,000
Add: Handling and loading charges [Note 2] 10,000
Installation and commissioning charges [Note 3] 1,00,000
Transportation cost [Note 4] Nil
Price linked subsidy from Diligent Ltd. [Note 5] 2,00,000
Total price of the machine 43,10,000
Less: 2% cash discount on price of machinery = ` 40,00,000 × 2% [Note 6] (80,000)
Taxable value of supply 42,30,000
Tax liability for the month of August [Note 10]
IGST @ 12% [Note 8 and Note 7] – [A] 5,07,600
Tax liability for the month of October [Note 10]
Add: Interest collected @ 3% on ` 41,10,000 [Note 9] 1,23,300

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Cash discount recovered [Note 9] 80,000

Value of interest and cash discount inclusive of tax 2,03,300
IGST = (` 2,03,300/112) x 12% - [B] 21,782
Total IGST payable on the machinery [A] + [B] 5,29,382

Notes: (3) As per section 15(1), 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..

(4) All incidental expenses charged by the supplier to the recipient of a supply are includible in the value of
supply in terms of section 15(2)(c).

(5) 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 includiblein the value of supply in terms of section 15(2)(c).

(6) 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 (Aviant Ltd), in this case, merely arranges for the transport and does not provide the transport
service on its own account. Therefore, there will be no impact from valuation point of view on transport
expenses incurred for supply of machinery as the supplier is not the party to such supply of services.

(7) 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).

(8) Cash discount was deducted by Aviant Ltd. upfront at the time of supply on 1st August, and hence, the
same is excluded from the value of supply as it did not form part of the transaction value.

(9) In the given case-

• the location of the supplier is in Noida (UP); and

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• the place of supply of machinery is the place of installation of the machinery i.e., Gurugram (Haryana) 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 interms of
section 5(1) of the IGST Act, 2017.

(10) 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), 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.

(11) Interest for the delayed payment (which excludes subsidy related amount of Rs 2,00,000 as the same
was not recoverable from the recipient) of any consideration for any supply is includible in the value of
supply in terms of section 15(2)(d). Further, cash 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 are inclusive of tax. Thus, tax payable thereon has to be
computed by making back calculations in terms of rule 35.

(12) Invoice for the supply has been issued on 1st August . Thus, the time of supply of goods is 1st August in
terms of section 12(1)(a).

As per section 12(6), the time of supply in case of addition in value by way of interest, late fee, penalty etc.
for delayed payment of consideration for goods is the date on which the supplier receives such addition in
value. Thus, the time of supply of interest received and cash discount recovered on account of delayed
payment of consideration is 31st October, the date when the full payment was made. The supplier may issue
a debit note for such interest and cash discount recovered.

QUS.1 Mr. X purchases an Apple i-phone open market value Rs. 80,000 from registered mobile dealer, in exchange
of his existing mobile phone. The registered mobile dealer agreed to accept Rs. 72,000 instead of his quote
of Rs. 75,000, as he would still be in a profitable position (the old mobile phone can be sold for Rs. 10,000).

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Determine GST implications of such transaction.

ANS- As per Rule 27 of CGST Rules, 2017, where the price is not the sole consideration for the supply, the ‘open
market value’ would be the value of the supply. Therefore, Rs. 80,000 would be the value of the supply.

QUS.2 Mr. S supplied goods ‘X’ to Mr. R for consideration of Rs. 5,00,000 (excluding taxes). Mr. R also gave some
material to Mr. S as consideration for such supply whose value was Rs. 20,000 (excluding taxes). Mr. S has
supplied the same goods to another person at priceof Rs. 5,71,200 (including GST @ 12%). Determine the
value of supply.

a) What would your answer be if price of Rs. 5,71,200 is not available at the time of supply of goods to Mr. R.
b) 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 Mr. S, identical goods have been supplied at value of 5,25,000 (excluding taxes).

ANS- 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 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 if such 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 of supply of goods or
services or both of like kind arid quality;

Open market value: “Open market value” of a supply of goods or services or both means —
- the full value in money, excluding the integrated tax, central tax, State tax, Union territory tax and the cess
payable by a person in a transaction,

- 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.

Determination of value of taxable supply in different situations:

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(1) The value of taxable supply shall be the open market value. The open market value shall be determined
as under

Particular Rs.
Price charged from independent recipient 5,71,200
Less: GST included in the above price [Rs. 5,71,200 x 12 ÷ 112] 61,200
Open market value of supply of goods under consideration 5,10,000
Thus, the value of taxable supply shall be Rs. 5,10,000.

(2) if open market value is not available, the value of taxable supply shall be determined as under:
Particular Rs.
Consideration in Money 5,00,000
Value of Non-monetary consideration - Value of Goods known at time of supply 20,000
Value of taxable supply 5,20,000
(3) In such case, the value of supply shall be the value of supply of goods of like kind and quality i.e., Rs.
5,25,000 will be the value of supply of goods under consideration.

QUS.3 ABC Ltd. manufactured school bags. During the month of August 2019, XYZ Ltd. Purchased 500 bags at the
contracted price of Rs.1,000 per bag (excluding GST and discount) from ABC Ltd. XYZ Ltd. supplied chains
used in the manufacturing of the bags to ABC Ltd. without consideration. The open market value of the
chains so supplied was Rs.50 per chain. Also a discount of Rs. 20 per bag was given by the supplier at the
time of the supply and same has been duly recorded in the invoice issued in respect of such supply. GST rate
is 18%.Give reasons with suitable assumptions.

ANS- Computation of Value of taxable supply

Particular Rs.
Contracted sale price ofgoods [Rs. 1,000X 500] 5,00,000
Add: Open market value of supply of chains [Rs. 50 x 500] 25,000
Less: Discount [Rs. 20x500] -10,000
Value of taxable supply 5,15,000
GST payable @ 18% 92,700

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Working Note:

QUS.3 Mr. X located in Jaipur purchases 2,000 drawing boxes for Rs. 2,00,000 from M/s. Stationers Ltd.
(wholesalers) located in Delhi. Mr. X’s son is an employee in M/s. StationersLtd. The price of each drawing
box in the open market is Rs. 120. The supplier additionally charges Rs. 5,000 for delivering the goods to the
recipient’s place of business.

ANS- Mr. X and M/s. Stationers Ltd. would not be treated as related persons merely because the son of
The recipient is an employee of the supplier, although such son and the supplier would be treated as related
persons. (As they fall under deemed relationship of employer and employee).

Therefore, the transaction value will be accepted as the value of the supply. The transaction value includes
incidental expenses incurred by the supplier in respect of the supply up to the time of delivery of goods to
therecipient. This means, the transaction value will be: Rs. 2,00,000 + Rs. 5,000 i.e. Rs. 2,05,000.

QUS.4 GG Ltd. supplied printers from its establishment located in Maharashtra to its computer manufacturing unit
in Rajasthan @ 10,000 per unit. GGLtd. supplied such printers during the same period to independent
recipient @ Rs. 14,160 in market (includingCGST and SGST @ 18%).

Determine the value of supply for GG Ltd. in accordance with the CGST Act, 2017 and the rules made
thereof.

ANS- As per Section 25(4) of the CGST Act, 2017, a person who has 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, be treated as distinct persons for the purposes of this Act. Hence, the value of the supply would
be the open market value of such supply.

In this case the open market value shall be arrived as under:

Particular Rs.

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Price charged from independent recipient 14,160

Less: GST included in the above price [Rs. 14,160 X 18  118] 2,160
Open market value of supply of goods under consideration 12,000

QUS.5 SS Ltd. manufactures a customized product A at its unit in Madhya Pradesh and supplies it to its another
establishment, Located at Rajasthan. The Contracted sales price is Rs. 9,00,000. The cost of production of
Product ‘A’ is Rs. 10,00,000. SS Ltd. is the sole manufacturer of this product. Determine taxable value of
supply and calculate CGST and SGST payable @ 5%.
Would your answer be different if the establishment in Jaipur is eligible to avail Input tax credit of GST
payable by SS Ltd.

ANS- As per Section 25(4) of the CGST Act, 2017, a person who has 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, be treated as distinct persons for the purposes of this Act. As SS Ltd. is the sole manufacturer of
thisproduct, hence the value of supply is to be determined as per Rule 28(c) read with Rule 30 of CGST Rules,
2017 i.e. 110% of the Cost of production = Rs. 10,00,000 x 110% = Rs. 1100000. GST payable shall be 5% of
Rs. 11,00,000 = Rs. 11,00,000 x 5% = Rs. 55,000.

In second situation, if establishment in Jaipur is eligible to take Input tax credit, then value declared in
invoice shall be taken to be open market value as per provisions of Rule 28 of CGST Rules, 2017. Hence, value
of taxable supply shall be Rs. 9,00,000 and GST payable shall be 5% of Rs. 9,00,000 = Rs. 9,00,000 x 5% =
45,000.

QUS.7 Home Appliance Ltd. Fridabad has 15 agents located across the State of Haryana (except Faridabad). The
stock of vacuum cleaners is dispatched on Just-In-Time basis from Home Appliances Ltd. to the locations of
the agents, based on receipt of orders from various dealers, on a fortnightly basis. Home Appliances Ltd. is
also engaged in the wholesale supply of vacuum cleaners in Faridabad. An agent places an order for dispatch
of 20 vacuum cleaners on 10-12-2017. Home Appliances Ltd. had sold 20 vacuum cleaners to a retailer in
Faridabad on 8-12-2017 for Rs. 1,30,000. The agent effects of the sale of the 20 units to a dealer who would
effect the sales on MRP basis (i.e., @ 7,000/unit).

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ANS- The law deems these supplies between the principal and agent to be supplies for the purpose of GST.
“Therefore, the transfer of goods by the principal (Home Appliances Ltd.) to its agent for him to effect sales
on behalf of the principal would be deemed to be a supply although made without consideration. The value
would be either the open market value, or 90% of the price charged by the recipient of the intended supply
to its customers, at the option of the supplier. Thus, the value of the supply by home Appliances Ltd. to its
agent would be either Rs. 1,30,000, or Rs. 1,26,000 (i.e., 90% X 7,000 X 20), based on the option chosen by
Home Appliances Ltd.

QUS.8 M/s. Money Express Ltd., Jaipur is an authorised money changer registered under FEMA, 1999. It enters into
the following transactions of money changing:
(1) Sold 10,000 US $ @1 US $ = Rs. 61
(2) Purchased 1,000 Euro @ 1 Euro = Rs. 70
(3) Purchased 1,000 GBP @ 1 GBP = Rs. 99
Sold 50,000 units of currency ABC @ 1 ABC = Rs. 15
(5) RBI reference rate for the various currencies at the relevant time: 1 US $ = Rs. 60
1 Euro = Rs. 71 1GBP = Rs. 100
(6) Sold 11,300 US $ for 6,800 GBP
You are required to calculate value of taxable supply of service and tax thereon if all charges are exclusive of
GST. Applicable GST rate - 18%

ANS- The value of taxable supply of service shall be computed as follows:

Particulars Rs.
(1) Sale of 10,000 Us $ 10,000
(Selling Rate — RBI reference rate) X Units of foreign currency sold — Rs. (61 - 60) x
10,000
(2) Purchase of 1,000 Euro 1,000
(RBI reference rate — Buying rate) X Units of foreign currency purchased of Rs.(71 —
70) X 1,000
(3) Purchase of 1,000 GBP = Rs. (100 — 99) X 1,000 1,000
(4) Sold 50,000 units of currency ABC = 50,000 X Rs. 15 X 1% 7,500
(1% of the gross amount of currency exchanged in Indian Rupees)

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(5) Direct conversion of GBP into US $

*Value of Service = 1% of (Lower of ‘Amount 1 or Amount 2’)
Amount 1 = 11,300 US $ x Rs. 60 = Rs. 6,78,000
Amount 2 = 6,800 CBP x Rs. 100 = Rs. 6,80,000
Total value of taxable supply 26,280
CGST @ 9% 2,365
SGST @ 9% 2,365
Total GST payable 4,730

QUS.9 M/s. MNO Ltd., Delhi is an authorised money changer registered under FEMA, 1999. It has entered the
following transaction of supply of money changing :
(1) 600 transactions of conversion of Dollar into Indian Rupees of X 20,000 per transaction;
(2) 500 transactions of conversion of Dollar into Indian Rupees of X 1 lakh per transaction;
(3) 200 transactions of conversion of Indian Rupee in Dollar of X 5 lakhs per transaction;
(4) 100 transactions of conversion of Euro into Indian Rupee of X 500 lakhs per transaction;
(5) 300 transactions of conversion of Dollar into Euro of X 100 lakhs per transaction;
Compute the value of taxable supply and GST payable where M/s. MNO Ltd. opted for option u/r 32(2)(b) of
CGST Rules, 2017. Applicable GST rate -18%.

ANS- Computation of value of taxable supply under rule 32(2)(b) (amount in X):
(1) Conversion of Dollar into INR of ` 20,000 per transaction (600 x ` 250) [(i.e. 1,50,000
20,000 x 1% subject to minimum of 250) per transaction]
(2) Conversion of Dollar into INR ( ` 1 lakh x 1%) x 500 [(i.e. 1 lakh * 1% subject to 5,00,000
minimum of 250) per transaction]
(3) Conversion of INR into Dollar ( ` 1,000 + ` 4,00,000 x 0.5%) x 200 6,00,000
(4) 100 transactions of conversion of Euro into INR of ` 500 lakhs per transaction 54,50,000
i.e. 100 x [( ` 5,500 + ` 490 lakhs x 0.1%) Subject to maximum of ` 60,000]
(5) 300 transactions of conversion of Dollar into Euro [( ` 5500 + ` 90 lakhs * 0.1%) 43,50,000
subject to maximum of ` 60,000 per transaction]
Total value of taxable supply 1,10,50,000

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CGST @ 9% 9.94.500
SGST @ 9% 9.94.500
Total GST payable 19,89,000

QUS.10 M/s. Airlines Associates has sold tickets for transport of passengers to Singapore, and other foreign countries
during the month of January, 2020. The total amount charged is ` 30 lakhs on the flight (100 tickets) of which
10 lakhs is towards passenger taxes.
Determine the Value of taxable supply of services of M/s. Airlines Associates and tax thereon if applicable
rate of CGST is 18%. Amounts are exclusive of tax.

ANS- The relevant computations are as under— (amount in

Value of Taxable Supply by M/s. Airlines Associates : 20,00,000

Basic Fare (Total ` 30 lakhs - Government Taxes 10 lakhs) Value of Taxable Supply as
per Rule 32(3) @ 10% of Basic fare
CGST @ 9% 2,00,000
SGST @ 9% 18,000
18,000
Total GST payable 36,000

QUS.11 M/s. Kamal Associates has sold tickets for transport of passengers from various domestic flights during the
month of January 2020. The total amount charged is ` 90 lakhs on the flight (500 tickets) of which ` 10 lakhs is
towards passenger taxes.

Determine the value of taxable supply of services and GST payable thereon if rate of CGST is 9%. Amounts
are exclusive of CGST and SGST.

ANS- The relevant computations are as under — (amount in `)

Value of Taxable Supply provided by M/s. Kamal Associates : 80,00,000

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Basic Fare (Total ` 90 lakhs - Government Taxes ` 10 lakhs) Value of Taxable Supply as
per Rule 32(3) @ 5% of Basic fare
CGST @ 9% 4,00,000
SGST @ 9% 36,000
36,000
Total GST payable 72,000

QUS.12 LIC of India provides you the following information for the month of January 2020. You are required to
compute value of taxable Supply of services under Rule 32(4) of Determination of value of supply Rules,
2017.
(1) General policies : Total premiums collected ` 12,000 lakhs (Out of which 1st year premium is ` 5,000 lakhs)
(2) Single premium annuity policies : Premiums collected ` 850 lakhs.
(3) Only Risk Cover Policies : Premiums collected ` 500 lakhs.
(4) Life micro-insurance policies where insured amount does not exceed ` 2,00,000 : Premium collected ` 10
lakhs.
(5) Variable Insurance Policies : Premiums collected ` 8,000 lakhs. (80% of the amount is allocated for
investments on behalf of policy holder for which policy holder is given separate break up in premium
receipts)

ANS- Computation of Value of Taxable Supply of services ( in lakhs) :

Particulars Amount Rate Taxable

Value
General policies:
(i) First year premium 5,000 25% 1,250
(ii) Subsequent years i.e. policies issued in earlier years 7,000 12.5% 875
Single premium annuity policies 850 10% 85
Only Risk Cover Policies Since the entire premium is for risk cover, 500 100% 500
hence, the option under Rule 32(4) is not available.
Life micro-insurance policies [Exempt vide Entry 36 of Notification No.

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12/2017- CT (Rate)]

Variable Insurance Policies [Gross premium - Amount allocatedtowards 8,000 - 1,600

investment]
Total Taxable Value 4,310

QUS.13 Mr. Rohan is engaged in buying and selling of second hand cars in Jaipur. During the month of December,
2019 he supplied a used car after some processing at X 6,00,000 which he purchased from customer at X
5,40,000 and no input tax credit has been availed on such purchase. Compute the value of taxable Supply.
What would your answer be if purchase price of used car is X 6,20,000.

ANS As per Rule 32(5) of CGST Rules, 2017, 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 minor processing which does not change
the nature of the goods and where no input tax credit has been availed on purchase of such goods, the value
of supply shall be the difference between the selling price and purchase price.

(i) Computation of Value of Taxable Supply of Second hand Car (amount in X):
Sale price of Car Purchase price of used Car 6,00,000
5,40,000
Value of Taxable Supply 60,000
(ii) In case (ii), as per Rule 32(5) of CGST Rules, the value of supply of second hand goods shall be the
difference between the selling price and purchase price and where the value of such supply is negative it
shall be ignored.

Therefore, value of Taxable supply of Second hand Car = X (6,00,000 - 6,20,000) i.e., Nil.

QUS14 Mr. X purchased a motor car on l5t October 2019 for X 20,00,000. 80% of the purchase price of car was
financed by Easy Finance Ltd. The loan was payable in 60 monthly instalments beginning with 01-11-2019.
Mr. X defaulted in repayment of loan and Easy Finance Ltd. repossessed the car on 15- 05-2020. The car was
disposed defaulted in repayment of loan and Easy Finance Ltd. repossessed the car on 15- 05-2020. The car
was disposed on 10-12-2020 for X 15,50,000. Determine the value of taxable supply as per Rule 32(5) of

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CGST Rules, 2017.

ANS As per Rule 32(5) of CGST Rules, 2017, the purchase value of goods repossessed from a defaulting borrower,
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 borrower reduced by 5% points for every quarter or part thereof, between
the date of purchase and the date of disposal by the person making such repossession.

Computation of Value of Taxable Supply of Second hand Car (amount in `):

Sale price of Car 15,50,000
Purchase value of repossessed Car [WN] 15,00,000
Value of Taxable Supply 50,000

Working Note: Computation of purchase value of repossessed car (amount in `):

Purchase price of car 20,00,000
Date of purchase of car 01-10-2019
Date when repossessed car is sold 10-12-2020
No of quarters or part thereof 5
Percentage computed for the no. of quarters for which goods held prior to sale 25%
Percentage computed for determining value of supply [100%-25%] 75%
Purchase value of repossessed Car 15,00,000

Note: As per Section 2(92) of the CGST Act, 2017, "quarter" shall mean a period comprising
three consecutive calendar months, ending on the last day of March, June, September and December of a
calendar year.

QUS.15 Mr. & Ms. Bhargava purchase 5 gift vouchers for ` 1,000 each from Raymonds and give them as return gifts
to children and their parents on their son's birthday. Determine the value of supply.

ANS- As per the provisions of Rule 32(6) of the CGST Rules, the value of supply would be the money value of the
goods redeemable against the voucher. Thus, in case of vouchers from Raymonds, the value would be `

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5,000 (i.e., ` 1,000 x 5).

QUS.16 Easy Coupons Ltd. sells coupons that are redeemable against specified cosmetic products at retail outlets.
Each coupon has a face value of ` 1,500 but is redeemable for supplies worth ` 1,750. What is the value of
supply of such coupon under GST laws?

ANS- As per provisions 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 T 1,500, its value is `
1,750.

QUS.17 M/s. ILP Ltd. is a manufacturer of sharbat. It sells sharbat in bottles to various retail shop-keepers and gives
25 bottles free along with purchase of every 100 bottles. The MRP indicated on each bottle is 200 per bottle.
The transaction value is ` 160 per bottle. During a month, M/s. ILP Ltd. sold 1,00,000 bottles and gave away
25,000 bottles free to the retail shop-keepers. Compute the amount of GST payable by M/s. ILP Ltd. GST rate
is 18%.

Ans- It has been clarified vide Circular No. 92/11/2019-GST, dated 07-03-2019 that as per Section 7(l)(a) of the
said Act, the goods or services which are supplied free of cost (without any consideration) shall not be
treated as 'supply' under GST (except in case of activities mentioned in Schedule I of the said Act). It may
appear at first glance that in case of offers like 'Buy One, Get One Free', one item is being 'supplied free of
cost' without any consideration. In fact, it is not an individual supply of free goods but a case of two or more
individual supplies where a single price is being charged for the entire supply. It can at best be treated as
supplying two goods for the price of one. Taxability of such supply will be dependent upon as to whether the
supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions
of section 8 of the said Act.

In the present case, the sale is for the gross quantity (1,25,000) at the net price ( ` 160 per bottle on 1 lakh
bottles) and the claimed free supply (25,000 bottles).

Accordingly, the computation of GST payable is as shown below (amounts in `):

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No. of bottles on which GST payable (A) Transaction value per bottle (B) Total 1,00,000
transaction value on which GST is payable (C) = (A) * (B) 160
1,60,00,000
GST liability @ 18% (D = C x 18%) 28,80,000

QUS.18 M/s. Dental Care Ltd. has introduced a new product 'CLOVE' toothpaste. Determine the GST payable if rate
of tax is 18% on tooth paste and tooth brush :
(i) 1,000 pieces having retail sale price (RSP) 70 per piece are sold in retail packages to wholesale dealer at `
50 per piece.
(ii) 2 ,500 pieces having RSP ` 70 per piece are sold in retail packages, but buyer is charged for 2,400 pieces
only at ` 50 per piece (100 pieces have been given free as quantity discount).
(iii) 50 pieces were given away as free samples, without any RSP on the pack.
(iv) 200 multi-packs were cleared at ` 90 per pack, each containing two tooth paste tubes and one tooth
brush free (without any RSP on it).
The amount charged from the dealers/buyers are exclusive of GST.

ANS- The GST payable is as computed below (amount in `)-

(i) 1,000 pieces at transaction value of ` 50 per piece (Retail sale price is not relevant as 50,000
value for the purpose of calculating GST liability is the transaction value charged
from the buyers)
(ii) 2,400 pieces at transaction value of ` 50 per piece (Offering of extra quantity of the 1,20,000
same product is to be treated in the nature of discount. This discount or value of
free article /extra quantity of the same product which is known at the time of
recognition of supply shall not be included in the transaction value of supply so as to
compute GST liability.)
(iii) Samples : 50 pieces are given free of cost [The goods or services or both which are
supplied free of cost (without any consideration) shall not be treated as 'supply'
under GST (except in case of activities mentioned in Schedule I of the said Act),
hence no GST is payable] - Circular No. 92/11/2019-GST, dated 07-03-2019.

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(iv) Multi-packs : 200 packs at transaction value of ` 90 per pack (It has been clarified 18,000
vide Circular No. 92/1I/2019-GST, dated 07-03-2019, it is not an individual supply of
free goods but a case of two or more individual supplies where a single price is being
charged for the entire supply. It can at best be treated as supplying two goods for
the price of one. Taxability of such supply will be dependent upon as to whether the
supply is a composite supply or a mixed supply and the rate of tax shall be
determined as per the provisions of section 8 of the said Act. Since GST rate on tooth
paste and tooth brush is 18%, hence 18% rate will be applicable.)

Total Transaction value 1,88,000

GST payable @ 18% 33,840

QUS.19 (a) X contracts with Y, a real estate agent to sell his house. Thereupon, Y gives an advertisement in television
which costed him Rs. 1 lakh. Y billed X for Rs. 5 lakhs. The invoice showed Rs. 4 lakhs as consideration for his
services and Rs. 1 lakh for the television advertisement. Y paid GST only on Rs. 4 lakhs, claiming that Rs. 1
lakh was paid as a pure agent’. Decide.

ANS- Here, Y does not act as 'pure agent while giving the television advertisement, though it is separately shown
in the invoice. Advertising services is an input service for the estate agent in order to enable or facilitate him
to perform his services as an estate agent, therefore, GST is payable on Rs. 5 lakhs.

(b) In the course of providing a taxable service, X, a service provider incurs costs such as travelling expenses,
postage, telephone, etc. totalling to Rs. 50,000. Showing this separately in the bill, he claimed an exclusion of
same from the value of the taxable service under the pretext that he was acting as a 'pure agent’ of the
service recipient. Decide.

ANS- Here the expenditure incurred by X in course of providing taxable service is input/ input service procured by
X on his own account for providing the taxable service. Hence, by merely indicating such expenditure
separately in the bill, the same cannot be excluded from the value of service.

(c) A contracts with B, an architect for building a house, the consideration for his service being fixed at Rs.

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5,00,000. in course of providing service, B incurred expenses such as telephone charges, air travel tickets,
accommodation etc. totalling to Rs. 1,00,000. B recovered the same from A. He paid GST only on Rs.
5,00,000, claiming Rs. 1,00,000 as reimbursable expenditure incurred as 'pure agent' of A. Decide.

ANS- B is liable to GST on the entire Rs. 6,00,000, the expenditure incurred by him during the course of business
was to enable him to effectively perform Iris services and not as a 'pure agent'. These are input/ input
services for B.

(d) A Customs House Agent paid custom duty of Rs. 3,00,000 on behalf of his client and the same was
included in his fees 10,00,000. What is the taxable value of his service?

ANS- The value of taxable service is Rs. 7,00,000 as he acts as a pure agent wilh respect to custom duty.

QUS.20 Determine the value of supply for purpose of GST under the CGST Act, 2017 in the following cases :

(i) A supplier supplied his goods for Rs. 118 per piece and does not charge any GST in his invoice.
Subsequently it was found that the goods were not exempted from but were liable at 18% advalorem.
(ii) Certain goods were supplied for Rs. 118 per piece and 18% advalorem is the rate of GST. Subsequently it
was found that the price cum tax was in fact Rs. 138 per piece as the supplier had collected Rs. 20 per piece
separately.
(iii) The cum tax price per piece was Rs. 118 and the supplier had paid tax at 18% advalorem. Subsequently it
was found that the rate of tax was 28% advalorem and the supplier had nol collected anything over and
above Rs. 118 per piece.

ANS- The Value of taxable supply shall be calculated as under -

Tax amount
It is assumed that all the prices given in question excludes permissible exclusions i.e, discounts.

QUS.21 From the following particulars, compute the value of supply for GST purposes. Out of 1,000 units
manufactured, 800 units have been cleared to a sister- unit for further production of goods on assessee's
behalf, the balance 200 units are lying in the stock :

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Particulars Rs.
Direct material consumed (inclusive of GST @ 18%) 2,36,000
Direct labour and direct expenses 1,60,000
Works overheads 40,000
Research and development costs 25,000
Administration overheads (75% related to production) 80,000
Inputs received free of cost from sister units (to be used only in goods manufacturedfor 35,000
sister units)
Abnormal losses (not included above) 24,000
Advertisement and selling costs 36,000
VRS compensation to employees (not included above) 1,20,000
Realisable value of scrap/wastage 20,000

ANS- Calculation of cost of production (amount in Rs.) —

Direct material consumed (exclusive of GS(T) [Rs. 2,36,000 × 100 ÷ 118][WN-1] 2,00,000
Direct labour & expenses 1,60,000
Works Overheads 40,000
Research and development costs - Includible 25,000
Administrative Overheads (Rs. 80,000 × 75%) [WN-2] 60,000
Abnormal losses - Not includible [WN-4] Nil
Advertisement and selling costs [WN-5] Nil
VRS compensation to labour/employees [WN-4] Nil
Realisable value of Scrap/Wastage - Deductible from cost -20,000
Cost of production of 1,000 units 4,65,000
Cost per unit 465
Cost of production of 800 units transferred to sister units [800 × 465] 3,72,000
Inputs received free of cost from sister unit [WN-3] 35,000
Total Cost of production of 800 units transferred to sister unit 4,07,000
Add: 10% mark up as per Rule 28 40,700
Value of supply of 800 units cleared to sister under Rule 28 4,47,700

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Working Notes : (1) Direct material cost shall be taken as net of GST since input tax credit availed cannot
form part of cost of production.

(3) Inputs received free of cost from sister unit form part of cost of production as per CAS-4 issued by ICMA.

(4) Abnormal losses and VRS compensation shall also not form part of 'cost' as it is non-recurring cost arising
due to unusual or unexpected occurrence of events.

(5) Advertisement and selling costs shall not form part of cost of production.

(6) As per Rule 28 of CGST Rules, 2017, the value of the supply of goods or services or both where the
supplier and recipient are related shall —
(a) be the open market value of such supply;
(b) if the open market value is not available, be the value of supply of goods or services of like kind and
quality;
(c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of
Rule 30 or Rule 31, in that order i.e. it must be worked out based on the cost of the supply plus 10% mark-up
(Rule 30) or by other reasonable means, in that sequence (Rule 31).

QUS. BW Ltd. manufactures tobacco products. It has provided the following particulars relating to goods sold by it
to CF Ltd.
Particulars ₹
Price of the goods (exclusive of all taxes/duties and discounts) 60,000
Excise duty 6,000
Packing charges 2,000
Freight (arranged by BW Ltd.) 1600
Total amount billed to CF Ltd. before any discount 69,600
Discount @ 2% of the price of goods recorded in the invoice
The final amount charged from CF Ltd. is ₹ 69,600 less discount @ 2%.
Determine the value of taxable supply made by BW Ltd.

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ANS- Computation of value of taxable supply

Particulars ₹
Price of the goods (exclusive of taxes and discounts) 60,000
Add: Excise duty [Note 1] 6,000
Packing charges [Note 2] 2,000
Freight [Note 3] 1600
Less: Discount @ 2% on ₹ 60,000 [Note 4] 1,200
Value of taxable supply 68,400
Notes:
(1) As per section 15(2)(a), any taxes, duties, cesses, fees and charges other than CGST, SGST, UTGST, IGST
and GST Compensation Cess, if charged separately by the supplier should be included in the value of supply.
Thus, excise duty charged separately has been added in the value.

(2) As per section 15(2)(c), incidental expenses, including commission and packing, charged by the supplier
to the recipient of a supply should be included in the value. Thus, packing charges have been added in the
value.

(3) Since transport is arranged by the supplier, the contract of supply becomes a composite supply; the
principal supply being the supply of goods. Therefore, freight becomes part of the value of the composite
supply.

(4) As per section 15(3)(a), the value of the supply does not include any discount which is given before or at
the time of the supply if such discount has been duly recorded in the invoice issued in respect of such
supply. Therefore, since in this case, discount is known at the time of supply and recorded in the supply, it is
deductible from the value.

QUS. SA Ltd. is a manufacturer of biscuits. The price of a 200 gm pack of biscuit sold by SA Ltd. is ₹ 30. It has
received subsidy of ₹ 5 per pack of biscuit sold from NM Ltd. as part of NM Ltd.’s CSR activity. SA Ltd.
supplied 1000 packs of biscuits @ ₹ 25 per pack to one of its wholesalers namely, MA Pvt. Ltd. during a tax
period. Loading charges of ₹ 1200 have also been charged separately from MA Pvt. Ltd. MA Pvt Ltd. delayed

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the payment of consideration and thus, paid ₹ 5,000 as interest (no separate amount of GST is paid on the
interest by MA Ltd.) in the next tax period. Assume the rate of GST to be 18%.
Determine the value of taxable supply made by SA Ltd.

ANS- Computation of value of taxable supply

Particulars (`)
Price of 1,000 packs of biscuit @ 25 25,000
Subsidy received from NM Ltd. @ 5 for 1000 packs of biscuit [Note 1] 5,000
Lording charge [Note 2] 1,200
Interest for delay in payment of consideration [Note 3] (rounded off) 4,237
Value of taxable supply 35,437
Notes:
(1) As per section 15(2)(e), subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments should be included in the value.

(2) As per section 15(2)(c), 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
included in the value.

(3) As per section 15(2)(e), interest or late fee or penalty for delayed payment of any consideration for any
supply should be included in the value. However, as per section 12(6), the time of supply to the extent it
relates to an addition in the value of supply by way of interest is the date when such interest is received. In
the given case, since GST has not been paid separately on the interest, the same is inclusive of GST. Thus,
the value has been computed by [{Interest / (100 + Tax Rate)} x 100]. This time of supply in relation to the
addition in value by way of such interest will fall in the next tax period on the date when the same is
received.

QUS. X Pvt. Ltd., a money changer, has exchanged US $ 10,000 to Indian rupees @ ₹ 74 per US $. X Pvt. Ltd. wants
to value the supply in accordance with rule 32(2)(b) of CGST Rules.
Determine the value of supply made by X Pvt. Ltd.

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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 ₹ 1,00,000, subject to a minimum
amount of ₹ 250;
(ii) ₹ 1,000 and 0.5% of the gross amount of currency exchanged for an amount exceeding ₹ 1,00,000 and up
to ₹ 10,00,000.
Therefore, the value of supply, made by X Pvt. Ltd., under rule 32(2)(b) of CGST Rules is computed as
under:
Particulars (`) (`)
Value of currency exchanged in Indian rupees [₹ 74 x US $ 10,000] 7,40,000
Upto ₹ 1,00,000 1,000
For ₹ 6,40,000 [0.50% x ₹ 6,40,000] 3,200
Value of supply 42,000

QUS. UB & Sons is an air travel agent. Compute the value of supply of service made by the firm during a month
with the help of following particulars furnished by it:

Particulars Basic fare (₹) Other charges Taxes (₹) Total value of
and fee (₹) tickets (₹)
Domestic Bookings 1,00,900 9,510 4,990 1,15,400
International Bookings 3,16,880 20,930 15,670 3,53,480

ANS- Computation of value of supply of services made by UB & Sons in a month

Particulars (`) (`)
Basic fare in case of domestic bookings 1,00,900
Value of supply @ 5% [A] Refer Note below 5,045
Basic fare in case of international bookings 3,16,880
Value of supply @ 10% [B] Refer Note below 31,688
Value of supply [A] + [B] (rounded off) 36,733
Note:

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As per rule 32(3) of CGST Rules, the value of the supply of services in relation to booking of tickets for travel
by air provided by an air travel agent is 5% of the basic fare in the case of domestic bookings, and 10% of the
basic fare in the case of international bookings.

QUS. Income tax collected at source should be added in value of the supply in terms of section 15(2)(a). Examine
the correctness of the statement.

ANS- The statement is not correct. CBIC vide Circular No. 76/50/2018 GST dated 31.12.2018 (amended vide
corrigendum dated 7.03.2019) has clarified that for the purpose of determination of value of supply under
GST, tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible
as it is an interim levy not having the character of tax.

QUS. 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.

QUS. Examine whether the following discounts ought to be excluded to determine the value of supply:
(i) Company offering 20% discount for purchases above ₹ 10,000
(ii) Company offering additional discount of 1% on purchase of 10,000 pieces in a year
(iii) After selling a product, the company re-values the product at a lower value and issues credit note to the
buyer for the differential amount.

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ANS- (i) The given case is a case of staggered discounts where rate of discount increases with increase in purchase
volume. Such discounts are shown on the invoice itself. Therefore, the same are excluded
to determine the value of supply.

(ii) The given case is a case of volume discount which are offered by the suppliers to their stockists, etc. Such
discounts are established in terms of an agreement entered into at or before the time of supply though not
shown on the invoice as the actual quantum of such discounts gets determined after the supply has been
effected and generally at the year end. Such type of volume discounts are excluded to determine the value
of supply provided they satisfy the parameters laid down in section 15(3) including the reversal of ITC by the
recipient of the supply as is attributable to the discount on the basis of document (s) issued by the supplier.

(iii) This is a case of secondary discounts. These are the discounts which are not known at the time of supply
or are offered after the supply is already over. Therefore, such discounts shall not be excluded while
determining the value of supply.

QUS. Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it to Colourful Pvt.
Ltd.
Particulars Rs.
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
Packing charges (not included in price above) 1,000
Black and White Pvt. Ltd. received Rs. 2000 as a subsidy from a NGO on sale of such goods. The price of Rs.
50,000 of the goods is after considering such subsidy. Black and White Ltd. offers 2% discount on the list
price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Black and White Pvt. Ltd.

ANS- Computation of value of taxable supply

Particulars Rs.
Service charges 5,00,000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi Advertisers [Liability of 20,000
the supplier being discharged by the recipient, is includible in the value in terms of

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section 15(2)(b)]
Interest for delay in payment of consideration [Includible in the value in terms of 12,712
section 15(2)(d) –Refer note below] (rounded off)
Value of taxable supply 5,32,712
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 thus, the value has been computed by making back
calculations [(Interest x 100)/(100 + tax rate)]

QUS. Arihant Life Insurance Company Ltd. (ALICL) has charged gross premium of Rs. 180 lakh from policy holders
with respect to life insurance policies in the 2017-18; out of which Rs. 100 lakh have been allocated for
investment on behalf of the policy holders.

Compute the value of supply of life insurance services provided by ALICL:

(i) if the amount allocated for investment has been intimated by ALICL to policy holders at the time of supply
of service.

(ii) if the amount allocated for investment has not been intimated by ALICL to policy holders at the time of
providing of service.

(iii) if the gross premium charged by ALICL from policy holders is only towards risk cover.

Note: ALICL has started its operations in the year 2017-18. Thus, the entire gross premium of Rs. 180 lakh is
the premium for the first year of all the policies. ALICL has not issued any single premium annuity policy.

ANS- As per rule 32(4), of the CGST Rules, value of supply of services in relation to life insurance services is
a) the gross premium reduced by the amount allocated for investment on behalf of the policy holder, if such
an amount is intimated to the policy holder at the time of supply of service;

b) in all other cases, 25% of the premium in the 1st year and 12.5% of the premium in subsequent years
However, where the entire premium paid by the policy holder is only towards risk cover, such gross

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premium is the value of supply of life insurance services.

In the light of the aforesaid provisions, value of supply of life insurance services provided by ALICL in
financial year 2017-18 will be computed as follows:
(i) Amount allocated for investment intimated to policy holder at the time of supply of service
Value of service = Rs. (180-100) lakh = Rs. 80,00,000
(ii) Amount allocated for investment not intimated to policyholders at the time of supply of service
Value of service = 25% of Rs. 180 lakh = Rs. 45,00,000
(iii) Gross premium received is only towards risk cover Value of service = Rs. 180 lakh

QUS. 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- 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.
Since AKJ Foods Pvt. Ltd. does the testing before the delivery of goods, the charges there for 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.

QUS. A philanthropic association makes a substantial donation each year to a reputed private management
institution to subsidize 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- As per section 15(2)(e), the value of a supply includes subsidies directly linked to the price, excluding

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State Government and Central Government subsidies. In this case, the subsidy is not from the Government
but is from a philanthropic association. 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.

QUS. 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.

QUS. Crunch Bakery Products Ltd sells biscuits and cakes through its dealers, to whom it charges the list price
minus standard discount and pays GST accordingly. When goods remain unsold with the dealers, it offered
additional discounts on the stock as an incentive to push the sales.
Can this additional discount be reduced from the price at which the goods were sold and concomitant tax
adjustments made?

ANS- The discounts were not known or agreed for at the time of supply of goods to the dealers. Therefore, in
terms of section 15(3), such discounts cannot be reduced from the price on which tax had been paid.

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TAX INVOICE

QUS. Discuss the provisions relating to issue of an invoice/document in the following circumstances:
(i) Advance payment is received against a supply, but subsequently no supplies are made.
(ii) Goods are sent on approval for sale or return and are removed before the supply takes place.
(iii) Malcolm provides continuous supply of services to his client, where the due date of payment for such
services is not ascertainable. No advance has been received in this behalf.

ANS- i) As per section 31(3)(e) of CGST Act, 2017, where advance payment is received against a supply for which
receipt voucher has been issued, but subsequently no supplies are made and no tax invoice is issued in
pursuance thereof, a refund voucher has to be issued to the person who had made the advancepayment.

(ii) As per section 31(7) of CGST Act, 2017, where the goods are sent on approval for sale or return and are
removed before the supply takes place, the invoice shall be issued before or at the time of supply or 6
months from the date of removal, whichever isearlier.

(iii) As per section 31(5)(b) of CGST Act, 2017, in case of continuous supply of services, where the due date of
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.

QUS.2 Jai, a registered supplier, runs a general store in Ludhiana, Punjab. Some of the goods soldby him are
exempt whereas some are taxable. You are required to advise him on the followingissues:

(i) Whether Jai is required to issue a tax invoices in all cases, even if he is selling the goods to the
endconsumers?

(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

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customers. You are required to advise him.

ANS- (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 taxinvoice.

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 GSTRules,2017 ,are
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 tocustomers.

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QUS.3 Avtaar Enterprises, Kanpur started trading in ayurvedic medicines from July 1, 20XX. Its turnover exceeded `
40 lakh on October 3, 20XX. The firm applied for registration on October 31, 20XX and was issued registration
certificate on November 5,20XX.

Examine whether any revised invoice can be issued in the given scenario. If the answer to the first question is
in affirmative, determine the period for which the revised invoices can be issued as also the last date upto
which the same can be issued.

ANS- As per section 31(3)(a) of the CGST Act, a registered person may, within one month from the date of issuance
of certificate of registration, issue a revised invoice against the invoice already issued during the period
beginning with the effective date of registration till the date of issuance of certificate of registration tohim.

Further, rule 10(2) of CGST Rules lays down that the registration shall be effective from the date on which
the person becomes liable to registration where the application for registration has been submitted within a
period of 30 days from suchdate

In the given case, Avtaar Enterprises has applied for registration within 30 days of becoming liable for
registration and the registration has been granted. Thus, the effective date of registration is the date on
which Avtaar Enterprises became liable for registration i.e., October 3, 20XX. Therefore, since in the given
case there is a time lag between the effective date of registration (October 3, 20XX) and the date of
grant of certificate of registration (November 5, 20XX), revised invoices can be issued. The same can be
issued for supplies made during this intervening period i.e., for the period beginning with October 3, 20XX till
November5, 20XX. Further, the revised invoices can be issued for the said period till December 5,20XX.

QUS.4 The aggregate turnover of Sangri Services Ltd., Delhi exceeded Rs. 20 lakh on 12thAugust. 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- As per section 25 read with CGST Rules, 2017, where an applicant submits application for registration within

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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 31 read with CGST Rules, 2017, every registered person who has been granted registration
with effect from a date earlierthan 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 (12thAugust) till the date
of issuance of certificate of registration (6thSeptember) within 1 month from the date of issuance of
certificate of registration, i.e. on or before 6thOctober.

QUS.5 Bhumika Caretakers, a registered person, provides the services of repair and maintenance of electrica
appliances. On April 1, it has entered into an annual maintenance contract with Naveen 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 Bhumika 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

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Therefore, the given situation is a case of continuous supply ofservice as repair and maintenance services
have been provided by Bhumika Caretakers on a quarterly basis, under a contract, for a period of 1 year
with the obligation for quarterly payment
In terms of section 31 of the CGST Act, 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, Bhumika Caretakers should issue quarterly invoices on or before April 1, July 1,
October 1, and January 1.

QUS.6 ABC Ltd., a registered supplier has made following taxable supplies to its customer Mr. P in the quarter
ending 30th June, 2019

Date Bill No. Particulars Invoice value (including

GST)[Rs.]
5th April, 2019 102 Notebooks [10 in numbers] 1,200
10th May, 2019 197 Chart Paper [4 in number] 600
20th May, 2019 230 Crayon colors [2 packets] 500
2nd June, 2019 254 Poster colors [5 packets] 900
22nd June, 2019 304 Pencil box [4 sets] 700

Goods in respect of bill no. 102, 230 and 254 have been returned by Mr. P. You are required to advise ABC
Ltd. whether it can issue consolidated credit note against all the three invoices?

ANS- Where one or more tax invoices have been issued for supply of any goods and/or services and
(a) the taxable value/tax charged in that tax invoice is found to exceed the taxable value/tax payable in
respect of such supply, or
(b) where the goods supplied are returned by the recipient, or
(c) where goods and/or services supplied are found to be deficient,
the registered person, who has supplied such goods and/or services, may issue to the recipient one or more
credit notes for supplies made in a financial year containing prescribed particulars.

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Thus, one (consolidated) or more credit notes can be issued in respect of multiple invoices issued in a
financial year without linking the same to individual invoices.

Hence, in view of the above-mentioned provisions, M/s ABC Ltd. can issue a consolidated credit note for the
goods returned in respect of all the three invoices.

QUS.7 Royal Fashions, a registered supplier of designer outfits in Delhi, decides to exhibit its products in a Fashion
Show being organised at Hotel Park Royal, Delhi on 4th January, 2020. For the occasion, it gets the makeover
of its models done by Aura Beauty Services Ltd., Ashok Vihar, for which a consideration is Rs. 5,00,000
(excluding GST) has been charged. Aura Beauty Services Ltd. issued a duly signed tax invoice on 10th
February, 2020 showing the lumpsum amount of Rs. 5,90,000 inclusive of CGST and SGST @ 9% each.
Royal Fashions made the payment the very next day. Answer the following questions

(i) Examine whether the tax invoice has been issued within the time limit prescribed under law?

(ii) Tax consultant of Royal Fashions objected to the invoice raised suggesting that the amount of tax charged
in respect of the taxable supply should be shown separately in the invoice raised by Aura Beauty Services Ltd.

However, Aura Beauty Services Ltd. contended that there is no mandatory requirement of showing tax
component separately in the invoice. You are required to examine the validity of the objection raised by tax
consultant of Royal Fashions? (RTP May, 2018)

ANS- (i) As per section 31 of the CGST Act, 2017 read with the CGST Rules, 201.7, in case of taxable supply of
services, invoices should be issued before or after the provision of service, but within a period of 30 days [45
days in case of insurer/ banking company or financial institutions including NBFCs] from the date of supply of
service.

In view of said provisions, in the present case, the tax invoice should have been issued in the prescribed time
limit of 30 days from the date of supply of service i.e. upto 03-02-2020. However, the invoice has been issued
on 10-02-2020,

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In such a case, the time of supply as per Section 13 of the CGST Act, 2017 would be 04-01-2020 i.e. earliest of
the following:

(a)Date of provision of service (04-01-2020)(b)Date of receipt of payment (1.1-02-2020)

(ii) Section 31 of the CGST Act, 2017 read with the CGST Rules, 201.7, inter alia, provides that tax invoice shall
contain the following particulars-
(a) Total value of supply of goods or services or both;
(b) Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
(c) Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union
territory tax or cess);

The objection raised by the tax consultant of Royal Fashions suggesting that the amount of tax charged in
respect of the taxable supply should be shown separately in the invoice raised by Aura Beauty Services Ltd.,
is valid in law. In the present case, the tax amount has not been shown separately in the invoice.

QUS.8 Gemini Stationers is a trader dealing in stationery items. It is registered under GST and has undertaken
following sales during the day:

Sr.No. Recipient of supply Amount (Rs.)

(1) Atal Enterprises - a registered retail dealer 195
(2) Salil Associates - an unregistered trader 450
(3) Raman - a Painter [unregistered person] 500
(4) Kalyani Charitable Trust - an unregistered entitv 190
(5) Itishree - a Student [unregistered] 185

None of the recipients require a tax invoice [Atal Enterprises being a composition dealer].

Determine in respect of which of the above supplies, Gemini Stationers may issue a Consolidated Tax Invoice
instead of Tax invoice at the end of the day?

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ANS- In the given illustration, Gemini Stationers can issue a Consolidated Tax Invoice only with respect to supplies
made to Kalyani Charitable Trust [worth Rs. 190] and Itishree [worth Rs. 185] as the value of goods supplied
to these recipients is less than Rs. 200 as also Ihese recipients are unregistered and don't require a tax
invoice

As regards the supply made to Atal Enterprises, although the value of goods supplied to it is less than Rs.
200, Atal Enterprises is registered under GST. So, Consolidated Tax Invoice cannot be issued.
Consolidated Tax Invoice can also not be issued for supplies of goods made to Salil Associates and Raman
although both of them are unregistered. The reason for the same is that the value of goods supplied is not
less than Rs. 200.

QUS.9 An international trade exhibition is going to be held in United States of America in January. Aayaat Niryat
Export House (ANEH) has participated in it. It intends to send 100 units of taxable goods manufactured by it
to USA for display in the said exhibition

ANEH is of the view that the activity of sending the goods out of India for exhibition is a zero-rated supply.
However, its tax advisor does not concur with its view. Examine whether the view of ANEH is correct.
Assuming that ANEH could not sell any goods at the exhibition and brings back entire 100 units to India (i) in
February, (ii) in August,

Discuss the requirement to issue invoice, if any, in each of the above independent cases.
Would your answer be different if ANEH sells an aggregate of 65 units of the taxable goods in USA exhibition
on different dates in January and remaining 35 units are brought back on 31st January. The tax advisor of
ANEH advises ANEH that the export of 65 units qualify as zero-rated supply and it should apply for refund of
the unutilized ITC in respect of the same. Examine the technical veracity of the tax advisor’s advice.

ANS- No, the view of ANEH that the activity of sending the goods out of India for exhibition is a zero- rated supply,
is not correct. As per section 7 of the CGST Act, for any activity or transaction to be considered a supply, it
must satisfy twin tests namely-
(i) it should be for a consideration by a person; and
(ii) it should be in the course or furtherance of business.

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The exceptions to the above are the activities enumerated in Schedule I of the CGST Act which are treated as
supply even if made without consideration. Further, section 2(21) of the IGST Act defines “supply”, wherein it
is clearly stated that it shall have the same meaning as assigned to it in section 7 of the CGST Act.
Section 16 of the IGST Act defines “zero rated supply” as any of the following supplies of goods or services or
both, namely:–
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone
unit.

Thus, only such “supplies” which are either “export” or are “supply to SEZ unit/ developer” would qualify
as zero-rated supply.

In view of the above provisions, Circular No. 108/27/2019 GST dated 18.07.2019 clarified that the activity of
sending/ taking the goods out of India for exhibition or on consignment basis for export promotion, except
when such activity satisfy the tests laid down in Schedule I of the CGST Act, do not constitute supply as the
said activity does not fall within the scope of section 7 of the CGST Act as there is no consideration at that
point in time. Since such activity is not a supply, the same cannot be considered as “zero rated supply” as per
the provisions contained in section 16 of the IGST Act.

The said circular further clarified that the activity of sending/taking goods out of India for exhibition is in the
nature of “sale on approval basis” wherein the goods are sent/ taken outside India for the approval of the
person located abroad and it is only when the said goods are approved that the actual supply from the
exporter located in India to the importer located abroad takes place.

The activity of sending/ taking specified goods is covered under the provisions of section 31(7) of the CGST
Act, 2017 read with rule 55 of CGST Rules, 2017. As per said provisions, in case of the goods being sent or
taken on approval for sale, the invoice shall be issued before/at the time of supply or 6 months from the
date of removal, whichever is earlier. The goods which are taken for supply on approval basis can be moved
from the place of business of the registered supplier to another place within the same State or to a place
outside the State on a delivery challan.

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In view of the said provisions, ANEH is not required to issue invoice at the time of taking the goods out of
India since the activity of merely sending/ taking the taxable goods out of India is not a supply. However, the
goods shall be accompanied with a delivery challan. Further,

(I) In case the entire quantity of goods (100 units) sent to USA is not sold but brought back by ANEH in,
February i.e. within the stipulated period of 6 months from the date of removal, no tax invoice is required to
be issued as no supply has taken place in such a case.

(i) In case, the entire quantity of goods (100 units) sent to USA is not sold and brought back by ANEH in
August, i.e. after 6 months from the date of removal, a tax invoice is required to be issued for entire 100
units of taxable goods in accordance with the provisions contained in section 12 [determining time of supply
of goods] and section 31 [tax invoice] of the CGST Act, 2017 read with rule 46 [tax invoice] of the CGST Rules,
2017 within the time period stipulated under section 31(7) of the CGST Act, 2017.

However, if an aggregate of 65 units of the goods are sold in USA exhibition by ANEH on different dates in
January (i.e. within the stipulated period of 6 months), a tax invoice would be required to be issued for these
units, at the time of each of these sales, in accordance with the provisions contained in section 12 and
section 31 of the CGST Act read with rule 46 of the CGST Rules. When the goods are sold in exhibition, actual
supply from the exporter in India to the importer located abroad takes place and this supply qualifies as
export. Export of goods is a zero-rated supply in terms of section 16(1)(a) of the IGST Act, 2017.
If the remaining 35 units are brought back on 31st January, i.e. within the stipulated period of 6 months from
the date of removal, no tax invoice is required to be issued as no supply has taken place in such a case.

Further, tax advisor’s advice is technically correct. Since the activity of sending / taking specified goods out of
India is not a zero-rated supply, execution of a bond/Letter of Undertaking (LUT), as required under section
16 of the IGST Act, is not required.

However, the sender can prefer refund claim even when the specified goods were sent / taken out of India
without execution of a bond/LUT, if he is otherwise eligible for refund as per the provisions contained in
section 54(3) of the CGST Act, 2017 read with rule 89(4) of the CGST Rules, 2017 in respect of zero-rated

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supply of 65 units.

QUS.10 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 (RTP Nov 20)

ANS- 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.

QUS. 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.

QUS. The aggregate turnover of Sangri Services Ltd., Delhi exceeded Rs. 20 lakh on 12th August. He applied for

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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- 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 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.

QUS. 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 advise 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].

Therefore, in the given case, Shyam Fabrics cannot issue tax invoice. Instead, it shall issue a Bill of Supply.

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QUS. Discuss the provisions relating to issuance of refund voucher under CGST Act and rules there under.

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.

QUS. 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 there under.

ANS- A registered person who is liable to pay tax under reverse charge [under section 9(3)/9(4) of the CGST Act]
shall issue an Invoice in respect of goods or services or both received by him from the supplier who is not
registered on the date of receipt of goods or services or both. Thus, a recipient liable to pay tax by virtue of
section 9(3) has to issue invoice only when supplies have been received from an unregistered supplier.

QUS. Discuss the provisions relating to issuance of credit and debit notes under CGST Act and rules there under.

ANS- (i) Issuance of Debit Note: There can be situations when after the invoice has been issued:
• The supplier has erroneously declared a value which is less than the actual value of the goods or services or
both provided.
• The supplier has erroneously declared a lower tax rate than what is applicable for the kind of the goods or
services or both supplied.
• The quantity received by the recipient is more than what has been declared in the tax invoice.
• Any other similar reasons.
In order to regularize these kinds of situations, the supplier is allowed to issue a document called as debit
note to the recipient.

(ii) Issuance of Credit Note: During the course of trade or commerce, after the invoice has been issued, there
can be situations like:
• The supplier has erroneously declared a value which is more than the actual value of the goods or services

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provided.
• The supplier has erroneously declared a higher tax rate than what is applicable for the kind of the goods or
services or both supplied.
• The quantity received by the recipient is less than what has been declared in the tax invoice.
• The quality of the goods or services or both supplied is not to the satisfaction of the recipient thereby
necessitating a partial or total reimbursement on the invoice value
• Any other similar reasons.

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TIME OF SUPPLY

QUS.1 Royal .Sweet Co., Delhi, a registered supplier, has furnished the details of the following few transactions
which took place in November, 2019 :

S.No, Date Particulars Date of invoice Amount (Rs.)

1. 11-11-2019 Payment made to an advocate in Delhi 07-07-2019 1,25,000
2. 20-11-2019 Paid sitting fee to Director from Haryana for 15-10-2019 75,000
meeting held in Delhi on 15-10-2019
[Inter-State supply]

Assume the rates of taxes to be as under:-

Particulars Rate of Tax
Central tax (CGST) 9%
State tax (SGST) 9%
Integrated tax 18%

You are required to compute GST [CGST & SGST/IGST, as the case may be] payable for the month of
November, 2019 along with time of supply of the aforementioned activities. (RTP May, 2018)

ANS- Computation of GST payable for the month of November, 2019 :

Sr.No. Particulars Time of CGST SGST IGST Interest

supply of (Rs.) (Rs.) (Rs.) (Rs.)
services
1. Services from an advocate in Delhi(Taxed 06-09-2019 11,250 11,250 - 244
on reverse charge basis)
[WN 1 & 2] [WN-4]
2. Director's Sitting fee (Taxed on reverse 20-11-2019 - - 13,500

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charge basis)
[WN 2 & 3]

Working Notes :
(1) Services supplied by an individual advocate to any business entity located in the taxable
territory is a notified service on which tax is payable on reverse charge basis by the recipient of services.
Services supplied by a director of a company to the said company is a notified service on which tax is payable
on reverse charge basis by the recipient of services.

As per Section 13 of the CGST Act, 2017, the time of supply of services in case of reverse charge is earliest of
the following
(a) Date of payment as entered in the books of account of the recipient or the date on which the payment is
debited to his bank account, whichever is earlier, or
(b) Date immediately following 60 days since the date of issue of invoice.
Provisions of time of supply as provided under section 13 of the CGST Act are also applicable for inter-State
supply vide Section 20 of the IGST Act.

In view of the aforesaid provisions, the time of supply and due date for payment of tax in the given cases
would be determined as under:
(i) Time of supply of the services is the date immediately following 60 days since the date of issue of invoice,
i.e. 06-09-2019. The due date for payment of tax is 20-10-201.9 with return of September, 2019.
(ii) Time of supply of service is 20-11-2019 and due date for payment of tax is 20-12-2019 with return of
December, 2019.

(4) The due date for payment of tax in case (i) is 20-10-2019 with return of September, 2019. However, the
payment of tax is actually made on 11-11-2019. Thus, payment of tax is delayed by 22 days.
In case of delayed payment of tax, interest @ 18% p.a. is payable for the period for which the tax remains
unpaid starting from the day succeeding the day on which such tax was due to be paid [Section 50 of the
CGST Act, 2017 read with Notification No. 13/2017 CT dated 28-06-2017], In view of the same, in the given
case,interest payable would be as follows :
Amount of interest payable = Rs. 22,500 × 18% × 22/366 [Since leap year] = Rs. 243.44 (rounded off)

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QUS.2 Determine Time of supply of goods

Invoice date Invoice due date Payment entry Credit in

[Date of removal] in suppliers book Bank Account
1 Invoice raised 10-oct-17 20-oct-17 26-oct-17 30-oct-17
before removal
2 Advance received 30-oct-17 20-oct-17 10-oct-17 12-oct-17

ANS- 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
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

Invoice Invoice duedate Payment entry in Credit in Time of

date [Date of removal] suppliers book Bank supply
Account
1 Invoice raised before 10-oct-17 20-oct-17 26-oct-17 30-oct-17 10-oct-17
removal
2 Advance received 30-oct-17 20-oct-17 10-oct-17 12-oct-17 20-oct-17

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 advance received and the above
provision is applicable to all registered person.

QUS.3 Invoice/document Removal of Delivery of Receipt of

date goods goods payment
1 Delayed issue of invoice 26-oct-17 20-oct-17 26-oct-17 26-oct-17

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2 Inter-state stock transfer 10-oct-17 20-oct-17 26-oct-17 -

3 Advance received, invoice for full 30-oct-17 10-Nov-17 14-Nov-17

amount issued on same day (40%
advance, 60% post supply
payment)

ANS- 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
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.

Supply involves movement of Invoice Removal of Delivery of Receipt of Time of

goods Section 12(2) read with document date goods goods payment supply
Section 31(1)(a)
1. Delayed issue of invoice 26-oct-17 20-oct-17 26-oct-17 26-oct-17 20-oct-17
2 Inter-state stock transfer 10-oct-17 20-oct-17 26-oct-17 - 10-oct-17

Advance received, invoice for 30-oct-17 10-Nov-17 14-Nov-17

full amount issued on
Same day(40% advance, 60%
post supply payment)

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 advance received and the above
provision is applicable to all registered persons.

QUS.4 An order is placed on Ram & Co. on 18th august for supply of a consignment of customized 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.

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What is the time of supply of the shoes?

ANS- 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 not involved the invoice shall be issued before or at
the time of delivery of goods or making the goods available to the recipient.
In this case,
Date of invoice: 2nd December
Date of actual receipt of payment: 7th December
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 advance received and the above
provision is applicable to all registered persons. For the given case the invoice date i.e., 2nd December shall
be considered at the TOS.

QUS.5 A machine has to be supplied at site. It is done by sourcing various components from vendors and assembling
the machine at site. The details of the various events are

17th September Purchase order with advance of Rs. 50,000 is received for goods worth Rs. 12
lakh and entry duly made in the seller's book of account
20th October The machine is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
4th November Balance payment of Rs. 11,50,000 received
Determine the time of supply (ies) in the above scenario.

ANS- 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 of issue of invoice; or

Note: As per Sec. 31(1) in case of movement of goods not involved the invoice shall be issued before or at the

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time of delivery of goods or making the goods available 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.

In this case, As per N/N 66/2017 dated - CT 15/11/2017

The time of supply of goods to the extent of Rs. 50,000 is 20th October, i.e., the last date of for issue of
invoice, even though the date of payment is earlier this will not be considered as per above notification.
[Section 12(2)(a)].

The time of supply of goods to the extent of the balance amount of Rs. 11,50,000 is 20th October which is
the date on which the goods were made available to the recipient as per section 31(1)(b), and the invoice
should have been issued on this date [Section 12(2)(a)].

QUS.6 Determine the time of supply in the following cases assuming that GST is payable under reverse charge.

Date of receipt of Date of payment by recipient of goods Date of issue of invoice by

goods supplier of goods
(1) (2) (3)
(i) July 1 August 10 June 29
(ii) July 1 June 25 June 29
(iii) July 1 Part payment made on June 30 and balance June 29
amount paid on July 20
(iv) July 5 Payment is entered in the books of account on June 1
June 28 and debited in recipient's bank
account on June 30
(v) July 1 Payment is entered in the books of account on June 29
June 30 and debited in recipient's bank
account on June 26
(vi) August 1 August 10 June 29

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ANS- As per sec 12(3) tax liable to be paid on goods under reverse charge mechanism, the time of supply shall be
the earliest of the following:
a) Date of receipt of goods by the recipient; or
b) Date on which the payment is entered in the books of accounts of the recipient; or
c) Date on which payment is debited in the bank account of the recipient; or
d) Date immediately following 30 days from the date of issue of invoice or any other document, by whatever
name called, in lieu thereof by the supplier.

Date of receipt of Date of payment by Date of issue of Date immediately Time of supply
goods recipient of goods invoice by following 30 days of goods [Earlier
supplier of goods from date of Of (1), (2) & (4)]
invoice
(1) (2) (3) (4) (5)
(i) July 1 August 10 June 29 July 30 July 1
(ii) July 1 June 25 June 29 July 30 June 25
(iii) July 1 Part payment made on June 29 July 30 June 30 for part
June 30 and balance payment mad
amount paid on July 20 balance amount
e and July 1 for
balance amount
(iv) July 5 Payment is entered in June 1 July 2nd June 28 (i.e.,
the books of account on when payment
June 28 and debited in is entered in the
recipient's bank account books account
on June 30 of the recipient.
(v) July 1 Payment is entered in June 29 July 30 June 26 (i.e.,
the books of account on when payment
June 30 and debited in is debited in the
recipient’s bank account recipient's bank
on June 26 account

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(vi) August 1 August 10 June 29 July 30 July 30 (i.e., 31st

Day from
issuance of
Invoice)

QUS.7 Ms Reema purchased a gift voucher from shoppers stop (a departmental store) worth Rs. 2,500 on
30/10/2019 and gifted it to her friend on occasion of her birthday on 04/12/2019. Her friend encashed the
same on 01/01/2020 for purchase of a handbag. Determine the time of supply.

ANS- Legal provision

In terms of section 12(4) of the CGST Act, 2017, time of supply of vouchers shall be the 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 used to purchase any product.

Conclusion
Hence, time of supply is 1/1/2020

QUS.8 Determine the TOS in the following cases:

(i) Mugdha Private Limited is engaged in providing taxable services. It receives advances of Rs. 1,00,000 from
clients on 23rd June, 20xx for the service to be rendered in the month of July, 20xx.
(ii) Rohan Ltd. provided management consultancy services to M/s Bhatia & Sons on 5th June, 20xx and billed
it for Rs. 1,20,000 on 10th July, 20xx. It received the payment for the same on 14th July, 20xx.

ANS- Legal provision

As per sec 13(2)(a) of CGST Act, if the invoice is The date of issue of invoice by the supplier,

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issued within the period prescribed under sec Or the date of receipt of payment, whichever
31(2) of CGST act. is earlier

Conclusion: Hence, in the above case the time of supply will be on 23rd June, 20xx. Also as per sec 31(3)(d) a
receipt voucher will be issued on the receipt of advance payment.

(ii) Legal provision

As per sec 13(2)(b) of CGST Act, if the invoice is The date of provision of service, or the date
not issued within the period prescribed under sec of receipt of payment, whichever is earlier
31(2)
In the above case the invoice is not issued within 30 days. Thus, as per the above stated section time of
supply will be the dater of provision of service or date or receipt of payment whichever is earlier.

Conclusion
Provision of services: 5th June, 20XX Invoice : 10th July, 20XX
Receipt of payment: 14th July, 20XX
Hence, time of supply is 5th June, 20XX

QUS.9 Determine the TOS and due date of e-payment of tax in each of following independent cases:

Sr.No. Date of completion of service Date of invoice Date on which payment received
1 10.04.2019 05.05.2019 20.05.2019
2 10.04.2019 05.05.2019 25.04.2019
3 10.04.2019 05.05.2019 25.04.2019 (part) and 20.05.2019
(remaining)
4 10.04.2019 05.05.2019 06.04.2019 (part) and 09.04.2019
(remaining)
5 10.04.2019 16.05.2019 05.04.2019 (part) and 14.05.2019
(remaining)

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ANS- Sr.No. Date of Date of Date on which Section Time of Supply

completion of invoice payment if Applicability
service received
1 10.04.2019 05.05.2019 20.05.2019 Section 13(2)(a) isapplicable. 05.05.2019
Date of invoice or date of
receipt of payment
whichever is earlier
2 10.04.2019 05.05.2019 25.04.2019 Section 13(2)(a) is applicable 25.04.2019
Date of invoice or date of
receipt of payment
whichever is earlier.
3 10.04.2019 05.05.2019 25.04.2019 Section 13(2)(a) is applicable. 25.04.2019
(part) and Date of invoice or date of (part) and
25.05.2019 receipt of payment whichever 05.05.2019
(remaining) is earlier. (remaining)
4 10.04.2019 05.05.2019 06.04.2019 Section 13(2)(a) isapplicable. 06.04.2019
(part) and Date of invoice or date of (part) and
14.04.2019 receipt of payment hichever 09.04.2019
(remaining) is earlier. (remaining)
5 10.04.2019 16.05.2019 05.04.2019 Section 13(2)(b) isapplicable. 05.04.2019
(part) and Date of provision of service or (part) and
14.04.2019 date of receipt of payment 10.04.2019
(remaining) whichever is earlier (remaining)

QUS.10 Determine the time of supply in the following cases assuming that GST is payable under reverse charge.

Sr.No Date of payment by recipient for supply of services Date of issue of invoice by
supplier of services
(i) August 10 June 29
(ii) August 10 June 1
(iii) Part payment made on June 30 and balance amount paid on June 29

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September 1
(iv) Payment is entered in the books of account on June 28 and June 1
debited in recipient's bank account on June 30
(v) Payment is entered in the books of account on June 30 and June 29
debited in recipient's bank account on June 26

ANS- Sr.No Date of payment by recipient for supply of Date of issue Date immediately Time of supply of
services of invoice by following 60 days service earlier of (1)
supplier of from invoice & (3)
services
(1) (2) (3) (4)
(i) August 10 June 29 August 29 August 10
(ii) August 10 June 1 August 1 August 1
(iii) Part payment made on June 30 and June 29 August 29 June30 for part
balance amount paid on September 1 payment and
August 29 for
balance amount
(iv) Payment is entered in thebooks of June 1 August 1 June 28 (i.e. when
account on June 28 and debited in payment is entered
recipient's bank account on June 30 in the books of
account of the
recipient)
(v) Payment is entered in thebooks of June 29 August 29 June 26 (i.e. when
account on June 30 and debited in payment is debited
recipient's bank account on June 26 in the recipient's
bank account)

QUS.11 Sr. No Issue of vouchers section 13(4) First Service / Issue of Redemption Last date for Time of
[or section 12(4)] delivery of vouchers of vouchers acceptance supply

Goods of voucher
1 Voucher issued to a recipient 01-Nov 01-Nov 14-Dec 31st oct 01-Nov

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after supply of a service [or

specific oods], for the same
service-
2 Voucher issued to a recipient of 01-Nov 01-Nov 14-Dec 31-Oct 01-Nov
machinery along at the time of
delivery, for availing repair
service [or specific goods] worth
Rs.5,000 - valid for 1 year
3. Voucher issued to a recipient 01-Nov 01-Nov 14-Dec 31-Oct 14-Dec
after supply of a service, for any
other services or goods across
India, -valid for 1 year
4. Gift voucher for Rs. 1,500 for - 01-Nov 25-Dec 31-March 25-Dec
services [or goods] -valid for 6
months

QUS.12 ABC & Co., A CMA firm, provided audit service that got completed on 15-05-2019. Its invoice was issued on
15-06-2019 and payment was made on 25.05.2019. The rate of GST was 12% till 31.05.2019 but
changed after that to 18%. Determine the TOS with respect to the GST so applicable.

ANS- Legal provision

The above case falls within the purview of section 14(a)(iii) of CGST Act

Discussion
In the above case the services have been supplied before CERT. As per the above stated section where the
payment has been received before the change in rate of tax, but the invoice for the same is issued after the
change in rate of tax, the time of supply shall by the date of receipt of payment.

Conclusion
Date of completion of service: 15/05/2019
Date of invoice: 15/06/2019

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Date of receipt of payment: 25/05/2019

CRT from 12% to 18%: 01/06/2019
Time of supply shall be the date of receipt of payment which is 25/05/2018 and the rate applicable will be
12%.

QUS.13 TOS when date of provision of service is not ascertainable: Swacchta & Co. is engaged in supply of cleaning
services in residential premises. investigation shows that Swacchta & Co. carried out service of cleaning and
repairs of tanks in Kamal Housing society, for which the Kamal Housing society showed a payment in cash on
25-12-2019 to them against work of this description. The dates of the work are not clear from the records of
Swacchta & Co. Swacchta & Co. have not issued invoice or entered the payment in their books of account.

ANS- The time of supply cannot be determined vide the provisions of Section 13(2)(a)/(b) 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 not available.

Therefore, the time of supply will be determined vide Section 13(2)(c) i.e., the date on which the recipient of
service shows receipt of the service in his books of account. Thus, time of supply will be 25-12-2019, the date
on which the Apartment Owners’ Association records the receipt of service in its books of account.

QUS.14 TOS in case of RCM — Services: Golden Industries Ltd engaged the services of Sandhu transporter for road
transport of a consignment on 25-12-2019 and made advance payment for the transport on the same date,
i.e.,25-12-2019. However, the consignment could not be sent immediately on account of a strike in the
factory, and instead was sent on 20-01-2020. Invoice was received from the transporter on 22-01-2020.
What is the time of supply of the transporter’s service?

ANS- Time of supply of service taxable under reverse charge is the earlier of the following two dates in terms of
section 13(3): Date of payment 61 day from the date of issue of invoice In this case, the date of payment
precedes 61 day from the date of issue of invoice by the supplier of service. Hence, the date of payment, i.e.
25-12-2017, will be treated as the time of supply of service.

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QUS.15 TOS in case of RCM — Services: Rajesh of Assam received some taxable services from Loreal Enterprises of
UK on 1-12-2019 for which an invoice was raised on 1-12-2019. Determine the time of supply of services if
Rajesh makes the payment for the said services on:
Case l: 01-01-2020
Case II: 05-03-2019

ANS- According to Section 13(3) of CGST Act, 2017, the time of supply in respect of persons who are required to
pay tax as recipients of service under the Reverse Charge Mechanism shall be the date of payment or the
date immediately following 60 days from the date of issue of invoice by the supplier, whichever is earlier.

Case I: Since the payment has been made within 60 days from the date of invoice, time of supply shall be the
date of payment i.e. 01-01-2018.

Case II: Since the payment is not made within a period of 60 days of the date of invoice, the time of supply
shall be the date immediately following the said period of 60 days i.e. 31-01-2018.

QUS,16 TOS in case of Associated Enterprises: Apte & Apte Ltd. is located in India arid holding 51% of shares of
Wilson Ltd., a USA based company. Wilson Ltd. provides Business Auxiliary Services to Apte & Apte Ltd.
From the following details, determine the time of supply of Apte & Apte Ltd.

Agreed consideration US $ 1,00,000

Date on which services are provided by Wilson Ltd. 16-12 -2019
Date on which invoice is sent by Wilson Ltd. 19-12-2019
Date of debit in the books of account of Apte & Apte Ltd. 30-12-2019
Date on which payment is made by Apte & Apte Ltd. 23-03-2020

ANS- Apte & Apte Ltd. of India and Wilson Ltd. of US are associated enterprises’ as per Section 92A of Income Tax
Act, 1961, since Indian Company holds 51% shareholding of US based company. As per Section 13(3) of CGST,
Act, 2017, in case of supply by associated enterprises, where the supplier of service is located outside India,
the time of supply shall be—

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(a) the date of entry in the books of account of the recipient of supply; or
(b) the date of payment, whichever is earlier
Therefore, the time of supply shall be 30-12-2019.

QUS. TOS of services in residuary cases: An income-tax search was carried out at residential premises of Mr. X,
working in a multinational company. In course of search large volume of undisclosed assets were found,
which he claims as service income. On this basis, the GST authorities investigate the GST liability. Dates of
provision of service, whether in the first half or the second half of the financial year being scrutinized by
income- tax authorities, are not known. Mr. X voluntarily pays GST during the investigation. What is the time
of supply of the services?

ANS- As per provisions of Section 13(5)(b) of the CGST Act, 2017, where it is not possible to determine the time of
supply in terms of date of invoice or date of provision of service or date of receipt of payment or date of
receipt of services in the books of account of the recipient, and where periodical return is not to be filed (Mr.
X, being an employee in a multinational company, is not a registered person), the date of payment of tax is
taken as the time of supply. Therefore, the date when Mr. X pays the GST will be the time of supply.

QUS.18 TOS in case of change in rate of tax: Determine the time of supply in the following cases. The rate of CGST
has been increased to 12% w.e.f. 01-10-2019, Before the said date, the rate of tax was 5%.

Sr.N. Date of supply of service Date of Invoice Date of Payment Value of service (Rs.)
1. 25-09-2019 05-10-2019 08-10-2019 20,00,000
2. 25-09-2019 25-09-2019 08-10-2019 10,00,000
3. 25-09-2019 08-10-2019 30-09-2019 15,00,000
4. 04-10-2019 28-09-2019 30-09-2019 20,00,000
5. 04-10-2019 04-10-2019 30-09-2019 10,00,000
6. 04-10-2019 30-09-2019 08-10-2019 15,00,000

ANS- The time of supply shall be determined as under -

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Sr.No. Value of service Reason/Remarks Time of Rateof tax GST

(Rs.) Supply (Rs.)
1. 20,00,000  Service is supplied before chang in 05-10-2019 12% 2,40,000
rate of tax,
invoice issued after change in rate of tax,
the payment has been received after
change in rate of tax,
TOS shall be earlier of date of issue of
invoice or date of receipt payment.
2. 10,00,000  Service is supplied before change in 25-09-2019 5% 50,000
rate of tax,
invoice issued prior to such change in
rate of tax,
the payment is received after change in
rate of tax,
TOS shall be date of issue of invoice

3. 15,00,000  Service is supplied before change in 30-09-2019 5% 75,000

rate of tax,
the payment is received before change in
rate of tax,
invoice issued after change in rate of tax,
TOS shall be date of receipt of payment.
4. 20,00,000  Service is supplied after change in 28-09-2019 5% 1,00,000
rate of tax,
invoice is issued before change in rate of
tax,
the payment is received before change in
rate of tax,
TOS shall be earlier of date of issue of
invoice or date of receipt of payment.

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5. 10,00,000  Service is supplied after change in 04-10-2019 12% 1,20,000

rate of tax,
invoice is issued after change in rate of
tax,
the payment is received before change in
rate of tax,
TOS shall be the date of issue of invoice.
6. 15,00,000  Service is supplied after change in 08-10-2019 12% 1,80,000
rate of tax,
the payment is received after change in
rate of tax,
invoice is issued before change in rate of
tax,
TOS shall be date of receipt of payment.
Total CGST 7,65,000

QUS.19 Date of payment in case of change in rate of tax and its implications: A service provider supplied service on
01-12-2019 for a value of 25,00,000. He issued invoice for the same on 30-11-2019 and received payment by
an account payee cheque on 30-11-2019 and the. same was entered in the books on the same date 30-11-
2019. The cheque was deposited in bank on 04-12-2019 and the same was credited in his bank account on 09-
12-2019.

The said service was taxable @ 5% prior to 01-12-2019. The rate of CGST has been increased to 12% w.e.f. 01-
12-2019. On 03-12-2019, there was a public holiday Discuss his CGST liability.

ANS- In case of change in rate of tax, the “date of receipt of payment” shall be 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 shall be the date of credit in the bank
account if such credit in the bank account is after four working days from the date of change in the rate of
tax.

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In this cases, since the payment is credited in bank account after 4 working days from the date of change in
rate of tax hence, the date of receipt of payment shall be 09-12-2019 and not the date when the same is
entered in books of accounts.

In this case since services have been supplied after the change in rate of tax and the payment is received after
the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply
shall be the date of receipt of payment.

Hence, applicable rate of tax shall be 12%. Amount of CGST payable = Rs. 25,00,000 x 12% = Rs. 300000.

QUS.20 TOS in case of change in rate of tax:

Mr. X buys a motor car from a car dealer. Mr. X has made payment for the same and car dealer has issued an
invoice in respect of the same on 25th October 2019. The car was to be delivered on 1” November 2019 on
occasion of his birthday. On 26th October 2019, the rate of tax applicable to motor car was revised upward,
and the car dealer is demanding differential amount of tax. Is this correct on dealers part?

ANS- No the car dealer is not correct in demanding differential amount 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.

QUS.21 Chiku Traders is a registered supplier of plastic goods. On 10th April, 2019, 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, 2019.
consignment was issued the next day, 15th April, 2019. Neelu Traders collects the consignment from the
godown of Chiku Traders on 25th April, 2019 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, 2019 and amount is
credited intheir bank account on 27th April, 2019.

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Determine the time of supply of the plastic goods supplied by Chiku Traders to Neelu Traders as per the
provisions of CGSTAct,2017.

ANS- 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) 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
section31(1).

As per section 31, the invoice in case of supply of goods needs to be issued either before or at the time of
removal/delivery ofgoods. 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,2019*.

QUS.22 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
10-08-2019 and payment received was entered in the books of Mr. Mahendra Sharma on11-08-2019.
With effect from 16/08/2019, applicable GST rate was increased from 5% to 12%. However payment for the
service received was credited in his bank account on 17/08/2019 and invoice for the same was raised on23-
08-2019.

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 14-08-2019 instead of17-08-2019?
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

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Earlier of:
(i) dateofenteringpaymentinthebooksofaccountofthesupplier(11.08.2019) or
(ii)date on which the payment is credited to his bank account(17.08.2019).

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 11.08.2019 [i.e., earlier of 11.08.2019
or17.08.2019].

Section 14 further provides that where goods and/or services have been supplied before the change in rate of
tax (10.08.2019) and the payment has been received before the change in rate of tax (11.08.2019), but the
invoice for the same is issued after the change in rate of tax (23.08.2019), the time of supply shall be the date
of receipt of payment.

Therefore, in the given case, the time of supply will be 11.08.2019 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 14.08.2019, the date of
receipt of payment will continue to be 11.08.2019 [i.e., earlier of 11.08.2019 or 14.08.2019] 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.

QUS.23 Determine the time of supply from the following particulars:

8th September Community hall booked for a marriage, sum agreed` 1,20,000, advance ` 20,000
recorded in the books of account
10th September Advance amount credited in bank account.
2nd November Marriage held in the Community hall.

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18th December Invoice issued for ` 1,20,000 indicating the balanceof 1,00,000 payable
22nd December Balance ` 1,00,000 recorded in the books of account.
24th December Payment ` 1,00,000 credited to the bank account

ANS- As per section 31(2) of the CGST Act, 2017 read with rule 47 of CGST Rules, 2017 a 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) of CGST Act, 2017, in a case where the invoice is not issued within the prescribed time,
the time of supply of service is–
(i) date of provision of service or
(ii) date of recording the payment in the books of account of the supplier or
(iii) date of crediting of payment in the supplier’s bank account
Which ever is earlier.

Therefore, the time of supply of service to the extent of advance of ` 20,000 is 8th September (date of
recording the payment in the books of account) as it is earlier than the date of crediting of payment in the
bank account and the date of provision of service.
The time of supply of service to the extent of the balance ` 1,00,000 is 2nd November, which is the date of
provision of service as it is earlier than the other two events in this case.

QUS.24 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. Is this correct on store’s part?

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.

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QUS.25 Mehra Sons, a registered supplier, is a wholesale supplier of ready-made garments located in Bandra,
Mumbai. On 5thSeptember, 2020, Subhadra, owner of Aura Boulique located in Dadar, Mumbai, approached
Mehra Sons for supply of a consignment of customised dresses for ladies and kids.
Mehra Sons gets the consignment ready by 2nd December, 2020 and informs Subhadra about the same. The
invoice for the consignment was issued the next day, 3rd December, 2020.

Due to some reasons, Subhadra could not collect the consignment immediately. So, she collects the
consignment from the premises of Mehra Sons on 18th December, 2020 and hands over the cheque for
payment on the same date. The said payment is entered in the accounts on 20th December, 2020 and
amount is credited in the bank account on 21st December, 2020,

You are required to determine the time of supply of the readymade garments supplied by Mehra Sons to
Subhadra elaborating the relevant provisions under the GST law. (MTP, May 2018)

ANS- Time of supply of goods is the earlier of the following two dates :
Date of issue of invoice/last date on which the invoice is required to be issued
Date of receipt of payment.
Further, date of receipt of payment is earlier of date of recording the payment in books of account and date
of crediting of payment in bank account [Section 12(2) of the CGST Act, 2017],

However vide Notification No. 66/2017 dated 15-11-2017, exemption to all taxpayers from payment of rax on
advances received in case of supply of goods. Tax on 'supply of goods' is to be paid on 'invoice basis' and
receipt basis is not applicable.
In the given case,—
Date of invoice: 3rd December, 2020
Date of recording payment in books of account: 20th December, 2020
Date of crediting in the bank account: 215’ December, 2.020

Therefore, the date of receipt of payment will be 20th December, 2020 (earlier of two dates namely, date of
recording the payment in books of account and date of crediting of payment in bank account). The time of
supply shall be 3-12-2020 i.e. date of issuance of invoice irrespective of the date of receipt of payment.

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QUS.26 Raghu & Co. received advance of Rs. 1,18,000 from a client on 30-07-2019, for supplying advertising services
in the month of August, 2019. However, due to some unavoidable reasons, said services could not be
provided and the advance money (including GST) was returned to the client on 12-09-2019.

ANS- The time of supply will be -

As per Section 13(2) of CGST Act, 2017, advances received are taxable at the time of their receipt itself. Thus,
the time of supply of Ihe advance received by Raghu & Co. from the client is 30-07- 2019. It is immaterial that
services have not been provided subsequently and the money was returned on 12-09-2019.

Further, the amount of GST included in the amount refunded (Rs. 18,000) in the next month i.e. September,
2019 would be adjusted against GST liability of subsequent periods.

QUS.27 Surbhi Limited entered into a contract with Meena Limited for construction of a new’ building to be used
primarily for the purpose of commerce or industry for a total consideration of Rs. 500 lakh on 1st October,
2019. The initial booking amount of Rs. 100 lakh was billed and received on the date of contract itself. It was
further agreed that Rs. 170 lakh, Rs. 140 lakh, Rs. 90 lakh respectively would be received on completion of
50%, 75% and 100% of the construction work of the building. Determine the time of supply in respect of each
of following stages of completion with the help of relevant details furnished as under

Stage % of completion ofthe Date of completion Date of issuance of Date of payment of

building invoice stipulated amount
I 50% November 20, 2019 November 30, 2019 January 25, 2020
II 75% December 30, 2019 February 25, 2020 January 30, 2020
III 100% February 25, 2020 March 03, 2020 February 24, 2020

A certificate from Chartered Engineer registered with Institution of Engineers has been obtained for each
stage of completion of the building. Give brief reasons for your answer.

ANS- The above service falls within continuous supply of service as per Section 2(33) of CGST Act, 2017. In case of
continuous supply of service,the date of issuance of invoice would be computed according to Section 31 (5) of

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CGST Act, 2017. As per the provisions, where payment is linked to the completion of an event the invoice
shall be issued on or before the date of completion of that event. The time of supply will be determined
accordingly in terms of provisions of Section 13(2) of CGST Act, 2017.

Therefore, in the given case, the date of completion of various stages of construction which require payment
to be made (including initial booking) - will be considered as dates of completion of service and time of supply
will be determined in accordance with Section 13(2) as under:

Stage of Deemed date of Time of Reason/Remarks

Completion completion of provision Supply
of service
Initial 01-10-2019 01-10-2019 01 -10-2019 as the date of completion of
booking service,date of issuance of invoice and date of
payment are the same.
50% 20-11-2019 20-11-2019 Since invoice has been not been issued on or
before the date of completion of event and
payment is also received after that date, TOS is
date of completion of event.
75% 30-12-2019 30-12-2019 Since invoice has not been issued on or before
the completion of event as per contract and
payment is also received after that date, TOS is
date of completion of event.
100% 25-02-2020 24-02-2020 Since payment has been received prior to
completion of event.

QUS.28 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, September5, Payments of ` 2 lakh made in each month

October 6

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October 3 Statement of accounts issued by supplier, with invoice forthe quarter July –
September
October 17 Differential payment of ` 56,000 received by supplier forthe quarter July –
September as per statement of accounts

ANS- 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.
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.

Thus, the time of supply for the purpose of payment of tax will be August 5, September 5 and October 6
respectively for goods valued at ` 2 lakh each. For goods valued at ` 56,000, the time of supply fo
October 3, the date of issuance of invoice.

QUS.29 Mr. X a registered supplier supplied certain goods to Mr. Y 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 01-12-2019 and invoice raise was Rs. 20,000. Mr. Y does not make the payment on the due date due to
unavoidable reasons. He however made the payment of the invoice value on 01-06-2020. Mr. X raised a debit
note for the penalty amount.There being dispute on this, the matter was in arbitration which was finally
resolved with Mr. Y agreeing to pay half of the penalty amount. The amount was paid by Mr. Y on
12/12/2020.
Determine the time of supply.

ANS- Legal provision

The above case falls within the purview of section 12(6) of CGST Act

Discussion
As per the above stated section time of supply to the extent it related to an addition in the value of supply by

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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.

Conclusion
For the amount received as penalty the time of supply shall be 12/12/2020.

QUS.30 Determine the time of supply from the given information.

May 4 Supplier invoices goods taxable on reverse charge basis to Bridge& Co. (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- Here, may 12th , 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)].

QUS.32 Radha Traders sold goods to Shyam Sales on 6th June with a condition that interest @ 2% per month will be
charged if Shyam Sales failed to make payment within 15 days of the delivery of the goods. Goods were
delivered as also the invoice was issued on 6th June. Shyam Sales paid the consideration for the goods on 6th
July along with applicable interest.
Time of supply for the goods sold is the date of issue of invoice i.e., 6th June and the
time of supply for addition in value by way of interest is the date when such addition in value is received by
Radha Traders i.e., 6th July.

QUS.33 Determine the time of supply from the given information.

A telephone company receives ` 5000 against an invoice of ` 4800. The excess amount of ` 200 can be
adjusted against the next invoice.
The company has the option to take the date of the next invoice as the time of supply of service in relation to
the amount of ` 200 received in excess against the earlier invoice

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QUS.34 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- Time of supply of service taxable under reverse charge is the earlier of the following two dates in terms of
section 13(3):
• Date of payment
• 61st day from the date of issue of invoice

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, i.e. 17th June, will be treated as the time of supply of service [Section 13(3)(a)].

QUS.35 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- 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):
Date of provision of service
Date of receipt of payment
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.

QUS.36 Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2nd August but no invoice was
raised and the transaction (dispatch of cartons) was not entered in the accounts. There was no evidence of
receipt of payment.

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What is the time of supply of 150 cartons for the purpose of payment of tax?

ANS- In this case since the invoice has not been issued, the time of supply for the purpose of payment of tax will be
the last date on which the invoice is required to be issued.
The invoice for supply of goods must be issued on or before the dispatch of goods, i.e. on 2nd August.

Therefore, the time of supply for the purpose of payment of tax for the goods will be 2nd August, the date
when the invoice should have been issued.

QUS.37 An order is placed on Ram & Co. on 18th August for supply of a consignment of customized 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- 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.

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, the time of supply for the purpose of payment of tax is the date of issue of
invoice, which is 2nd December.

QUS.38 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?

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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 in terms of section 12(4).

QUS.39 A firm of lawyers issues invoice for services to ABC Ltd. on 17th 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- Time of supply of services that are taxable under reverse charge is earliest of the following two dates in terms
of section 13(3):
• Date of payment *3rd November+
• 61st day from the date of issue of invoice *19th April+
The date of payment comes subsequent to the 61st day from the issue of invoice by the supplier of service.
Therefore, the 61st day from the date of supplier’s invoice has to be taken as the time of supply. This fixes
19th April as the time of supply.

QUS.40 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- 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)]. In this case, the service is provided on 5th
September but not invoiced within the prescribed time limit. Therefore, 5th September, the date of provision
of service, being earlier than the date of payment, will be the time of supply.

QUS.41 An online portal, Best Info, raises invoice for database access on 21st 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

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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 from 3rd March. In the meanwhile, the rate of tax is
changed from 1st March 2017.
What is 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 (21st February) or date of receipt of payment (28th 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)].

QUS Tyan Industries Ltd. has entered into a contract with Vyan Ltd. to supply gas by a pipeline toVyan Ltd. for a
period of one year. As per the terms of the contract-
(i) Vyan Ltd. shall make monthly payments [Payment for a month shall be made by 7 th day ofthe next month]
(ii) Every quarter, Tyan Industries Ltd. shall issue a statement of account showing the quantityand value of
goods dispatched, payments received and payment due.
(iii) The differential amount, if any, as mentioned in the statement of account shall be paid byVyan Ltd.
The details of the various events are:

August 5, September 5, October 6 Payments of Rs. 2 lakh made in each month for the quarter July-
September
October 3 Statement of accounts for the quarter July –September issued by the
supplier showing amount of Rs. 2,56,000 as unpaid
October 17 Balance payment of Rs. 56,000 received by supplier for the quarter July –
September
Determine the time of supply of goods for the purpose of payment of tax.

ANS- 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) 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 of the CGST Act, 2017. Asper section 31(4) of the CGST Act, 2017, in case of continuous
supply of goods, where successive statements of accounts or successive payments are involved, the invoice is

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issued before or at the time of each such statement is issued or, as the case may be, each such payment is
received.

Therefore, invoices should be issued for Rs. 2 lakh each on or before August 5, and September5, when
monthly payments of Rs. 2 lakh are received. Further, invoice should also be issued for differential payment of
Rs. 2,56,000 on or before October 3, when statement of account is issued Thus, assuming that the invoice is
issued on August 5, September 5 and October 3, the time of supply for the purpose of payment of tax will be
August 5 and September 5 res pectively for goods valued at Rs. 2 lakh each and October 3 for the goods
valued at Rs. 2,56,000

QUS- 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

ANS- (ii) 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

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Dhruv & Co., i.e. 18 th August.

QUS. Kanchenjunga Pvt. Ltd. supplies taxable goods to Sutlej Pvt. Ltd. for ` 2,50,000 on 23rd June and issues the
invoice on 25th June. Payment for the goods is made by Sutlej Pvt. Ltd. on 15th July.
Determine the time of supply 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 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 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.

QUS. 1. Trust Industries Ltd. has entered into a contract with VST Ltd. to supply gas by a pipeline to VST Ltd. for a
period of one year. As per the terms of the contract-
(i) VST Ltd. shall make monthly payments [Payment for a month shall be made by 7th day of the next month]
(ii) Every quarter, Trust Industries Ltd. shall issue a statement of account showing the quantity and value of
goods dispatched, payments received and payment due.
(iii) The differential amount, if any, as mentioned in the statement of account shall be paid by VST Ltd.
The details of the various events are:

August 5,September 5, Payments of ` 2 lakh made in each month for the quarterJuly-September
October 6
October 3 Statement of accounts for the quarter July – September issuedby the supplier
showing amount of ` 2,56,000 as unpaid
October 17 Balance payment of ` 56,000 received by supplier for thequarter July –
September
Determine the time of supply of goods for the purpose of payment of tax.

ANS- 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. As per

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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, invoices should be issued for ` 2 lakh each on or before August 5, and September 5, when monthly
payments of ` 2 lakh are received. Further, invoice should also be issued for differential payment of ` 2,56,000
on or before October 3, when statement of account is issued

Thus, assuming that the invoice is issued on August 5, September 5 and October 3, the time of supply for the
purpose of payment of tax will be August 5 and September 5 respectively for goods valued at ` 2 lakh each
and October 3 for the goods valued at ` 2,56,000.

QUS. Mint Industries Ltd., a registered supplier, imports business support services from Green Inc. of USA on
13th August. The relevant invoice for $ 1,20,000 is raised by Green Inc on 18th August. Mint Industries Ltd.
makes the payment against the said invoice as follows:

75% Case I 22nd September

100% Case II 27th December
Determine time of supply in each of the aforesaid cases.

ANS- 1. In case of services supplied by any person located in a non-taxable territory

to any person other than non-taxable online recipient, tax is payable under reverse charge by the person
located in the taxable territory. [Notification No. 10/2017 IT (R) dated 28.06.2017]. Hence, in the given case,
since the business support services are provided by Green Inc (located in non-taxable territory) to Mint Ltd.
(person other than non-taxable online recipient and located in taxable territory), tax is payable under reverse
charge by Mint Ltd.

The time of supply of services taxable under reverse charge is the earlier of the following:
Date of payment, or
Date immediately following 60 days since issue of invoice (or any other document in lieu of invoice) by the
supplier.

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If it is not possible to determine the time of supply by using these parameters, then the time of supply will be
the date of entry of the service in the books of account of the recipient of supply.
In view of the aforesaid provisions, the time of supply in each of the given cases will be as under:

CASE Time of supply

CASE I Since Mint Ltd makes the payment within 60 days of the date ofissueof invoice, the time of
supply is the date of payment, i.e. 22nd September.
CASE II As Mint Ltd. makes the payment after 60 days from the date of invoice, time of supply is the
date immediately following the said

QUS. 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 followingdetails, 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 ofsupply [which is 30th September
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.

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QUS. Basis the following information, determine the time of supply:

Event Date
Commencement of provision of service 05th June
Completion of service 10th October
Invoice issued 20th October
Payment received by cheque and entered in thebooks 15th October
Amount credited in Bank account 18th October
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 paymentin 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.

QUS. 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:

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Event Printing of books Printing

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. However, Notification No. 66/2017
CT dated 15.11.2017 specifies that 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.

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

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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.

QUS. 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:

Sr. No. Date Event

(I) 10TH February Payment of ` 1,00,000 made by buyer for supplyof ‘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 supplyof ‘B’ to be delivered in the
month of March
(IV) 20 TH 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

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(viiI) 10 TH March Receipt of product ‘B’ *as mentioned in point (vii) above+ by the buyer
(ix) 23 TH March Invoice for ` 2,00,000 issued for supply of ‘A’
(x) 4 TH March Invoice for ` 4,00,000 issued for supply of ‘B’
(xi) 11TH March Payment made by the buyer of ‘A’
(xii) 25 TH March Payment [as mentioned in point (xi) above] received
(xiii) 1th 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- 1. 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. However, Notification No.
66/2017 CT dated 15.11.2017 specifies that 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.

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 receiptof 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, dateof receipt of goods (23rd March), date of
payment (1st April) and date immediately following 30 days of issuance of invoice (11th April).

QUS.3 (a) SRK Limited, registered under GST, is engaged in sale of fabrics as well as doing job work of knitting of yarn
for garment manufacturers. The company provides the following information in respect of order received
for both sale of fabrics and job work:

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Event Supply of fabrics Job work of knitting

Date of confirmation of order 01-08-2020 10-09-2020
Date of receipt of advance of ` 1,00,000 each 05-08-2020 12-09-2020
Date of removal of goods on completion of order 10-08-2020 15-09-2020
Date of issue of invoice for full amount 15-08-2020 20-09-2020
Date of receipt of balance payment of ` 50,000 25-08-2020 25-09-2020
each

Determine the time of supply for the purpose of payment of tax under CGST Act, 2017, in respect of the
above orders executed by the company. (5 Marks)

ANS- Time of supply in case of supply of fabric:

Supply of fabric is supply of goods. The time of supply of goods for the purpose of payment of tax is the date
of issue of invoice or the last date when the invoice ought to have been issued viz. before/at the time of
removal of goods for supply to the recipient, where supply involves movement of goods. Thus, the time of
supply for advance of ` 1,00,000 as well as for the balance payment of ` 50,000 received for the supply
of fabric is 10.08.2020.

Time of supply in case of job work:

Job work is treated as supply of services. The time of supply of services in case where the invoice is issued
within 30 days of provision of service is the earlier of date of invoice or date of receipt of payment (to the
extent the invoice or payment covers the supply of services).

Thus, the time of supply for advance of ` 1,00,000 received for the supply of job work services is 12.09.2020
and for balance payment of ` 50,000 is 20.09.2020.

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INPUT TAX CREDIT

QUS.1 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.

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In the given case, Shah & Constructions 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.

QUS.2 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:

Sr.No. Particulars Price (`) GST (`)

(a) Machinery ‘U’ purchased on 01.10.20XX for being used in manufacturing all the 2,00,000 36,000
three products
(b) Machinery ‘V’ purchased on 01.10.20XX for being used in manufacturing product 1,00,000 18,000
‘Alpha’ and ‘Gama’
(c) Machinery ‘W’ purchased on 01.10.20XX for being exclusively used in manufacturing 3,00,000 54,000
product ‘Beta’
(d) Machinery ‘X’ purchased on October 1, three years before 01.10.20XX for being 5,00,000 90,000
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 before 01.10.20XX for being 4,00,000 72,000
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 before 01.10.20XX for being used 3,00,000 54,000

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in manufacturing all the three products

(g) Raw Material used for manufacturing ‘Alpha’ 1,50,000 27,000
(h) Raw Material used for manufacturing ‘Beta’ purchased on 10.10.20XX 2,00,000 36,000
(i) Raw Material used for manufacturing ‘Gama’ purchased on 15.10.20XX 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.

Sr. 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, 20XX 1,89,000
(ii) Computation of common credit for the month of October, 20XX
(a) Value of ‘A’ for Machinery ‘U’ purchased on 36,000

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(b) Value of ‘A’ for Machinery ‘X’ purchased 3 years before 90,000
01.10.20XX and used for effecting both taxable and exempt supplies from 01.10.20XX
(c) Value of ‘A’ for Machinery ‘Z’ purchased 2 years before 01.10.20XX for effecting both 54,000
taxable and exempt supplies
(d) Value of ‘A’ for Machinery ‘Y’ purchased 4 years before 01.10.20XX and used for effecting 72,000
both taxable and exempt supplies from 01.10.20XX [Note 8]
(iii) Total common credit for the month of October, 20XX – Tc [Note 9] 2,52,000
(a) Computation of common credit attributable to exempt supplies, for the month of
October, 20XX
ITC attributable to a month on common capital goods during their useful life – Tm 4,200
[Note 10]
(b) Common credit attributable to exempt supplies,for the month of October 20XX – Te=Tr х 1,680
Turnover of exempt supplies during October 20XX /Total turnover of XYZ Pvt. Ltd.
During October 20XX = 4,200 х 10,00,000 / 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
Common credit attributable to exempt supplies for the month of October, 20XX [Note 11] 1,680

54,000
Ineligible credit in respect of machinery “X”
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

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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) Where any capital goods earlier used exclusively for effecting exempt supplies is subsequently also used
for effecting taxable supplies, entire input tax paid shall be credited to e credit ledger & ineligible credit
calculated @ 5% per quarter or part thereof shall be debited to e liability ledger [Proviso to rule 43(1)(c) of
the CGST Rules, 2017].

Thus, ‘A’ shall be computed as under- = 90,000

Ineligible credit to be added to output tax liability = 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.

(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) Where any capital goods earlier used exclusively for effecting taxable supplies is subsequently also used
for effecting exempt supplies, the value of ‘A’ shall be the entire input tax paid on such capital goods & no
amount shall be credited to e credit ledger as entire ITC has already been availed earlier
[Proviso to rule 43(1)(d) of the CGST Rules, 2017].
Thus, ‘A’ shall be computed as under- = 72,000

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(9) 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].

(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

= 2,52,000 ÷ 60
= 4,200

(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(1)(h) of the CGST Rules, 2017].

After amendment in rule 43, the time period for reversal of credit will decrease and the amount of reversal
to be made every month will increase.

QUS.3 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):

Particulars Turnover for the quarter ended Turnover for the quarter
30.06.20XX (`) ended 30.09.20XX (`)
‘P’ 60,00,000 50,00,000
‘Q’ 17,65,000 17,00,000

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Particulars Stock as on 30.06.20XX Stock as on30.09.20XX Stock as on 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 ` 3,00,000, which was purchased in the April
month of the preceding financial year. In the current financial year, in the month of October, 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 2,00,000 3,000 2,03,000
2307 01.10.20XX 1,33,000 5,250 1,38,250
2308 02.10.20XX 67000 39,250 1,06,250
2309 03.10.20XX 58,750 33,750 92,500
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:

Sr.No. Particulars (`)

(i) Freight paid to Goods Transport Agency during the period April 20XX to 1,40,000
October 20XX. Assume equal amount of freight is paid each month on the

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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 20thday of
the month.
(ii) Special packing charges paid to a Packing Company, having expertise in such 3,00,000
specialized packing, during the period January 20XX to October 20XX. The
packing charges are paid for the goods which are transported between 11th
to 20thday 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 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 to 80,000 14,400
01.01.20XX
Motor cycle used by the staff for 23.09.20XX 85,000 15,300
collecting 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: 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.

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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 input services is not allowed and 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:

Particulars Amount(`)
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 to02.10.20XX 3,20,000
[(2,00,000 + 1,33,000 + 67,000]) x 80%]
Stock of taxable inputs as on 02.10.20XX 6,80,000
[Since the bill numbers are in continuation, it can be concluded that no sales

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are missing from the extract]

Less: More than one year old stock 3,00,000
Stock of inputs on which ITC can be claimed 3,80,000
ITC of CGST @ 9% 34,200
ITC of SGST @ 9% [Since all purchases are intra-State and from the suppliers 34,200
registered under regular scheme]

B. ITC on capital goods

Particulars CGST @ SGST @

9% (`) 9% (`)
Computers [` 36,000 – (5% x 4 quarters)] ÷ 2 14,400 14,400
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 for
transportation of persons having approved seating capacity of not more than
thirteen persons only when they are 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 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 [` 72,000 – (5% x 3 quarters)] ÷ 2 30,600 30,600
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 [` 9,000 – (5% x 4 quarters)] ÷ 2 3,600 3,600
ITC to be claimed on capital goods 48,600 48,600
Total ITC on inputs and capital goods credited to Electronic Credit Ledger 82,800 82,800
on 02.10.20XX [34,200 [34,200
+48,600] +48,600]

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QUS.4 Keeping all the facts and figures of above question unchanged, compute the GST liability of B & D Company
payable from Electronic Credit Ledger and/or Electronic Cash Ledger, as the case may be, for the period
covered under regular scheme.

ANS- Output tax liability of B & D Company under regular scheme

From 03.10.20XX, firm will pay tax under regular scheme on monthly basis in terms of sub-sections (1) and
(7) of section 39 of the CGST Act, 2017 and will be eligible to avail ITC on inputs held in stock and capital
goods as on 02.10.20XX in terms of section 18 of the CGST Act, 2017 as also on goods and services procured
on or after 03.10.20XX and used in the course or furtherance of business in accordance with section 16 of the
CGST Act, 2017. However, since common input services and capital goods are used in effecting taxable
supplies as well as exempt supplies, ITC attributable to the exempt supplies will need to be added to the
output tax liability of the month of October, 20XX in terms of section 17(2) read with rules 42 and 43 of the
CGST Rules, 2017 respectively. Further, since all the sales are made within the State (eastern part of
Maharashtra), CGST and SGST @ 9% each will be payable on the outward supplies.

The tax liability for the month of October, 20XX under regular scheme will be computed as under-

Particulars Value CGST (`) SGST (`)

Tax on outward supply of ‘P’ 4,00,000 36,000 36,000
Taxable supplies from 03.10.20XX to 31.10.20XX chargeable to CGST and
SGST 9% each [` 8,00,000 (Refer Working Note 4)]
Tax on inward supplies attracting reverse charge: GTA services availed 20,000 500 500
chargeable to CGST and SGST @ 2.5% each (` 1,40,000 / 7)
ITC reversal on input services [Refer Working Note 1 below] 371 371
ITC reversal on capital goods [Refer Working Note 2 below] 129 129
Total GST liability (RULE 86 B NOT APLLICABLE) 37,000 37,000
Less: ITC [Refer Working Note 3 below] (RCM liability payable in cash) 36,500 36,500
Tax paid in cash 500 500
As per section 49(4) of the CGST Act, 2017 amount available in the

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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

Particulars Value (`) CGST (`) SGST (`)

CGST & SGST @ 2.5% each paid under reverse charge on freight paid to 20,000 500 500
GTA on 10.10.20XX (for the goods transported between 11.10.20XX &
20.10.20XX) will be available as ITC under regular scheme
CGST & SGST @ 9% each paid to Packing Agency on 09.10.20XX (for 30,000 2,700 2,700
specialized packing to be carried out on 10.10.20XX on goods to be
transported between 11.10.20XX & 20.10.20XX) will be available as ITC
under regular scheme.
Total common credit 3,200 3,200
Common credit on input services attributable to exempt supplies 371 371
(rounded off)
Common credit on input services availed during the period under
regular scheme x (Exempt turnover made during the period under
regular scheme / Total turnover during the period under regular
scheme)
= ` 3,200 x 52,500/ 4,52,500
Turnover of ‘Q’ (exempt turnover) from 03.10.20XX to 31.10.20XX is Rs.
52,500
[Refer Working Note 4]
Total turnover from 03.10.20XX to 31.10.20XX is Rs. 4,52,000
[Refer Working Note 4]

Working Note 2

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Particulars CGST @ SGST @

9% (`) 9%(`)
ITC claimed on capital goods on02.10.20XX [Refer Ans. 3] 48,600 48,600
Air conditioner used in the office purchased on 15.10.20XX 18,000 18,000
Common ITC [Since all the capital goods are used for effecting both taxable and 66,600 66,600
exempt supplies, the entire ITC on capital goods is common]
Common credit for a tax period [Common credit ÷ 60] (rounded off) 1,110 1,110
Common credit on capital goods attributable to exempt supplies (rounded off) 129 129
Common credit on capital goods during the period under regular scheme x
(Exempt turnover made during the period under regular scheme / Total turnover
during the period under regular scheme)
= ` 1,110 x 52,500/ 4,52,500

Working Note 3

Particulars CGST (`) SGST (`)

ITC on inputs and capital goods claimed on02.10.20XX [Refer Ans. 3] 82,800 82,800
ITC on air conditioner used in the office purchased on 15.10.20XX 18,000 18,000
ITC on freight paid to GTA 500 500
ITC on packing charges 2,700 2,700
Total ITC available with the firm 1,04,000 1,04,000

Working Note 4

Particulars Total turnover for the month of Turnover in the month of

October, 20XX* (`) october under regular scheme
[03.10.20XX 31.10.20XX]
(`)
‘P’ 8,00,000 [(10,00,000 – 3,60,000) x 125%] 4,00,000 [8,00,000 – 2,00,000
– 1,33,000 –67,000]

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‘Q’ 1,00,000 [(2,00,000 – 1,20,000) x 125%] 52,500 [1,00,000 – 3,000 –

5,250 – 39,250]
Aggregate turnover 9,00,000 4,52,500

Note - Turnover for October, 20XX will be computed as under:

*Turnover = Cost of goods sold** × 125% (20% margin on sales = 25% margin on cost)
**Cost of goods sold = Stock as on 30.09.20XX less stock as on 31.10.20XX (since no purchases are made after
September, 20XX)

QUS.5 ‘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 – ` 42,00,000
Items exempted vide a notification – ` 12,00,000
Items not leviable to GST – ` 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 ` 5,00,000.
Such items are sold in the Mumbai Store at ` 8,00,000.
(iii) Aggregate value of various items procured for being sold in the Store:
Taxable items – ` 55,00,000
Items exempted vide a notification – ` 15,00,000 Items not leviable to GST – ` 5,00,000
(iv) Freight paid to goods transport agency (GTA) for inward transportation of taxable items – ` 1,00,000
(v) Freight paid to GTA for inward transportation of exempted items – ` 80,000
(vi) Freight paid to GTA for inward transportation of non-taxable items - ` 20,000

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(vii) Monthly rent payable for the complex – ` 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 – ` 2,50,000
(ix) Salary paid to the regular staff at the Store – ` 2,00,000
(x) GST paid on inputs used for personal purpose – ` 5,000
(xi) GST paid on rent a cab services availed for business purpose – ` 4,000.
(xii) GST paid on items given as free samples – ` 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)
Where,

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T = Total input tax involved on inputs and input services in a tax period
T1 = Input tax attributable to inputs and input services intendedto be used exclusively for non-
business purposes
T2 = Input tax attributable to inputs and input services intendedto 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 (`)
GST paid on taxable items [` 55,00,000 x 18%] 9,90,000
Items exempted vide a notification [Since exempted, no GST is paid] Nil
Items not leviable to tax [Since non-taxable, no GST is paid] Nil
GST paid under reverse charge on freight paid to GTA for inward transportation of 5,000
taxable items - [` 1,00,000 x 5%]
GST paid under reverse charge on freight paid to GTA for inward transportation of 4,000
exempted items - [` 80,000 x 5%]
GST paid under reverse charge on freight paid to GTA for inward transportation of 1,000
non-taxable items - [` 20,000 x 5%]
GST paid on monthly rent - [` 5,50,000 x 18%] 99,000
GST paid on packing charges [` 2,50,000 x 18%] 45,000
Salary paid to staff at the Store Nil
[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].
GST paid on inputs used for personal purpose 5,000
GST paid on rent a cab services availed for business purpose 4,000
GST paid on items given as free samples 4,000
Total input tax involved in a tax period (October,20XX) [T] 11,57,000

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Computation of T1, T2, T3

Particulars (`)
GST paid on monthly rent attributable to personal purposes [1/3 of ` 99,000] 33,000
GST paid on inputs used for personal purpose 5,000
Input tax exclusively attributable to non-businesspurposes [T1] 38,000
GST paid under reverse charge on freight paid to GTA for inward transportation of 4,000
exempted items
[As per section 2(47) of the CGST Act, 2017, exempt supply means, inter alia, supply
which may be wholly 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.]
GST paid under reverse charge on freight paid to GTA for inward transportation of 1,000
non-taxable items [Exempt supply includes non-taxable supply in terms of section
2(47) of the CGST Act, 2017. Hence, input service of inward transportation of non-
taxable items is exclusively used for effecting exempt supplies.]
Input tax exclusively attributable to exempt supplies [T2] 5,000
GST paid on rent a cab services availed for business purpose 4,000
[ITC on rent a cab service is blocked under section 17(5)(b)(i) of the CGST Act, 2017 as
the same is not used by All-in-One Store for providing the rent a cab service or as part
of a taxable composite or mixed supply. It has been assumed that it is not obligatory
for an employer to provide the same to its employees under any law for the time
being in force.
GST paid on items given as free samples 4,000
[ITC on goods inter alia, disposed of by way of free samples is blocked under section
17(5)(h) of the CGST Act, 2017].
Input tax for which credit is blocked under section17(5) of the CGST Act, 2017 [T3] ** 8,000

**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

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C1 = T - (T1+T2+T3)
=` 11,57,000 – (` 38,000 + ` 5,000 + ` 8,000)
= ` 11,06,000

B. Computation of Common Credit

C2 = C1 - T4
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 (`)
GST paid on taxable items 9,90,000
GST paid under reverse charge on freight paid toGTA for inward transportation of 5,000
taxable items
Input tax exclusively attributable to taxablesupplies [T4] 9,95,000
Common Credit C2 = C1 - T4
=` 11,06,000 – ` 9,95,000
= ` 1,11,000

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
= ` 15,00,000 (` 12,00,000 + `3,00,000)
Total turnover in the State during the tax period

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= ` 65,00,000 (` 42,00,000 + ` 12,00,000 + `3,00,000 + ` 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 = (15,00,000 ÷ 65,00,000) x 1,11,000 = ` 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
= ` 85,385

E. Computation of Net GST liability for the month of October, 20XX

Particulars GST (`)

GST liability under forward charge
Taxable items sold in the store [` 42,00,000 x 18%] 7,56,000
Taxable items transferred to Goa Store [` 8,00,000 x18%] 1,44,000
Ineligible ITC [ITC out of common credit, attributable to exempt supplies] 25,615
Total output tax liability under forward charge 9,25,615
Less: ITC credited to the electronic ledger 11,06,000
ITC carried forward to the next month (1,80,385)
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%] 5,000
Freight paid to GTA for inward transportation of exempted items [` 80,000 x 4,000
5%]
Freight paid to GTA for inward transportation of non-taxable items [` 20,000 x 5%] 1,000

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Total output tax liability under reverse charge [B] 10,000

Net GST liability to be paid in cash [A] + [B] 10,000
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.

RULE 86 B APPLIES WHERE VALUE OF TAXABLE SUPPLY OTHER THAN EXEMPT SUPPLY AND ZERO RATED
SUPPLY EXCEED 50 LAKHS RUPEES IN A MONTH

Note: While computing net GST liability, ITC credited to the electronic ledger can alternatively be computed
as follows:

Particulars (`)
GST paid on taxable items [` 55,00,000 x 18%] 9,90,000
Items exempted vide a notification [Since exempted, no GST is paid] Nil
Items not leviable to tax [Since non-taxable, no GST is paid] Nil
GST paid under reverse charge on freight paid to GTA for inward transportation of 5,000
taxable items [` 1,00,000 x 5%]
GST paid under reverse charge on freight paid to GTA for inward transportation of Nil
exempted items [` 80,000 x 5%] [As per section 2(47) of the CGST Act, 2017, exempt
supply means, inter alia, supply which may be wholly exempt from tax by way of a
notification issued under section11.Hence, input service of inward transportation
of exempt items is exclusively used for effecting exempt supplies. Input tax
exclusively attributable to exempt supplies is to be excluded]
GST paid under reverse charge on freight paid to GTA for inward transportation Nil
of non-taxable items [` 20,000 x 5%]
[Exempt supply includes non-taxable supply in terms of section 2(47) of the CGST Act,
2017. Hence, input service of inward transportation of non-taxable items is
exclusively used for effecting exempt supplies. Input tax exclusively attributable to

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exempt supplies is to be excluded]

GST paid on monthly rent - for business purposes [(` 5,50,000 x 18%) - 1/3 of [(` 66,000
5,50,000 x 18%)]
GST paid on packing charges [` 2,50,000 x 18%] 45,000
Salary paid to staff at the Store Nil
[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]
GST paid on inputs used for personal purpose Nil
[ITC on goods or services or both used for personal consumption is blocked under
section 17(5)(g) of the CGST Act, 2017]
GST paid on rent a cab services availed for business purpose Nil
[ITC on rent a cab service is blocked under section 17(5)(b)(i) of the CGST Act, 2017 as
the same is not used by All-in-One Store for providing the rent a cab service or as part
of a taxable composite or mixed supply. It has been assumed that it is not obligatory
for an employer to provide the same to its employees under any law for the time
being in force]
GST paid on items given as free samples Nil
[ITC on goods inter alia, disposed of by way of free samples is blocked under section
17(5)(h) of the CGST Act, 2017]
Total ITC credited to the electronic ledger 11,06,000

QUS.6 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 `
2,00,000, ` 10,00,000 and ` 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 and amount of common credit attributable towards exempted supplies, if any, for
the month of April, 20XX.

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Particulars GST paid (`)

Machine ‘A’ purchased on 01.04.20XX, exclusively used for non-business purposes 19,200

Machine ‘B’ purchased on 01.04.20XX for being exclusively used in manufacturing 38,400
zero-rated supplies
Machine ‘C’ purchased on 01.04.20XX for being used in manufacturing all the 96,000
three products – X, Y and Z
Machine ‘D’ purchased on April 1, 2 years before 01.04.20XX for being exclusively 1,92,000
used in manufacturing product Z. From 01.04.20XX, such 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 2,88,000
used in manufacturing products X and Y. From 01.04.20XX, such machine will also be
used for manufacturing product Z.

Particulars Common Ineligible Amount to

credit (`) credit (`) be credited
to ECrL (`)
Machine ‘A’ 19,200
[Since exclusively used for non-business purposes, ITC is not
available under rule 43(1)(a) of CGST Rules, 2017]
Machine ‘B’ 38,400
[For ITC purposes, taxable supplies include zero-rated supplies
under rule 43(1)(b) of CGST Rules, 2017. Hence, full ITC is available]
Machine ‘C’ 96,000 96,000
[Commonly used for taxable and exempt supplies – Rule 43(1)(c) of
the CGST Rules, 2017]
Machine ‘D’ 1,92,000 1,92,000
[Owing to change in use from exclusively exempt to both taxable
and exempt, entire tax paid shall be credited to e credit ledger &
ineligible credit calculated @ 5% per quarter or part thereof shall be

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added to output tax liability i.e. 76,800 (5% X 8 quarter X 1,92,000)

Machine ‘E’ 2,88,000
[Owing to change in use from exclusively taxable to both taxable
and exempt, the value of “’A”’ i.e. common credit shall the amount
of entire tax paid on such capital goods.
Further, the credit relating to Machine E would have been credited
to electronic credit ledger three years back when the machine was
used exclusively for taxable supplies. Therefore, no amount will be
credited to the electronic credit ledger again on change of in use of
machine.
Total common credit 5,76,000
Common credit for the tax period (in the given case, a month) 9,600
under rule 43(1)(e) of CGST Rules, 2017 = ` 5,76,000 ÷ 60
[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 3,26,400
Industries for the month of April, 20XX

QUS.7 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. It seeks your advice on availability of input tax credit
in respect of the following expenses incurred by it during the course of its business operations
(i) Cars purchased from the manufacturer for making further supply of such cars. Two of such cars are
destroyed in accidents while being used for test drive by potential customers.
(ii) Works contract services availed for constructing a car shed in its premises

ANS- As per section 16(1) of the CGST Act, 2017, every registered person can take credit of input tax charged on
any supply of goods or services or both to him which are used or intended to be used in the course or
furtherance of his business. However, section 17(5) of CGST Act, 2017 specifies certain goods and services on
which the input tax credit is not available.

In the light of the foregoing provisions, the availability of input tax credit (ITC) in respect of the various

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expenses incurred by Krishna Motors is discussed below:

(i) Section 17(5)(a) specifically blocks ITC on motor vehicles for transportation of passengers having approved
seating capacity of not more than thirteen persons. However, the same is allowed when the motor vehicles
are used, inter alia, for further supply of such vehicles. Thus, ITC on cars purchased from the manufacturer
for making further supply of such cars will be allowed.

However, ITC on the cars destroyed in accident will not be allowed as the ITC on goods destroyed for
whichever reason is specifically blocked under section 17(5)(h) of CGST Act.
(ii) Section 17(5)(c) specifically blocks 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. Since, in this case the car shed is not a plant and machinery and the works contract
service is not used for further supply of works contract service, ITC thereon will not be allowed.

QUS.8 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 countries.In 20,00,000
all cases, the consideration has been received in convertible foreign exchange
Sale of building (excluding stamp duty of Rs. 2.50lakh, 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 mentioned 50,00,000

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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.

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.]
RULE 86 B APPLIES WHERE VALUE OF TAXABLE SUPPLY OTHER THAN EXEMPT SUPPLY AND ZERO RATED
SUPPLY EXCEED 50 LAKHS RUPEES IN A MONTH

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Working Note 1 : Computation of GST payable on outward supply

Particulars Value GST
(Rs.) (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) [Export of goods is a zero 10,00,000 Nil
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 in foreign 20,00,000 Nil
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

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[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 (Exempt 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

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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

QUS.9 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:

Sr.No. Items GST paid in (`)

(i) Life Insurance premium paid by the company on the life of factory employees as 1,50,000
per the policy of the company
(ii) Raw materials purchased for which invoice is missing but delivery challan is 38,000
available.

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(iii) Raw materials purchased which are used for zero rated outward supply. 50,000
(iv) Works contractor's service used for repair of factory building which is debited in 30,000
the profit and loss account of company.
(v) Company purchased the capital goods for` 4,00,000 and claimed depreciation of ` 48,000
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 offactory employees [Note 1] Nil
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 claimedon the tax component [Note 5] Nil
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].

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(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.

QUS.10 On 25th August, 20XX, of previous financial year, M/s Agarwal & Agarwal Ltd., a registered supplier of textile
products located in Bengaluru (Karnataka) purchased one machine for ` 12,39,000 including IGST, from one
supplier of Maharashtra who issued invoice on the same date. M/s Agarwal & Agarwal Ltd. put the
machinery to use on the same day and availed input tax credit for the eligible amount.

M/s Agarwal & Agarwal Ltd. sold this machine after using the machine in the process of manufacture of
taxable goods for ` 7,50,000 excluding lGST, to Mr. Suresh Kumar of Andhra Pradesh on 20th August 20XX of

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current financial year.

During purchase as well as sale of the machinery, the lGST rate applicable was 18%.

Is M/s Agarwal & Agarwal Ltd., required to pay GST? If yes, calculate the amount of tax payable under GST
Laws at the time of sale of the machine. Also, briefly state the relevant statutory provisions.

ANS- As per section 18 of the CGST Act, 2017, if capital goods/ plant and machinery on which input tax credit (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.

Accordingly, the amount payable on supply of machinery by M/s Agarwal & Agarwal Ltd. shall be computed
as follows:

Particulars
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 period of use of machine
(i) For the previous year = (` 1,89,000 × 5%) × 3 quarters 28,350
(ii) For the current year = (` 1,89,000 × 5%) × 2 quarters 18,900
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) and (B) 1,41,750
Thus, M/s Agarwal & Agarwal Ltd. is required to pay GST amounting to ` 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
provisions of section 18(6) of the CGST Act, 2017 read with rule 40(2) of the CGST Rules, 2017 [wherein 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].

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However, the said amount can also be computed in accordance with the provisions of section 18(6) of the
CGST Act, 2017 read with rule 44(6) of the CGST Rules, 2017 [wherein ITC involved in the remaining useful
life (in months) of the capital goods/ machine will be reversed on pro-rata basis, taking the useful life as 5
years].

QUS.11 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, 20XX;

(1) Details of sales:

Supply of taxable goods 50,00,000
Supply of goods not leviable to GST 10,00,000
(2) Details of goods purchasedforbeing sold in the shop:
Taxable goods 45,00,000
(3) Goods not leviable to GST 4,00,000
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 of the shop 10,000
as per company policy.
Freight paid to goods transport agency (GTA) for inward transportation of non-taxable 50,000
Goods
Freight paid to goods transport agency (GTA) for inward transportation of taxable 1,50,000
goods

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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, 20XX

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 @6% SGST@6%

(`) (`) (`)
GST paid on taxable goods 45,00,000 2,70,000 2,70,000

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Goods not leviable to GST [Since non-taxable, no GST is paid] 4,00,000 Nil Nil
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 as per company 10,000 Nil Nil
policy [ITC on life insurance service is allowed only if it is
obligatory for employers to provide such services to its
employees under any law for the time being in force- Proviso to
section 17(5)(b)(i)].
GST paid on goods given as free samples 5,000 Nil Nil
[ITC on goods disposed of by way of free samples is blocked
under section 17(5)(h) of the CGST Act, 2017]

Particulars Amount CGST @ SGST @

(`) 2.5% (`) 2.5% (`)
Freight paid to GTA for inward transportation of non-taxable 50,000 Nil Nil
goods under reverse charge
[Since definition of exempt supply under section 2(47) of the
CGST Act, 2017 specifically includes 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 1,50,000 3,750 3,750
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].

Particulars CGST (`) SGST (`)

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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 transportation of taxable goods 3,750 3,750
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, 20XX

Particulars CGST (`) SGST (`)

GST liability under forward charge
Supply of taxable goods [` 50,00,000 x6%] RLUE 86 B NOT APLLICABLE 3,00,000 3,00,000
Add: Ineligible ITC [ITC out of common credit, attributable to exempt 4,600 4,600
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 goods 3,750 3,750
[`1,50,000 x 2.5%]
Freight paid to GTA for inward transportation of non-taxable goods 1,250 1,250
[` 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

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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.

QUS.12 Siddhi Ltd. is a registered manufacturer engaged in taxable supply of goods. Siddhi Ltd. purchased the
following goods during the month of January, 20XX. The following particulars are provided:

Sr. No. Particulars Input tax

1. Capital goods purchased on which depreciation has been taken on full value 15,000
including input tax thereon
2. Goods purchased from Ravi Traders (Invoice of Ravi Traders is received in month of 20,000
January, 20XX, but goods were received in month of March, 20XX)
3. Car purchased for making further supply of such car. Such car is destroyed in 30,000
accident while being used for test drive by potential customers
4. Goods used for setting up telecommunication towers being immovable property 50,000
5. Goods purchased from Pooja Ltd. (Full payment is made by Siddhi Ltd. to Pooja Ltd. 10,000
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.

Sr.No. Particulars Input tax(`)

1. Capital goods Nil
[Since depreciation has been claimed on the tax component of the value of the

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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 20XX, ITC
thereon can be availed in March 20XX and not January 20XX even though the
invoice for the same has been received in January 20XX]
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 20XX 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

QUS.13 X, a manufacturer of roofing sheets, has total input tax credit of `1,60,000 as on 30-06-20XX. He provides the
following other information pertaining to June 20XX:
(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.

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(5) Total turnover (inter-State, taxable @18%) for the month of June is ` 60 lakh.
Compute the ITC available and his output tax liability for the month of June 20XX.

ANS- Computation of ITC available and output tax liability of X for June 20XX

Particulars Amount (`)

Output tax liability for June 20XX
GST on taxable turnover for June 20XX 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 30.06.20XX 1,60,000

RULE 86 B SHALL APPLY AS VALUE OF TAXABLE SUPPLY EXCLUDING EXEMPT ASUPPLY & ZERO RATED
SUPPLY EXCEEDS 50 LAKH RUPESS IN JUNE MONTH. HENCE REGISTERED PERSON CAN NOT
USE ITC IN EXCESS OF 99% OF ITS OUTPUT TAX LIABILITY.

Working Note: 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

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[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 [ITC on cosmetic and plastic Nil
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 40,000
[ITC credited to Electronic Credit Ledger (`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.

QUS.14 Soren Enterprises is in possession of certain capital goods and purchases more of them as per the following
particulars:

Particulars Input tax on capital goods (`) Status of its use

Capital Goods A 12,000 Exclusively used for non-
business purpose.
Capital Goods B 24,000 Exclusively used for
Zero rated supplies.
Capital Goods C 60,000 Used both for taxable
and exempt supplies.

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Capital goods D(has been exclusively 1,20,000 Now there is change in

used for 2 years for exempted supplies) use, both for taxable and
--- exempt supplies.
Capital goods E (has been exclusively used 1,80,000 Now there is change in
for 3 years for taxable supplies). use, both for taxable and
exempt supplies.
Useful life of all the above capital goods is considered as 5 years.

Compute the input tax credit to be reversed for each tax period (monthly) on account of common credit
attributable to exempted use of such machines, while being informed that aggregate value of exempt
supplies during the tax period being `6,00,000 and total turnover during the tax period being ` 12,00,000.

ANS- Apportionment of common credit pertaining to capital goods:

Particulars ITC(`)
Capital goods ‘A’ Nil
[Since exclusively used for non-business purposes, ITC is not available under rule 43(1)(a)
of CGST Rules, 2017]
Capital goods ‘B’ -
[For ITC purposes, taxable supplies include zero-rated supplies under rule 43(1)(b) of
CGST Rules, 2017. Hence, full ITC of ` 24,000 is available]
Capital goods ‘C’ 60,000
[Commonly used for taxable and exempt supplies]
Capital goods ‘D’ 1,20,000
[Owing to change in use from exclusively exempt to both taxable and exempt, entire tax
paid on capital goods “D” shall be credited to e credit ledger. Ineligible credit shall be
debited to output tax liability calculated @ 5% per quarter or part there of
= 48,000 (` 1,20,000 × 5% × 8 quarters)
Capital goods ‘E’ 1,80,000
[Owing to change in use from exclusively taxable to both taxable and exempt, the value
of “’A”’ i.e. common credit shall the amount of entire tax paid on such capital goods in

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terms of rule 43(1)(d) of CGST Rules, 2017]

No amount shall be credited to e credit leger as entire ITC has been availed earlier
Total common credit 3,60,000
Common credit for the tax period under rule 43(1)(e) of CGST Rules,2017 6,000
= 3,60,000÷ 60
Common credit attributable to exempt supplies in a tax period interms of rule 3,000
43(1)(g) of CGST Rules, 2017
= (Turnover of exempt supplies/Total turnover) ×Common credit
= (6,00,000/12,00,000) × ` 6,000

QUS.15 Sarani Weavers at Pune, Maharashtra 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 20XX. The following are the details available for such
distribution:

Branch Turnover of the last quarter ITC specifically applicable to

(Amount in `) the branch (Amount in `)

Ganganagar Branch (Rajasthan) 10,00,000 IGST – ` 12,000

CGST – ` 3,000

SGST –` 3,000

Madhugiri Branch (Karnataka) 5,00,000 Nil

Kosala Branch (UP) 15,00,000 Nil

Mumbai Branch (Maharashtra) 20,00,000 IGST – ` 1,50,000

CGST– ` 15,000

SGST– ` 15,000

Input services used commonly by all branches against which lTC available is:
CGST - ` 60,000 SGST - ` 60,000 IGST - ` 1,20,000
lTC (IGST) of March 20XX (last year), ` 10,000 which was inadvertently left out, whether same can be
considered for distribution in March, 20XX (last year)
Madhugiri, Karnataka branch uses inputs to manufacture exempted products. Turnover excludes duties &

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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 ` 18,000 specifically attributable to Ganganagar Branch, Rajasthan
will be distributed as IGST credit of ` 18,000 only to Ganganagar Branch, Rajasthan. [since recipient and ISD
are located in different states.]

(ii) IGST credit of ` 1,50,000, CGST credit of ` 15,000 and SGST credit of ` 15,000 specifically attributable to
Mumbai Branch, Maharashtra will be distributed as IGST credit of ` 1,50,000, CGST credit of ` 15,000 and
SGST credit of ` 15,000 respectively, only to Mumbai Branch, Maharashtra. [since recipient is located in the
same State in which ISD is located.]

(iii) CGST credit of ` 60,000, SGST credit of ` 60,000 and IGST credit of `1,20,000 have to be distributed among
the three branches and Mumbai Branch, Maharashtra in proportion of their turnover of the last quarter.
Ganganagar Branch, Rajasthan will get – ` 48,000 [`2,40,000 x (10,00,000/ 50,00,000)] as IGST credit.
Madhugiri Branch, Karnataka 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, UP will get - ` 72,000 [`2,40,000 x (15,00,000/ 50,00,000)] as IGST credit
Mumbai Branch, Maharashtra will get - ` 24,000 [60,000 x (20,00,000/ 50,00,000)] as CGST credit, `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.

(iv) ITC of ` 10,000 of March, 20XX (last year) cannot be distributed in March 20XXas ITC available for
distribution in a month is to be distributed in the same month.

QUS.16 With the help of information given below in respect of a manufacturer for the month of September, 20XX,
calculate eligible input tax credit for the month and also calculate the amount of ITC to be reversed in
September, 20XXand October, 20XX. There is no carry forward credit or reversal requirement. Only the
current month's information is to be considered for calculation purposes.

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Sr.No. Particulars Amount in `

1. Outward supply of taxable goods 70,000
2. Outward supply of exempted goods 40,000
Total Turnover 1,10,000
3. Inward supplies GST paid (`)
Capital goods purchased which are exclusively used for taxable outward supply 2,000
Capital goods purchased which are exclusively used for exempted outward 1,800
Supply
Capital goods purchased which are used for both taxable and exempted 4,200
outward supply

ANS- Computation of eligible ITC and ITC to be reversed:

Particulars ` ITC (`)

Capital goods exclusively used for taxable outward supply 2,000
[Since exclusively used for taxable supply, full ITC is available under rule
43(1)(b) of the CGST Rules, 2017] – [A]
Capital goods exclusively used for exempted outward supply Nil
[Since exclusively used for non-business purposes ITC is not available under rule
43(1)(a) of the CGST Rules, 2017]
Capital goods used for both taxable and exempted outward supply -Common 4,200 4200
credit [B]
[Commonly used for taxable and exempt supplies –
Rule 43(1)(c) of the CGST Rules, 2017]
Common credit for the tax period (month here) 70
= 4,200 ÷ 60[Rule 43(1)(e) of the CGST Rules, 2017]
Common credit attributable to exempt supplies in amonth [C] 25.45
(rounded off)
= (40,000/1,10,000) × ` 70 [Rule 43(1)(g) of the CGST Rules, 2017
Total eligible credit for September, 20XX 6,200
Amount of ITC to be reversed in September, 20XX[B] 25.45

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Amount of ITC to be reversed in October, 20XX [B] 25.45

QUS.17 A registered supplier of taxable goods supplied goods valued at ` 2,24,000 (inclusive of CGST ` 12,000 and
SGST ` 12,000) to Mohan Ltd. under the forward charge on 15-08-20XX for which tax invoice was also issued
on the same date. The inputs were received by Mohan Ltd. on 15-08-20XX. Mohan Ltd. availed credit of `
24,000 on 18-08-20XX. But Mohan Ltd. did not make any payment towards such supply along with tax
thereon to the supplier. Is Mohan Ltd. eligible to avail input tax credit on such supply? What are the
consequences of such non- payment by Mohan Ltd.?

Discuss input tax credit provisions if Mohan Ltd. makes the payment of ` 2,24,000 to the supplier on 18-03-
20XX (Next Year).

ANS- As per section 16 of the CGST Act, 2017, Mohan Ltd. is eligible to avail input tax credit (ITC) of the tax paid on
inputs received by it on the basis of the invoice issued by the supplier provided other conditions for availing
ITC are fulfilled.

Payment of value of the goods along with the tax to the supplier is not a pre- requisite at the time of availing
credit, but Mohan Ltd. has to pay the said amount within 180 days from the date of issue of invoice.
If Mohan Ltd. did not make any payment towards such supply along with tax thereon to the supplier, it has
to report the fact of non-payment in the ITC return (GSTR-3B) for the month immediately following the
period of 180 days from the date of the issue of the invoice. When such report is made, ITC of `24,000 will
be added to his output tax liability. Mohan Ltd will be required discharge this liability with interest @ 18%
p.a. from the date of availing credit till the date when the amount added to the output tax liability [Second
proviso to section 16(2) of the CGST Act, 2017 read with rule 37 of the CGST Rules, 2017].

If Mohan Ltd. does not pay the supplier as mentioned above, subject to the provisions of section 126 of the
CGST Act, 2017, a general penalty which may extend to ` 25,000 may also be levied for such contravention by
Mohan Ltd. under section 125 of the CGST Act, 2017].

If Mohan Ltd. makes the payment of ` 2,24,000 (Value + tax) to the supplier on 18.03.20XX (Next Year) i.e.,
after the expiry of 180 days from date of issue of invoice, Mohan Ltd. will take the credit of ` 24,000.

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QUS.18 What are the conditions applicable to Input Service Distributor to distribute the credit?

ANS- The following conditions are applicable to Input Service Distributor to distribute the input tax credit (ITC):-
(i) The credit can be distributed to the recipients of credit against an ISD invoice containing prescribed
details.
(ii) The amount of the credit distributed shall not exceed the amount of credit available for distribution.
(iii) The credit connected to an input service must be distributed only to the particular recipient to whom
that input service is attributable.
(iv) If the input service is attributable to more than one recipient, the relevant ITC is distributed pro rata to
such recipients in the ratio of turnover of the recipient in a State/ Union Territory to the aggregate turnover
of all the recipients to whom the input service is attributable and which are operational during the current
year.
(v) ITC pertaining to input services which are common for all units, is distributed to all the recipients in the
ratio of turnover in the prescribed manner.
(vi) ITC available for distribution in a month shall be distributed in the same month and the details thereof
shall be furnished in the prescribed form.
(vii) Both ineligible and eligible ITC are to be distributed separately.
(viii) ITC of CGST, SGST/UTGST and IGST are to be distributed separately.
(ix) ITC of CGST, SGST/UTGST in respect of recipient located in the same State/Union Territory is distributed
as CGST and SGST/UTGST respectively.
(x) ITC of CGST and SGST/UTGST, in respect of a recipient located in a different State/Union territory, is
distributed as IGST (total of ITC of CGST and SGST/UTGST which were to be distributed to such recipient).
(xi) ITC on account of IGST is distributed as IGST.

QUS.19 Arise India Pvt. Ltd., a company engaged in manufacturing of various goods, has its corporate office at
Mumbai and manufacturing units in Pune and Chennai and service centres in Kolkata and Bengaluru. The
manufacturing units at Pune and Chennai and service centres at Kolkata and Bengaluru are registered in
Maharashtra, Tamil Nadu, West Bengal and Karnataka respectively. The corporate office is registered as an
input service distributor. All the units and centres of Arise India Pvt. Ltd. are operational in the current year.
The corporate office intends to distribute input tax credit (ITC) for the month of October 20XX. The

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following details are available for such distribution:

Table 1
Unit/centre Turnover for the quarter endingSeptember Eligible ITC on input services
20XX* (`) attributable to a specific unit/centre,
for the month of October 20XX (`)
Pune 20,00,000 IGST – `3,00,000; CGST– ` 30,000;
SGST– `30,000
Chennai 30,00,000 IGST – ` 24,000; CGST – ` 6,000;
SGST – `6,000
Kolkata 10,00,000 Nil
Bengaluru 40,00,000 Nil
*Note: Turnover excludes all taxes and duties

Table 2
Sr.No. Particulars CGST SGST IGST
(i) Input services used by all units and centres
(a) Eligible ITC under the provisions of the GST law 1,20,000 1,20,000 2,40,000
(b) Ineligible ITC in terms of section17(5) of the CGST Act, 2017 40,000 40,000 80,000
(ii) Inputs used by Pune unit and Kolkata centre 60,000 60,000
(iii) Input services used by Chennai unit and Bengaluru centre (ITC 30,000 30,000 10,000
pertaining to such invoices is eligible ITC under the provisions of the
GST law)
Chennai unit manufactures exempted products.
Compute the amount of ITC to be distributed to each of the units and centres. (RTP MAY 20)

ANS- Computation of ITC to be distributed by ISD

Sr.No. Particulars Pune Chennai Kolkata Bengaluru

Unit (`) Unit (`) Centre (`) Centre (`)

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(i) IGST credit of ` 3,00,000, CGST credit of ` 30,000 3,00,000

and SGST credit of ` 30,000 specifically (IGST)
attributable to Pune unit [Note 1] 30,000
(CGST)
30,000
(SGST)
(ii) IGST credit of ` 24,000, CGST credit of ` 6,000 36,000
and SGST credit of ` 6,000 specifically (IGST)
attributable to Chennai unit [Note 2]
(iii) Eligible ITC pertaining to input services used 24,000 1,44,000 48,000 1,92,000
by all units and centres [Note 3] (CGST) (IGST) (IGST) (IGST)
24,000
(SGST)
48,000
(IGST)

(iv) Ineligible ITC pertaining toinput services used 8,000 48,000 16,000 64,000

by all units and centres [Note 4] (CGST) (IGST) (IGST) (IGST)

8,000

(SGST)

16,000

(IGST)
(v) Inputs used by Pune unit and Kolkata centre Nil Nil Nil Nil
[Note 5]
(vi) Input services used by Chennai unit and 30,000 40,000
Bengaluru centre [Note 6] (IGST) (IGST)
Notes:
(1) IGST credit of ` 3,00,000, CGST credit of ` 30,000 and SGST credit of ` 30,000 specifically attributable to
Pune unit will be distributed as IGST credit of ` 3,00,000, CGST credit of ` 30,000 and SGST credit of ` 30,000
respectively, only to Pune unit, since recipient is located in the same State in which ISD is located [Section
20(2)(c) of the CGST Act, 2017 read with clauses (e) & (f)(i) of sub-rule (1) of rule 39 of the CGST Rules,
2017].

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(2) Total GST credit (CGST+ SGST + IGST) of ` 36,000 specifically attributable to Chennai unit will be distributed
as IGST credit of ` 36,000, only to Chennai unit, since recipient and ISD are located in different States [Section
20(2)(c) of the CGST Act, 2017 read with clauses (e) & (f)(ii) of sub-rule (1) of rule 39 of the CGST Rules, 2017].

(3) Eligible ITC of CGST [` 1,20,000], SGST [` 1,20,000] and IGST [` 2,40,000] will be distributed among the units
and centres in the ratio of their turnover of the last quarter [Section 20(2)(e) of the CGST Act, 2017 read with
clause (a)(ii) of the explanation to the said section and rule 39(1)(b) of the CGST Rules, 2017].
Ratio of the turnover of the units and centres in last quarter, previous to the month during which ITC is to be
distributed: = 20 lakh : 30 lakh : 10 lakh : 40 lakh = 2: 3: 1: 4

Therefore,
Pune unit will get - ` 24,000 [1,20,000 x (2/10)] as CGST credit, ` 24,000 [1,20,000 x (2/10)] as SGST credit and `
48,000 [2,40,000 x (2/10)] as eligible IGST credit [Clauses (e) & (f)(i) of sub-rule (1) of rule 39 of the CGST
Rules,2017].

Chennai unit will get – ` 1,44,000 [` 4,80,000 x (3/10)] as IGST credit [Clauses (e) & (f)(ii) of sub-rule (1) of rule
39 of the CGST Rules, 2017]. The credit attributable to a recipient is distributed even if such recipient is
making exempt supplies [Clause (d) of sub-rule (1) of rule 39 of the CGST Rules, 2017].

Kolkata centre will get - ` 48,000 [` 4,80,000 x (1/10)] as IGST credit [Clauses (e) & (f)(ii) of sub-rule (1) of rule
39 of the CGST Rules, 2017].

Bengaluru will get - ` 1,92,000 [` 4,80,000 x (4/10)] as IGST credit [Clauses (e) & (f)(ii) of sub-rule (1) of rule 39
of the CGST Rules, 2017].

(4) Ineligible ITC of CGST [` 40,000], SGST [` 40,000] and IGST [` 80,000] will also be distributed among the
units and centres in the ratio of their turnover of the last quarter [Section 20(2)(e) of the CGST Act, 2017 read
with clause (a)(ii) of the explanation to the said section and rule 39(1)(b) of the CGST Rules, 2017].
Ratio of the turnover of the units and centres in last quarter, previous to the month during which ITC is to be
distributed: = 20 lakh : 30 lakh : 10 lakh : 40 lakh = 2: 3: 1: 4

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Therefore,
Pune unit will get - ` 8,000 [40,000 x (2/10)] as CGST credit, ` 8,000 [40,000 x (2/10)] as SGST credit and `
16,000 [80,000 x (2/10)] as eligible IGST credit.
Chennai unit will get – ` 48,000 [` 1,60,000 x (3/10)] as IGST credit. Kolkata centre will get
- ` 16,000 [` 1,60,000 x (1/10)] as IGST credit. Bengaluru will get - ` 64,000 [` 1,60,000 x (4/10)] as IGST credit.

(5) ISD mechanism is meant only for distributing the credit on common invoices pertaining to input services
only and not goods (inputs or capital goods).

(5) Eligible ITC of CGST [` 30,000], SGST [` 30,000] and IGST [` 10,000] will be distributed among the Chennai
unit and Bengaluru centre in the ratio of their turnover of the last quarter [Section 20(2)(d) of the CGST Act,
2017 read with clause (a)(ii) of the explanation to the said section and rule 39(1)(b) of the CGST Rules, 2017].
Ratio of the turnover of the Chennai unit and Bengaluru centre in last quarter, previous to the month during
which ITC is to be distributed: = 30 lakh : 40 lakh = 3 : 4 Therefore,
Chennai unit will get – ` 30,000 [` 70,000 x (3/7)] as IGST credit. Bengaluru unit will get – ` 40,000 [` 70,000 x
(4/7)] as IGST credit.

QUS.20 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:

Sr. No. Particulars IGST (`)

(a) Machinery 1 purchased on 1st July for being used in manufacturing Xt and St 72,000
(b) Machinery 2 purchased on 1st July for being exclusively used in manufacturing 36,000
product Xt
(c) Machinery 3 purchased on 1st July for being exclusively used in manufacturing 1,08,000
product St
(d) Machinery 4 purchased on 1st October last year for being exclusively used in 1,44,000
manufacturing product St. From 1st July, such machinery will also be used for
manufacturing product Xt.

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(e) Machinery 5 purchased on 1st January for being exclusively used in manufacturing 18,000
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 manufacturing 1,08,000
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. (RTP Nov 20)

ANS- Sr. 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 effecting both 72,000
taxable and exempt supplies
Value of ‘A’ for Machinery 4 purchased on 1st October last year for being used for 1,44,000
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 and used for 1,08,000

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effecting both taxable and exempt supplies

Input tax claimed on Machinery 5 purchased on 1st January for being used for 18,000
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 [Note 9] 3,42,000
(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 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 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

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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 to the 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.

QUS.21 ABC Company Ltd. of Bengaluru is a manufacturer and registered supplier of machine. It has provided the
following details for the month of November, 2019.

Details of GST paid on inward supplies during the month:

Items GST paid(`)

Health insurance of factory employees as required by Factory Act 20,000
Raw materials for which invoice has been received and GST has also been paid for full 18,000

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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 directly sent to job worker’s premises under challan. 50,000
Purchase of car used by director for the business meetings only. 25,000
Outdoor catering service availed for business meetings. 8,000
ABC Company Ltd. also provides service of hiring of machines along with man power 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.

Receipts on outward supply (exclusive of GST) for the month of November, 2019 are as follows

Items Outward Supply (`)

Hiring receipts for machine 5,25,000
Service charges for supply of man power operators 2,35,000

Assume all the transactions are inter State and the rates of IGST to be as under:
(i) Service of hiring of machine 12%
(ii) Supply of man power operator service 18%
Compute the amount of input tax credit available and also the net GST payable for the month of November,
2019 by giving necessary explanations for treatment of various items.
Note: Opening balance of input tax credit 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 liability 9,200

Working Notes:

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(1) Computation of Input Tax Credit (ITC) available with ABC Company Ltd. in the month of November, 2019
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 [Note -3] 12,000
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) of the CGST Act,
2017 since it is obligatory for employer to provide health insurance to its employees under Factory Act -.

2. Where the goods against an invoice are received in lots/ installments, ITC is allowed upon receipt of the last
lot/ installment vide first proviso to section 16(2) of the CGST Act, 201 7. Therefore, ABC Company Ltd. will be
entitled to ITC of raw materials on receipt of second installment in December, 2019.

3. Section 17(5)(c) of CGST Act, 2017 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) of CGST Act, 2017 read with rule 45(1) of CGST Rules, 2017.

5. Section 17(5)(a) of CGST Act, 2017 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

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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 goods or any
other use as specified, ITC thereon will not be available.

6. Section 17(5)(b)(i) of CGST Act, 2017 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.

QUS.22 Cash and Credit Ltd. is registered with GST Department in the State of Maharashtra. It has its registered
office at Mumbai. It is engaged in the business of production, manufacture and supply of fresh fruits,
vegetables, fresh juices and fruit pulp etc. It has made the following intra-State supplies during the month of
April, 2020:

Sr. No. Particular Amount in lakh (`)

1. Fresh fruits 1100
2. Vegetables 1100
3. Fresh juices 2000
4. Carbonated fruit drink 200

GST rate as applicable on above supplies is as follows:

Sr. No. Particular CGST SGST IGST

1. Fresh fruits Nil Nil Nil
2. Vegetables Nil Nil Nil
3. Fresh juices 6% 6% 12%
4. Carbonated fruit drink 14% 14% 28%

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Further, for making the supplies of fruit juices, it has used the services of Goods Transport Agency ("GTA")
based in Ahmedabad who have charged them ` 20 lakh as charges for their services. Such GTA have not
charged any tax on their invoices. Rate of tax on GTA under reverse charge is 5%.

In respect of the above supply, the company has received the following inward supplies:

Sr.No. Particular Amount of Amount of input tax credit

Purchase thereon (` in lakh)
(` in lakh)
CGST SGST IGST
1. Fresh fruits for supply 800 Nil Nil Nil
2. Vegetables for supply 1200 Nil Nil Nil
3. Fruit pulp used for fruit juice and carbonated 200 20 20 Nil
Dink
4. Sugar used for fruit juice and carbonated drink 100 6 6 Nil
5. Preservatives for fruit juice and carbonated 100 Nil Nil 12
drink
6. Water for fruit juice and carbonated drink 20 Nil Nil Nil
7. Administrative expenses (common) 40 2 2 Nil
8. Marketing expenses (common) 50 Nil Nil 10
9. Purchase of machinery (capital goods) for fruit 40 Nil Nil 8
drink manufacture
10. Motor vehicle for director official use 100 14 14 Nil

Compute the output GST liability, available ITC and payment to be made from Electronic Cash and Credit
Ledger for the month of April, 2020 (considering that the entire ITC shall be utilized for payment of tax).
(Jan 21 exam)

ANS- Computation of ITC available with Cash and Credit Ltd. for April, 2020

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Particulars ITC (` in lakh)

CGST SGST IGST
I. Input tax credit on inputs, input services and capital goods
Fruit pulp 20 20
Sugar 6 6
Preservatives 12
Administrative expenses 2 2
Marketing expenses 10
1
Transportation charges for supply of fruit juices
[Tax is payable by Cash and Credit Ltd. @ 5% under reverse charge. Further, it is an
inter-State supply since supplier is located in Ahmedabad and place of supply is
Maharashtra
(location of registered recipient)]
Machinery 8
Input tax (CGST & SGST/ IGST) paid on inputs, input services and capital goods used
in the manufacture of taxable products viz., fresh juices & carbonated fruit drinks
is available as input tax credit
Motor vehicle - -
[ITC on motor vehicle for transportation of persons with seating capacity of up to13
persons is blocked for a supplier who is not engaged in further supply of such
vehicles, transportation of passengers or imparting training on driving such vehicles.]
Total 28 28 31
II. Input tax credit to be reversed on inputs and input services
Common credit of CGST on administrative expenses being used commonly for taxable (1) (1)
and exempt products = `2 lakh
Exempt turnover = ` 2200 lakh; Total turnover = ` 4400 lakh Common credit
attributable to exempt supply ` in lakh [2 x 2200/4400] = `1 lakh Similar reversal for
SGST credit
Common credit of IGST on marketing expenses being used commonly for taxable (5)
and exempt products = `10 lakh; Common credit attributable to exempt supply

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` in lakh [10 x 2200/4400] = ` 5 lakh

Total ITC available for set off 27 27 26

Computation of net GST payable for the month of April, 2020

Particulars Value1 CGST SGST IGST

`[in lakh] `[in lakh] `[in lakh] `[in lakh]
Intra-State sale of fresh fruits 1100 Nil Nil Nil
Intra-State sale of vegetables 1100 Nil Nil Nil
Intra-State sale of fresh juices 2000 120 120
Intra-State sale of carbonated fruit drinks 200 28 28
Total output tax liability RULE 86 B APPLICABLE* 148 148
Less: Payment from Electronic Credit Ledger
IGST credit being set off against SGST liability as it can be (26)
set off against CGST and SGST liability in any order and in
any Proportion
CGST and SGST credit set off against CGST and SGST (27) (27)
liability Respectively
Net GST payable from Electronic Cash Ledger [A] 121 95
GST payable on inward supply of GTA services under 1
reverse charge through Electronic Cash Ledger [B]
[Tax payable under reverse charge, being not an output
tax, cannot be set off against ITC and thus, will have to be
paid in cash.]
Net GST payable through Electronic Cash Ledger [A] + [B] 121 95 1
Total GST payable by cash 217

 NOT MORE THAN 99 % OF OUTPUT TAX LIABILITY CAN BE PAID BY E CASH LEDGER
Note: In the above answer, tax payable from Electronic Cash Ledger has been computed by setting off the
IGST credit against SGST liability. However, since IGST credit can be set off against CGST and SGST liability in
any order and in any proportion, the same can be set off against CGST and/or SGST liabilities in different ways

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as well. In all such cases, net CGST and net SGST payable from Electronic Cash Ledger will differ though the
total amount of net GST payable (` 217 lakh) in cash will remain the same.

QUS. 23 ABC Ltd., a registered supplier, is engaged in the manufacture of dyeing machines. The company provides the
following information pertaining to GST paid on the purchases made/input services availed by it during the
month of September 2020 :

Particulars GST Paid `

(i) Purchase of 10 apple i-pads which were given as gift to employees 1,85,000
(ii) Payment for club membership availed by employees as per terms of employment 90,000
(iii) Purchase of MAXI CAB for transport of its employees to and from home to office 70,000
(iv) Purchase of calendars and diaries for distribution as new year compliments to 25,000
customers and distributors
(v) Works contract services availed for erection and installation of RO treatment plant in 35,000
factory

Determine the amount of ITC available to ABC Ltd. for the month of September, 2020 by giving necessary
explanations for treatment of various items. None of expenses incurred for staff was under statutory
obligation and seating capacity of the maxi cab was excluding driver.
]

Subject to the information given above, all the conditions necessary for availing the ITC have been fulfilled.
(Jan 21 exam)

ANS- (a) Computation of ITC available with ABC Ltd. for the month of September, 2020

Particulars GST paid (`)

Apple i-pads given as gifts to the employees Nil
[ITC in respect of goods that are disposed of by way of gifts is blocked.]
Club membership availed by employees Nil
[ITC on membership of a club is blocked as ABC Ltd. is not under any statutory
obligation to provide the same to its employees.]
Maxi cab for transport of employees [ICAI SUGGESTED ANSWER] 70,000

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[ITC on motor vehicles for transportation of persons with seating capacity of more
than (or exceeding) 13 persons (including the driver) used for any purpose, is allowed.]
Calendars and diaries for distribution as compliments to customers and distributors Nil
[ITC in respect of goods that are disposed of by way of gifts is blocked.]
Works contract services for erection and installation of RO treatment plant in factory 35,000
[ITC on works contract service used for construction of a plant and machinery fixed to
earth by foundation or structural support is allowed.]
Total ITC available 1,05,000

Q.24 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.

Sr. No. Particulars Amount in lakh (`)

Turnover in the relevant month of each of the units:
(1) Mumbai (Maharashtra) 12.00
(2) Bangalore (Karnataka) 60.00
(3) Hyderabad (Andhra Pradesh) 36.00
(4) Trivandrum (Kerala) 72.00
(5) Total ITC available during the month with the ISD 48.00
(includes CGST/SGST & IGST) on account of supplies received during the month
(6) From the above, ITC exclusive to Bangalore unit, available as IGST credit 12.00
(7) From the above, ITC exclusive to Trivandrum and Hyderabad units (CGST and 6.00
SGST of `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, 50.00
in respect of a 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 exclusively 118.00

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to Kerala unit, taxed at the rate of 9% CGST and 9% SGST, which is charged and
indicated Separately

Also make your comments regarding the amount of ITC in credit notes, if exceeds the ITC from invoices and
debit notes in a particular month for all or any of the units. (Nov 20 exam)

ANS- (a) Computation of the amount of credit distributed14 by the ISD to various units of the company
It has been most logically assumed that the credit to be distributed by ISD is the credit of input services.

Particulars Mumbai Bangalore Hyderabad Trivandrum

IGST IGST IGST SGST CGST IGST
ITC exclusive to Bangalore unit available as IGST 12
[ITC of IGST is distributed as IGSTonly.]
ITC exclusive to Trivandrum and Hyderabad units 2 2 2
[ITC of CGST and SGST is distributedas CGST and SGST
To unit located inKerala (Trivandrumunit) and as IGST to
Unit located in a different State (Hyderabad unit) in the
RATIO of 2:1.]
Common credit forall units 2 10 6 6 6
[Balance credit Of CGST and SGST (since supplies are
received locally)
Of `15 lakh each(`48 lakh – `12 lakh – ` 6 lakh) to be
distributed amongall four units in proportion oftheir
turnover oftherelevantmonth, i.e., 1:5:3:6. Further, itc will
bedistributed tomumbai, bangaloreand hyderabad unit as
igst and to trivandrum unit as cgst and sgst.]
Additional ITC [ 6lakh (` 50 lakh × 12%)] on account .4 2 1.2 2.4
of debit note received from supplier to be of debit note
received from supplier to be
Distributed among all four units in proportion of their
turnover of the relevant month, i.e., 1:5:3:6. [ITC of IGST is

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distributed as IGST only.]

ITC to be reducedon account of credit note received 9 9
From supplier,exclusive to Kerala unit 9% of (` 118 lakh ×
100/118)
Total ITC apportioned to each unit 2.4 24 9.2 -1 -1 2.4
Negative amount apportioned to TRIVANDRUM
Unit shall be added to its output tax liability Since ITC 1 1
distributed by ISD is less than
Amount reduced on account of credit note
Being basic value of the debit note received, the amount of ` 50 lakh has been assumed to be exclusive of
taxes.It has been most logically assumed that the additional ITC of ` 6 lakh on account of the debit note

received during the month from a supplier in respect of a previous supply pertains to all the four units.
It has been most logically assumed that there is one unit of the company located in Kerala and i.e.,
Trivandrum unit.
Being total value in credit note received, the amount of `118 lakh has been assumed to be inclusive of taxes.

QUS.25 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:

Sr. 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 process 60,000
9. Raw material – W (imported from China) 50,000
Total 10,50,000

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Sr.No. Particulars IGST (`)

(i) Balance in Form GSTR-2A on 28th October 4,80,000
(Invoices at S. Nos. 1, 2 and 3 uploaded by the respective suppliers in their Form
GSTR-1s)
(ii) 6,00,000
Balance in Form GSTR-2A on 11th November
(Invoices at S. Nos. 1, 2, 3 and 4 uploaded by the respective suppliers in their
Form GSTR-1s)

(iii) 6,80,000
Balance in Form GSTR-2A on 20th November
(Invoices at S. Nos. 1, 2, 3, 4 and 5 uploaded 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

involved in the can 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 uploaded in GSTR-1 4,00,000 0.00

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[Note 3]
Invoice at S. No. 9 50,000 50,000
[Note 4]
Total 10,50,000 5,30,000

Notes:
(1) ITC in respect of the invoices whose details have not been uploaded 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 uploaded 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 uploaded 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) The ITC in respect of invoices not uploaded in GSTR – 1, no ITC can be availed. Thus, in respect of invoices
at S.Nos. 5, 6 7 and 8 ITC of 4,80,000 cant be availed

(4) The restriction of availment of ITC is imposed only in respect of those invoices, details of which are
required to be uploaded by the suppliers under section 37(1) of the CGST Act, 2017 and which have not been
uploaded. Therefore, full ITC can be availed in respect of IGST paid on imports which are outside the ambit of

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section 37(1) [Circular No. 123/42/2019 GST dated 11.11.2019].

QUS.26 Mr. Vijay, a registered supplier, receives 100 invoices (for inward supply of goods/ services) involving GST of `
10 lakh, from various suppliers during the month of October.

Compute the ITC that can be claimed by Mr. Vijay in his GSTR-3B for the month of October to be filed by 20th
November in the following independent cases assuming that GST of ` 10 lakh is otherwise eligible for ITC:
Case I: Out of 100 invoices, 80 invoices involving GST of ₹ 6 lakh have been uploaded by the suppliers in their
respective GSTR-1s filed on the prescribed due date therefor.

Case II: Out of 100 invoices, 95 invoices involving GST of ₹ 9.8 lakh have been uploaded by the suppliers in
their respective GSTR-1s filed on the prescribed due date therefor.

ANS- Section 16(2) of the CGST Act, 2017 provides certain conditions for availing ITC wherein one of the
conditions is that the taxpayer must be in possession of the tax invoice or other tax paying document in
respect of which he is claiming the ITC. Rule 36 of the CGST Rules, 2017 lays down the documents and other
conditions basis which the registered person can claim ITC. Sub-rule (4) of rule 36 of the CGST Rules, 2017
stipulates that ITC to be availed by a registered person only in respect of invoices or debit notes, the details of
which have been uploaded by the suppliers in GSTR- 1, no ITC can be availed in respect of invoices or
debit notes the details of which have not been uploaded by the suppliers in GSTR-1.

In accordance with the aforesaid provisions, given two cases have been analysed as under:
Case I

ITC to be claimed by Mr. Vijay in his GSTR-3B for the month of October to be filed by 20th November will be
computed as under-

Invoices Amount of ITC involved in the invoices (`) Amount of ITC that can be
availed (`)
In respect of 80 invoices uploaded 6 lakh 6 lakh
in GSTR-1 [Refer Note 1 below]

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In respect of 20 invoices not 4 lakh NO ITC

uploaded in GSTR-1 [Refer Note 2 below]
Total 10 lakh 6.00 lakh

Notes:
(1) In respect of invoices uploaded by the suppliers in their GSTR-1, full ITC can be availed.

(2) The ITC in respect of invoices not uploaded in GSTR – 1, no ITC can be availed. Thus, in respect of 20
invoices not uploaded in GSTR-1s, ITC of 4 lakh cant be availed.

Case II
ITC to be claimed by Mr. Vijay in his GSTR-3B for the month of October to be filed by 20th November will be
computed as under-
Invoices Amount of ITC involved in the invoices (`) Amount of ITC that can be
availed (`)
In respect of 95 invoices uploaded 9.8 lakh 9.8 lakh
in GSTR-1 [Refer Note 1 below]
In respect of 5 invoices not 0.2 lakh 0.00 lakh
uploaded in GSTR-1 [Refer Note 2 below]
Total 10 lakh 9.8 lakh

Notes: (1) In respect of invoices uploaded by the suppliers in their GSTR-1, full ITC can be availed.

(2) The ITC in respect of invoices not uploaded in GSTR – 1, no ITC can be availed. Thus, in respect of 5
invoices not uploaded in GSTR-1s, ITC of 0.2 lakh cant be availed.

QUS. Xenon Pvt. Ltd., Agra, is a registered supplier engaged in the manufacture of taxable goods. Goods valued at
10,50,000 were supplied by the company to Freshbite Pvt. Ltd., a registered supplier located at Ferozabad,

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without the cover of an invoice with a fraudulent intent. Since the company evaded tax by not issuing the
invoice for the supply, a show cause notice was issued by the proper officer under section 74 requiring the
company to pay tax @ 12% [₹ 1,26,000] and applicable interest and penalty. The company paid the tax,
interest and penalty after the order was passed by the proper officer.
Examine the ITC entitlement of Freshbite Pvt. Ltd. in respect of tax of ₹ 1,26,000 paid by Xenon Pvt. Ltd.

ANS- As per section 17(5), tax paid under sections 74, 129 and 130 is not available as ITC. Further, rule 36(3) also
lays down that tax paid in pursuance of any order where any demand has been confirmed on account of any
fraud, fraud, willful misstatement or suppression of facts cannot be availed as ITC by a registered person.
In the given case, Xenon Pvt. Ltd. has paid tax in pursuance of an order issued under section 74. Therefore,
Freshbite Pvt. Ltd. cannot avail ITC of such tax.

QUS. Flamingo Ltd. is an airline providing passenger transportation services by air. The company offers meals of
premium quality to passengers on board the aircraft. The value of such meals is compulsorily included in the
price of the air ticket. The company avails outdoor catering services of Dhaniaram Pvt. Ltd. for providing such
meals to its customers.
Examine whether Flamingo Ltd. can avail ITC on such outdoor catering service availed by it.

ANS- As per section 17(5)(i)(b), ITC on supply of inter alia food and beverages and outdoor catering is blocked.
However, ITC in respect of such goods or services or both shall be available where an inward supply of such
goods or services or both 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.
In the given case, Flamingo Ltd. is availing outdoor catering service to provide outdoor catering (meals) to the
passengers on board the aircraft. Since ITC in respect of outdoor catering is available if the same is used for
making an outward taxable supply as an element of a taxable composite or mixed supply, Flamingo Ltd. can
avail ITC on outdoor catering service procured by it

QUS. Jumbo Sales Pvt. Ltd., a supplier of readymade garments, announced ‘Buy One get Two free’ offer on Men’s T-
Shirts on Diwali to boost its sales.
You are required to advise the company on the availability of ITC in respect of inward supplies used in relation
to such supply.

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ANS- It may appear at first glance that in case of offers like “Buy One, Get One Free”, one item is being “supplied
free of cost” without any consideration.
As per clause (a) of section 7(1) read with clause (c) thereof, goods or services which are supplied free of cost
(without any consideration) shall not be treated as supply except in case of activities mentioned in Schedule I.
Circular No. 92/11/2019 GST dated 28.03.2019 has clarified the entitlement of ITC in the hands of supplier in
respect of sales promotional scheme like ‘buy one get one free’. Such promotional offers are not individual
supplies of free goods, but a case of two or more individual supplies where a single price is being charged for
the entire supply. It can at best be treated as supplying two goods for the price of one.
Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed
supply and the rate of tax shall be determined as per the provisions of section 8.
ITC shall be available to the supplier for the inputs, input services and capital goods used in relation to supply
of goods or services or both as part of such offers.

Therefore, the given case is not the case of individual supplies of free goods, but a case of three individual
supplies where a single price is being charged for the entire supply. Thus, Jumbo Sales Pvt. Ltd. will be entitled
to avail ITC on inputs, input services and capital goods used in relation to supply of T- Shirts as part of such
offer

QUS. A garment factory receives a Government order for making uniforms for a commando unit. This supply is
exempt from tax under a notification issued under section 11 of the CGST Act. 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 (exclusive of taxes) of the other products of the factory and exempted uniforms in July is 4 crore
and ₹ 1 crore respectively, the ITC on thread and lining material procured in July is ₹ 5,000 and ₹ 15,000
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 reversed in terms
of rule 42.

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Credit attributable to exempt supplies = Common credit x (Exempt turnover/ Total turnover)
Common credit = ₹ 15,000 + ₹ 5,000 = ₹ 20,000 Exempt turnover = ₹ 1 crore
Total turnover = ₹ 5 crore [₹ 1 crore + ₹ 4 crore]
Credit attributable to exempt supplies = (₹ 1 crore /₹ 5 crore) x ₹ 20,000 = 4,000.
Ineligible credit of ₹ 4,000 will be reversed in Form GSTR-3B. Credit of 16,000 will be eligible credit for the
month of July.

QUS. Ceramity Ltd. has following units:

A: Factory in Tumkur, Karnataka; turnover of 27 crores in 2019-20;
B: Service centre in Hyderabad, Telangana; turnover of 1 crore in 2019-20; C: Service centre in Chennai, Tamil
Nadu; turnover of 2 crores in 2019-20; Ceramity Ltd.’s corporate office functions as ISD. It has to distribute ITC
of 9 lakh for May, 2020. Of this, an invoice involving tax of 3 lakh pertains to technical consultancy for Tumkur
unit.
Explain in brief how should the ITC be distributed?

ANS- As per rule 39(d) relating to ITC, -

• ₹ 3 lakh is attributable to Tumkur unit, and will be transferred to Tumkur unit only.
• 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 2019-20.
o Tumkur unit will get (27 crore / 30 crore) x 6 lakh = ₹ 5.4 lakh;
o Hyderabad service centre will get (1 crore /30 crore) x 6 lakh = 20,000; and
o Chennai service centre will get (2 crore /30 crore) x 6 Lakh = 40,000.
Ceramity Ltd. should issue ISD invoices (from GSTN obtained separately for ISD) for distributing ITC (as
calculated above) to its units. It should be clearly indicated in the invoices that the same are issued only for
distribution of ITC.

QUS. A registered supplier of taxable goods supplied goods valued at 2,24,000 (inclusive of CGST ₹ 12,000 and SGST
₹ 12,000) to Mohan Ltd. under forward charge on 15th August for which tax invoice was also issued on the
same date. The inputs were received by Mohan Ltd. on 15th August. Mohan Ltd. availed credit of
₹ 24,000 on 20th September by filing Form GSTR-3B for August month. However, Mohan Ltd. did not make
any payment towards such supply along with tax thereon to the supplier. Is Mohan Ltd. eligible to avail ITC on

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such supply?
Discuss ITC provisions if Mohan Ltd. Makes the payment of 2,24,000 to the supplier on 18th March of next
calendar year.

ANS- As per section 16, Mohan Ltd. is eligible to avail ITC of the tax paid on inputs received by it on the basis of the
invoice issued by the supplier provided other conditions for availing ITC are fulfilled.
Payment of value of the goods along with the tax to the supplier is not a pre- requisite at the time of availing
credit, but Mohan Ltd. has to pay the said amount within 180 days from the date of issue of invoice. If Mohan
Ltd, fails to do so the ITC of ₹ 24,000 will be added to its output tax liability with interest. Such interest will be
paid @ 18% p.a. from the date of availing credit till the date when the amount added to the output tax liability
is paid [Second proviso to section 16(2) read with rule 37].
If Mohan Ltd. makes the payment of ₹ 2,24,000 (Value + tax) to the supplier on 18th March of next calendar
year, i.e. after the expiry of 180 days from date of issue of invoice, Mohan Ltd. can avail the credit of ₹ 24,000
while filing form GSTR-3B for the month of March.

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JOB WORK

QUS.1 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

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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, dies, 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.

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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).

QUS.2 Alok Pvt. Ltd., a registered manufacturer, sent steel cabinets worth ` 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 AlokPvt. Ltd. The metal frame is
to be supplied by M/s Prem Tools. M/s Prem Tools has agreed to a consideration of ` 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 ` 45,000. M/s Prem Tools sent the steel cabinets mounted on
the metal frame to AlokPvt. Ltd. on 03.12.20XX in the same financial year.

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 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.

ANS- As per para 3 of Schedule II to the CGST Act, any treatment or process which is applied to another person’s
goods is a supply of services and accordingly is subject to GST rate applicable for services.
In the given case, M/s Prem Tools (job worker) undertakes the process of mounting the steel cabinets of Alok
Pvt. Ltd. (principal) on metal frames. In view of para 3 of Schedule II to the CGST Act cited above, 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.

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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 does not 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 AlokPvt. Ltd., on 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 the 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 5,00,000
GST @ 18% (A) 90,000
Sale of metal waste 45,000
GST @ 12% (B) 5,400
Total GST payable (A) + (B) 95,400

QUS.3 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.

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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 had 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.

QUS. 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), the principal may take ITC on capital goods sent to a job worker for job work without

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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 *extendible by another 2 years+ from sending them to the job worker or
direct receipt by the job worker from the supplier. If the above time- linesare 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.

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PAYMENT OF TAX

QUS.1 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:

Sr.No. Particulars Total contract Payment

Value(inclusive due in October,
Of GST) (`) 20XX (`)
(i) Supply of stationery to FisheriesDepartment, Kolkata 2,60,000 15,000
(ii) Supply of car rental services to Municipal Corporation of Delhi 2,95,000 20,000
(iii) Supply of a heavy machinery to Public Sector Undertaking 5,90,000 25,000
registered and located in Uttarakhand
(iv) Supply of taxable goods to Delhi office of National Housing Bank, a 6,49,000 50,000
society established by Government of India under the Societies
Registration Act, 1860
(v) Interior decoration of AndhraBhawan located in Delhi. Service 12,39,000 12,39,000
contract is entered into with the Government of Andhra
Pradesh (registered only in Andhra Pradesh)
(vi) Supply of printed books and printedpost cards to a West Delhi 9,72,000 50,000
Post Office [Out of total contract value of ` 9,72,000, contract for books &
value for supply of books (exempt from GST) is ` 7,00,000 and for 20,000 for
supply of printed post cards (taxable under GST) is ` 2,72,000.] printed post
Cards
(vii) Maintenance of street lights in Municipal area of East Delhi* [The 3,50,000 3,50,000
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

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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:

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Sr.No. Particular Total Payment Tax to Beded Ucted

contract Due CGST(`) SGST(`) IGST(`)
value (`)
(i) Supply of stationery to Fisheries 2,60,000 15,000 -- --
Department, Kolkata (Note-1)
(ii) Supply of car rental services to Municipal 2,95,000 20,000 -- --
Corporation of Delhi(Note-2)
Supply of a heavy machinery to Public
(iii) Sector 5,90,000 25,000 500
Undertaking located in Uttrakand(Note-3)
(iv) Supply of taxablegoods to Delhi office of 6,49,000 50,000 500 500
National Housing Bank, a society
established by Government of India
under the Societies Registration Act, 1860
(Note-4)
(v) Interior decoration ofAndhra 12,39,000 12,39,000 -- -- --
Bhawan located in Delhi (Note- 5)
(vi) Supply of printed books and printedpost 9,72,000 70,000 -- -- --
cards to a West Delhi Post Office (Note-6)
(vii) Maintenance of street lights in Municipal 3,50,000 3,50,000 -- -- --
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]

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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 registered and located in
Uttarakhand is subject to IGST @ 18% and the place of supply in this case is also in the same state where the
recipient of goods is located. 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
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.

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registration of the recipient i.e. 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. As per Notification No. 12/2017 CT (R) dated 26.06.2017, 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.

QUS.2 Miss Nitya has following balances in her Electronic Cash Ledger as on 28/02/20XX as per GST portal.
Major Heads Minor Heads Amount (`)
Tax 40,000
CGST Interest 1,000
Penalty 800

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Tax 80,000
SGST Interest 400
Penalty 1,200
Fee 2,000
IGST Tax 45,000
Interest 200
Penalty Nil

Her tax liability for the month of February, 20XX for CGST and SGST was ` 75,000 each. She failed to pay the
tax and contacted you as legal advisor on 12/04/20XX to advise her as to how much amount of tax or
interest she is required to pay, if any, by utilizing the available balance to the maximum extent possible as
per GST Laws. She wants to pay the tax on 20-04-20XX.
Other Information:-
(i) Date of collection of GST was 18thFebruary, 20XX.
(ii) No other transaction after this up to 20th April 20XX.
(iii) Assume there is no penalty and late fee payable for this transaction.
(iv) No other balance is available.

ANS- Due date for payment of tax collected on 18.02.20XX is 20.03.20XX. Interest @ 18% p.a. is payable for the
period for which the tax remains unpaid in terms of section 50 of CGST Act, 2017. In the given case, since
Miss Nitya wants to pay the tax on 20.04.20XX, interest payable on the amount of CGST and SGST each is as
follows:
Rs 75,000 × 18% × 31/365 = ` 1,147 (rounded off)

As per section 49(10) of the CGST Act, 2017, any amount of tax, interest, penalty, fee or any other amount
available in the electronic cash ledger under the CGST Act, 2017 can be transferred to the electronic cash
ledger for integrated tax, central tax, State tax, Union territory tax or cess, in such form and manner and
subject to such conditions and restrictions as may be prescribed. Thus, amount entered under any Minor
head (Tax, Interest, Penalty, etc.) and Major Head (CGST, IGST, SGST/UTGST) of the Electronic Cash Ledger
can be transferred to any other major or minor head. Consequently, cross-utilization among Major and
Minor heads are also possible.

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Thus, Miss Nitya is liable to pay the following amount of tax and interest as under:

CGST SGST
Tax Interest Tax Interest
Tax Liability 75,000 1,147 75,000 1,147
Balances in Electronic cash ledger in same major/ 40,000 1,000 80,000 400
minor head
Balance transferred from other major/minor head 35,000 147(Note-2) Nil 747
(Note 1)
(Note-3)
Amount payable in cash Nil Nil Nil Nil

Note 1 – Rs 35,000 shortfall amount assumed to be transferred from cash ledger balance available in Major
Head IGST.

Note 2 – Rs 147 shortfall amount assumed to be transferred from cash ledger balance in minor head penalty
of major head CGST.

Note 3 – Rs 747 shortfall amount assumed to be transferred from cash ledger balance in minor head tax of
major head SGST.

Since there is no restriction in intra-head or inter-head transfer of available balance in cash ledger as per the
relevant provisions, it is upon the taxpayer to decide from which account the shortfall has to be made good.

QUS.3 Yash Shoppe, a registered supplier of Jaipur, is engaged in supply of various goods and services exclusively
to registered 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 by the recipient of supplies

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from each of the receivables given below (independent cases) assuming that the payments as per the
contract values are made on 31.10.20XX. 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 registered and 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 (CGST,
SGST/UTGST and IGST) and GST 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:

Sr.No. Particulars Tax to be deducted

Total contract CGST @ SGST @ IGST @
value due to be 1% (`) 1% (`) 2% (`)
received
[excluding
GST] (`)
(1) Supply of computer stationery to PSU in Mumbai 2,42,857 -- --
[Since the total value of supply under the contract [2,72,000
[excluding IGST (being inter-State supply)] does × 100 /112]
not exceed ` 2,50,000, tax is not required to be

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deducted.]
(2) Supply of air conditioner to GST Department in 2,55,000 -- 5,100
Delhi [Since the total value of supply under the
contract [excluding IGST (being inter-State supply)]
exceeds ` 2,50,000 and place of supply is in the
state/ UT where the recipient is located, tax is
required to be deducted.]
(3) Supply of a generator renting service to Municipal 3,12,500 3,125 3,125
Corporation of Jaipur [Since the total value of [3,50,000
supply under the contract [excluding CGST and × 100 /112]
SGST (being intra- State supply)] exceeds `
2,50,000, tax is required to be deducted.]
Total 3,125 3,125 5,100

QUS. From the following information of independent cases, your expert advice, with appropriate reasoning, is
sought on the applicability of TDS/TCS provisions of the CGST Act, 2017. You shall also quantify the amount
of TDS/TCS, as the case be, if the same is applicable.
(i) Top Fashions, a designer cloth dealer and registered in the State of West Bengal, effected supply through
'QUICK DEAL', an electronic commerce operator. Net value of taxable intra-State supplies effected for the
month of October 2019 was ` 1,50,000.
(ii) M/s Super Builders, a registered supplier in Tamil Nadu, was awarded a works contract by Government
of Tamil Nadu amounting to ` 4,30,000. Of this, value of exempt supply was ` 1,00,000.
(iii) Tasty Caterers, a• registered supplier of Kerala, provided catering services in Kochi, Kerala to
Government of Andhra Pradesh for its annual training camp held for its staff. Value of said services was `
4,50,000. (Jan 21 exam)

ANS- (i) An electronic commerce operator (ECO) is required to collect TCS - an amount @ 1% (CGST 0.5% and
SGST @ 0.5%) of the net value of taxable supplies made through it by other suppliers.
= ` 1,50,000 × 0.5%
= ` 750 (CGST)&
` 750 (SGST)

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(ii) A State Government is required to deduct tax from the payment made to the supplier of taxable goods
and/or services, where the total value of such supply [excluding GST] under a contract, exceeds ` 2,50,000.
TDS to be deducted in the given intra- State supply (since place of supply and location of supplier is in Tamil
Nadu) is as follows:
= `(4,30,000 - 1,00,000) × 1%
= ` 3,300 (CGST)
` 3,300 (SGST)

(iii) Since, in the given case, the location of supplier and place of supply are in the same State, i.e., Kerala
and location of recipient is in Andhra Pradesh,
Andhra Pradesh Government is not required to deduct TDS although the total value of supply under the
contract is more than `2,50,000.

Note: In above question, it has been assumed that the value given is exclusive of GST, wherever applicable,
since the rate of tax is not given in the question.

QUS. (i) A Central Government Department located at Uttar Pradesh is registered with the Commercial Tax
Department UP State for deducting GST. It enters into a contract with a Public Sector Undertaking (PSU),
registered under GST in the State of Delhi, forsupplying goods valued ` 3,50,000. The PSU argues that no tax
is deductible on this supply by the Central Government Department as it is located outside the State of
Uttar Pradesh and therefore not liable to tax under CGST and SGST as it is a local levy and IGST tax
deduction is not applicable if it is located in another State, other than the State in which the Department is
registered. You are required to comment on this.

(ii) Would there be any difference, if instead of the PSU if it was an entity in the private sector?
Applicable tax rate for deduction is 1% CGST, 1% SGST and 2% IGST.

(iii) If the private sector entity undertakes works contract, for the above Department in New Delhi. What
would be the position of tax deduction when the contract value is ` 5,00,000?

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(iv) The disbursing officer has not paid the tax deducted in the month of February 2019, amounting to `
2,00,000 under CGST and 2,00,000 under SGST to the Government's account on the relevant due date, but
has paid it on 14th May, 2019. Further, return for that month is also filed on that date and the certificate is
also issued simultaneously. What are the consequences, on such failures, to the disbursing officer under the
GST law?

ANS- (i) Certain specified persons are required to deduct tax from the payment made to the supplier of taxable
goods and/or services, where the total value of such supply [excluding GST] under a contract, exceeds
`2,50,000.

However, the tax is not liable to be deducted at source when supply of goods and/or services has taken
place between one specified person to another specified person. Since both Central Government
Department and PSU are the specified persons, tax is not deductible in case of supply of goods between
them.

(ii) Central Government Department is mandatorily required to deduct IGST @ 2% sincea private entity is
not the specified person.

(iii) Since, in the given case, the location of supplier and place of supply is in the sameState, i.e., Delhi and
location of recipient is in UP, Central Government Department is not required to deduct TDS although the
total value of supply under the contract is more than `2,50,000.
It has been assumed that the location of private entity and the place of supply are in Delhi and the Central
Government Department is in U.P.

(iv) Failure to deposit TDS with the Government and failure to furnish TDS return within the stipulated time
period will result in following consequences:

(A) Interest @ 18% p.a. on the amount of tax deducted shall be payable.
(B) Late fee of 25 per day for the period of delay in furnishing return, or ` 1,000, whichever is lower, shall
be payable. Equal amount of late fee will be payable under the respective State law.
(C) Applicable penalty will also be levied.

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QUS.1 Mr. Georege, a registered supplier of goods at Kerala, who pays GST under regular scheme has made the
following transactions (exclusive of tax) during April 2019 :

Source Purchases Sales Tax Rate

New Delhi 5,00,000 10,00,000 18%
Trivandrum 2,50,000 8,00,000 9% each SGST & CGST
Total 7,50,000 18,00,000

He has complied all the conditions for availing the ITC and on 01-04-2019 has the following ITC credit :

Source Taxes Interest Penalty

CGST 30,000 1,500 500
SGST 30,000 1,500 500
IGST 1,00,000 2,000 500

Compute the net CGST, SGST and IGST payable by Mr. George during April 2019 in cash.

ANS- Computation of GST liability (amount in Rs.) :

Particulars CGST SGST IGST
Inter-State Sale of goods in New Delhi [Rs. 10,00,000 × 18%] 1,80,000
Intra-State Sale of goods in Trivandrum [Rs. 8,00,000] (CGST/SGST @ 9% 72,000 72,000
each)
Less: Input tax credit [WN]
Opening balance 30,000 30,000 1,00,000
Purchases during the month
Intra-State purchases - Rs. 2,50,000 [CGST @ 9%and SGST @ 9%] 22,500 22,500 -
Inter-State purchases [Rs. 5,00,000] [IGST @ 18%] - - 90,000
Total Input tax credit 52,500 52,500 1,90,000
Less: Extra credit of IGST to be used for payment of CGST 10,000 - -10,000

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Net amount of CGST/ SGST/ IGST payable 9,500 19,500 NIL

Working Note : Interest and penalty is not eligible for input tax credit.

QUS.2 Manufacturer 'A' of Rajasthan extracted raw produce 'X' and raw produce 'Y' from mines at Rs. 10,000 and
Rs. 15,000 respectively and sold the same at 100% margin to Manufacturer 'B' of Rajasthan (GST rate is 5%
on produce 'X' and 12% on produce 'Y'). Manufacturer 'B' used X and Y as raw material and sold the
resultant product for Rs. 2,00,000 to wholesaler 'C' of Rajasthan (GST rate is 12%). Wholesaler rC' sold the
same to Retailer 'D' of Rajasthan at 25% above cost (GST rate is 12%). The retailer 'D' sold the same to a
consumer at 20% above cost (GST rate is 12%). Compute the amount of GST payable in cash by each person.

ANS- Computation of GST payable in cash (amount in Rs.)-

Particulars CGST SGST Total

(1) GST payable in cash by Manufacturer ’A'
5% on produce 'X' i.e. 5% of Rs. 20,000 (Rs. 10,000 + 100% of Rs. 10,000) 500 500
12% on produce Y’ i.e. 12% of Rs. 30,000 (Rs. 15,000 + 100% of Rs. 15,000) 1,800 1,800
GST to be paid in cash 2,300 2,300 4,600
(2) GST payable in cash by Manufacturer *B'
GST @ 12'% on sale price of Rs. 2,00,000 12,000 12,000
Less: ITC credit on raw produce 'X' &‘Y’ 2,300 2,300
GST to be deposited in cash 9,700 9,700 19,400
(3) GST payable in cash by Wholesaler 'C'
GST @ 12% on sale price of Rs. 2,50,000 (Rs. 2,00,000 + 25% of Rs. 2,00,000) 15,000 15,000
Less: GST credit on purchases from Manufacturer 'B' 12,000 12,000
GST to be deposited in cash 3,000 3,000 6,000
(4) GST payable in cash by Retailer 'D'
GST @ 12% on sale price of Rs. 3,00,000 (Rs. 2,50,000 + 20% of Rs. 2,50,000) 18,000 18,000
Less: GST credit on purchases from Wholesaler ‘C’ 15,000 15,000
GST to be deposited in cash 3,000 3,000 6,000
Total GST paid to the Government [(1) + (2) + (3) + (4)] 36,000

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The above illustration shows that :

the GST paid to the Government at various stages (here, Rs. 36,000) is equal to;
the GST collected from the ultimate consumer (here, Rs. 36,000 or 12% of Rs. 3,00,000).

QUS.3 A manufacturer has purchased raw material for Rs. 1,05,000 (inclusive of 5% GST) and plant and machinery
for Rs. 2,24,000 (inclusive of 12% GST). The manufacturing and other expenses (excluding depreciation) are
Rs. 3,00,000. He sells the resultant products at 50% above cost (GST on sales is 12%). The plant and
machinery is to be depreciated at 50% straight line. Compute the amount of GST payable in cash. All
purchases and sales are made within the State of Rajasthan.

ANS- Computation of Value of taxable supply and GST payable in cash (amount in Rs.) —
Raw material net of GST (Rs. 1,05,000 × 100 + 105) 1,00,000
Depreciation on plant (50% of price net of GST i.e. 50% of Rs. 2,24,000 × 100 ÷ 112) 1,00,000
Manufacturing and other expenses 3,00,000
Total cost 5,00,000
Add: 50% mark-up on cost 2,50,000
Value of taxable supply 7,50,000
(Amount in Rs.)

Particulars CGST SGST Total

GST on sales (12% of Rs. 7,50,000) 45,000 45,000 90,000
Less; Input tax credit as follows :
ITC on raw materials and components (Rs. 1,05,000 × 5 ÷ 105) 2,500 2,500 5,000
Input tax credit on plant (Rs. 2,24,000 × 12 ÷ 112) 12,000 12,000 24,000
GST payable in cash 30,500 30,500 61,000

QUS.4 Mr. K of Kolkata purchased goods from Mr. A of Assam amounting to ` 1,18,000 (including 18% IGST). He
also purchased raw material worth ` 1,25,000 from local dealer who has opted for composition scheme. He
incurred ` 50,000 as direct and indirect expenses and added profit margin @ 12% of cost.

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Mr. K sold 70% of finished goods to Mr. M of Mumbai with IGST @ 12% payable thereon, and 30% of
finished goods to Mr. N of Kolkata with CGST and SGST @ 12% payable thereon.
Compute the net CGST, SGST and IGST liability and input tax credit if any.

ANS- Computation of taxable value of supply (amount in `):

Purchases of raw material from Mr. A of Assam [WN-1] 1,00,000
Purchases of raw material from dealer opted for composition 1,25,000
Scheme [WN-2]
Other direct and indirect expenses 50,000
Total Cost of goods manufactured 2,75,000
Add: Profit margin @ 12% of cost 33,000
Taxable value of supply 3,08,000
Goods sold to Mr. M of Mumbai (70% of goods produced) 2,15,600
Goods sold to Mr. N of Kolkata (30% of goods produced) 92,4000

Computation of GST liability

Particulars CGST SGST IGST

@ 6% @ 6% @ 12%
Goods sold to Mr. M of Mumbai - - 25,872
Goods sold to Mr. N of Kolkatta 5,544 5,544 -
Less: Eligible input tax credit in respect of purchases of— Raw material
(from Assam) 18,000
CGST/SGST/IGST to be paid in cash 5,544 5,544 7,872

Working Notes: (1) Credit will be available for IGST charged by outside state suppliers, hence same shall not
be included in the cost.

(2) No input tax credit shall be admissible on purchases made from dealer who has opted for the
composition scheme.

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(3) The credit of IGST is to be utilised for payment of IGST output tax liability first and if any amount remains
thereafter then such amount is to be utilised towards payment of CGST and SGST liability in any order.

QUS.5 Vivitha & Co., a registered dealer in Ludhiana, furnishes the following details of purchases and sales
pertaining to the month of July:
Goods 'A' purchased from local market (including GST @ 12%) 50,400
Goods 'B' purchased from Jaipur (including IGST @ 18%) 82,600
Sales made during the month to dealer of Kolkata of product:
Goods 'A' 80,000
Goods 'B' 45,000
Sales made within the state of Goods 'B' 35,000
Above sales amount given is exclusive of tax. Compute the net CGST, SGST and IGST liability and input tax
credit, if any for the month of July.

ANS- Computation of GST liability (amount in `)

Particulars CGST SGST IGST

Inter-State Sale:
Goods A' sold to Kolkata (IGST @ 12%) - - 9,600
Goods 'B' sold to Kolkata (IGST @ 18%) - - 8,100
Intra-State Sale:
Goods 'B' sold within state (CGST/SGST @ 9% each) 3,150 3,150 -
2,700 2,700 12,600
Less: Eligible ITC [( 50,400 x 100/112) x 12%] [( 82,600 x 100/118) x18%]
Net amount of CGST/ SGST/ IGST payable 450 450 5,100

QUS.6 XYZ Ltd. has supplied goods to local authority for Rs. 11,80,000 (inclusive of GST @ 18%). Determine the
amount of tax to be deducted at source. Also determine the interest liability if the tax deducted at source on
25-12-2019 is deposited on 28-03-2020.

ANS- As per provisions of Section 51(1) of the Act, the local authority has to deduct tax @ 2% (1% CGST and 1%
SGST) from the payment made or credited to the supplier of taxable goods or services or both, where the

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total value of such supply, under a contract, exceeds Rs. 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, in
such manner as may be prescribed 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 2% of
Rs. 10,00,000 = Rs. 20,000 [i.e. 10.000 - CGST and Rs. 10.000- SGST]

Computation of Interest on delay in deposit of TDS :

Due date for deposit of TDS [A] 10-01-2020

Date of payment of GST IB] 28-03-2020
Period of delay (in days) [C = B - A] 78
Amount of TDS [D] 20,000
Interest payable @ 18 % p.a. for delay in payment of days [D × 18% × C ÷ 366 days] 767
[Since leap year]

QUS.7 XYZ Ltd. a registered supplier of goods is effecting supplies through E-Comm Ltd (an Electronic Commerce
operator). It has made taxable supplies of goods amounting Rs. 55,00,000 in month of December 2019
through E-Comm Ltd. E-Comm Ltd. has returned goods amounting Rs. 5,00,000 to XYZ Ltd. during the month
of December 2019. Determine the amount of tax to be collected at source by E-comm Ltd.

ANS- As per provisions ol Section 52 of CGST Act, 2017, everv electronic commerce operator, not being an agent,
shall collect an amount calculated @1% [0.5% CGST and 0.5% SGST], 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.

Thus, the amount of tax to be collected at source by E- Comm Ltd. is as under (amount in Rs.):

Value of taxable supplies of goods made by XYZ Ltd. 55,00,000

Less: A’value of taxable supplies of goods returned to XYZ Ltd. 5,00,000
Amount on which lax is to be collected at source 50,00,000
Rate of TCS [0.5% CGST and 0.5% SGST] 1.00%

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Amount of TCS 50,000

QUS.8 M/s. Manmohak Apparels, is registered under GST in Madhya Pradesh, it sells leather handbags across India
through e-commerce operator Pingpong. Pingpong, is also registered with Madhya Pradesh GST Authority as
TCS collector. M/s. Manmohak Apparels made sales of Rs. 3,45,000/- and received sales returns of Rs.
67,700/- in the month of October, 2019. Sales are inclusive of tax. Leather handbags are taxable @ 18% GST.

Determine the amount of tax to be collected at source.

ANS- As per Section 52 of CGST Act, every electronic commerce operator not being an agent,shall collect an
amount calculated @ 0.5% CGST and @ 0.5% SGST, 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.

"Net value of taxable supplies" shall mean the aggregate value of taxable supplies of goods or services or
both, other than services notified under Section 9(5), made during any month by all registered persons
through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the
said month.

The amount of tax to be collected at source shall be determined as under :

Value of taxable supplies of goods made by Manmohak Apparels. 3,45,000
Less: Value of taxable supplies of goods returned to Manmohak Apparels. 67,700
Net Value of taxable supplies inclusive of 18% GST 2,77,300
Less: GST [Rs. 2,77,300 ×18 ÷ 118] 42,300
Net Value of taxable supplies on which tax is to be collected at source 2,35,000
Rate of TCS [0.5% CGST and 0.5% SCST] 1%
Amount of TCS 2,350

QUS. 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 I
amount which is received by it against the supplies?

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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.

QUS. 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 payableat 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.

QUS. A makes intra-State supply of goods valued at ` 50,000(excluding taxes) to B within State of Karnataka. There
is no input tax credit balance available with A. B makes inter-State supply to X Ltd. (located in Telangana)
after adding 10% as its margin on the value of goods excluding taxes. Thereafter, X Ltd. sells it to Y in
Telangana (Intra-State sale) after adding 10% as his margin on the value of goods excluding taxes.

Assume that the rate of GST chargeable is 18% (CGST and SGST at 9% each and IGST chargeable at 18%) and
every person involved in the aforesaid supplies are registered tax payers. Calculate tax payable at each stage
of the transactions detailed above. Wherever input tax credit is available and can be utilized, calculate the
net tax payable in cash. At each stage of the transaction, indicate which Government will receive the tax
paid and to what extent.

ANS- I. Intra-State supply of goods by A to B

`
Value charged for supply of goods 50,000
Add: CSGT @9% 4,500
Add: SGST @9% 4,500
Total price charged by A from B 59,000

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A does not have credit of CGST, SGST or IGST. Thus, the entire CGST (` 4,500) & SGST (` 4,500) charged will be
paid in cash by A to the Central Government and Karnataka Government respectively.

II. Inter-State supply of goods by B to X Ltd. – Margin @ 10%

`
Value charged for supply of goods (50000 x 110%) 55,000
Add: IGST 9,900
Total price changed by B from X Ltd. 64,900

Computation of IGST payable by B to Central Government in cash

`
IGST payable 9,900
Less: Credit of CGST 4,500
Less: Credit of SGST 4,500
IGST payable to Central Government in cash 900

Credit of CGST and SGST can be used to pay IGST provided the SGST credit shall be utilised towards payment
of IGST only where the balance of CGST credit is not available for payment of IGST. [Section 49(5) of the
CGST Act, 2017]. Karnataka Government will transfer SGST credit of ` 4,500 utilised in the payment of IGST to
the Central Government.

III. Intra-State supply of goods by X Ltd. to Y

`
Value charged for supply of goods (` 55,000 X 110%) 60,500
Add: CSGT @9% 5,445
Add: SGST @9% 5,445
Total price charged by X Ltd. from Y 71,390

Computation of CGST and SGST payable by X Ltd in cash

`
CGST payable 5,445

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Less: Credit of IGST 5,445

CGST payable Nil
SGST payable 5,445
Less: Available Credit of IGST (`9,900 - `5,445) 4,455
SGST payable to Telangana Government in cash 990
Credit of IGST shall first be utilised towards payment of IGST and the amount remaining, if any, may be
utilized towards the payment of CGST and SGST/UTGST, as the case may be, in any order and in any
proportion. Here, there is no payment to be made with respect to IGST so its credit balance will be directly
utilised for making payment of CGST or SGST, in any order. Central Government will transfer IGST of R` 4,455
utilised in the payment of SGST to Telangana Government.

QUS. Can one use input tax credit for payment of interest, penaltyor payment of GST under reverse charge?

ANS- No, as per section 49(4) the amount available in the electronic credit ledger may be used for making any
payment towards ‘output tax’.
As per section 2(82), 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 or GST payment under reverse
charge.

QUS. ABC Limited wanted to file its monthly return for GST under section 39(1) for the month of November on
20th December without paying self-assessed tax of ` 2,50,000.
Explain what could be the implications for ABC Limited as per relevant provisions.

ANS- As per section 2(117), “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 would not be considered as a valid return and also input tax credit will not
be allowed to the recipient of supplies.
Interest under section 50 and late fees under section 47 would also be levied.

QUS. M/s PPC & Co. have availed input tax credit of ` 42,500 during September under IGST head, instead of

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availing ` 21,250 under CGST & SGST heads. Mr. X, accountant of the above entity would like to use Form
GST PMT-09 for making a transfer from IGST head to respective CGST & SGST heads.
Examine the scenario and offer your comments.

ANS- As per provisions of section 49(10) read with rule 87(13) of CGST Rules, 2017, “A registered person may, on
the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the
electronic cash ledger under the Act to the electronic cash ledger for integrated tax, central tax, State tax or
Union territory tax or cess in FORM GST PMT-09”.

It is important to note that only amounts available under Electronic Cash Ledger can be transferred to the
respective heads using Form GST PMT-09 and not otherwise.
Accordingly, contention of the Accountant Mr. X of M/s PPC & Co., is not valid for transfer of ` 42,500 from
head IGST to respective CGST & SGST in Electronic Credit Ledger.

QUS. ABC Ltd. has belatedly filed GST return (under section 39) for the month of January after 60 days from the
due date for filing such return. Total tax paid in such return is as below:
Particulars IGST(`) CGST(`) SGST(`)
Output tax payable 4,50,000 2,85,000 2,85,000
Tax payable under revers charge 18,000 32,000 32,000
Input tax available for utilization 2,50,000 55,000 55,000
Tax paid through Electronic Cash Ledger 2,18,000 2,62,000 2,62,000
Examine the interest payable as per the provisions of GST law with the help of above information.
What would be your answer, if entire tax for the month of January has to be paid through Electronic Credit
Ledger except taxes to be paid on reverse charge basis?

ANS- Proviso to section 50 lays down that the interest on tax payable in respect of supplies made during a tax
period and declared in the return for the said period furnished after the due date in accordance with the
provisions of section 39, except where such return is furnished after commencement of any proceedings
under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is
paid by debiting the electronic cash ledger.

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In the given scenario, ABC Ltd. has filed its return belatedly and as per the above provisions, interest is
payable on the tax component paid through Electronic Cash Ledger only. A point relevant to note here is
that tax payable on reverse charge basis also carries interest for the period of delay in remittance of tax and
input tax credit cannot be used to pay the same (i.e. tax payable under reverse charge has to be paid in
cash).

Accordingly, interest under section 50 payable for the tax paid through Electronic Cash Ledger is computed
as below:
IGST: 218,000 *18%*60/365 = 6,450
CGST: 262,000*18%*60/365 = 7,752
SGST: 262,000*18%*60/365 = 7,752Further, if entire tax payable for January is paid through Electronic
Credit ledger, except for the taxes to be paid under reverse charge basis, then interest under section 50 is
applicable only on the remittance of tax under reverse charge basis and not for tax payable on forward
charge basis. Interest payable is given as below:
IGST: 18,000 * 18% * 60/365 = 532
CGST: 32,000 * 18% * 60/365 = 946
SGST: 32,000 * 18% * 60/365 = 946

QUS. Examine the taxes to be paid for the month of July on the basis of below information furnished by M/s Zinc
& Co.:
Particulars IGST(`) CGST(`) SGST(`)
Output tax payable 14,75,000 28,34,000 28,34,000
Tax payable under reverse change 36,000 1,44,000 1,44,000
Balance in Electronic Credit Ledger 26,52,000 18,32,000 18,32,000
Output tax reported under IGST column pertains to the month of February, which was not paid for the said
period. Also, note that input tax credit available in Electronic Credit Ledger pertains to input tax on
purchases made during the month of July and no opening balance exists from previous tax period. It
furnishes return on monthly basis.

ANS- Payment of taxes is governed as per the provisions laid in section 49 read with section 49A and 49B of CGST
Act, 2017 along with rule 88A of CGST Rules, 2017

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Also, section 49(8) of CGST Act, stipulates that every taxable person shall discharge his tax and other dues
under this Act or the rules made thereunder in the following order, namely:
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand
determined under section 73 or section 74;”

As per the above provisions, self-assessed tax of previous tax period i.e. February shall be paid first and later
self-assessed tax of current tax period i.e. July shall be paid.

Payment of taxes under forward charge

Particulars IGST(`) CGST(`) SGST(`)
Balance in electronic credit ledger for utilization 26,52,000 18,32,000 18,32,000
Output tax payable for July 14,75,000 28,34,000 28,34,000
Less: Utilization of input tax credit
a. IGST [Refer Note 1] 14,75,000 5,88,500 5,88,500
b. CGST 0 18,32,000 0
c. SGST 0 0 18,32,000
Amount payable through electronic cash ledger Nil 4,13,500 4,13,000

Total amount payable through electronic cash ledger

Particulars IGST(`) CGST(`) SGST(`)
Amount payable through Electronic cash ledger under forward Nil 4,13,500 4,13,500
Charge
Amount payable through electronic cash ledger under reverse 36,000 1,44,000 1,44,000
charge [Refer Note-2]
Total amount payable through electronic cash ledger 36,000 5,575,000 5,57,500

Notes:-
1 After utilization of IGST credit towards output IGST liability, balance has been utilized equally amongst

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CGST & SGST

2 Input tax credit cannot be utilized for discharging tax liability under reverse charge basis, thus payable vide
electronic cash ledger.

Since, M/s Zinc & Co., have defaulted in payment of taxes for the month of February and the same has been
paid during July, interest is payable as per the provisions of section 50 of the CGST Act, 2017

QUS. M/s Neptune & Co. is registered under GST in the state of Maharashtra. They have made zero-rated supply
of goods worth ` 84,50,000/- on payment of IGST for ` 10,14,000/- during the month of May. The refund
application under section 54 for the above supply has been rejected by the proper officer.
Mr. A, taxation manager of the firm, has sought for recrediting the Electronic Credit Ledger as per the
provisions of rule 86 for the above rejection. Examine the scenario and offer your comments.

ANS- Rule 86 of CGST Rules provides that where a registered person has claimed refund of any unutilized amount
(i.e. ITC) from the electronic credit ledger in accordance with the provisions of section 54, the amount to the
extent of the claim shall be debited in the said ledger.

If the refund so filed is rejected, either fully or partly, the amount so debited to the extent of rejection, shall
be re-credited to the electronic credit ledger by the proper officer.

In the present case, M/s Neptune & Co., have made zero-rated supply with payment of IGST for `
10,14,000/-and the refund for the same has been rejected by the proper officer. Therefore, contention of
Mr. A is not sustainable as debit entry in the Electronic Credit Ledger has not been made as per sub-rule (3)
of Rule 86 towards “refund of any unutilized amount”.

Supply made during May by M/s Neptune & Co. is on payment of IGST and therefore provisions laid out in
sub-rule (4) of Rule 86 shall not be applicable.

QUS. Examine the taxes to be paid for the month of July on the basis of below information furnished by M/s Zinc
& Co.:

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Particulars IGST (₹) CGST (₹) SGST (₹)

Output tax payable 14,75,000 28,34,000 28,34,000
Tax payable under reverse charge 36,000 1,44,000 1,44,000
Balance in Electronic Credit Ledger 26,52,000 18,32,000 18,32,000
Output tax reported under IGST column pertains to the month of February, which was not paid for the said
period. Also, note that input tax credit available in Electronic Credit Ledger pertains to input tax on
purchases made during the month of July and no opening balance exists from previous tax period.

ANS- Payment of taxes is governed as per the provisions laid in section 49 read with section 49A and 49B of CGST
Act, 2017 along with rule 88A of CGST Rules, 2017
Also, section 49(8) of CGST Act, stipulates that every taxable person shall discharge his tax and other dues
under this Act or the rules made thereunder in the following order, namely:
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand
determined under section 73 or section 74;”
As per the above provisions, self-assessed tax of previous tax period i.e. February shall be paid first and later
self-assessed tax of current tax period i.e. July shall be paid.

Payment of taxes under forward charge

Particulars IGST (₹) CGST (₹) SGST (₹)
Balance in electronic credit ledger for utilization 26,52,000 18,32,000 18,32,000
Output tax payable for July 14,75,000 28,34,000 28,34,000
Less: Utilization of input tax credit:
a. IGST [Refer Note1] 14,75,000 5,88,500 5,88,500
b. CGST 0 18,32,000 0
c. SGST 0 0 18,32,000
Amount payable through electronic cash ledger Nil 4,13,500 4,13,500

Total amount payable through electronic cash ledger

Particulars IGST (₹) CGST (₹) SGST (₹)

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Amount payable through Electronic cash ledger under Nil 4,13,500 4,13,500
forward charge
Amount payable through electronic cash ledger under 36,000 1,44,000 1,44,000
reverse charge [Refer Note-2]
Total amount payable through electronic cash ledger 36,000 5,57,500 557,500
Notes:-
1 After utilization of IGST credit towards output IGST liability, balance has been utilized equally amongst
CGST & SGST
2 Input tax credit cannot be utilized for discharging tax liability under reverse charge basis, thus payable vide
electronic cash ledger.
Since, M/s Zinc & Co., have defaulted in payment of taxes for the month of February and the same has been
paid during July, interest is payable as per the provisions of section 50 of the CGST Act, 2017

QUS. 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.

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QUS. Explain the following terms in brief:

a) E-FPB
b) CPIN
c) CIN

ANS- CPIN stands for Common portal Identification Number. It is created for every Challan successfully generated
by the taxpayer. It is a 14-digit unique number to identify the challan. CPIN remains valid for a period of 15
days.

CIN or Challan Identification Number is generated by the banks, once payment in lieu of a generated Challan
is successful. It is a 18-digit number that is 14-digit CPIN plus 4-digit Bank Code.
CIN is generated by the authorized banks/Reserve Bank of India (RBI) when payment is actually received
by such authorized banks or RBI and credited in the relevant government account held with them. It is an
indication that the payment has been realized and credited to the appropriate government account. CIN is
communicated by the authorized bank to taxpayer as well as to GSTN.

E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks which are authorized
to collect payment of GST. Each authorized bank will nominate only one branch as its E-FPB for pan India
transaction.

The E-FPB will have to open accounts under each major head for all governments. Any amount received by
such E-FPB towards GST will be credited to the appropriate account held by such E-FPB. For NEFT/RTGS
Transactions, RBI will act as E-FPB.

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PLACE OF SUPPLY

QUS.1 Determine the place of supply for the following independent cases under the IGST Act, 2017:
(i) Grand Gala Events, an event management company at Kolkata, 377tilized377 two award functions for Kalyan
Jewellers of Chennai (Registered in Chennai) at New Delhi and at Singapore.
(ii) Perfect Planners (Bengaluru) is hired by Dr. Kelvin (unregistered person based in Kochi) to plan and
377tilized his son’s wedding at Mumbai.

Will your answer be different if the wedding is to take place at 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) of IGST Act,2017.
Since, in the given case, the award functions at New Delhi and Singapore are organized for Kalyan Jewellers
(registered in Chennai), place of supply in both the cases is the location of Kalyan Jewellers i.e., Chennai.

(ii) 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 [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.

However, if the wedding is to take place outside India [Malaysia], the place of supply is the location of
recipient, i.e.Kochi.

QUS.2 Raman Row, a registered supplier under GST in Mumbai, is directed by Nero Enterprises, Kolkata to deliver
goods valued at ` 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

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circumstances.

ANS- The supply between Raman Row (Mumbai) and Nero Enterprises (Kolkata) is a bill to shipto 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 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 ` 12,00,000, which comes out to ` 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 toIGST.

QUS.3 Mr. Murthy, an unregistered person and a resident of Pune, hires the services of M/s Sun Ltd. An event
management company registered in Delhi, for 378tilized378o of the new product launch inBengaluru.
(i) Determine the place of supply of services provided by M/s Sun Ltd.
(ii) What would your answer be in case the product launch takes place in Bangkok? What would your answer
be in case Mr. Murthy is a registered person and product launches take place in Bengaluru and Bangkok?

ANS-(i) 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 ofrecipient.

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.The location of the supplier and the
location of the recipient is irrelevant in thiscase.

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(ii) However, if product launch takes place outside India [Bangkok], the place of supply will be the location of
recipient i.e.,Pune.

(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)ofIGSTAct,2017.
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.

QUS.4 Mr. Mahendra Goyal, an interior decorator provides professional services to Mr. Harish Jain in relation to
two of his immovable properties.

Determine the place of supply in the transactions below as per provisions of GST law in

Case Location of Mr. Mahendra Goyal Location of Mr.Harish Jain Properties situated at
I Delhi Mumbai New York (USA)
II Delhi New York Paris (France)

Explain the relevant provisions of law to support your conclusions.

ANS- Case- I
As per section 12(3) of the IGST Act, 2017, where both the service provider and the service recipient are
located in India, the place of supply of services directly in relation to an immovable property, including
services provided by interior decorators is the location of the immovable property. However, if the
immovable property is located outside India, the place of supply is the location of therecipient.

Since in the given case, both the service provider (Mr. Mahendra Goyal) and the service recipient (Mr. Harish
Jain) are located in India and the immovable property is located outside India (New York), the place of supply
will be the location of recipient i.e., Mumbai.

Case II

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As per section 13(4) of the IGST Act, 2017 where either the service provider or the service recipient is located
outside India, the place of supply of services directly in relation to an immovable property including services
of interior decorators is the location of the immovableproperty.

Since in the given case, service recipient (Mr. Harish Jain) is located outside India (New York), the place of
supply will be the location of immovable property i.e., Paris (France).

QUS.5 (i) 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 said activity of
supply of goods by Mr. Z to customer in US is taxable under GST . If yes, determine the place of supply of the
same.

(ii) Priyank of Pune, Maharashtra enters into an agreement to sell goods to Bisht of Bareilly, Uttar Pradesh.
While the goods were being packed in Pune godown of Priyank, Bisht got an order from Sahil of Shimoga,
Karnataka for the said goods. Bisht agreed to supply the said goods to Sahil and asked Priyank to deliver the
goods to Sahil at Shimoga.

You are required to determine the place of supply(ies) in the above situation.

ANS-(i) Schedule III to the CGST Act specifies transactions/ activities which shall be neither treated as supply of
goods nor supply of services. A new activity has been added in the said Schedule III vide the CGST
(Amendment) Act, 2018 namely, 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-taxableterritory.

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.

(ii) The supply between Priyank (Pune) and Bisht (Bareilly) is a bill to ship to supply where the goods are

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delivered by the supplier [Priyank] to a recipient [Sahil (Shimoga)] or any other person on the direction of a
third person [Bisht]. The place of supply in case of domestic 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 per son.

Thus, in the given case, it is deemed that the Bisht has received the goods and the place of supply of such
goods is the principal place of business of Bisht. Accordingly, the place of supply between Priyank (Pune) and
Bisht (Bareilly) will be Bareilly, Uttar Pradesh.

This situation involves another supply between Bisht (Bareilly) and Sahil (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 (Sahil), i.e. Shimoga,Karnataka.

QUS.6 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 theassignment.
With reference to the provisions of GST law, determine the place of supply of the service. Also, explain

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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 services 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 servicewhen,–
(a) the supplier of service is located in India;
(b) the recipient of service is located outsideIndia;
I the place of supply of service is outsideIndia;
(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 section8.
Since all the above five conditions are fulfilled in the given case, the same will be considered as an export of
Service

QUS.7 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.

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Note: GST @ 18% is applicable on supply of the support services provided by ABC Pvt. Ltd. Rate of exchange
is ` 65 per US$.

ANS- 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.

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 ser vice 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- Statesupply.

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 = ` 5,85,000 (1,00,000 x 65 x 9%)
SGST = ` 5,85,000 (1,00,000 x 65 x 9%)

QUS.8 Musicera Pvt. Ltd., owned by Nitish Daani – a famous classical singer – wishes to 383tilized 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 383tilized383o the said

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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, I 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’ aresold.

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 givenscenario.
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- In the given situation, three supplies areinvolved:

(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 384tilized384o the musicconcert.
(iii) Services provided by Hotel Dumdum to Supriya (P) Ltd. By way of accommodation in the Hotel lawns for
organizing 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 actuallyheld.

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.

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Therefore, the place of supply of services supplied by Supriya (P) Ltd. To Musicera Pvt. Ltd. (Ludhiana, Punjab)
by way of 385tilized385o 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 asfollows:
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)I 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 islocated.

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 385tilized385o 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 I 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.

QUS.9 (i) Parth of Pune, Maharashtra enters into an agreement to sellgoods 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,

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Karnataka for the said goods. Bakul agreed to supply the said goods to Shreyas and asked Parth to deliver the
goods to Shreyas atShimoga.

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
utilized 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 utilized386 at Dubai?

ANS- 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 businesss 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, UttarPradesh.

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 move mentof goods terminates for deli very to the recipient.

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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 387tilized387 at Dubai, the answer will remain the same, i.e. the place of
supply is the location of Damani Industries – Mumbai.

QUS. Determine the place of supply for the following independent cases under the IGST Act, 2017:
(i) Mega Events, an event management company at Kolkata, 387tilized387 two award functions for Shagun
Jewellers of Chennai (Registered in Chennai) at New Delhi and at Singapore.
(ii) Crown Planners (Bengaluru) is hired by Dr. Banta (unregistered person based in Kochi) to plan and
utilized his son’s wedding at Mumbai.

Will your answer be different if the wedding is to take place at 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) of IGST Act, 2017.
Since, in the given case, the award functions at New Delhi and Singapore are organized for Shagun Jewellers
(registered in Chennai), place of supply in both the cases is the location of Shagun Jewellers i.e., Chennai.

(ii) 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 [Dr. Banta] is unregistered and event is held in India, place of supply is the location where the event
is actually held i.e., Mumbai.

However, if the wedding is to take place outside India [Malaysia], the place of supply is the location of
recipient, i.e. Kochi.

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QUS.11 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 IGSTRules].

QUS.12 Answer the following questions in the light of the place of supply provisions contained in the IGST Act, 2017:
(1) 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.
(2) Supra Events, an event management company at New Delhi, organizes an award function for Chirag
Diamond Merchants of Varanasi (registered in U.P.), at Mumbai. Determine place of supply of the service
supplied by Supra Events. Will your answer be different, if the award function is 388tilized388 at Mauritius
Instead of Mumbai?

ANS- Section 10(1)I 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.

(2) Section 12(7) of the IGST Act stipulates that the place of supply of services provided by way of

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utilized of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of
services in relation to a conference, fair, exhibition, celebration or similar events is the location of recipient
in a case where such service is provided to a registered person. In the given case, since the recipient (Chirag
Diamond Merchants) is a registered person, the place of supply is the location of the recipient, i.e.,
Varanasi,U.P.

Further, the place of supply will not change even if the award function is 389tilized389 at Mauritius instead of
Mumbai as the location of recipient remains unchanged. Thus, in that case also, the place of supply is the
location of the recipient, i.e., Varanasi, U.P.

QUS.13 Prarambh Ltd., Maharashtra, 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 the
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. Prarambh Ltd. Charges its foreign customer cost plus 10% mark up for services provided by it.
For the month of June, 20XX, the company has charged US $ 1,87,000 (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 Prarambh Ltd. Rate of exchange
is Rs. 53 per US$.

ANS- Section 2(13) of the IGST Act 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 ownaccount.

In this case, since Prarambh 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

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of supply is determined in terms of section 13 of the IGST Act. 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 IGSTAct.

As per section 13(8)(b) of the IGST Act, the place of supply in case of intermediary services is the location of
the supplier i.e., the location of Prarambh Ltd. Which is Maharashtra. Further, as per section 8(2) of the IGST
Act, 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.

Therefore, since in the given case, both the location of Prarambh Ltd. And the place of supply of the service
provided by it are in Maharashtra, 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. 8,91,990 (1,87,000 x 53 x9%)
SGST = Rs. 8,91,990 (1,87,000 x 53 x9%)

QUS.14 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 390tilized390o of the new product launch in Bengaluru.
(i) Determine the place of supply of services provided by M/s NiceLtd.
(ii)What would your answer be in case the product launch takes place in Bangkok? What would your answer
be in case Mr. Dhiraj is a registered person and product launches take place in Bengaluru and Bangkok?

ANS- (i) 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.

(ii) However, if product launch takes place outside India [Bangkok], the place of supply will be the location of

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recipient i.e.,Pune.

(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 IGSTAct, 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.

QUS.15 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
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 shipped in a lorry by Asha
Enterprises.

Briefly explain the following :

(i) the place of supply under IGST Act, 2017;
(ii) the nature of supply : whether inter-state or intra-state and
(iii) whether CGST/SGST or IGST as would be applicable in this case. (4 Marks, May 2019-NS)

ANS- Where three parties are involved i.e. to say a supplier, a buyer who is not the recipient of goods (referred as
tlrird person) and the recipient who actually receives the goods on the directions of the buyer, a fiction is
introduced by Section 10(1)(b) of IGST Act, 2017, whereby the third person on whose direction the goods are
delivered will be considered the recipient of the goods and the place of supply is deemed to be the principal
place of business of the said third person (being the first buyer).

There are two parts to this transaction :

(1) First part of the transaction – between Asha Enterprises and Deep Traders : Asha Enterprises is the
supplier of sewing machine, and Deep Traders is the buyer. Accordingly, Asha Enterprises bills the
transaction to Deep Traders, and as per the instruction, ships the goods to Jyoti Sons in Patiala (Punjab).
Over here, on the instruction from Deep Traders, Asha Enterprises ships the sewing machine to Jyoti Sons

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located in Patiala (Punjab). Here, Deep Traders is deemed as the tlrird person. Therefore, the place of supply
will be the principal place of business of the third person, i.e., Jalandhar (Punjab). Since the location of
supplier is in Kota (Rajasthan) and Place of supply Jalandhar (Punjab), the supply is an interstate supply.
Accordingly, Asha Enterprises will charge IGST on billing to Deep Traders.

(2) The second part of the transaction – between Deep Traders and Jyoti Sons : Deep Traders is the supplier,
and Jyoti Sons is the buyer. Deep Traders bills the transaction to Tvoti Sons, and endorses tire lorry receipt
(goods shipped in a lorry by Asha Enterprises) in favour of Jyoti Sons. This lorry receipt (LR) will enable Jyoti
Sons to take the delivery of the goods. The second part of the transaction between Deep Traders Jalandhar
(Punjab) and Jyoti Sons Patiala (Punjab) will be intra- state supply, CGST and SGST will be charged.

QUS.16 PQ’, a statutory body, deals with the all the advertisement and publicity of the Government. It has issued a
release order to ‘Moon Plus’ channel (registered in State ‘A’) for telecasting an advertisement relating to one
of the schemes of the Government in the month of September 20XX. The advertisement will be telecasted in
the States of ‘A’, ‘B’, ‘C’, ‘D’ and ‘E’. The total value of the service contract entered into between ‘Moon Plus’
and ‘PQ’ is Rs 10,00,000 (exclusive of GST).

You are required to determine the place of supply of the services in the instant case as also the value of
supply attributable to the States of ‘A’, ‘B’, ‘C’, ‘D’ and ‘E’.

Further, compute the GST liability [CGST & SGST or IGST, as the case may be+ of ‘Moon Plus’ as also advise it
as to whether it should issue one invoice for the entire contract value or separate State-wise invoices.
The other relevant information is given hereunder: (RTP May 20)

Table 1
States Viewership figures of ‘Moon Plus’ channel in last week of June 20XX as
provided by the Broadcast Audience Research Council
A 50,000
B+ C 1,00,000
D+E 50,000

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Table 2
States Population as per latest census (in crores)
A 50
B 180
C 20
D 100
E 25

The applicable rate of tax is as under:

CGST SGST IGST
9% 9% 18%

ANS- 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 ‘A’, ‘B’, ‘C’, ‘D’
and ‘E’.
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 into 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 on the basis of
the viewership of such channel in such State, which in turn, shall be calculated in the following manner,
namely: -

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(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 ‘A’, ‘B’, ‘C’, ‘D’ and ‘E’, will be computed as under:

States Viewership figures of ‘Moon Viewership ratio of ‘Moon Proportionate valueof

Plus’ channel as provided by Plus’ channel in the States advertisement services
the Broadcas Audience ‘A’, (‘B’ + ‘C’) and (‘D’ + ‘E’) for States A’, (‘B’ + ‘C’)
Research Council in the last and(‘D’ + ‘E’)
week of June 20XX
A 50,000 50,000: 1,00,000: ` 10,00,000 x ¼
50,000 = 1:2:1 =` 2,50,000
B+C 1,00,000 ` 10,00,000 x 2/4 =
` 5,00,000
D+E 50,000 ` 10,00,000 x ¼ =
` 2,50,000

States Population asper latest Population ratio in the Proportionate value of

Census (in crores) States ‘B’ & ‘C’ and advertisement services in the
‘D’ & ‘E’ States ‘A’, ‘B’, ‘C’, ‘D’ & ‘E’
A 50 `2,50,000
B 18 B:C = 180:20 = 9:1 ` 5,00,000 x 9/10 =

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0 `4,50,000
C 20 ` 5,00,000 x 1/10 = `50,000
D 10 D:E = 100:25 = 4:1 ` 2,50,000 x 4/5 =
0 `2,00,000
E 25 ` 2,50,000 x 1/5 = `50,000

Since, there are five different places of supply in the given case, ‘Moon Plus’ channel will have to issue five
separate invoices for each of the States namely, ‘A’, ‘B’, ‘C’, ‘D’ & ‘E’ indicating the value pertaining to that
State. The GST liability of ‘Moon Plus’ channel will, therefore, be worked out as under:

Computation of GST liability of ‘Moon Plus’

States Proportionate value of advertisement CGST SGST IGST
services (`) @ 9% (`) @ 9% (`) @ 18% (`)
A 2,50,000 22,500 22,500
B 4,50,000 81,000
C 50,000 9,000
D 2,00,000 36,000
E 50,000 9,000

Only in case of supply of services in State ‘A’, the location of supplier (State ‘A’) 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 ‘A’) and the places of supply (States ‘B’, ‘C’, ‘D’ & ‘E’) 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].

QUS.2 (a) Determine place of supply along with reasons in the following cases:
(i) Mr. X, an architect (Kolkata), provides interior decorator services to Mr. Y of New York (USA) in relation to
his immovable property located in New Delhi.
(ii) Mr. A (a Chartered Accountant registered in Kolkata) supplies services to his client in Bhubaneswar
(registered in Bhubaneswar, Odisha).
(iii) ABC Ltd. Of Patna imported certain goods from XYZ Inc. of USA. The goods were imported through vessel

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and delivery of goods was taken at Kolkata, whereafter the movement terminates and the goods are stored.
(iv) Mr. X, registered in Guwahati, has availed land-line services from BSNL. The telephone is installed in
residential premises in Kolkata and the billing address is office of Mr. X in Guwahati.
(v) Mr. X, residing in Chennai, is travelling with an Indian Airline aircraft and is provided with movie-on-
demand service for `100 as on-board entertainment during Delhi-Chennai leg of a Bangkok-Delhi- Chennai
flight.
(vi) Mr. X of Kolkata purchased online tickets for Aquatica water p ark in Mumbai.
(vii) Mr. Z, an unregistered person of Kolkata, sends a courier from New Delhi to his friend in Chennai,
Tamil Nadu while he was on trip to New Delhi.
(viii) Mr. X, a registered person in Ranchi, Jharkhand, buys shares from a broker in Patna on NSE, Mumbai.
Determine the place of supply of brokerage service.
(ix) XYZ Ltd., New Delhi entered into contract with an Indian airline for the supply of biscuit packets for
further supply by airline to the passengers in Kolkata-Guwahati route. The biscuits were loaded on board in
Lucknow. (Jan 21 exam)

ANS-(a) (i) New Delhi. In a case where location of the supplier or location of recipient of service is outside India, the
place of supply of services supplied directly in relation to an immovable property including that of interior
decorators is the place where theimmovable property is located.
(ii) Bhubaneshwar, Odisha. The place of supply of services, except the specified services made to a registered
person, is the location of such person.

(iii) Patna. The place of supply of goods imported into India is the location of the importer.

(iv) Kolkata. The place of supply of services by way of fixed telecommunication line is the location where the
telecommunication line is installed for receipt of services.

(v) Bangkok. The place of supply of services on board an aircraft is the location of the first scheduled point of
departure of that aircraft or flight for the journey

(vi) Mumbai. The place of supply of services provided by way of admission to an amusement park is the place
where the park is located.

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(vii) New Delhi. The place of supply of services by way of transportation of goods by courier to a person other
than a registered person is the location at which such goods are handed over for their transportation.

(viii) Ranchi, (Jharkhand). The place of supply of stock broking services to any person shall be the location of
the recipient of services on the records of the supplier of services.2

(ix) Where the supply involves movement of goods, the place of supply of such goods is the location of the
goods at the time at which the movement of goods terminates for delivery to the recipient. Therefore, the
place of supply of biscuit packets sold by XYZ Ltd. To Indian Airlines is Lucknow3.

Further, where the goods are supplied on board an aircraft, the place of supply shall be the location at which
such goods are taken on board. Thus, the place of supply of biscuit packets sold by Indian Airlines to the
passengers in Kolkata-Guwahati route is Lucknow.

QUS. 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

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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, I 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 398tiliz 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.

QUS. Mr. Sheru, an unregistered person and a resident of Pune, Maharashtra hires the services of Class Ltd. An
event management company registered in Delhi, for 398tilized398o the new product launch in Bengaluru,
Karnataka.

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(i) Determine the place of supply of services provided by Class Ltd.

(ii) What would be your answer if the product launch takes place in Bangkok?
(iii) What would be your answer if Mr. Sheru is a registered person and product launch takes place in-
(a) Bengaluru
(b) Bangkok?

ANS- (i) As per section 12(7)(a)(ii) of the 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. Sheru] 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, 2017.

Therefore, if Mr. Sheru 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.

QUS. Priyesh 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, Priyesh 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
Priyesh 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?

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ANS- As per section 13(2) of the IGST Act, 2017, in case where the location of the supplier of services 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) of the IGST Act, 2017 shall be the location of the recipient of services.
Sub-sections (3) to (13) of the IGST Act, 2017 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 of the IGST Act, 2017. 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;
I 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
or in Indian rupees wherever permitted by the Reserve Bank of India; and
(e) the supplier of service and the recipient of service are not merely establishments of adistinct 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.

QUS. 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

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ANS- 14.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 managemen is the location of
Dobriyal Technocrats Ltd., i.e.G urgaon, Haryana.

(ii) As per the provisions of section 12(3)I 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.

QUS. 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 journeyfrom 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)].

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QUS. What is the place of supply for mobile connection? Can it be the location of supplier?

ANS- 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 toa 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.

QUS. 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.

QUS. An unregistered person from Gurugram travels by Air India flight from Mumbaito 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 locationof the recipient of services on the
records of the supplier of insurance servicesis the place of supply. So Gurugram is the place of supply
[Section 12(13)].

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QUS. 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 bethe 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 locatedin 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 403tilized403o to supply in
terms of section 7(1)(b) of CGST Act and are liableto GST.

As per reverse charge Notification No. 10/2017 ITI 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, thetax 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.

QUS. Damani Industries has recruited Super Events Pvt. Ltd., an event management company of Gujarat, for
utilized the grand party for the launch of its new product at Bangalore. Damani Industries is registered in
Mumbai. Determinethe 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 utilized at Dubai?

ANS- Section 12(7)(a)(i) stipulates that when service by way of organization of an event is provided to a registered

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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, Maharashtra.
In case the product launch party is 404tilized404 at Dubai, the answer will remain the same, i.e. the place of
supply is the location of recipient (Damani Industries)– Mumbai, Maharashtra.

QUS. Priyank Sales of Pune, Maharashtra enters into an agreement to sell goods to Bisht Enterprises of Bareilly,
Uttar Pradesh. While the goods were being packed in Pune godown of Priyank Sales, Bisht got an order
from Sahil Pvt. Ltd. Of Shimoga, Karnataka for the said goods. Bisht Enterprises agreed to supply the said
goods to Sahil Pvt. Ltd. And asked Priyank Sales to deliver the goods toSahil Pvt. Ltd. At Shimoga.
You are required to determine the place of supply(ies) in the above situation.

ANS- The supply between Priyank Sales (Pune) and Bisht Enterprises (Bareilly) is abill to ship to supply where the
goods are delivered by the supplier [Priyank Sales] to a recipient [Sahil Pvt. Ltd. (Shimoga)] or any other
person on the direction of a third person [Bisht Enterprises]. The place of supply in case of domestic bill to
ship to supply of goods is determined in terms of section 10(1)(b).

As per section 10(1)(b), 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, eitherby 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 Bisht Enterprises has receivedthe goods and the place of supply
of such goods is the principal place of business of Bisht Enterprises. Accordingly, the place of supply between
Priyank Sales (Pune) and Bisht Enterprises (Bareilly) will be Bareilly, Uttar Pradesh.

This situation involves another supply between Bisht Enterprises (Bareilly) and Sahil Pvt. Ltd. (Shimoga). The
place of supply in this case will be determined in terms of section 10(1)(a).

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Section 10(1)(a) 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 (Sahil Pvt. Ltd.), i.e. Shimoga, Karnataka.

QUS. Musicera Pvt. Ltd. Owned by Nitish Daani – a famous classical singer – wishes to 405tilized 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 405tilized405o 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 casemay be, in respect of the
supply(ies) 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 amountsgiven above are exclusive of taxes,
wherever applicable.

ANS- In the given situation, three supplies are involved:

(i) Services provided by Musicera Pvt. Ltd. To audiences by way ofadmission to music concert.
(ii) Services provided by Supriya (P) Ltd. To Musicera Pvt. Ltd. By way oforganising the music concert.
(iii) Services provided by Hotel Dumdum to Supriya (P) Ltd. By way ofaccommodation in the Hotel lawns for
utilized 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), the place of supply of services provided by way of admission to,

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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.

(Ludhiana, Punjab) 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) = ` 20,00,000IGST @ 18% on value of supply = `
20,00,000 x 18% = ` 3,60,000.

(ii) Section 12(7)(a)(i) 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. (Delhi) to Musicera Pvt. Ltd. (Ludhiana,
Punjab) by way of 406tilized406o 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)I of the IGST Act, 2017, the placeof 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.
(Delhi) by way of accommodation in Hotel lawns for 406tilized406o 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
asfollows: Consideration for supply = ` 4,00,000
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CGST @ 9% on value of supply = ` 4,00,000 x 9% = ` 36,000SGST @ 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 respectof 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 I dated 28.06.2017, if the
consideration for rightto 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.

QUS. RST Inc., a corn chips manufacturing company based in USA, intends to launchits 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 outa 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 paidin 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), in case where the location of the supplier of services orthe location of the recipient of
services is outside India, the place of supplyof 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), export of services means the supply of any service when,–
(a) the supplier of service is located in India;

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(b) the recipient of service is located outside India;

I 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
or in Indian rupees wherever permitted by the Reserve Bank of India; 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

QUS. ABC Pvt. Ltd., New Delhi, provides support services to foreign customers inrelation 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 vendorfor purchase of the specified
goods. ABC Pvt. Ltd. Charges its foreign customer cost plus 10% mark up for services provided by it.
The company has charged US $ 1,00,000 (exclusive of GST) to its foreign customer for the services provided
by it. With reference to the provisions of GST law, examine whether the said supply will amount to export of
service?

ANS- Section 2(13) 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.

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 canbe 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

Since, in the given case, the recipient of supply is located outside India,the provisions of supply of

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intermediary services will be determined in termsof section 13.

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 NewDelhi.

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;
I 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
or in Indian rupees wherever permitted by the Reserve Bank of India; and
(e) the supplier of service and the recipient of service are not merely establishments of a distinct person in
accordance with Explanation 1in section 8.

Since, in the given case, place of supply is in India, this transaction does not tantamount to export of service.

QUS. Mr. Murthy, an unregistered person and a resident of Pune, Maharashtra hiresthe services of Sun Ltd. An
event management company registered in Delhi, for 409tilized409o 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?

ANS- 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 [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 locationof the supplier
and the location of the recipient is irrelevant in this case.

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(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).
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.

QUS. Mr. Mahendra Goyal, an interior decorator provides professional services to Mr. Harish Jain in relation to
two of his immovable properties.

Determine the place of supply in the transactions below as per provisions ofGST law in the following
independent situations:

Case Location of Mr. Mahendra Goyal Location of Mr.Harish Jain Property situated at
I Delhi Maharashtra New York (USA)
II Delhi New York Paris (France)
Explain the relevant provisions of law to support your conclusions.

ANS- Case I
As per section 12(3), where both the service provider and the service recipient are located in India, the place
of supply of services directly in relation to an immovable property, including services provided by interior
decorators is the location of the immovable property.
However, if the immovable property is located outside India, the place of supply is the location of the
recipient.

Since in the given case, both the service provider (Mr. Mahendra Goyal) I service recipient (Mr. Harish
Jain) are located in India and the immovable property is located outside India (New York), the place of supply
will be the location of recipient, i.e. Maharashtra.

Case II

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As per section 13(4), where either the service provider or the service recipient is located outside India, the
place of supply of services directly in relation toan immovable property including services of interior
decorators is the location of the immovable property.

Since in the given case, service provider (Mr. Mahendra Goyal) is located in India and service recipient (Mr.
Harish Jain) is located outside India (NewYork), the place of supply will be the location of immovable
property, i.e. Paris (France).

QUS. 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;
(b) the nature of supply:- whether inter-State or intra-State and
I whether CGST/SGST or IGST 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)]. 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, liable to IGST.

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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)].

Since the location of supplier and the place of supply are in the same State, thesupply is an intra-State supply
in terms of section 8, liable to CGST and SGST.

QUS. Determine the place of supply for the following independent cases:
(iv) Grand Gala Events, an event management company at Kolkata, 412tilized412 two award functions for
Narayan Jewellers of Chennai (Registered in Chennai, Tamil Nadu) at New Delhi and at Singapore.
(v) Perfect Planners (Bengaluru, Karnataka) is hired by Dr. Kelvin (unregistered person based in Kochi,
Kerala) to plan and 412tilized his son’s wedding at Mumbai, Maharashtra.
Will your answer be different if the wedding is to take place in Malaysia?

ANS- 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.

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.

QUS.1 Determine the location of the recipient of service in following cases:

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(1) Mr. X with registered place of business in Delhi and having other fixed establishments at Jaipur, Agra,
Bharatpur enters into agreement with Mr. Y in Delhi for IT solutions for his offices. The services are received
in Delhi and then the same is 413tilized by all the other offices.
(2) What would your answer be in the above case if Mr. X receiving IT solutions at Agra.
(3) What would your answer be in case agreement though entered into at Delhi, but service is received at all
establishments.

ANS- (1) Since the service has been received at the registered place of business i.e. Delhi, the location of the
recipient shall be Delhi as per Section 2(70)(a) of the CGST Act, 2017 though the beneficiary of the services
are all the four offices.

(2) If the service is received at a fixed establishment (here, Agra), then as per Section 2(70)(b) of the CGST
Act, 2017, the location of the fixed establishment shall be the location of the recipient. In this case, the
location of the recipient shall be Agra.

(3) If the agreement is entered into at Delhi, but the service is received at all establishments, then as per
Section 2(70) I of CGST Act, 2017 in case service is received at multiple establishments, then, the
establishment most directly concerned with the receipt of supply shall be the location of the recipient of
service.

QUS.2 Mr. A located in Chennai places order on Mr. B of Chennai for installation of a machinery at his factory in
Delhi. Mr. B procures the various parts of the machinery from different states and arranges for installation of
the same in A’s factory at Delhi. Determine the place of supply of machine.

ANS- As per Section 10(l)(d) of IGST Act, 2017, where the goods are assembled or installed at site, the place of
supply shall be the place of such installation or assembly. In this case the place of supply shall be the place
where the goods are installed, i.e. Delhi even though A and B are both located in Chennai.

QUS.3 Determine place of supply of goods in the following cases and also state the nature of supply and the type of
tax leviable:

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Supplier and his location Recipient and his location Place of assembly/
installation of goods
A Ltd. Jaipur B Ltd. Jaipur Kolkatta
A Ltd. Jaipur M Ltd. Mumbai Surat
A Ltd. Jaipur S Ltd. Surat Allahabad
A Ltd. Jaipur M Ltd. Mumbai Jaipur

ANS- The place of supply shall be determined as under —

Supplier and Recipient and hislocation Place of assembly/ Place of Supply Nature of supply
his location installation of goods and tax leviable
A Ltd. Jaipur B Ltd. Jaipur Kolkatta Kolkatta Inter-State – IGST
A Ltd. Jaipur M Ltd. Mumbai Surat Surat Inter-State – IGST
A Ltd. Jaipur S Ltd. Surat Allahabad Allahabad Inter-State – IGST
A Ltd. Jaipur M Ltd. Mumbai Jaipur Jaipur Inter-State – IGST

QUS.4 XYZ Ltd. Of Jaipur imported certain goods from PQR Inc of US. The goods were imported through vessel and
delivery of goods was taken at Mumbai Port. Determine the place of supply of goods.

ANS- As per Section 11(a) of the IGST Act, 2017, the place of supply of goods imported into India shall be the
location of the importer. Thus, in this case the place of supply shall be the location of XYZ Ltd. i.e. Jaipur.

Illustrations:
1. A hotel chain X charges a consolidated sum of ` 30,000/- for stay in its two establishments in Delhi and Agra,
where the stay in Delhi is for 2 nights and the stay in Agra is for 1 night. The place of supply in this case is
both in the Union territory of Delhi and in the State of Uttar Pradesh and the service shall be deemed to
have been provided in the Union territory of Delhi and in the State of Uttar Pradesh in the ratio 2:1
respectively. The value of services provided will thus be apportioned as ` 20,000/- in the Union territory of
Delhi and ` 10,000/- in the State of Uttar Pradesh.

2. There is a piece of land of area 20,000 square feet which is partly in State SI say 12,000 square feet and

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partly in State S2, say 8000 square feet. Site preparation work has been entrusted to T. The ratio of land in
the two states works out to 12:8 or 3:2 (simplified). The place of supply is in both SI and S2. The service shall
be deemed to have been provided in the ratio of 12:8 or 3:2 (simplified) in the States SI and S2 respectively.
The value of the service shall be accordingly apportioned between the States.

3. A company C provides the service of 24 hours accommodation in a houseboat, which is situatedboth in

Kerala and Karnataka in asmuch as the guests board the house boat in Kerala and stay there for 22 hours but
it also moves into Karnataka for 2 hours (as declared by the service provider). The place of supply of this
service is in the States of Kerala and Karnataka. The service shall be deemed to have been provided in the
ratio of 22:2 or 11:1 (simplified) in the states of Kerala and Karnataka, respectively. The value of the service
shall be accordingly apportioned between the States.

QUS.5 X Ltd. Of Delhi entered into contract with the airlines authority for the supply of food packets to the
passengers flying on Delhi – Bengaluru route. Aircraft commenced the journey from Delhi. The goods were
loaded on board the aircraft in Jaipur. Determine the place of supply of goods.

ANS- As per Section 10(l)(e), where the goods are supplied on board a conveyance, including a vessel, an aircraft, a
train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board. In
present case the place of supply shall be the place of loading of goods on board the aircraft i.e. Jaipur,
irrespective of the place of commencement or destination of aircraft.

Examples:
(i) Mr. X (Mumbai) boards the Mumbai-Jaipur train at Mumbai. During the journey, he sells the goods at Kota
which were taken on board by him at Mumbai. The place of supply of goods is the location at which the
goods are taken on board i.e., Mumbai and not Kota where they have been sold.

(ii) 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 goods were
loaded into the train at Aligarh (Uttar Pradesh) – 2nd Station. Ms. S buys goods on board the train. The place
of supply is the location at which the goods are taken on board i.e., Aligarh. The location at which Ms. S
boards the train is irrelevant.

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Examples:
(i) Mr. Y (a Chartered Accountant registered in Jaipur) supplies service to his client Mr. R of Noida, Uttar
Pradesh (registered in Uttar Pradesh). In this case, since the supply is made to a registered person, the place
of supply is the location of the registered recipient i.e., Noida.

(ii) Mr. Y, an astrologer in Bhilwara, Rajasthan, (registered in Rajasthan) provides astrology services to his
client Mr. C who is a resident of Uttar Pradesh but is not registered under GST. Here, if the address of Mr. C
is available on the records of Mr. Y, location of Mr. C i.e., Uttar Pradesh will be the place of supply, else the
location of Mr. Y, which is Bhilwara, will be the place of supply.

Examples:
(i) Mr. X of jaipur has leased his machine (Cost ` 15,00,000) to Mr. Y (Dewas, Madhya Pradesh) for production
of goods on a monthly rent of ` 30,000. After 18 months Mr. Y requested Mr. X to sell the machine to him for
` 9,00,000, which is agreed to by Mr. X. In this case, there will be no movement of goods and the same will
be sold on ‘as is where is basis’. Thus, the location of the machine at the time of such sale will be the place of
supply i.e., Dewas.

(ii) KK Ltd. (Delhi) opens a new branch office at Noida, UP. It purchases a building for office from FDL Builders
(Noida) along with pre-installed office furniture and fixtures. Though there will be no GST liability on
purchase of building, office furniture and fixtures will be liable to GST. Since there is no movement of office
furniture and fixtures, the place of supply of such goods is their location at the time of delivery to the
recipient (KK Ltd.) i.e., Noida..

QUS.6 Determine place of supply in independent cases as under :

(1) A company in Pune contracts with a Pune based architect to design a structure for their new office to be
located in Bangalore.
(2) Mr. A of Jaipur entered into a lease agreement with Mr. B of Jaipur whereby he leased out his farm in
Nagpur to Mr. B.
(3) Mr. A an employee of ABC Ltd. Kolkata, goes on an official tour to Hyderabad and stays in a hotel there,

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booked in the name of his company.

(4) Mr. X of Mumbai arranged for destination wedding of his son at Pushkar (Rajasthan) he booked a resort
at Pushkar for the accommodation of his guests and also for performing the marriage ceremony. Apart from
providing the resort for the marriage purpose, decoration was also provided.
(5) The contractor M/ s. ABC of Pune subcontracted the work of construction of the building at Delhi to M/s.
XYZ of Mumbai, to complete the work as per the drawing and design of the Architect.
(6) ABC Ltd. Of Mumbai, hires a professional firm of Delhi to design its office in Canada.

ANS- The place of supply of services shall be determined as under —

Case Place of supply Reasons

1. A company in Pune contracts with a Pune Bangalore Though the supplier of service and the
based architect to design a structure for recipient are both located in Pune, place of
their new office in Bangalore. Supply would be the place where the
immovable property is located i.e.
Bangalore.

2. Mr. A of Jaipur entered into a lease Nagpur Though the supplier and the recipient are
agreement with Mr. B of Jaipur whereby both in Jaipur, Rajasthan but any service
he leased out his farm in Nagpur to Mr. provided by way of grant of rights to use
B. immovable property is covered under
Section 12(3) of the IGST Act, 2017,
therefore, the place of supply shall be the
location of the immovable property, here
being Nagpur.

3. Mr. A an employee of ABC Ltd. Kolkata, Hyderabad This being the accommodation service, is
goes on an official tour to Hyderabad and covered under Section 12(3) of the IGST
stays in a hotel there, booked in the Act, 2017, accordingly, the place of supply
name of his company. Shall be the location of the immovable

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property (here Hotel). The location of the

supplier and the receiver is irrelevant.

4. Mr. X of Mumbai arranged for Pushkar The place of supply of service for
destination wedding of his son at (Rajasthan) accommodation provided for organizing the
Pushkar (Rajasthan). He booked a resort marriage is governed by Section 12(3) I of
at Pushkar for the accommodation of his the IGST Act, 2017, hence, the place of
guests and also performing the marriage supply shall be the place of location of the
ceremony. Resort.
Apart from providing the resort for the => The provision of service of decorator,
marriage purpose, decoration was also being ancillary to the services of organizing
provided the marriage is covered by Section 12(3) (d)
of the IGST Act, 2017, hence, the place of
supply shall be the place of location of the
immovable property.

5. The contractor M/s. ABC of Pune sub- Delhi Here, the main contractor, M/s. ABC merely
contracted the work of construction of coordinates with the sub-contractor M/s.
the building at Delhi to M/s. XYZ of XYZ to ensure completion of construction
Mumbai, to complete the work as per the work. Hence, both these services of
drawing and design of the Architect. Construction activity undertaken by M/s. XYZ
and the co-ordination of construction work
undertaken by M/s. ABC are covered under
Section 12(3)(a) of the IGST Act, 2017,
hence, the place of supply shall be the place
where the immovable property is located.

6. ABC Ltd. Of Mumbai, hires a professional Mumbai Since the immovable property is intended to
firm of interior decorators of Delhi to be located outside India, therefore, as per
design its office in Canada. Proviso to Section 12(3) of the IGST Act,

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2017, the place of supply shall be the

location of the recipient of service, here -
Mumbai, being the location of ABC Ltd.

QUS.7 Ms. X of Jaipur went on trip to Mumbai. She availed beauty treatment services in Beauty Parlour of Mumbai.
Determine place of supply of beauty treatment services provided to Ms. X.

ASN As per Section 12(4) of IGST Act, 2017, the place of supply of beauty treatment services shall be the location
where the services are actually performed. Thus, place of supply in this case shall be Mumbai.

QUS.8 XYZ Ltd. Of Delhi has entered into a contract with ASL Training Ltd. Of Mumbai for training and performance
appraisal of its employees. Training was provided at Dehradun Training Centre of ASL Training Ltd.

Determine the Place of supply of services in case XYZ Ltd. Is registered in Delhi. What would your answer be
in case XYZ Ltd. Is unregistered recipient.

ANS As per Section 12(5) of IGST Act, 2017, the place of supply of services in relation to training and performance
appraisal to, —
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the location where the services are actually performed.

Thus, when XYZ Ltd. Is registered the place of supply of services shall be Delhi. When XYZ Ltd. Is unregistered
the place of supply will be Dehradun.

QUS.9 Auditions of music show were held at Jaipur, where the judges of the music and dance firm registered in
Mumbai were sent to appraise the performance of the young aspirants. Determine the place of supply of
performance appraisal services.

ANS As per Section 12(5) of IGST Act, 2017, the place of supply of services in relation to training and performance
appraisal to, a person other than a registered person, shall be the location where the services are actually
performed. Here, the place of supply of service shall be the location of the performance of activity (Jaipur) as

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the participants are unregistered.

QUS.10 Mr. X, of Mumbai purchased online tickets for the Wonder water park in Bengaluru. Determine the place of
supply.

ANS Here, there are two kinds of supply of services- first admission to the park and second hiring of the jeep. As
per the provisions of Section 12(6) of the IGST Act, the place of supply of services by way of admission to a
amusement park or any other place shall be the location of the park, here Ranthambor (Rajasthan). The
service of hiring of the jeep is ancillary to the service of admission to the park as the same is provided to
make the visit more convenient. Hence, the provisions of Section 12(6) shall apply thereon and the place of
supply shall be the place of location of the park being Ranthambor (Rajasthan).

Example:
An event management company E has to 420tilized some promotional events in States SI and S2 for a
recipient R. 3 events are to be 420tilized420 in SI and 2 in S2. They charge a consolidated amount of
` 10,00,000 from R. The place of supply of this service is in both the States SI and S2. Say the proportion
arrived at by the application of generally accepted accounting principles is 3:2. The service shall be deemed
to have been provided in the ratio 3:2 in SI and S2 respectively. The value of services provided will thus be
apportioned as ` 6,00,000/- in SI and ` 4,00,000/- in S2 .

QUS.11 Jas Fashions Ltd. An Indian fashion designing company registered in Delhi hosts a fashion show at Toronto,
Canada. The firm receives the services of ABC Ltd. Of Mumbai for organizing the event. Determine the place
of supply of services provided by ABC Ltd.

ANS As per Section 12(7) of IGST Act, 2017, the place of supply of services provided by way of utilized on of a
cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in
relation to a conference, fair, exhibition, celebration or similar events to a registered person, shall be the
location of such person. Thus, in this case, though the service is received outside India, since service
recipient is registered person, the place of supply shall be the location of the recipient, here Delhi.

QUS.12 Jas Fashions Ltd. An Indian fashion designing company registered in Delhi hosts a fashion show at Toronto,

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Canada. The firm receives the services of ABC Ltd. Of Mumbai for organizing the event. Determine the place
of supply of services provided by ABC Ltd.

ANS As per Section 12(7) of IGST Act, 2017, the place of supply of services provided by way of 421tilized421on421
of a
cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in Delhi.
Relation to a conference, fair, exhibition, celebration or similar events to a registered person, shall be the
location of such person. Thus, in this case, though the service is received outside India, since service
recipient is registered person, the place of supply shall be the location of the recipient, here Delhi.

QUS.14 Mr. A of Raipur (unregistered person) hires the services of M/s XYZ an event management company
registered in Jaipur, for 421tilized421o the marriage ceremony of his daughter at marriage garden in Jaipur.
Determine place of supply of services provided by XYZ Ltd. What would your answer be in case marriage
takes place in Dubai.

ANS As per Section 12(7) of IGST Act, 2017, the place of supply of services provided by way of 421tilized421on421
of a
cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in
relation to a conference, fair, exhibition, celebration or similar events to a person other than a registered
person, shall be the place where the event is actually held and if the event is held outside India, the place of
supply shall be the location of the recipient.

Since Mr. A is not a registered person, the place of supply shall be the place where the event is held, here as
the marriage ceremony is held in Jaipur, therefore, place of supply shall be Jaipur. The location of the
supplier and the location of the recipient is irrelevant.

If the marriage ceremony is utilized in Dubai, then the place of supply would have been the location of the
recipient. Since Mr. A resides in Raipur, therefore, the place of supply shall be Raipur.

QUS.13 The All India Scientists Association (AISA) registered in Bengaluru, contracted with event managers M/s. BB
Ltd. Of New Delhi for utilized the National seminar of scientists at Gurgaon and the highly esteemed real

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estate company XYZ Ltd. Of Rajasthan offered sponsorship for the seminar. Mr. A, a scientist from Chennai
paid for the fees to attend the seminar at the Bengaluru office of the AISA. Determine the place of supply of
the various services supplied herein.

ANS The place of supply shall be determined as follows :

Service supplied Supplier Recipient Place of supply Reason

Organisation I BB Ltd. ofDelhi AISA of Bengaluru As per Section 12(7), where the
event Bengaluru services by way of organisation
of an event is supplied to a
registered person, the place of
supply shall be the location of
such person.
Assigning of AISA Bengaluru XYZ Ltd. Rajasthan As per Section 12(7), where the
Sponsorship Rajasthan services ancillary to organisation
of any of the events or assigning
of sponsorship to such events is
supplied to a registered person,
the place of supply shall be the
location of such person.
Admission I AISA Bengaluru Mr. A of Gurgaon As per Section 12(6), in case of
event Chennai services provided by way of
admission to an event, the
place of supply shall be the
place where the event is
actually held.

QUS.14 Determine the place of supply in the following independent cases:-

(i) Mr. Sahukaar (New Delhi) boards the New Delhi - Sawai Madhopur train at New Delhi. Mr. Sahukaar sells
the goods taken on board the train by him (at New Delhi), in the train, at Bharatpur during the journey.

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(ii) Vidhyut Pvt. Ltd. imports electric food processors from USA for its Electronic Store in Varanasi, Uttar
Pradesh. Vidhyut Pvt. Ltd. is registered in Uttar Pradesh.

(iii) Mr. Aatmaram (unregistered under GST), 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. Thus, withdrawal charges were
levied by the Best bank.

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 Bharatpur 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 place of supply of the goods
imported by Vidhyut Pvt. Ltd. is Varanasi, 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 over to Gokul Carriers 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

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the records of the supplier bank, i.e. New Delhi.

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IMPORT AND EXPORT UNDER GST

QUS. Discuss supplies which have been notified as deemed exports under section 147 of CGST Act, 2017.

ANS- The following supplies have been notified as deemed exports under section 147 of the CGST Act, 2017:
1. Supply of goods by a registered person against Advance Authorisation.
2. Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation.
3. Supply of goods by a registered person to Export Oriented Unit.
4. Supply of gold by a notified bank/Public Sector Undertaking against Advance Authorisation.

QUS. M/s Joinder Drills of Australia exports rough rock cutting diamonds to M/s Ankit Enterprises of India, a
registered supplier in the State of Haryana. M/s Ankit Enterprises is expected to process them into tools and
export the same to the supplier in Australia. The process does not involve any sophisticated process other
than cutting, polishing and finishing. M/s Ankit Enterprises requests M/s Joinder Drills for use of such tools
for his business in Indiafor 3 months, which is agreed to by the supplier. It then exports it to the Australian
supplier, invoicing it for ` 12,00,000 for processing it into the required tool.

M/s Ankit Enterprises is of the assumption that it is an export transaction and therefore , it is entitled to
treat it as a zero-rated supply and decides that no tax is payable under LUT although the rate applicable to
such services for domestic supplies is CGST – 9%, SGST – 9% and IGST – 18%.
State the provisions relating to the above supply of service and explain whether the stand taken by M/s Ankit
Enterprises is correct and also determine the tax, if applicable, as the goods are now moving out of Haryana.
(Nov 20 exam)

ANS- One of the conditions for a supply of service to qualify as export of service is that the place of supply of said
service must be outside India.
The place of supply of services supplied in respect of the goods which are temporarily imported into India for
any other treatment/process and are exported after such treatment/process without being put to any use in
India, other than that which is requiredfor such treatment/process, is the location of recipient of such service

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[Second proviso to section 13(3)(a) of the IGST Act, 2017].

In view of the above, in the given case, the place of supply of the services provided byM/s Ankit Enterprises
is the place where the services are actually performed, i.e., in India as the tools to be exported have been
used in India for 3 months before their export. Resultantly, the supply of services by M/s Ankit Enterprises do
not qualify as export of service.

Since the recipient is outside India, the place of supply is governed by section 13 and hence, the supply is not
an intra-State supply in terms of section 8(2) of the IGST Act, 20178. Therefore, since the place of supply is in
India and the supply is not an intra –State supply, the same is an inter-State supply [in terms of section 7(5)I
of the IGST Act, 2017] of services and not of goods. Thus, the same is liable to IGST of ` 1,83,051(`
12,00,000/118 x 18)9.

In case where the place of supply (determined under section 13 of the IGST Act, 2017) and the location of
supplier are in the same State, CBIC FAQs on ‘Banking, Insurance and Stock Brokers Sector’ have taken a view
that such supplies will be treated as intra-State supply.
9It has been assumed that the amount of `12,00,000 is inclusive of IGST.

QUS. Briefly discuss how exports are treated under the GST LOW

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.

QUS. 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. IGSTpaid 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 themachinery of the customs

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law is used to levy and collect the same.

QUS. Describe how exports are taxed under GST.

ANS- Exports of goods and services are zero rated. The exporter has the option eitherto 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.

QUS. Is it necessary to execute a bond for effecting zero rated supplies? Elucidate.

ANS- No. The facility to export under LUT has been extended to all zero rated suppliers(barring a few exceptions
such as those who have been prosecuted for an offence involving tax of ` 2.5 crore) vide Notification No.
37/2017 CT dated 4.10.2017. The other conditions for executing LUT have been specified in Circular No.
8/8/2017 GST dated 4.10.2017 as amended.

QUS. A Ltd. Enters into an agreement for sale of goods with B Ltd., a company based inUAE. B Ltd. Requires the
goods to be delivered by A Ltd. To C Ltd., a company basedin Karnataka.
Whether the transaction will qualify as export of goods under GST? Analyze the scenario and offer your
comments.

ANS- A Ltd. Enters into an agreement for sale of goods with B Ltd., a company based inUAE. B Ltd. Requires the
goods to be delivered by A Ltd. To C Ltd., a company basedin Karnataka.
Whether the transaction will qualify as export of goods under GST? Analyze the scenario and offer your
comments.

As per the definition of export of goods provided under section 2(5), export of goods means taking goods out
of India to a place outside India.

Since in the given case, the goods remain in India, i.e. with C Ltd. Located in Karnataka, the transaction
between A Ltd. And B Ltd. Cannot be treated as exportof goods under GST

QUS. A Ltd. Is making zero rated supplies which are also specifically exempt from GST. The company has paid input

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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 inputservices 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 supplyis 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.

QUS. 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)I? Examine.

ANS- 1. 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)I, the place of supply of services by way of
accommodation in any immovable property for utilized any functions shall be the location at which the
immovable propertyis 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 I general provision. In the instant case, section 7(5)(b) is

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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 servicesdo 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.

QUS. 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 paymenthas 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 individual receiving 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 byan 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 I 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.

QUS- ‘Separate LUT is to be furnished for every export supply.’

With reference to the provisions of the GST law, examine the veracity or otherwiseof the statement.

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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.

QUS. 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 ofsuch 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 theport of origin located outside India but before clearance for
home consumption (high sea sale) is neither treated as supply of goods nor supply of services in terms of
paragraph 8(b) of Schedule III to the CGST Act.

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.

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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 filingthe bill of entry for import
of goods is correct.

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RETURNS

QUS.1 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.

QUS. 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.

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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.

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

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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.

QUS. 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 viewthat 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 feeon delayed filing of return are prescribed in both CGST Act and SGST/UTGST
Actal though a common return is filed for both the laws

QUS. 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 incorrectdisclosure 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.

QUS. 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

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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- 1. 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.

QUS. 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 I 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.

QUS. Whether GSTPs are required to furnish any return for disclosure of activities carriedout by them for any of
the registered person during a tax period? Elucidate

ANS- In terms of section 48(2), a registered person may 435tilized435 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.

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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.

QUS. Which type of taxpayers need to file annual return under section 44? Enumerate.

ANS- Every registered person, other than ISD’s, casual/non-resident taxpayers, tax deductors at source, tax
collector at source 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.

QUS. 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.

QUS. Do input service distributors (ISDs) need to file separate statement of outward supplies with their return?
Discuss.

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.

QUS. Is it compulsory for a taxpayer to file return by himself? Explain.

ANS- No. A registered taxpayer can also get his return filed through a Goods and Services Tax Practitioner.

QUS. Explain the provisions of section 39(9) of the CGST Act, 2017 with reference to rectification of returns.

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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 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 following the end of the financial year, or the actual date of furnishing of relevant annual return,
whichever is earlier.

QUS. M/s. Sahu & Co. a registered firm has filed its GST Return in GSTR-1 for the month of February, 2021
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 2021 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 2021 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.

QUS. Mr. X, a regular tax payer, did not make any taxable supply during the month of July. Is he required to file
any goods and service tax return?

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ANS- A regular tax payer is required to furnish a return u/s 39 for every month 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 monthly return even if he did not make any taxable supply during the
month of July.

QUS. 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 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.

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EXEMPTIONS UNDER GST

QUS.1 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 I dated 28.06.2017, services by way of health care services by a clinical
establishment, an 439tilized439o 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

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illness, injury, deformity, abnormality or pregnancy in any 440tilized440o 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.

QUS. “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 l
earning 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 utilized by the law [The All India
Council for Technical Education (AICTE)].

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(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

Sr.No Particulars KIT Little Bright Spring

Millennium Minds Model
(`) (`) (`) (`)
(i) Printing services for printing 2,50,000 1,50,000 2,00,000
the 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 (iii)
the examiners (not on the rolls of
(iv) Rent for exam centers taken on 8,00,000 1,00,000
rent like schools etc., for conducting
Examination
(v) Subscription for online ucational 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

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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 of` 60,000 for
catering at a student event utilized in
a banquet hall outside the campus)
(viii) Security and housekeeping 6,00,000 4,00,000 3,75,000 4,65,000
services 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 442tilized442 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
Sprin
Sr.No Particulars KIT Little Bright g
Millennium Minds Model
(`) (`) (`) (`)
(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 to
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.

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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 ITC have been complied with.
Notification No. 12/2017 CTI 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 utilized 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;
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 is 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.

Further, as per S. No. 22 of Notification No. 12/2017 CT I services by way of giving on hire motor vehicle
for Transport of students, faculty and staff, to a person providing services of transportation of students,

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faculty and staff to an educational institution providing services by way of pre-school education and
education upto higher secondary school or equivalent is exempt.

In the given case, all the engineering courses including the distance learning post graduate engineering
programme run by KIT are 444tilized444o 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 444tilized444o 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 to September 20XX is computed as under:

Particulars KIT Little Spring Bright Millennium (` )

Minds Model
(` ) (` )
Printing services for printing Exempt [Services 27,000 Exempt
the question papers (paper provided to ducational [1,50,000 x 18%]
and content are provided institution in relationto
by the Institutions) Conduct of examination]
Paper procured for printing 51,600 30,960 41,280
the question papers – Supply [4,30,000 x12%] [2,58,000x 12%] [3,44,000 x 12%]
of select services to
educational institutions is
exempt and not supply of
goods to such educational
institutions]

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Honorarium topaper setters Exempt [Services

and examiners (not on provided to educational
the rolls of the educational institute in relation to
institution) Conduct of examination]
Rent forexamcentres taken Exempt 18,000
rent like schools etc.,for [Services provided to [1,00,000
Conducting examination Educational institution x 18%]
In relation to conduct
Of examination]
Subscription for online Exempt 14,400 39,600 43,200
Educational journals [80,000 [2,20,000 [2,40,00 0 x 18%]
[Little Millennium ha taken x 18%] x 18%]
The subscription for
online periodicals onchild
development and
learning]
Hire charges for buses used 86,400 [4,80,000 x18%] Exempt 23,400 Exempt
to transport student and [1,30,000 x 18%]
faculty from their residence
to the institutions and back
Catering services For 16,000 Exempt 9,000 Exempt
running a canteen in the [3,20,000 x 5%] [1,80,000 x 5%]
campus for students
[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

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secondary school]
Security and housekeeping 1,08,000 Exempt 67,500 14,400
services for the [6,00,000 x18%] [3,75,000 x 18%] [80,000 x 18%]
nstitution(s) [Security and
Housekeeping service

Provided to pre-schoo
And the higher secondary
School are exempt.]
Total GST on payable 2,62,000 14,400 2,15,460 98,880
goods and services
received by the
educational institutions

(1) Sl. No. 66 of Notification No. 12/2017 CTI 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:

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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 2,06,460
as computed in point (i) above less the tax payable on catering charges
(2,15,460 – 9,000)]
Net GST payable from Electronic Cash Ledger 1,76,940

QUS. 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 I 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 447tilized447o 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
447tilized447o 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

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qualification utilized 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 I 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 I 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 utilized 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.

QUS.4 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:

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

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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 I dated 28.06.2017/Notification No. 9/2017 IT

I 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

Particulars Amount (`)

Renting of residential dwelling for use as residence[Exempt vide Nil
exemption notification]
Renting of rooms for pilgrims* 8,00,000
[Since charges per day are not below `1,000]
Renting of rooms for devotees [Since charges per day are below `1,000] Nil
Renting of Kalyana Mandapam [Since charges per day are not below `10,000] 12,00,000
Renting of halls and open spaces [Since charges per day are below ` 10,000] Nil
Renting of shops for business [Since charges per month are below `10,000] Nil
Renting of shops for business [Since charges per month are not below ` 7,50,000
10,000]
Value of taxable supply 27,50,000

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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 I dated 28.06.2017 (in case services are intra- State supplies)/Entry 14(b) of Notification
No. 9/2017 IT I dated 28.06.2017 (in case services are inter-State supplies).

QUS.5 Pethalal has obtained registration in the current financial year in Uttar Pradesh. His turnover in the
preceding financial year was ` 19,90,000. He has received the following amounts in respect of the activities
undertaken by him in the month of September:

Sr. No. Particulars Amount ( )

(i) Funeral services 8,80,000
(ii) Services of warehousing of jaggery 50,000
(iii) Electrically operated buses given on hire to MunicipalCorporation 5,00,000
(iv) Service provided to recognized sports body ascommentator 2,00,000
(v) Commission received as an insurance agent from insurancecompany 65,000
(vi) Commission received as business facilitator for the services 15,000
provided to the urban branch of a nationalized bank with respect to
savings bank accounts
(vii) Security services (supply of security personnel) provided toDamodar 28,000
Engineering College (DEC)* [registered under GST] for the security of the
college Premises
*All the engineering courses run by DEC are 450tilized450o by the law [The All
India Council for Technical Education (AICTE)]

Further, he has received following services in the month of September:

Sr. No. Particulars Amount ( )

(a) Freight paid to unregistered goods transport agency for hisbusiness 1,00,000
activities relating to serial number (i) above
(b) Legal advice received from M/s Kanoon Associates, a partnership firm, 50,000

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seeking advice in relation to a tax dispute of the business

All the transactions stated above are intra-State transactions and amounts given are exclusive of GST,
wherever applicable.

You are required to calculate net GST payable by Pethalal for the month of September. There was no
opening balance of input tax credit. Rate of CGST and SGST is 9% each for all the outward supplies made by
Pethalal. (RTP MAY 20)

ANS- Computation of net GST payable by Pethalal

Particulars Amount (`) CGST (`) SGST

Supplies on which Pethalal is liable to pay
GST under forward charge
Funeral services [Note 1] 8,80,000
Services of warehousing of 451tilize [Note 2] 50,000
Services by way of giving on hire electricallyperated 5,00,000
buses to Municipality [Note 3]
Service provided to recognized sports body as 2,00,000 = 2,00,000 = 2,00,000
commentator [Note 4] × 9% × 9%
= 18,000 = 18,000
Commission received as an insurance agent 65,000
from insurance company [Note 5]
Commission received as business facilitator 15,000
for the services provided to the urban branch of a
451tilized451on451 bank with respect to savings bank
accounts [Note 6]
Security services (supply of security personnel) 28,000
provided to DEC for the security of the college
premises [Note 7]
Value of taxable supply 2,00,000

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Total tax liability on outward supplies (A) 18,000 18,000

Supplies on which Pethalal is liable to pay GST under
reverse charge
Services received from GTA [Note 8] 1,00,000 = 1,00,000 = 1,00,00
× 2.5% × 2.5%
= 2,500 = 2,500
Legal services received [Note 9] 50,000
Value of taxable supply 1,00,000
Total tax liability on inward supplies under reverse 2,500 2,500
charge (B) – payable in cash [Note 10]
ITC available on input services [Note 8] Nil Nil
Net GST payable (A) + (B) 20,500 20,500

Notes:
(1) Funeral services being covered in entry 4 of Schedule III to the CGST Act, 2017 are not a supply and thus,
are outside the ambit of GST.

(2) Services by way of storage/ warehousing of, inter alia, 452tilize are exempt from GST vide Exemption
Notification No. 12/2017 CTI dated 28.06.2017 (hereinafter referred to as exemption notification). Thus,
services of warehousing of 452tilize are exempt.

(3) Services by way of giving on hire to a local authority, an Electrically operated vehicle (EOV) meant to
carry more than 12 passengers are exempt vide exemption notification. Buses are EOVs meant to carry more
than 12 passengers. Hence, services of giving electrically operated buses on hire to Municipal Corporation
are exempt from GST.

(4) 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 commentator is liable to GST.

(5) Though commission for providing insurance agent’s services to any person carrying on insurance business

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is liable to GST, 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 CTI dated 28.06.2017 (hereinafter referred to as
reverse charge notification). Thus, Pethalal will not be liable to pay GST on such commission.

(6) Services provided by a business facilitator to a banking company with respect to accounts in its rural area
branch are exempt from GST vide exemption notification. Thus, services provided by him in respect of urban
area branch of the bank will be taxable. However, the tax payable thereon is to be paid by the recipient of
service i.e., banking company, under reverse charge in terms of reverse charge notification. Hence, Pethalal
will not liable to pay GST on commission received for said services.

(7) Services provided to an educational institution, by way of security services performed in such educational
institution are exempt from GST only when said services are provided to an institution providing services by
way of pre-school education and education up to higher secondary school or equivalent, vide exemption
notification. Thus, in the given case, security services provided to DEC are not exempt. Further, the tax on
security services (supply of security personnel) provided by any person other than a body corporate to a
registered person is payable by the recipient of service under reverse charge in terms of reverse charge
notification. Hence, Pethalal will not be liable to pay GST in the given case.

(8) 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 reverse charge
notification. Since in the given case, GTA is unregistered, Pethalal is liable to pay tax under reverse charge @
5% (CGST @ 2.5% and SGST @ 2.5%). Further, since said input services are being exclusively used for
effecting non-taxable supplies [funeral services], input tax credit of the GST paid on the same will not be
available.

(9) Legal services provided by a partnership firm of advocates to a business entity (with an aggregate
turnover up to such amount in the preceding FY as makes it eligible for exemption from registration under
the CGST Act, 2017) are exempt from GST vide exemption notification. Since the aggregate turnover of
Pethalal did not exceed ` 20 lakh [the applicable threshold limit for registration for Pethalal being a supplier
of services] in the preceding FY, legal services received by him are exempt from GST.

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(10) 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.

(11) Since all the transactions given hereunder are intra-State, CGST and SGST are payable in terms of
section 9(1) of the CGST Act, 2017

QUS.6 (a) BODMAS Ltd., providing educational services, furnishes you with the following information for the
various services provided by it for the month of March, 2019:

Particulars `
Receipts from running a Boarding School (including receipts forproviding 30,00,000
residential dwelling service of ` 14,00,000)
Receipts of ‘Gyan Uday’ – an Industrial Training Institute (ITI) affiliated to the National 2,00,000
Council for Vocational Training (NCVT)
Receipts of ‘Lakshya’, an institute, registered with Directorate General of Employment 1,00,000
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)
Receipts of ‘Wizard”, a Commercial Coaching Institute providing commercial coaching 80,000
in the field of arts and science (no certificate was issued on completion of the training)
Fees from prospective employers for campus interview 4,00,000
Renting of furnished flats for temporary stay to different persons 5,00,000
Receipts of ‘Concepts’, a Commercial coaching institute providing coaching in the field 1,40,000
of commerce (a certificate was awarded to each trainee after completion of the
training)
Receipts of Gurukul School providing education upto highersecondary 5,00,000
Compute the value of taxable supply assuming that all the above receipts are exclusive of GST.
(NOV 19 EXAM)

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ANS- (a) Services provided by an educational institution to its students, faculty and staff are exempt vide
Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Further, an educational institution means,
inter alia, an institution providing services by way of-
(i) education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification utilized by any law for the time being
in force;
(iii) education as a part of an approved vocational education course.

In view of the aforesaid provisions, value of taxable supply of BODMAS Ltd. For the month of March, 2019
has been computed as follows:

Particulars Amount(`)
Receipts from Boarding School including receipts for residentialdwelling service Exempt
[Educational institution providing education up to higher secondary school or
equivalent]
Receipts of Gyan Uday Exempt
[Educational institution running approved vocational education course (assuming that
such courses are run in designated trades)]
Receipts of Lakshya running Modular Employable Skill Course [Educational institution Exempt
running approved vocational education course]
Receipts of Wizard – a coaching institute 80,000
[Taxable since coaching institute is not an educational institution]
Fees from prospective employers for campus interview [Taxablesince such 4,00,000
services are not specifically exempt]
Renting of furnished flats for temporary stay to different persons4 5,00,000
[Not exempt since services by a hotel, inn, guest house, club or campsite, by whatever
name called, for residential or lodging purposes, are exempt only when the value of
supply of a unit of accommodation is below ` 1,000 per day.]
Receipts of Concepts – a coaching institute 1,40,000
[Taxable since coaching institute is not an educational institution]
Receipts of Gurukul School providing education upto higher secondary Exempt

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Value of taxable supply 11,20,000

4 It has been assumed that rent per flat per day ≥ ` 1,000.

QUS.7 Mr. Nagarjun, a registered supplier of Chennai, has received the following amounts in respect of the
activities undertaken by him during the month ended on 30th September, 2019:

Sr. No. Particulars Amount (`)

(i) Amount charged for service provided to recognized sports body asselector of 50,000
national team.
(ii) Commission received as an insurance agent from insurancecompany. 65,000
(iii) Amount charged as business correspondent for the services provided to the 15,000
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 value of taxable supply on which GST is to be paid by Mr. Nagarjun for
the month of September, 2019. Working notes should form part of your answer (MTP Nov 20)

ANS- Computation of gross GST liability

Particulars Value received(`) Rate of GST GST payable(`)

Hiring receipts for machine 5,25,000 12% 63,000
Service charges for supply of manpower operators 2,35,000 12% 28,200
Gross GST liability 91,200

Note:

Since machine is always hired out along with operators and operators are supplied only when the machines

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are hired out, it is a case of composite supply, wherein the principal supply is the hiring out of machines
[Section 2(30) of the CGST Act, 2017 read with section 2(90) of that Act]. 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) of the CGST Act, 2017.

Computation of gross value of taxable supply on which GST is to be paid by Mr. Nagarjun

Particulars Amount(`)
Supplies on which Mr. Nagarjun is liable to pay GST under forwardcharge
Amount charged for service provided to recognized sports body as selector ofnational 50,000
team [Note 1]
Commission received as an insurance agent from insurance company [Note 2] Nil
Amount charged as business correspondent for the services provided to the 15,000
urban branch of a utilized on bank with respect to savings bank accounts [Note 3]
Services provided to foreign diplomatic mission located in India [Note 4] 28,000
Funeral services [Note 5] Nil
Supplies on which Mr. Nagarjun is liable to pay GST under reversecharge
Services received from GTA [Note 6] 45,000
Value of taxable supply on which GST is to be paid 1,38,000

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 No. 12/2017 CTI dated 28.06.2017. Thus, service provided as selector of
team is liable to GST.

(2) Though commission for providing insurance agent’s services is liable to GST, 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 CTI 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

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area branch are exempt from GST vide Exemption Notification No. 12/2017 CTI dated 28.06.2017.
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 No. 12/2017 CTI dated 28.06.2017, services provided to such mission are taxable.

(5) Funeral services being covered in entry 4 of Schedule III to CGST Act, 2017 are not a supply and thus, are
outside the ambit of GST.

(6) GST on services provided by a GTA 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 CTI dated
28.06.2017.
The turnover of previous year is irrelevant in this case.

QUS.8 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. M. V. College provides education as a part of a curriculum for obtaining a
qualification 458tilized458o by a law
(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 in its premises, 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 (MTP Nov 20)

ANS- (1) As per Notification No. 12/2017 CT I 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 458tilized458o by any law for the time being in force.

Since M. V. College provides education as a part of a curriculum for obtaining a qualification utilized by a

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law, the services provided by it to its staff by way of conducting personality development course would be
exempt from GST.

(2) Since 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 I 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 as housekeeping services have been performed in such play school itself.

(4) As per Notification No. 12/2017 CT I 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 utilized 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.

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EXEMPTION

QUS.1 MTCT, an entity registered under section 12AA of the Income-tax Act, 1961, has furnished you the following
details with respect to the activities undertaken by it. You are required to compute its GST liability from the
information given below:

Particulars
Fees charged for yoga camp conducted by the trust 6,00,000
Amount received for advancement of educational programmes relating to 10,50,000
abandoned, orphaned or homeless children
Amount received for renting of commercial property owned by the trust 35,00,000
Payment made for the services received from a service provider located in 10,00,000
England, for the purposes of providing ‘charitable activities’
Amount received for activities relating to preservation of forests and wildlife 12,35,000
Donation received from Mr. Daanveer for construction of orphanage in 30,00,000
memory of his father. “Donated by Mr. Daanveer the memory of his father”
was written on the main door of the orphanage constructed with the said
donation.
Receipts of old age home meant for residents of 60 years or more 10,00,000
[Consideration per month per member is ?5,000 (inclusive of boarding lodging
and maintenance)]

Note: GST have been charged separately wherever applicable. Rate of GST is 18%.

ANS- Computation of GST liability of MTCT (amount in `) —

Fees charged for yoga camp conducted by the trust [WN-1] Nil
Amount received for advancement of educational programmes relating toabandoned, Nil
orphaned or homeless children [WN-1]

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Amount received for activities relating to preservation of forests and wildlife [WN-1] Nil
Receipts of old age home meant for residents of 60 years or more [Considerationper Nil
month per member is ?5,000 (inclusive of boarding lodging and maintenance)] [WN-4]
Donation received from Mr. Daanveer for construction of orphanage in memoryof his Nil
father [WN-5]
Amount received for renting of commercial property owned by the trust [WN-3] 35,00,000
Value of Taxable supply 35,00,000
GST payable @ 18% [A] 6,30,000
Services to be taxed on reverse charge basis :
Payment made for the services received from a service provider located inEngland for Nil
the purposes of providing ‘charitable activities’ [B] [WN-2]
GST liability [(A) + (B)] 6,30,000

Working Notes:
(1) Services provided by an entity registered under section 12AA of the Income-tax Act, 1961 by way of
charitable activities are exempt from GST vide Exemption Notification No. 12/2017-CT I dated 28-06-
2017. The definition of term charitable activities, inter alia, means activities relating to :
(a) advancement of yoga;
(b) advancement of educational programmes relating to abandoned, orphaned or homeless children
I preservation of environment including watershed, forests and wildlife.

(2) Service recipient is liable to pay GST in case of a taxable service provided by any person located in a non-
taxable territory and received by any person located in the taxable territory. However, services received
from a provider of service located in a non-taxable territory by an entity registered under section 12AA of
the Income-tax Act, 1961 for the purposes of providing charitable activities are exempt from GST vide Entry
10 of Notification No. 9/2017-IT I dated 28-06-2017.

(3) Renting of commercial property owned by the trust is liable to GST.

(4) Services by an old age home run by an entity registered under section 12AA of the Income-tax Act, 1961

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to its residents (aged 60 years or more) against consideration upto ` 25,000 per month per member,
provided that the consideration charged is inclusive of charges for boarding, lodging and maintenance is
exempt from tax vide Entry 9D of Notification No. 12/2017-CT I.

QUS.2 Renting of precincts of a religious place : VHP, an entity registered as religious trust u/s 12AA of the
Income-tax Act, 1961, has furnished you the following details with respect to the activities undertaken by it.

You are required to compute its value of taxable supply from the information given below:

Particulars
(1) Renting of room where charges are ` 500 per day 6,00,000
(2) Renting of room where charges are ` 1,500 per day 9,00,000
(3) Renting of community halls where charges are ` 25,000 per day 10,00,000
(4) Renting of kalyanmandapam where charges are ` 5,000 per day 7,50,000
(5) Renting of shops for business where charges are 115,000 per month 7,50,000
(6) Renting of shops for business where charges are ` 5,000 per month 5,50,000

ANS- Computation of GST liability of VHP (amount in `) —

(1) Renting of room where charges are ` 500 per day Nil
(2) Renting of room where charges are ` 1,500 per day 9,00,000
(3) Renting of community halls where charges are ` 25,000 per day 10,00,000
(4) Renting of kalyanmandapam where charges are ` 5,000 per day Nil
(5) Renting of shops for business where charges are 115,000 per month 7,50,000
(6) Renting of shops for business where charges are ` 5,000 per month Nil
Value of Taxable supply 26,50,000

Working Note : Services by a person by way of renting of precincts of a religious place meant for general
public, owned or managed by an entity registered as a charitable or religious trust under Section 12AA of
the Income-tax Act, 1961 are exempt. However, this exemption shall not apply to,—
(i) renting of rooms where charges are ` 1,000 or more per day;

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(ii) renting of premises, community halls, kalyanmandapam or open area, and the like where charges are `
10,000 or more per day;
(iii) renting of shops or other spaces for business/ commerce where charges are ` 10,000 or more per
month.

QUS.3 Agricultural related service: “Agro Care Limited” registered under GST furnishes the following details with
respect to the activities undertaken by them in the month of March, 2020 :

Particulars
1. Receipts from Supply of farm labour 85,000
2. Charges for seed testing 65,000
3. Charges for soil testing of farm land 35,000
4. Charges for warehousing of potato chips 85,000
5. Commission received on sale of wheat 75,000
6. Charges for training of farmers on use of new pesticides and fertilizers 10,000
10,000 developed through scientific research
7.Renting of vacant land to a stud farm 1,85,000
8.Leasing of vacant land to a cattle farm 83,500
9.Charges for warehousing of rice 1,50,000
10.Charges for warehousing of cotton fabrics 2,00,000
11.Retail packing and 463tilized of fruits and vegetables 5,00,000
12.Charges for warehousing of minor forest produce 8,00,000
13.Charges for warehousing of spices 2,20,000

Compute the value of taxable supply of ‘Agro Care Limited’ for the month of March, 2020 if all the above
amounts are exclusive of GST.

ANS- Computation of Value of taxable supply (amount in f> —

1. Receipts from Supply of farm labour [Exempt vide Entry No. 54 of Nil
Exemption Notification No. 12/2017-CT (Rate)] Charges for seed testing

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[Exempt vide Entry No. 54 of Exemption Notf. No. Nil

2. 12/2017-CT (Rate)]
3. Charges for soil testing of farm land [Exempt vide Entry No. 54 of Nil
Exemption Notification No. 12/2017-CT (Rate)]
4. Charges for warehousing of potato chips [Potato chips is not an 85,000
agricultural produce, hence warehousing of the same shall be taxable]
5. Commission received on sale of wheat [Exempt vide Entry No. 54 of Nil
Exemption Notification No. 12/2017-CT (Rate)]
6. Charges for training of farmers on use of new pesticides and fertilizers Nil
developed through scientific research [Exempt vide Entry No. 54 of
Renting of vacant land Exemption Notification No. 12/2017-CT (Rate)]
7. to a stud farm [The same will be liable for GST as rearing of horses has 1,85,000
been specifically excluded from Exemption]
8. Leasing of vacant land to a cattle farm [Exempt vide Entry No. 54 of Nil
Exemption Notification No. 12/2017-CT (Rate)]
9. Charges for warehousing of rice [Exempt vide Entry No. 24 of Exemption Nil
Notification No. 12/2017-CT (Rate)]
10. Charges for warehousing of cotton fabrics [Liable to GST] 2,00,000
11. Retail packing and 464tilized of fruits and vegetables [Exempt vide Entry Nil
No.
57of Exemption Notification No. 12/2017-CT (Rate)]
12. Charges for warehousing of minor forest produce [Exempt vide Entry No. Nil
24A of Exemption Notification No. 12/2017-CT (Rate)]
13. Charges for warehousing of spices [Exempt vide Entry No. 24B of Nil
Exemption Notification No. 12/2017-CT (Rate)]
Value of Taxable Supply 4,70,000

QUS.4 Fortune Ltd. (a registered taxable person) provides the following information relating to their services for
the month of November, 2019 :

Particulars
Gross receipts from -
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1) Running a Boarding School (including receipts for providing residential dwelling 28,00,000
2) Conducting private tuition’s 16,00,000
3)Education services for obtaining a qualification 465tilized465o by law of a foreign 8,00,000
country
4) Conducting modular employable skill course, approved by National Council of 10,00,000
vocational training
5) Fees from prospective employers for campus interview 6,00,000

6) Renting of furnished flats for temporary stay to different persons 6,80,000

Compute the value of taxable supply and the amount of GST payable. The above receipts are exclusive of
GST. GST rate – 18%.

ANS- Computation of Value of taxable supply and GST liability (amount in `) —

Running a boarding school [including residential dwelling services] [WN-1]

Conducting private tuition [WN-2]
Education services for obtaining a qualification recognized by law of a [WN-3] Nil
foreign country [WN-4] 16,00,000
Conducting Modular Employable Skill Course, approved by NCVT 8,00,000
Fees from prospective employers for campus interview [Not covered in Nil
exemption] 6,00,000
Value of renting of furnished flats for temporary stay to different
persons [WN-5] 6,80,000
Value of taxable supply 36,80,000
GST payable @ 18% 6,62,400
Working Notes:
(1) Running a boarding school is not taxable since education up to higher secondary school is exempt vide
Entry 66 of Notification No. 12/2017-CT (Rate) and renting of residential dwelling is exempt vide Entry 12 of
Notification No. 12/2017-CT (Rate)].

(2) Private tuition is not exempt as they do not lead to grant of a qualification 465tilized465o by law.

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(3) Education as a part of a curriculum for obtaining a qualification recognized by only an Indian law and not
a foreign law is exempt.

(4) Modular Employable Skill Course is an approved vocational education course and is exempt
vide Entry 66 of Notification No. 12/2017-CT (Rate).

(5) Short stay by different persons in furnished flats is not renting of residential dwelling and thus, not
exempt.

QUS.5 Indian Institute of management furnishes you the following information of its receipts for the month ending
April 2020.
Gross receipts from -
(1) Students pursuing 2 year full time Post Graduate Programmes in Management 2,50,00,000
(2) Students pursuing fellow programme in management 50,00,000
(3) Participants pursuing short duration (3 months) executive development programme. 25,00,000
Participation certificates are awarded to participants after completion of programme.
You are required to compute value of taxable supply and GST liability if applicable rate of GST is 18%.

ANS- Computation of Value of taxable supply and GST liability (amount in `) —

Receipts from students pursuing 2 year full time Post Graduate Programmes in Nil
Management [Exempt vide vide Entry 66 of Notification No. 12/2017-CT (Rate).] Nil
Receipts from students pursuing fellow programme in management. [Exempt vide 25,00,000
vide Entry 66 of Notification No. 12/2017-CT (Rate).]
Receipts from participants pursuing short duration (3 months) executive
development programme.
Value of taxable supply 25,00,000
GST payable @ 18% 4,50,000

QUS.6 XYZ Ltd. Is engaged in providing various services to educational institutions and furnishes you with the
following information for the month of April 2019. You are required to determine the value of taxable

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supply and GST payable thereon if all charges are exclusive of GST. The rate of GST is 18%.
(1) Renting of immovable property to higher secondary school: 12,00,000
(2) Renting of immovable property to Commercial coaching centre: 2,00,000
(3) Transportation services provided to students of higher secondary school: 5,00,000
(4) Outdoor catering services provided to educational institutions running approved vocational courses:
5,00,000
(5) Security Services provided to pre-nursery school: 1,25,000
(6) House keeping and cleaning services in college providing 467tilized467o graduation degree : ` 5,12,500
(7) Conduct of examination of ICAI: 10,00,000
(8) Placement services provided to ICSI: 12,00,000
(9) Development of course content of ICMA institute : 2,00,000
(10) Training of Staff of Higher Secondary School: 1,50,000
(11) Receipts by way subscription of online educational journals/periodicals:7,50,000 (5,00,000 is from
educational institutions who provide degree recognized by any law and balance f2,50,000 from Higher
Secondary school).

ANS- Solution: Computation of the Value of taxable supply and GST payable (amount in `) —

(1) Renting of immovable property to higher secondary school [Liable for GST] 12,00,000

(2) Renting of immovable property to Commercial coaching centre [Liable forGST] 2,00,000
(3) Transportation services provided to students of higher secondary school Exempt
[Exempt vide Entry 66 of Notification No. 12/2017-CT (Rate)]
(4) Outdoor catering services provided to educational institutions running 5,00,000
approved vocational courses [Not covered under Entry 66 of Notification
No. 12/2017-CT (Rate), hence liable to GST]
(5) Security Services provided to pre-nursery school [Exempt vide Entry 66 of Exempt
Notification No. 12/2017-CT (Rate)]
(6) House keeping and cleaning services in college providing recognised 5,12,500
graduation degree [Not covered under Entry 66 of Notification No. 12/2017-
CT (Rate), hence liable to GST)]

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(7) Conduct of examination of ICAI [Covered under Entry 66 of Notification No. Exempt
12/2017-CT (Rate), hence exempt from GST]
(8) Placement services provided to ICSI [Liable for GST] 12,00,000
(9) Development of course content of ICMA institute [Liable for GST] 2,00,000
(10) Training of Staff of Higher Secondary School [Not covered under Entry 66 of 1,50,000
Notification No. 12/2017-CT (Rate), hence liable to GST]
(11) Receipts by way subscription of online educational journals/periodicals from 2,50,000
educational institutions who provide degree recognized by any law is exempt
under Entry 66 of Notification No. 12/2017-CT (Rate). However amount
received from higher Secondary school is liable to GST.
Value of taxable supply 42,12,500
GST payable @ 18% 7,58,250

QUS.7 Well-Being Nursing Home has received the following amounts in the month of November in lieu of various
services rendered by it in the same month. You are required to determine its GST liability for November
from the details furnished below :

Particulars ` in lakhs
(1) Palliative care for terminally ill patients at patient’s home 30 lakhs
(Palliative care is given to improve the quality of life of patients who have a
serious or life- threatening disease but the goal of such care is not to cure the
disease)
(2) Services provided by cord blood bank unit of the nursing home by way of 24 lakhs
preservation of stem cells.
(3) Hair transplant services 100 lakhs
(4) Ambulance services to transport critically ill patients from various locations to 12 lakhs
nursing home
(5) Naturopathy treatments. Such treatment is a recognized system of medicine in 80 lakhs
terms of Section 2(h) of the Clinical Establishments Act, 2010
(6) Plastic surgery to restore anatomy of a child affected due to an accident 30 lakhs
(7) Pranic healing treatments. Such treatment is not a recognized system of 120 lakhs

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medicine in terms of Section 2(h) of the Clinical Establishments Act, 2010

(8) Mortuary services 10 lakhs

Note: All the amounts given above are exclusive of GST. Rate of GST-18%. Solution: Computation of Value of
taxable supply and GST liability (Tin lakhs) —

(1) Palliative care for terminally ill patients at patient’s home [WN-l(a)] -
(2) Services provided by cord blood bank by way of preservation of stem
[WN-2]cells
(3) Hair transplant services [WN-l(b)j 100.00
(4) Ambulance services to transport critically ill patients from various locations -
to nursing Home [WN-lI]
(5) Naturopathy treatments [WN-l(d)] -
(6) Plastic surgery to restore anatomy of a child affected due to an accident -
[WN-l(e)]
(7) Pranic healing treatments [WN-l(f)] 120.00
(8) Mortuary services [WN-3] -
Value of Taxable Supply 220.00
GST payable @ 18% 39.60

Working Notes:
(1) Health care services provided by, inter alia, a clinical establishment in any recognized system of
medicines in India is exempt from GST vide Entry 74 of Notification No. 12/2017-CT (Rate).
(a) It is immaterial whether health care service is provided at the clinical establishment or at the home of
the patient or at any other place. Thus, palliative care for terminally ill patients at patient’s home is eligible
for exemption.
(b) Hair transplant services are specifically excluded from the health care services, and thus are not eligible
for exemption.
I Ambulance services to transport critically ill patients from various locations to nursing home are eligible
for exemption.
(d) Since naturopathy is a recognized system of medicine in terms of Section 2(h) of the Clinical

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Establishments Act, 2010, it would be eligible for exemption.

(e) Plastic surgery to restore anatomy of a child affected due to an accident will be eligible for exemption.
(f) Since pranic healing treatment is not a recognized system of medicine in terms of Section 2(h) of the
Clinical Establishments Act, 2010, it would not be eligible for exemption.

(2) Services provided by cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation are also exempt from GST vide Entry 73 of Notification No. 12/2017-CT I.

(3) Mortuary services are covered under negative list under Schedule III of CGST Act, 2017. Hence, the same
are not liable to GST.

QUS.8 Lakhanpur Post Office provided the following services to persons other than Government during the month
of March 2020, all charges are exclusive of GST:

Services rendered
(1) Basic mail services 1,00,000
(2) Transfer of money through money orders 5,00,000
(3) Operation of saving accounts 1,50,000
(4) Rural postal life insurance services 2,00,000
(5) Distribution of mutual funds, bonds and passport applications 5,00,000
(6) Issuance of postal orders 3,00,000
(7) Collection of telephone and electricity bills 1,00,000
(8) Pension payment services 50,000
(9) Speed post services 5,00,000
(10) Express parcel post services 2,00,000

ANS- Computation of Value of taxable supply

(1) Basic mail services [Exempt since covered in Entry 6 of Exemption Notif. No. 12/2017-CT Nil
(Rate)]
(2) Transfer of money through money orders [Exempt since covered in Entry 6 of Exemption Nil

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Notification No. 12/2017-CT (Rate)]

(3) Operation of saving accounts [Exempt since covered in Entry 6 of Exemption Notification Nil
No. 12/2017-CT (Rate)]
(4) Rural postal life insurance services (Liable to GST) 2,00,000
(5) Distribution of mutual funds, bonds and passport applications (Liable to GST) 5,00,000
(6) Issuance of postal orders [Exempt since covered in Entry 6 of Exemption Nil
Notification No. 12/2017-CT (Rate)]
(7) Collection of telephone and electricity bills (Liable to GST) 1,00,000
(8) Pension payment services [Exempt since covered in Entry 6 of Exemption Nil
Notification No. 12/2017-CT (Rate)]
(9) Speed post services (Liable to GST) 5,00,000
(10) Express parcel post services (Liable to GST) 2,00,000
Value of taxable supply 15,00,000

QUS.9 A promoter entered into agreement with land owner for transfer of development rights on 15-5- 2020. As
per the agreement, promoter was allowed to develop a real estate project on the land. The promoter had
agreed to give apartments consisting of 40% of the carpet area to land owner as consideration for granting
development rights to promoter. The real estate project was of 100 apartments of same size. Out of these
100 apartments, 40 apartments were to be given by promoter to land owner. It was agreed that promoter
will make all the bookings and sales, even of apartments given to land owner. The project was registered
under RERA and construction commenced in August 2020.

The promoter started booking of apartments in September 2020. The rate offered was ` 90 lakhs per
apartment and first two apartments were booked at that rate.
The construction was completed on 20-11-2021. Five apartments were sold in October, 2021 for ` 120 lakhs
each.

Calculate value of transfer of development rights on which the promoter is liable to pay GST under reverse
charge (without considering the exemption available in respect of residential apartments booked prior to
20-11-2021) and the GST payable.

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Also calculate value of apartments remaining un-booked on 20-11-2021 if 30 apartments remained

unbooked on the date of completion 472tilized472on.

ANS- The development rights were transferred in May, 2020. The booking rate at that time was
90 lakhs. Hence, value of supply of service is ` 60 lakhs (two-third of T 90 lakhs). Since 40 apartments were
to be given to land owner, the total value of transfer of development rights – 40 x 60 lakhs = ` 2,400 lakhs.
GST payable of transfer of development rights = 18% of ` 2,400 lakhs = ` 432 lakhs.

The value of un-booked apartments is to be considered on basis of value of similar apartments booked
nearest to date of completion. The apartments were booked by promoter for Rs 120 lakhs in October 2021.
Hence, value of the apartment nearest to date of completion is T 80 lakhs (two- third of ` 120 lakhs).
Since 30 residential apartments remained un-booked on date of completion certificate, the value of
unbooked apartments = ` 80 lakhs x 30 = ` 2,400 lakhs.

QUS.10 In the aforesaid illustration, out of 100 apartments, 30 were commercial apartments and 70 were residential
apartments. Carpet area of each is 100 Sq M. Out of these, 20 commercial apartments and 40 residential
apartments were booked prior to date of completion certificate. Value and carpet area of commercial and
residential apartments are same. Calculate the exemption available to promoter in respect of GST on
development rights and GST payable by promoter under reverse charge on transfer of development rights.

ANS- The calculations are as follows -

GST payable on transfer of development rights is f 432 lakhs (as above). Carpet area of residential
apartments of project = 70 x 100 Sq M = 7,000 Sq M
Total carpet area of residential and commercial apartments = 100 x 100 Sq M = 10,000 Sq M
Carpet area of residential apartments which remain un-booked on date of completion = 30 x 100 = 3,000 Sq

(A) GST on transfer of development rights/FSI attributable residential apartments = 302.4

GST payable on TDR or FSI (including Carpet area of the residential
additional FSI) or both or on upfront apartments in the project i.e. 7000 sq M
amount payable in respect of service by
way of granting of long term lease of X Total carpet area of the residential and

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thirty years, or more for construction of commercial apartments in the project

the project] i.e. ` 432 lakhs i.e. 10000 sq M
(B) GST payable on residential apartments remain un-booked on date ofcompletion = 129.6
GST payable on TDR or FSI (including Carpet area of the residential
additional FSI) or both or upfront amount apartments in the project which remain
(called as premium, salami, cost, price, un-booked on the date of issuance of
development charges or by any other completion certificate or first occupation
name) payable for long term lease of land X i.e. 3000 sq M
for construction of the residential
apartments in the project but for the Total carpet area of the residential
exemption contained herein i.e. ` 302.40 apartments in the project i.e. 7000 sq M

Maximum GST payable on un-booked apartments : The tax payable shall not exceed 0.5% of value of
affordable residential apartments remaining un-booked and 2.5% of value of residential apartments (other
than affordable residential apartments) remaining un-booked on date of completion.
The value nearest to date of completion is ` 2,400 lakhs (as in above illustration). Since area of each
residential apartment is 100 Sq. M., these are residential apartments (other than affordable residential
apartments, GST rate of 2.5% will be applicable). Hence, 2.5% of f 2,400 lakhs is ` 60 lakhs.
Thus, GST payable on un-booked residential apartments is f 60 lakhs due to the ceiling. Hence, (B) =
f 60 lakhs.

Amount of exemption on TDR’s : Exemption available on development rights pertaining to residential

apartments which were booked prior to date of completion = (A) – (B) = f 302.40 - ` 60 = f 242.40 lakhs. GST
payable by promoter under RCM on TDR’s : GST payable by promoter on transfer of development rights
under revere charge = Total GST f 432 lakhs – Exemption available on transfer of development rights
pertaining to residential apartments transferred prior to completion certificate f 242.40 lakhs = f 189.60
lakhs.
Thus, the promoter is liable to pay ` 189.60 lakhs under reverse charge as GST on transfer of development
rights.
This can be checked by making same calculations in different way.
The GST liability shall be calculated as under : (f in lakhs)

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(i) GST on transfer of development rights/FST attributable commercial apartments = 129.6

GST payable on TDR or FSI (including Carpet area of the commercial
additional FSI) or both or on upfront apartments in the project i.e. 3000 sq M
amount payable in respect of service by X
way of granting of long term lease of thirty Total carpet area of the residential and
years, or more for construction of the commercial apartments in the project i.e.
project i.e. ` 432 lakhs 10000 sq M
(ii) GST payable on residential apartments remain Un-booked on date ofcompletion =
GST payable on TDR or FSI (including Carpet area of the residential apartments
additional FSI) or both or upfront amount in the project which remain un-booked on
(called as premium, salami, cost, price, the date of issuance of completion
development charges or by any other X certificate or first occupation
name) payable for long term lease of land
for construction of the residential Total carpet area of the residential
apartments in the project but for the apartments in the project
exemption contained herein
GST payable on un-booked residential apartments (due to the limit of 2.5% ofvalue) 60
Total GST payable by promoter under reverse charge 189.6

QUS.11 M/s. PQR Ltd. Is engaged in providing service of transportation of passengers by following modes in the
month of November, 2019 :
(1) Service of transportation of passengers by vessels in National Waterways : 30,00,000;
(2) Service of transportation of passenger by Air conditioned Stage carriage : 25,00,000;
(3) Service of transportation of passenger by non air conditioned Stage carriage : 25,00,000;
(4) Service of transportation of passengers by contract carriage for tourism : 20,00,000;
(5) Service of transportation of passenger for Mumbai to Chennai port in a vessel and such service is not for
tourism purpose : 10,00,000;
(6) Service of transportation of passenger in Metered Cab : 35,00,000;
(7) Service of transportation of passengers in Radio Taxis : 10,00,000;
(8) Service of transportation of passengers in Non AC contract carriages: ` 10,00,000;

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(9) Service of transportation of passengers in air-conditioned contract carriages : ` 15,00,000. Compute the
value of taxable supply if all charges are exclusive of GST.

ANS- Computation of Value of taxable supply (amount in `) —

(1) Transportation of passengers by National Waterways [Since National Nil

Waterways are covered in definition of inland Waterways – Exempt from GST vide Entry
17 of Notification No. 12/2017- CT (Rate)]
(2) Transportation of passenger by Air conditioned Stage Carriage (Liable to GST) 25,00,000
(3) Transportation of passenger by non air conditioned Stage carriage [Exempt Nil
from GST vide Entry 15 of Notification No. 12/2017-CT (Rate)]
(4) Transportation of passengers by contract carriage for tourism (Liable to GST) 20,00,000
(5) Transportation of passenger from Mumbai to Chennai port in a vessel [Being Nil
a public transport in a vessel sailing in India and not for tourism – Exempt from GST vide
Entry 17 of Notification No. 12/2017-CT (Rate)]
(6) Transportation of passenger in Metered Cab [Exempt from GST vide Entry 17 of Nil
Notification No. 12/2017-CT (Rate)]
(7) Service of transportation of passengers in Radio Taxis (Liable to GST) 10,00,000
(8) Service of transportation of passengers in non air-conditioned contract carriages Nil
[Exempt from GST vide Entry 15 of Notification No. 12/2017-CT (Rate)]
(9) Service of transportation of passengers in air-conditioned contract carriages
(Liable to GST) 15,00,000
Value of Taxable Supply 70,00,000

QUS.12 Compute Value of taxable supply and GST Liability for transport of goods by rail by Indian railway within
India (all sums exclusive of all taxes) (the information relates to the month of November, 2019)-
(1) Transport of postal mails and postal bags : ` 55 lakhs
(2) Transport of household effects : ` 50 lakhs
(3) Transport of petroleum products : ` 25 lakhs
(4) Transport of relief materials to flood affected areas : ` 25 lakhs
(5) Transport of newspapers and magazines registered with registrar of newspapers : ` 15 lakhs

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(6) Transport of milk : ` 15 lakhs

(7) Transport of tea : ` 10 lakhs
(8) Transport of sugar : ` 25 lakhs
(9) Transport of alcoholic beverages : ` 7 lakhs
(10) Transport of defence and military equipments : ` 40 lakhs
(11) Transport of organic manure : ` 90 lakhs
(12) Transport of baled cotton : ` 25 lakhs
(13) Transport of other goods : ` 5000 lakhs Applicable GST rate – 5%.

ANS- Computation of Value of taxable supply (?in lakhs) —

(1) Transport of postal mails and postal bags [Liable to GST] 55

(2) Transport of household effects [Liable to GST] 50
(3) Transport of petroleum products [Liable to GST] 25
(4) Transport of relief materials to flood affected areas [Exempt vide Entry 20 of Nil
Notification No. 12/2017-CT (Rate)]
(5) Transport of newspapers and magazines registered with registrar of Nil
newspapers [Exempt vide Entry 20 of Notification No. 12/2017-CT (Rate)]
(6) Transport of milk [Exempt vide Entry 20 of Notification No. 12/2017-CT Nil
(Rate)]
(7) Transport of tea [Liable to GST] 10
(8) Transport of sugar [Liable to GST] 25
(9) Transport of alcoholic beverages [Liable to GST] 7
(10) Transport of defence and military equipments [Exempt vide Entry 20 of Nil
Notification No. 12/2017-CT (Rate)]
(11) Transport of organic manure [Exempt vide Entry 20 of Notification No. Nil
12/2017-CT (Rate)]
(12) Transport of baled cotton [Liable to GST] 25
(13) Transport of other goods - ` 5000 lakh [Liable to GST] 5,000
Total Value of taxable supply 5,197
GST payable @ 5% 260

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QUS.13 Calculate the value of taxable supply of XYZ Transport Company engaged in the business of transport of
goods by road for the month of April 2020. Give reasons for taxability or exemption of each item. Suitable
assumptions may be made wherever required. XYZ transport company avails ITC. GST is leviable @ 12% :

(1) Total freight charges received by ‘XYZ1 transport company 13,50,000

(2) Freight charges received for transporting fruits 1,25,000
(3) Freight collected for transporting small consignment for persons who paid less than ` 75,000
750 for each consignment
(4) Freight collected for transporting goods in small vehicles for persons who paid less 1.50,000
than ` 1,500/- per trip

ANS- Computation of Value of taxable supply and GST leviable thereon (amount in `) —

Total freight received

Less: Freight charges received for transporting fruits being agricultural produce [Exempt
vide Entry 21 of Notification No. 12/2017-CT (Rate)] 13,50,000
Less: Freight collected less than ` 750 for each consignment (Exempt, since the freight
charged to a single consignee does not exceed ?750) [Exempt vide Entry 21 ofNotif. No.
12/2017-CT (Rate)]
Less: Freight collected for transporting goods in small vehicles for persons who paid less 1.25,000
than `1,500 per trip (Exempt, since the freight on all consignments transported into a 75,000
goods carriage doesn’t exceed ` 1,500) [Exempt vide Entry 21 of Notification No. 1,50,000
12/2017-CT (Rate)]
Total value of taxable supply 10,00,000
GST payable @ 12% 1,20,000

QUS.14 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

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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- factorv
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 2020 :
> 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 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 (amount in `):

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Particulars Freight GST Payable Total

Forward Charge Reverse charge GST
by Supplier payable
Transportation of biscuits in a local mini 54,000 Nil Nil Nil
van belonging to an individual [WN-1]
Transportation of biscuits by Indian Railways 3,17,000 15,850 - 15,850
[WN-]
Transportation of biscuits by GTA [WN-3] 3,00,000 - 15,000 15,000
Transportation of biscuits by GTA @ 12% [WN4] 73,000 8,760 - 8,760
Transportation of flour by GTA [WN-5] 55,000 Nil Nil Nil
Transportation of butter by GTA [WN-6] 35,000 - 1,750 1,750
Transportation of baking powder by GTA [WN-7] 1,500 Nil Nil Nil
Transportation of biscuits by GTA to sister 40,000 - 2,000 2,000
concern
Total tax payable by XYZ Ltd. On availing services of different transporters 43,360

Working Note:
(1) 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 I & 9/2017-IT I both dated
28-06-2017.

(2) Transportation of goods by Indian Railways is liable to GST and is taxed on forward charge basis.

(3) 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 I dated 28-06-2017.

(4) 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 I dated 28-06-2017.

(5) Services provided by GTA by way of transport (in a goods carriage) of, inter alia, flour are exempt from

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GST vide Notification No. 9/2017-IT I dated 28-06-2017.

(6) Services provided by GTA by way of transport (in a goods carriage) of milk is exempt from GST vide
Notification No. 9/2017-IT I dated 28-06-2017. However, the said exemption is not available in respect of
butter 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
Notification No. 10/2017-IT I dated 28-06-2017.

(7) 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 I dated 28-06-2017.

(8) 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 I dated 28-06-2017.

(ii) Computation of GST charged on transportation cost billed by XYZ Ltd. To its customers :
Supply of biscuits and transportation service – Principal Supply is transportation of Biscuits, hence GST rate
of biscuits is applicable : 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

(`) [A] freight (`) (with mark- up harged @
[B] @ 2% on [A] 12% (`)
Transportation of biscuits in a local mini 54,000 15,850 55,000 6,610
van belonging to an individual Transportation of 3,17,000 15,000 3,39,507 40,741
biscuits by Indian Railways Transportation of 3,00,000 8,760 3,21,300 38,556
biscuits by GTA Transportation of biscuits by GTA 73,000 15,850 83,395 10,007

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GST 481

@ 12%
Total tax charged by XYZ Ltd. On transportation 95,914
cost billed to the customers

QUS.15 Calculate the value of taxable supply of XYZ Transport Company engaged in the business of transport of
goods by road for the month of April 2020. Give reasons for taxability or exemption of each item. Suitable
assumptions may be made wherever required. XYZ transport company avails ITC. GST is leviable @ 12%

(1) Total freight charges received by ‘XYZ’ transport company 25,00,000

(2) Freight charges received from Government department registered only for the 2,00,000
purpose of tax deduction at source
(2) Freight charges received from Government department registered only for the 2,00,000
purpose of tax deduction at source
(3) Freight charges received from unregistered persons for transportation of their 50,000
household Goods
(4) Freight collected for transporting goods in small vehicles for persons who paid less 1,50,000

ANS- Computation of Value of taxable supply and GST leviable thereon (amount in `) —

Total freight received 25,00,000

Less: Freight charges received from Government department registered only for the 2,00,000
purpose of tax deduction at source [Exempt vide Entry 21B of Notification No. 12/2017-
CT (Rate)]
Less: Freight charges received from unregistered persons for transportation of their 50,000
household goods [Exempt vide Entry 21A of Notification No. 12/2017-CT (Rate)]
Less: Freight collected for transporting goods in small vehicles for persons who paid less 1,50,000
than ` 1,500 per trip (Exempt, since the freight on all consignments transported into a goods
carriage doesn’t exceed f 1,500) [Exempt vide Entry 21 of Notification No. 12/2017-CT
(Rate)]

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GST 482

Total value of taxable supply 21,00,000

GST payable @ 12% 2,52,000

QUS.16 With reference to the CGST Act, 2017, discuss the taxability of following activities relating to a bank:
(a) Bank extended housing loan of ` 50 lakhs to Mr. A.
(b) Bank received ` 50,000 as loan processing fee from Mr. A.
I Bank received ` 6 lakhs as interest on loan from Mr. A.

ANS- In accordance with the provisions of CGST Act, 2017 the taxability of activities is -
(a) The same is transaction in money, therefore not regarded as service as per Sec. 2(102) of CGST Act, 2017.
(b) The loan processing fees received by bank will be liable for GST @ 18%. Hence, GST liability = ` 50,000 x
18% = ` 9,000.
I 6 lakhs received as interest on loan will not be liable for GST as the same is exempt vide Entry 27 of
Notification No. 12/2017-CT (Rate).

QUS.17 M/s. Apna Bank Limited a Scheduled Commercial Bank has furnished the following details for the month of
August, 2019 :

Particulars In crores(Excluding GST)

Extended Housing Loan to its customers 100
Processing fees collected from its customers on sanction of loan 20
Commission collected from its customers on bank guarantee 30
Interest income on credit card issued by the bank 40
Interest received on housing loan extended by the bank 25

Minimum balance charges collected from current account and savingaccount 1

holder
Compute the Value of Taxable supply. Give reasons with suitable assumptions.

ANS- Extended Housing Loan to its customers [It is transaction in money and does not
come under the ambit of service] Nil
Processing fees collected from its customers on sanction of loan [Since it representstaxable 20

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GST 483

consideration, the same will be liable to GST]

Commission collected from its customers on bank guarantee [Since it represents 30
taxable consideration, the same will be liable to GST]
specifically excluded from exemption provided in respect of interest vide Entry 27 of 40
Notification No. 12/2017-CT (Rate)]
Interest received on housing loan extended by the bank [Interest on loan will not be Nil
liable for GST as the same is exempt vide Entry 27 of Notification No. 12/2017-CT(Rate)]
Minimum balance charges collected from current account and saving account holder [Since it 1
represents taxable consideration, the same will be liable to GST]
Total value of taxable supply 91

QUS.18 Mr. Abhishek, an advocate, has rendered the following services in the month of October, 2019 :
(i) Representing Mr. Archit in his divorce case before High Court.
(ii) Representing Mr. Aniket, an architect by profession, in relation to his GST liability [Turnover of
Mr. Aniket in the financial year 2018-19 was ` 25 lakh]
(iii) Legal consultancy given to Sunil Associates, a partnership firm of advocates [Turnover of services of Sunil
Associates in the financial year 2018-19 was ` 28 lakh]
Examine whether GST is payable on each of the above services assuming Mr. Abhishek to be—
(a) an advocate other than a senior advocate.
(b) a senior advocate in terms of Section 16 of the Advocates Act, 1961

ANS- Solution: In background of Entry 45 of Notification No. 12/2017-CT (Rate) dated 28-06-2017, GST liability of
each of the services rendered by Abhishek, are examined hereunder —

Sr.No. When Mr. Abhishek is an advocate other than When Mr. Abhishek is a senior advocate
senior advocate
(i) Service of representing Mr. Archit in his Such service will be exempt even if I are
divorce case will be exempt as Mr. Archit is not rendered by a senior advocate.
A business entity.
(ii) Since the turnover of Mr. Aniket, a business Such services, when provided by senior advocate,
entity, is more than such amount in the will also be liable to GST.

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GST 484

Preceding financial year as makes it liable for

registration under the CGST Act, 2017 [i.e. ` 20
lakh], the same will be liable to GST.
(iii) Legal consultancy provided by an advocate to Such services, when provided by a senior
partnership firm of advocates is exempt from advocate, will be liable to GST if the turnover of
GST. The partnership firm (business entity) in the
preceding financial year is more than such
amount as makes it liable for registration under
the CGST Act, 2017.
Thus, legal consultancy provided by Mr. Abhishek
to Sunil Associates, a partnership firm of
advocates, will be liable to GST.

QUS.19 Educators Ltd., providing educational services, furnishes you with the following information for the various
services provided by it. It has collected an aggregate sum of ` 25 lakhs during the month ended 30-09-2019
as under -
(1) Receipts of ‘Gyan sagar1 an industrial training institute (ITI) affiliated to the National Council for
Vocational Training (NCVT): ` 1.2 lakhs
(2) Receipts of ‘Edu care1 a vocational education provider affiliated to Sector Skill Council formed under
National Skill Development Corporation (NSDC): ` 1.8 lakhs
(3) Receipts of ‘Abhigyan Skill Centre’ an industrial training centre (ITC) affiliated to the State Council for
Vocational Training, Rajasthan : ` 2 lakhs
(4) Receipts of ’Mission’, an institute, registered with Directorate General of Employment and Training
(DGET), Union Ministry of Labour and Employment, running a Modular Employable Skill Course (MESC)
approved by the National Council of Vocational Training : ` 1 lakhs
(5) Receipts of ‘Scinart’ a Commercial coaching institute providing commercial coaching in the field of arts
and science : ` 0.8 lakhs (no certificate was issued on completion of the training)
(6) Receipts of ‘Commerce concepts’ a Commercial coaching institute providing coaching in the field of
commerce : ` 1.2 lakhs (a certificate was awarded to each trainee after completion of the training)
(7) Receipts of Gurukul school providing education upto higher secondary : ` 6 lakhs
(8) Receipts of ‘Play Kids’ school providing education upto primary level : ` 11 lakhs (such receipts includes

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GST 485

receipts from renting of premises to commercial coaching centre : ` 3 lakhs)

Compute the value of taxable supply and GST payable thereon. All the amounts are exclusive of GST. Rate of
GST-18%.

ANS- Computation of Value of taxable supply and GST liability (amount in `) —

Total Receipts 25,00,000

Less: Receipts of ‘Gyan sagar’ an industrial training institute (ITI) affiliated to the -1,20,000
National Council for Vocational Training (NCVT), are not liable to GST, since the
same are exempt vide Entry 66 of Notification No. 12/2017-CT (Rate).
Less: Receipts of ‘Edu-care’ a vocational education provider affiliated to Sector -1,80,000
Skill Council formed under National Skill Development Corporation (NSDC) are
exempt vide Entry 69 of Notification No. 12/2017-CT (Rate).
Less: Receipts of ‘Abhigyan Skill Centre’ an industrial training centre (ITC) -2,00,000
affiliated to the State Council for Vocational Training, Rajasthan, not liable to GST,
since the same are exempt vide Entry 66 of Notification No. 12/2017-CT (Rate).
Less: Receipts of ‘Mission’, an institute, registered with Directorate General of -1,00,000
Employment and Training (DGET), Union Ministry of Labour and Employment, running
a Modular Employable Skill Course (MESC) approved by the National Counci l of Vocational
Training – Not liable to GST, since the same is exempt vide Entry 66 of Notification
No. 12/2017-CT (Rate).
Less: Receipts of ‘Scinart1 a Commercial coaching institute providing commercial Taxable
coaching in the field of arts and science shall be liable for GST.
Less: Receipts of ‘Commerce concepts’ a Commercial coaching institute providing Taxable
coaching in the field of commerce shall be liable for GST irrespective of the fact
that a certificate was awarded to each trainee after completion of the training.
Less: Receipts of Gurukul school providing education upto higher secondary shall -6,00,000
are exempt vide Entry 66 of Notification No. 12/2017-CT (Rate)].
Less: Receipts of ‘Play Kids’ school providing education upto primary level i.e. ` 8 lakhs -8,00,000
are exempt vide Entry 66 of Notification No. 12/2017-CT (Rate). However, receipts from
renting of premises by the school to commercial coaching centre shall be liable for GST.

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GST 486

Value of taxable supply 5,00,000

GST payable @ 18% 90,000

QUS.20 Mr. Navab, a performing artist, provides the following information relating to December, 2019. Receipts
from:

Particulars
(1) Performing classical dance 98,000
(2) Performing in television serial 2,80,000
(3) Services as brand ambassador 12,00,000
(4) Coaching in recreational activities relating to arts 2,10,000
(5) Activities in sculpture making 3,10,000
(6) Performing western dance 90,000

Determine the value of taxable supply and GST payable by Mr. Navab for December, 2019. GST @ 18% has
been charged separately, wherever applicable.

ANS- Computation of Value of taxable supply and GST liability (amount in `) —

Classical dance performance [WN-1] Nil

Performance in television serial [Taxable since not covered in folk or classical art forms] 2,80,000
Services as brand ambassador [WN-1] 12,00,000
Coaching in recreational activities relating to arts [WN-2] Nil
Sculpture making activities [Taxable as it is an activity in still art form] 3,10,000
Western dance performance [Taxable since not covered in folk or classical art forms] 90,000
Value of taxable supply 18,80,000
GST payable @ 18% 3,38,400

Working Notes:
(1) Services by a performing artist in folk or classical art forms of,- (a) music, or (b) dance, or (c) theatre, if
the consideration charged for such performance is not more than ` 1,50,000 are Exempt from GST vide Entry

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GST 487

78 of Notification No. 12/2017-CT (Rate). However, the exemption shall not apply to service provided by
such artist as a brand ambassador.

(2) Services by way of training or coaching in recreational activities relating to arts, culture or sports are
Exempt from GST vide Entry 80 of Notification No. 12/2017-CT (Rate).

QUS.21 The Resident Welfare Association (RWA) of Blue Heaven Housing Society in Delhi provides the following
information with respect to the various amounts received by it in the month of November, 2019.

Particulars
1) Monthly subscription collected from member families (f 10,000 each from 100 amilies) 10,00,000
2) Electricity charges levied by State Electricity Board on the members of RWA [The same 3,50,000
was collected from members and remitted to the Board on behalf of members.]
3) Electricity charges levied by State Electricity Board on the RWA in respect of electricity 4,32,400
consumed for common use of lifts and lights in common area. [Bill was raised in the
name of RWA. RWA collected the said charges by apportioning them equally among 100
families and then, remitted the same to the Board.]
4) Proceeds from sale of entry tickets to a musical performance conducted by the RWA 40,000
in the park of Blue Heaven Housing Society [Where the consideration for admission is
not more than ` 500 per person.]
5) Other Services to non-members 2,92,000

Compute the value of taxable supply and GST liability of RWA of Blue Heaven Housing Society for the month
of November, 2019. It does not avail threshold exemption.

Notes: (i) All the above amounts are exclusive of GST (it) Wherever applicable, the time of supply falls in the
month of November, 2019. (ii) Rate of GST – 18%.

ANS- Computation of Value of taxable supply and GST liability (amount in X) —

Monthly subscription charges [WN 1] 10,00,000

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GST 488

Amount collected towards electricity charges levied by State Electricity Board on the members
of RWA [WN 2] of RWA [WN 2]
Amount collected towards electricity charges levied by State Electricity Board on the RWA in 4,32,400
respect of electricity consumed for common use of lifts and lights in common area [WN 3]
Proceeds from sale of entry tickets to musical performance held in the park of the Housing
Society [WN 4]
Other Services to non members [Liable for GST] 2,92,000
Value of taxable supply exclusive of GST GST payable @ 18% 17,24,400
3,10,392
Working Notes:
(1) If per month per member contribution of any or some members of a RWA exceeds X 7,500, entire
contribution of such members whose per month contribution exceeds X 7,500 would be ineligible for the
exemption under the said notification. GST would then be leviable on the aggregate amount of monthly
contribution of such members. [Circular No.109/28/2019- GST dated 22-07-2019]

(2) Services provided by a RWA in the name of its members, acting as a “pure agent” of its members, are
excluded from value of taxable supply available for the purposes of exemption provided under mega
exemption notification.

(3) In the case of electricity bills issued in the name of RWA, in respect of electricity consumed for common
use of lifts and lights in common area, etc., the exclusion from the value of taxable supply would not be
available, since there is no agent involved in these transactions.

(4) Entry to entertainment events where the consideration for admission is not more than ` 500 per person
is exempt vide Entry 81 of Notification No. 12/2017-CT (Rate).

QUS.22 M/s. PQR Properties registered under GST as taxable person is engaged in the business of renting various
immovable properties owned by it. During the month ending 31-03-2020, it collected a rent of ` 5,00,000.
The said sum includes rent from :
(1) Vacant land used for agriculture : ` 50,000;
(2) Land used for Appu Circus : ` 80,000;

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GST 489

(3) Houses let to individuals for residential purposes : ` 70,000;

(4) Building let to M/s. Elegant Hotel: ` 60,000;.
(5) Vacant land, given on lease to M/ s. ABC Ltd. For construction of building at a later stage to be used for
furtherance of business or commerce : ` 40,000;
(6) Premises let to a temple trust: ` 40,000;
(7) Premises let to a coaching centre : ` 80,000;
(8) Building let to a theatre : ` 80,000.

Compute the amount of GST payable by the firm, assuming that the rent is exclusive of GST, if any,
applicable in each case. Rate of GST -18%. Make suitable assumptions

ANS- Computation of GST payable (amount in `) —

Total Rent 5,00,000

Less:
(1) Rent from vacant land used for agriculture [Exempt vide Entry No. 54 of Exemption 50,000
Notification No. 12/2017-CT I]
(2) Rent from land used for Appu Circus [Liable to GST] Taxable
(3) Properties let for residential purposes [Exempt vide Entry No. 12 of Exemption 70,000
Notification No. 12/2017-CT I]
(4) Building let to hotel [Liable to GST] Taxable
(5) Vacant land, given on lease to M/s. ABC Ltd. For construction of building at a later Taxable
stage to be used for furtherance of business or commerce [Liable to GST]
(6) Premises let to a religious body being temple trust [Liable to GST] Taxable
(7) Premises let to a coaching centre [Liable to GST] Taxable
(8) Building let to a threatre [Liable to GST] Taxable
Total Taxable Value of Supply 3,80,000
GST payable @ 18% 68,400

QUS.23 Compute taxable value of supply and GST from following sums received by M/s. Road
Maintenance Ltd. (exclusive of GST) – Toll Receipts from Highway of Jaipur to Chomu: ` 8,000 lakhs;

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Commission earned on toll receipts : ` 75 lakh.

The rate of GST is 18%.

ANS- Toll receipts are exempt vide Entry 23 of Notification No. 12/2017-CT (Rate) from GST. However, commission
thereon is liable to GST.
Taxable value of supply = ` 75 lakh; GST @ 18% = ` 1350000.

QUS.24 Mr. X a famous cricketer furnishes you with the following information of the various receipts for the month
ended 30-09-2019. You are required to determine his GST liability if all the amounts are exclusive of GST.
(1) Receipts from Sports Authority of India for participation in 490tilized490o sport: ` 50 lakh;
(2) Receipts from franchisee of Indian Premier league (not a 490tilized490o sports body): ` 75 lakh;
(3) Receipts from acting as brand ambassador for corporate client: ` 22 lakh;
(4) Receipts of sports training academy to coach young players : ` 15 lakh. Rate of GST-18%.

ANS- (1) Receipts from sports authority of India for participation in 490tilized490o sports Exempt
[Exempt vide Entry No. 68 of Exemption Notification No. 12/2017-CT (Rate)]
(2) Receipts from franchisee of Indian Premier league (not a 490tilized490o sports body) 75,00,000
[Liable for GST]
(3) Receipts from acting as brand ambassador for corporate client [Liable for GST] 22,00,000
(4) Receipts of sports training academy to coach young players [Liable for GST since 15,00,000
sports training by charitable entities registered under Section 12AA of the Income-
tax Act is exempt vide Entry No. 80 of Exemption Notification No. 12/2017-CT
(Rate)]
Value of Taxable Supply 1,12,00,000
GST payable @ 18% 20,16,000

QUS.25 - HLL Pvt. Ltd. Manufactures cosmetic products with the brand name ‘Forever Young’. HLL Pvt. Ltd. Has
organized a concert to promote its brand. Ms. Aalia Sharma, its brand ambassador, who is a leading film
actress, has given a classical dance performance in the said concert. The proceeds of the concert worth
1,00,000 will be donated to a charitable organization. Whether Ms. Aalia Sharma will be required to pay any
GST?

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GST 491

ANS- Services by an artist by way of a performance in folk or classical art forms of (i) music, or (ii) dance, or (iii)
theatre are exempt from GST, if the consideration charged for such performance is not more than `
1,50,000. However, such exemption is not available in respect of service provided by such artist
as a brand ambassador.

Since Ms. Aalia Sharma is the brand ambassador of ‘Forever Young’ soap manufactured by HLL Pvt. Ltd., the
services rendered by her by way of a classical dance performance in the concert organized by HLL Pvt. Ltd. To
promote its brand will not be eligible for the above-mentioned exemption and thus, be liable to GST. The
fact that the proceeds of the concert will be donated to a charitable organization will not have any bearing
on the eligibility or otherwise to the above-mentioned exemption.

QUS.27 Determine taxable value of supply under GST law with respect to each of the following independent services
provided by the registered persons :

Particulars Gross amount

charged (`)
Fees charged for yoga camp conducted by a charitable trust 2,25,000
Amount charged by business correspondent for the services provided to
the rural branch of a bank with respect to Savings Bank Accounts 1,25,000
Amount charged by cord blood bank for preservation of stem cells 4,50,000
Amount charged for service provided by commentator to a recognized 4,25,000
sports body

ANS- Determination of taxable value of supply (amount in `) —

Fees charged for yoga camp conducted by a charitable trust [WN-1] Nil
Amount charged by business correspondent for the services provided to the rural Nil
branch of a bank with respect to Savings Bank Accounts [WN-2] Nil
Amount charged by cord blood bank for preservation of stem cells [WN-3] Amount 4,25,000
charged for service provided by commentator to a recognized sports body WN-4]
Value of taxable supply 4,25,000

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GST 492

Working Notes:
(1) Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable
activities are exempt from GST. The activities relating to advancement of yoga are included in the definition
of charitable activities. So, such activities are exempt from GST.

(2) Services by business facilitator or a business correspondent to a banking company with respect to
accounts in its rural area branch have been exempted from GST.

(3) Services provided by cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation are exempt from GST.

(4) Services provided to a recognized sports body only by an individual 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. Thus, services provided by commentators are liable to GST.

QUS.28 Discuss whether GST is payable in respect of transportation services provided by Vaibhav Goods Transport
Agency in each of the following independent cases :

Customer Nature of services provided Amount charged (`)

A Transportation of milk 55,000
B Transportation of books on a consignment transported in a single 3,000
goods Carriage
C Transportation of furniture for a single consignee in the goods 600
carriage

ANS- Determination of GST liability —

Customer Nature Of services provided Amount Taxability

charged (`)
A Transportation of milk 55,000 Exempt

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GST 493

[Transportation of milk by goods

transport agency is exempt.]
B Transportation of bookson a consignment 3,000 GST is payable
transported in a single goods carriage [Exemption is available for
transportation of goods only
where the consideration for
transportation of goods on a
consignment transported in a
single goods carriage does not
exceed ` 1,500.]
C Transportation of furniture for a single 600 Exempt
consignee in the goods Carriage [Transportation of goods where
consideration for transportation
of all goods for a single consignee
does not exceed ` 750 is exempt.]

QUS.29 With reference to the provisions of CGST Act, 2017, examine whether GST is leviable in the following
situations :
(1) Government of Rajasthan has provided services to ABC Ltd. Of Rajasthan in the month of November,
2019 for a consideration of ` 50,000. The turnover of ABC Ltd. In Financial Year 2018-19 was ` 18,00,000.
(2) Government of Rajasthan has provided services to XYZ Ltd. In the month of November, 2019 for
a consideration of ` 5,000. The turnover of XYZ Ltd. In Financial Year 2018-19 was ` 28,00,000.
(3) Jaipur Municipal corporation has awarded a contract for construction of road to PQR Ltd. Failed to
perform the contract and paid liquidated damages amounting ` 50,00,000 in accordance with the terms of
contract.
(4) XYZ Ltd. Has applied for registration under Companies Act, 2013 to Registrar of companies Rajasthan and
has paid registration fees of ` 13,85,510.
(5) Delhi Government has charged ` 50,00,000 from Agro Care Ltd. For allocation of natural resources for
agricultural purposes in the month of November, 2019.
(6) XYZ Ltd. Has paid to Customs department ` 50,000 on account Merchant Overtime charges for deputing
officers after office hours or on holidays for inspection or container stuffing or such other duties in relation

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GST 494

to import export cargo.

(7) XYZ Ltd. Has made an upfront payment of ` 80,00,000 to Bihar Government on account of assignment of
right to use minerals in the State of Bihar.

ANS- (1) Services provided by the Central Government, State Government, Union territory or local authority to a
business entity with an aggregate turnover of up to such amount in the preceding financial year as makes it
eligible for exemption from registration under the CGST Act, 2017 are exempt vide Entry 7 of Notification
No. 12/2017-CT(Rate). Since the aggregate turnover of ABC Ltd. In preceding financial year does not exceed `
20 lakhs, it is exempt from obtaining registration. Hence, no GST shall be levied on services provided by
Government of Rajasthan to ABC Ltd.

(2) Services provided by Central Government, State Government, Union territory or a local authority where
the consideration for such services does not exceed ` 5,000 are exempt, vide Entry 9 of Notification No.
12/2017- CT (Rate). Hence, on said services no GST shall be levied.

(3) Services provided by the Central Government, State Government, Union territory or local authority by
way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated
damages is payable to the Central Government, State Government, Union territory or local authority under
such contract are exempt vide Entry 62 of Notification No. 12/2017-CT (Rate). Hence, no GST shall be
payable on liquidated damages of ` 50,00,000 paid by PQR Ltd. To Jaipur municipal corporation.

(4) Services provided by the Central Government, State Government, Union territory or local authority by
way of registration required under any law for the time being in force vide Entry 47 of Notification No.
12/2017- CT (Rate). Hence, no GST shall be levied on fees paid for incorporation by XYZ Ltd.

(5) Services by way of allocation of natural resources to an individual farmer for the purposes of agriculture
have been exempted vide Entry 63 of Notification No. 12/2017-CT (Rate). Such allocations/ auctions to
categories of persons other than individual farmers would be leviable to GST. Hence, Agro Care Ltd. Will be
liable to pay GST on ` 50,00,000 under reverse charge basis.

(6) Services provided by the Central Government, State Government, Union territory by way of deputing

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officers after office hours or on holidays for inspection or container stuffing or such other duties in relation
to import export cargo on payment of Merchant Overtime charges are exempt from GST vide Entry 65 of
Notification No. 12/2017-CT (Rate). Hence, on such charges no GST shall be levied.

(7) XYZ Ltd. Will be liable to pay GST on assignment of rights to use minerals in the State of Bihar.

QUS.30 State with reasons whether the following are liable to Goods and Services Tax :
(1) Services by way of training or coaching in recreational activities relating to arts or culture.
(2) Services provided by a player to a franchisee which is not a recognized sports body.
(3) Pre-school education and education up to higher secondary school or equivalent.
(4) Services by a veterinary clinic in relation to health care of animals or birds.
(5) Services by way of public conveniences such as provision of facilities of washrooms.

ANS- The taxability is discussed as under -

(1) Exempt: Services by way of training or coaching in recreational activities relating to arts or culture are
not liable to GST as it is specifically exempt vide Entry 80 of Notification No. 12/2017-CT (Rate).

(2) Taxable : Service of a player to a franchisee which is not a recognized sports body is taxable as it does not
get covered under Entry 68 of Notification No. 12/2017-CT (Rate).

(3) Exempt : Pre-school education and education up to higher secondary school or equivalent is not liable to
GST as it is specifically exempt under Entry 66 of Notification No. 12/2017-CT (Rate).

(4) Exempt: Services by a veterinary clinic in relation to health care of animals or birds is not liable to GST as
it is specifically exempt vide Entry 46 of Notification No. 12/2017-CT (Rate).

(5) Exempt: Services by way of public conveniences such as provision of facilities of washrooms are not liable
to GST as it is specifically exempt vide Entry 76 of Notification No. 12/2017-CT (Rate).

QUS.31 Exemption: Examine whether GST is exempted on the following independent supply of services :
(a) Teja & Co., a tour operator, provides services to a foreign tourist for tour conducted to Jammu Kashmir

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GST 496

and receives a sum of ` 3,00,000.

(b) Ms. Poorva acts as a Team Manager for Indian Sports League (ISL), a utilized sports body, for a Tennis
tournament 496tilized496 by Multi brand retail company and received a remuneration of ` 2,00,000.

ANS- (a) Liable to GST : Yes, Tejas and Co. will be liable to pay GST. Services provided by a tour operator to a
foreign tourist in relation to a tour conducted wholly outside India are exempt vide Entry 54 of Notification
No. 9/2017-IT (Rate)]. In this case tour is conducted in Jammu and Kashmir and the IGST Act applies to whole
of India including Jammu and Kashmir, hence exemption will not operate.

(b) Liable to GST : Services provided to a 496tilized496o sports body by an individual as a player, referee,
umpire, coach or team manager for participation in a sporting event 496tilized496 by a recognized sports
body
are exempt vide Entry 68 of Notification No. 12/2017-CT (Rate)]. Since multi brand retail company is not a
recognized sports body hence exemption will not be available. Thus, the said services will be liable to GST.

EXAMPLES :
Bhavyajyoti Foundation, a charitable trust registered under section 12AA of the Income-tax Act, 1961, has
organized a ‘Meditation Camp’ for the old age people. GST would be exempt on the same as services
provided by entity registered under section 12AA of the Income-tax Act, 1961 by way of advancement of
religion, spirituality or yoga are exempt.

Raamanand Joshi, a priest, charges ` 12,000 for conducting a religious ceremony on the birthday of Mr.
Ghanshyam’s son.The amount charged for the conduct of any religious ceremony is exempt from GST.
Durgadevi Trust, a religious trust registered under section 12AA of the Income-tax Act, owns and manages a
temple in their locality. It rents the commercial shops located in the precincts of
the temple for a rent of 10,000 per month per shop. The consideration so received is liable to GST as the
consideration is not less than 10,000.

Sarvshiksha Foundation, an educational institution registered under section 10(23C)(v) of the Income-tax
Act, owns and manages a gurudwara. It rents the community hall located in the precincts of the gurudwara
for a rent of 9,000 per day for a marriage function. The consideration so received is exempt from GST as the
consideration is less than 10,000.
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Moolchand has leased out to a farmer – Tulsidas – a vacant land for agriculture. The land has a green house
and a storage shed which are incidental to its use for agriculture. Leasing of vacant land with a green house
or a storage shed which is incidental to its use for agriculture is exempt from GST.

A small business entity is carrying on a business relating to consulting engineer services in Delhi. The
aggregate turnover of the entity in the preceding financial year does not exceed the limit of 20 lakh in a
financial year. Thus, no tax is payable on the services received by it from Government or a local authority.
The Karnataka Cricket Association, Bangalore requests the Commissioner of Police, Bangalore to provide
security in and around the Cricket Stadium for the purpose of conducting the cricket match. The
Commissioner of Police arranges the required security for an agreed consideration. In this case, services of
providing security by the police personnel are not exempt. As the services are provided by Government,
Karnataka Cricket Association is liable to pay the tax on the consideration paid, albeit under reverse charge
mechanism.

Public Works Department of Karnataka entered into an agreement with M/s. ABC, a construction company,
for construction of its office complex for an agreed consideration.
In the agreement dated 10.07.20XX, it was agreed by both the parties that M/s. ABC shall complete the
construction work and handover the project on or before 31.12.20XX.

It was further agreed that any breach of the terms of contract by either party would give right to the other
party to claim for damages or penalty. M/s. ABC did not complete the construction and did not handover the
project by the specified date i.e., on or before 31.12.20XX. As per the contract, the Department asked for
damages/penalty from M/s. ABC and threatened to go to the court if not paid. Resultantly, M/s. ABC paid an
amount of ` 10,00,000/- to the Department for non-performance of contract. Amount paid by M/s. ABC to
Department is exempt from payment of tax.

Hari Prasad owns a truck and operates it himself. He carries the goods booked for his truck without issuance
of consignment note. Services provided by Hari Prasad by way of transportation of goods by road are
exempt under Entry 18 of the Notification.

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Nishant owns a truck which he has rented to Sindhu and Bansal Transport Agency – a GTA. Services by way of
giving on hire a means of transportation [truck in the given case] of goods to a GTA [Sindhu and Bansal
Transport Agency], are exempt from tax vide Entry 22 of the Notification (discussed later in this chapter) and
not vide Entry 18.

QUS.32 An individual acts as a referee in a football match organized by Sports Authority of India. He has also acted
as a referee in another charity football match organized by a local sports club, in lieu of a lump sum
payment. Discuss whether he is required to pay any GST?

ANS- Services provided to a recognized sports body by an individual inter alia as a referee in a sporting event
organized by a recognized sports body is exempt from GST.

Since in the first case, the football match is organized by Sports Authority of India, which is a recognized
sports body, services provided by the individual as a referee in such football match will be exempt.

However, when he acts as a referee in a charity football match organized by a local sports club, he would not
be entitled to afore-mentioned exemption as a local sports club is not a recognized sports body and thus,
GST will be payable in this case.

QUS.33 RXL Pvt. Ltd. Manufactures beauty soap with the brand name ‘Forever Young’. RXL Pvt. Ltd. Has organized a
concert to promote its brand. Ms. Ahana Kapoor, its brand ambassador, who is a leading film actress, has
given a classical dance performance in the said concert. The proceeds of the concert worth ` 1,20,000 will be
donated to a charitable organization whether Ms. Ahana Kapoor will be required to pay any GST?

ANS- Services by an artist by way of a performance in folk or classical art forms of

(i) music, or (ii) dance, or (iii) theatre are exempt from GST, if the consideration charged for such
performance is not more than ` 1,50,000. However, such exemption is not available in respect of service
provided by such artist as a brand ambassador.

Since Ms. Ahana Kapoor is the brand ambassador of ‘Forever Young’ soap manufactured by RXL Pvt. Ltd., the
services rendered by her by way of a classical dance performance in the concert organized by RXL Pvt. Ltd. To

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GST 499

promote its brand will not be eligible for the above-mentioned exemption and thus, be liable to GST. The
fact that the proceeds of the concert will be donated to a charitable organization will not have any bearing
on the eligibility or otherwise to the above-mentioned exemption.

QUS-34 Determine taxable value of supply under GST law with respect to each of the following independent services
provided by the registered persons:

Particulars Gross amount

charged (`)
Fees charged for yoga camp conducted by a charitable trustregistered under section 50,000
12AA of the Income-tax Act, 1961
Amount charged by business correspondent from banking company for the services 1,00,000
provided to the rural branch of a bank with respect to Savings Bank Accounts
Amount charged by cord blood bank for preservation of stem cells 5,00,000
Amount charged for service provided by commentator to arecognized sports body 5,20,000

ANS- Computation of value of taxable supply

Particulars (`)
Fees charged for yoga camp conducted by a charitable trust registered under section 12AA Nil
of the Income-tax Act, 1961 [Note-1]
Amount charged by business correspondent for the services provided to the rural Nil
branch of a bank with respect to Savings Bank Accounts [Note-2]
Amount charged by cord blood bank for preservation of stem cells[Note-3] Nil
Service provided by commentator to a recognized sports body[Note-4] 5,20,000

Notes:
1. Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable
activities are exempt from GST. The activities relating to advancement of yoga are included in the definition
of charitable activities. So, such activities are exempt fromGST.

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2. Services by business facilitator or a business correspondent to a banking company with respect to

accounts in its rural area branch have been exempted from GST.

3. Services provided by cord blood banks by way of preservation of stem cells or any other service in relation
to such preservation are exempt from GST.

4. Services provided to a recognized sports body only by an individual 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. Thus, services provided by commentators are liable to GST.

QUS.35 Examine whether GST is exempted on the following independent supplies of services:
(i) Service provided by a private transport operator to Scholar Boys Higher Secondary School in relation to
transportation of students to and from the school.
(ii) Services provided by way of vehicle parking to general public in a shopping mall.

ANS- (i) Yes. Services provided TO an educational institution by way of transportation of students are exempted
from GST.
(ii) No. Services provided by way of vehicle parking to general public are not exempted from GST. Therefore,
GST is payable on the same.

QUS.36 Discuss whether GST is payable in respect of transportation services provided by Raghav Goods Transport
Agency in each of the following independent cases:

Customer Nature of services provided Amount charged

A Transportation of milk ` 20,000
B Transportation consignment goods carriage of books transported in a ` 3,000
on a single
C Transportation of chairs for a singleconsignee in the goods ` 600
carriage

ANS- Customer Nature of servicesprovided Amount Taxability

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GST 501

charged
A Transportation of milk 20,000 Exempt. Transportation of milk
by goods transport agency is
exempt.
B Transportation of books on a 3,000 GST is payable. Exemption is available
consignment transported in a single for transportation of goods only
goods carriage where the consideration for
transportation of goods on a
consignment transported in a single
goods carriage does not exceed
`1,500.
C Transportation of chairs for a single 600 Exempt. Transportation of goods
consignee in the good carriage Where consideration for
transportation of all goods for a
single consignee does not exceed
`750 is exempt.

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EXEMPTION

QUS.1 Sarva Sugam Charitable Trust, a trust registered u/s 12AA of the Income-tax Act, 1961 provides the following
information relating to supply of its services for the month of August, 2019.

RS
Renting of residential dwelling for use as a residence 18,00,000
Renting of rooms for Pilgrims (Charges per day Rs. 1,200) 8,00,000
Renting of rooms for devotees (Charges per day Rs. 750) 6,00,000
Renting of Kalyana Mandapam (Charges per day Rs. 15,000) 12,00,000
Renting of Halls and open space (Charges per day Rs. 7,500) 10,75,000
Renting of Shops for business (Charges per month Rs. 9,500) 4,75,000
Renting of Shops for business (Charges per month Rs. 12,000) 7,50,000

Compute the total taxable value of supply for the month of August 2019 assuming that the above amounts
are exclusive of GST. (5 Marks, May 2018)

ANS- Compulation of GST liability (amount in Rs.) —

Renting of residential dwelling for use as a residence [WN-1] Nil

Renting of rooms for Pilgrims (Liable to GST) [WN-2] 8,00,000
Renting of rooms for devotees (Exempt) [WN-2] Nil
Renting of Kalvana Mandapam (Liable to GSI) [WN-2] 12,00,000
Renting of Halls and open space (Exempt) [WN-2] Nil
Renting of Shops for business (Exempt) [WN-2] Nil
Renting of Shops for business (Liable to GST) [WN-2] 7,50,000
Value of Taxable supply 27,50,000

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Working Note :
(1) Renting of residential dwelling for use as residence is exempt from tax vide Entry No. 12 of Exemption
Notification No. 12/2017-CT I.

(2) Services by a person by way of renting of precincts of a religious place meant for general public, owned or
managed by an entity registered as a charitable or religious trust under Section 12AA of the Income-tax Act,
1961 are exempt. However, this exemption shall not apply to,—
(a) renting of rooms where charges are Rs. 1,000 or more per day;
(b) renting of premises, community hails, kalyanmandapam or open area, and the like where charges are Rs.
10,000 or more per day;
I renting of shops or other spaces for business/commerce where charges are Rs. 10,000 or more per
month.

QUS.2 You are required to compute the value of taxable supply and GST payable thereon from the gross amount
charged in respect of the following transactions made available by A. Ftd. Dealing in agriculture related
services in the month of December 2019 :

Particulars Rs
(i) Renting of Agro-machinery 5,00,000
(ii) Cultivation of Ornamental flowers 2,50,000
(iii) Processing of Tomato ketchup 3,00,000
(iv) Plantation of Rubber 3,50,000
(v) Processing of Potato chips 1,50,000
Rate of CGST is 9% and SGST is 9%

ANS- Computation of Value of taxable supply and CST payable (amount in Rs.)—

Renting of Agro-machinery [Exempt vide Entry 54 of Notification No. 12/2017-CT (Rate)] Exempt
Cultivation of Ornamental flowers [Exempt vide Entn/ 54 of Notification No. 12/2017-CT (Rate)] Exempt
Processing of Tomato ketchup [WN] 3,00,000

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Plantation of Rubber [Exempt vide. Entry 54 of Notification No. 12/2017-CT (Rate)] Exempt
Processing of Potato chips [WN] 1,50,000
Value of taxable supply 4,50,000
CGST pay able @ 9 % 40,500
SGST payable @ 9 % 40,500
Total GST payable 81,000

Working Note : In terms of the definition of agricultural produce, only such processing should be carried out
as is usually done by cultivator or producers which does not alter its essential characteristics but makes it
marketable for primary market. Potato drips or tomato ketchup are manufactured through processes which
alter the essential characteristic of farm produce.

Hence, the same are not agricultural produce and not covered in exemption. It falls under service of job
work when carried out for others and thus liable to GST.

QUS.3 Mark Agro Products Ltd.furnishes the following details of various services provided by it in the month of
December, 2019 :

Sr. No. Particulars Amount (Rs.)

(1) Rearing of silkworm and horticulture 2,50,000
(2) Plantation of tea and coffee 2,00,000
(3) Renting of vacant land for performing marriage ceremony 4,50,000
(4) Sale of wheat on commission basis 50,000
(5) Sale of rice on commission basis 2,00,000

Compute the value of taxable supply and the GSF liability of Mark Agro Products Ltd. For the month of
December,2019. Rate of CGST is 9% and SGST is 9%.

ANS- Computation of Value of taxable supply and GST payable (amount in Rs.) —

(1) Rearing of silkworm and horticulture [Exempt vide Entry 54 of Notification No. 12/2017- Exempt

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CT (Rate)]
(2) Plantation of tea and coffee [Exempt vide Entry 54 of Notification No. 12/2017-CT (Rate)] Exempt
(3) Renting of vacant land for performing marriage ceremony [Liable to GST] 4,50,000
(4) Sale of wheat on commission basis [Exempt vide Entry 54 of Notification No. 12/2017-CT Exempt
(Rate)]
(5) Sale of rice on commission basis [Since rice is not an agricultural produce, its sale on 2,00,000
commission basis would be taxable.]
Value of taxable supply 6,50,000
CGST payable @ 9% 58,500
SGST payable @ 9% 58,500
(1) Rearing of silkworm and horticulture [Exempt vide Entry 54 of Notification No. 12/2017- Exempt
CT (Rate)]
(2) Plantation of tea and coffee [Exempt vide Entry 54 of Notification No. 12/2017-CT (Rate)] Exempt
(3) Renting of vacant land for performing marriage ceremony [Liable to GST] 4,50,000
Total GST payable 1,17,000

Qus.4 RSU Trainers Ltd., a commercial training or coaching centre, provides the various services as follows
(1) Training and coaching of Hockey: Rs. 7 lakhs
(2) Coaching for preparation of iit 25 lakhs
(3) Conduct admission test for admission to ICG college providing qualification 505tilized505o by foreign law :
Rs.
5 lakhs
(4) Training In recreational activities relating to culture: Rs. 10 lakhs
(5) Receipt from sale of prospectus/ application forms to trainees : Rs. 10 lakhs
(6) A building which was let out to school providing pre-school eduration : Rs. 2 lakhs
(7) Postal coaching receipts : Rs. 7 lakhs
(8) Placement services provided to MNC College, providing qualification 505tilized505o by Indian law:
Rs. 10 lakhs
(9) Receipts from running training centre in relation to art classes: Rs. 17 lakhs. Compute the GST payable
thereon if all charges are exclusive of GST.

ANS- Computation of Value of taxable supply and GST payable (amount in Rs.):
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(1) Training and coaching in field of sports [Liable to GST 7,00,000

(2) Coaching for preparation of iit – Taxable 25,00,000
(3) Conduct admission test – Taxable since such qualification is not 506tilized506o by Indian 5,00,000
law
(4) Training in recreational activities relating to culture Exempt
5) Receipt from sale of prospectus/applicalion form to trainees – Taxable 10,00,000
(6) Building let out to school – Taxable 2,00,000
(7) Postal coaching receipts – Taxable 7,00,000
(8) Placement services – Taxable 1.0,00,000
(9) Receipts from, running training centre in relation to art classes Exempt
Value of taxable supply 66,00,000
Total GST payable @ 18% 11,88,000

Qus.5 ‘Sarvshiksha Trust’ is a charitable trust registered under section 12AA of the Income-tax .Act, 1961. The trust
is registered under GST in the State of Uttar Pradesh. The trust runs the following educafional ins t [turiims;
(1) ‘Kaypee 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 citi
at centres appointed by the KIT. AH [he engineering courses including the distance learning post gradua ce
engineering programme run by KIT are approved by The All India Council for Technical Education (AICTE).
(2) ‘Nanhi Mutthi’, a pre-school in Lucknow.
(3) ‘Bright Minds’, a coaching institute in Kanpur. The Institute provides coaching for Institute of Banking
Personnel Selection (IBPS) Probationary Officers Exam.
(4) ‘Gyan Vaibhav a higher secondary school affiliated to CBSE Board.
The trust provides the following details relating to the goods and services received by the various
institutions run by it during the period April 2019 to September 2019 :
Sr.No. Particulars KIT Nanhi Bright Cyan
Mutthi Minds Vaibhav
(Rs.) (Rs.) (Rs.) (Rs.)
(i) Printing services for printing the question papers 2,50,000 1,50,000 2,00,000
(paper and content are provided by the Institutions)
(ii) Paper procured for printing the question papers 4,30,000 2,58,000 3,44,000
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GST 507

(iii) Courier services for sending the admit cards for the 50,000
examination, to the students
(iv) Honorarium to paper setters and examiners (not on 5,00,000
the rolls of the Institution)
(v) Rent for exam centers taken on rent like schools etc, for 8,00,000 1,00,000
conducting examination
(vi) Subscription for online educational journals [Nanhi 4,00,000 80,000 2,20,000 2,40,000
Mutthi has taken the subscription for online periodicals
on child development and experiential learning]
(vii) Hire charges for buses used to transport students and 4,80,000 5,50,000 1,30,000 75,000
faculty from their residence to college and back
(viii) Catering services for running a canteen in the campus 3,20,000 2,60,000 1,89,000 5,00,000
for students (Catering services for KIT include a sum of
Rs. 60,000 for catering at a student event 507tilized507
in a
banquet hall outside the campus)
(ix) Security and housekeeping services for theinstitution(s) 6,00,000 4,00.000 3,75,000 4,65,000
received from body corporate
(Security and housekeeping services for Cyan Vaibhav
include a sum of Rs. 80,000 payable for security and
housekeeping at the student event 507tilized507 in a
banquet hall outside the campus)

The trust further provides the following details relating to the output services provided to the students by
the various institutions run by it during the period April 2019 to September 2019 ;

Sr.No. Particulars KIT Nanhi Bright Cyan

Mutfhi Minds Vaibhav
(Rs.) (Rs.) (Rs.) (Rs.)
(i) Tuition fee 35,00,000 15,00,000 20,00,000 25,00,000
(ii) Transport fee charged from students 5,00,000 6,00,000 1,30,000 8,50,000
(iii) Charges for food supplied in canteen (located in the 4,60,000 2,40,000 6,10,000
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GST 508

premises of the Institutions)

The canteen facility being provided by Bright Minds is
not compulsory and is open to general public as well.
However, canteen facility being provided by KIT and
Gvan Vaibhav is only for students and staff of such
educational institutions.

With the help of the above details -

(i) determine the amount of GST payable, if any, on goods and services received during A.pril 2019-
September 2019 by the various educational institutions run by the ‘Sarvshiksha Trust’;
(ii) compute net GST liability of the ‘Saiyshiksha Trust’ payable from the Electronic Cash Ledger, for the
period April 2019 to September 2019.
All the amounts given above are exclusive of taxes, wherever applicable.

Notes:
(1) Rate of GST on catering service is 5%. No ITC has been availed on inputs and input services used in the
supply of catering service. Assume that while providing the catering service in the canteen, the educational
institutions have not used any inputs and input services except the catering service (mentioned at Entry No.
VIII of Table 1) availed from third parties.

(2) Rate of GST on goods is 12%. Rate of GST on printing services is 12% and on other services is 18%.

(3) Except catering service, wherever relevant, all the conditions necessary for availing the ITC have been
complied with. (MTP May 2019)

ANS- (1) The following services provided to educational institutions are exempt vide Entry No. 66 of Notification
No. 12/2017-CT I dated 28-06-2017 :
(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;

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GST 509

(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 point (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.
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 509tilized509o by any lew for the time
being
in force;
(iii) education as a part of an approved vocational education course;

KIT, Nanhi Mutthi and Gyan Vaibhav – Covered under the ambit to Educational Institution : In the given case
all the engineering courses including the distance learning post graduate engineering programme run by KIT
are approved by The All India Council for Technical Education (AICTE). Therefore, since KIT imparts education
as a part of a curriculum for obtaining a qualification 509tilized509o by the Indian law, the same is an
educational institution in terms of the exemption notification.

Similarly, Nanhi Mutthi and Gyan Vaibhav, being a pre-school and a higher secondary school respectively are
also educational institutions in terms of the exemption notification.
Bright Minds – Not educational institution : 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
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educational institutions during April 2019- September 2019 is computed as under:

Particulars KIT Nanhi Mutthi Bright Minds Gyan Vaibhav

(Rs.) (Rs.) (Rs.) (Rs.)
Printing services for printing the Exempt 18,000 Exempt
question papers (paper andcontent [1,50,000 × 12%]
are provided by the institutions)
Paper procured for printing the 51,600 30,960 41,280
question papers [It comes under the [4,30,000 × [2,58,000 × 12%] [3,44,000 × 12%]
ambit of supply of goods – Not eligible 12%]
for exemption as same is eligible for
services]Courier services for sending the Exempt
admit-cards for the examination, to the
Students
Honorarium to paper setters and
Examiners (not on the rolls of the Exempt
educational institution)
Rent for exam centers taken on Exempt 18,000
rent like schools etc, forconducting [1,00,000 × 18%]
examination
Subscription for online Exempt 14,400 39,600 43200
educational journals [80,000× 18 %] [2,20,000 × 18%] [2,40,000 × 18%
Hire charges for buses used to 86,400 Exempt 23,400 Exempt
transport students and facultyfrom [4,80,000 × [1,30,000 ×
their residence to college and back 18%] 18 %]
Catering services for running a 16,000 Exempt 9,000 Exempt
canteen in the campus forstudents [3,20,000 × [1,80,000 × 5%]
Catering service 5%]
provided to pre-school and the higher
secondary school is exempt
irrespective of whether the same is

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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 × [3,75,000 × 18 [80,000 × 18%]
[Security and housekeeping service 18%] %]
provided to pre-school and the higher
secondary school for the student event
511tilized511 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 andservices 2,62,000 14,400 2,06,460 98,880
received by the educational institutions

(2) Exemption in respect of services provided by Educational Institutions:

(i) Sarvshiksha Trust – Not eligible for exemption in respect of services by way of charitable activities
:Entry No. 1 of Notification No. 12/2017-CT I dated 28-06-2017 exempts services provided by an entity
registered u/s 12AA of the Income-tax Act, 1961 by way of charitable activities. Here, “charitable activities”
means activities relating to inter alia advancement of educational programmes or skill development relating
to,—
(a) abandoned, orphaned or homeless children;
(b) physically or mentally abused and traumatized persons;
I prisoners; or
(d) persons over the age of 65 years residing in a rural area;

In the given case, though Sarvshiksha Trust is registered under section 12AA of the Income-tax Act, 1961,
none of the educational institutions run by it are providing services by way of charitable activities. As is seen
from the relevant extract of the definition of the charitable activities given above, only when the education is
provided relating to the persons mentioned therein, it becomes charitable activity under GST laws. However,

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in the given case, education is not provided to any specific group or category of persons as specified above,
but to all the categories of children/ candidates approaching the college/pre- school/coaching institute/
higher secondary school. Therefore, the education services provided by the Sarvshiksha Trust is not exempt
under Entry No. 1 of the exemption notification.
(ii) Services provided by KIT, Nanhi-Mutthi and GyanVaibhav – Eligible for exemption : Entry No. 66 of
Notification No. 12/2017-CTI 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 Sarvshiksha Trust
except Bright Minds are educational institutions. Therefore, the education services, transport services and
catering services provided by KIT, Nanhi Mutthi) and Gyan Vaibhav to its students will all be exempt from
GST under Entry No. 66 of the exemption notification. Thus, only the educational services provided by Bright
Minds will be liable to GST @18%. The catering services provided by Blight Minds will be liable to GST @5%.

(iii) Input tax credit : 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, Nanhi Mutthi, and Gyan Vaibhav. Only Bright
Minds will be entitled to avail ITC on inputs and input services used in providing taxable education services.
However, as per the information given in the question, while providing the catering service, Bright Minds has
not availed any ITC of catering service received by it from third parties.

(iv) 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 Sarvshiksha Trust, which will comprise ofonly
the tax liability of Bright Minds, is computed as under :

Particulars Rs.
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% [A] 3,83,400
Value of output supply taxable @ 5% [Charges for food] 2,40,000
GST liability @ 5% [B] 12,000

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Total GST liability [A] + [B] 3,95,400

Tess: ITC [Total tax payable by Bright Minds on the service 1,97,460
received by it as computed in point (i) above less the tax payable
on catering charges (Rs. 2,06,460 – Rs. 9,000)]
Net GST payable from Electronic Cash Ledger 1,97,940

QUS.6 Determine taxable value of supply under GST law with respect to each of the following independent services
provided by the registered person

1. Fees charged from office staff or Ans: As per Entry 66(a) of Notification No. 12/2017-CT I,
in-house personality Services provided by an educational institution to its students,
development course conducted faculty’ and staff are exempt from tax. Educational Institution has
by M.V. College Rs. 10,000. Been defined to mean, inter alia, an institution providing services
by way of education as a part of a curriculum for obtaining a
qualification rec ognised 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 513tilized513o by a law, the
services provided by it to its staff by way of conducting
personality development course would be exempt from GST.

2. Bus fees collected fromstudents Ans: As per Entry 66(a) of Notification No. 12/2017-CT I,
by M.V, College Rs. 2,500 per Services provided by an educational institution to its students,
month. Faculty’ and staff are exempt from tax. Hence, bus fees collected
from students by M.V. College is exempt from tax.

3. Housekeeping service provided Ans: As per Entry 66(a) of Notification No. 12/2017-CT I,
by M/s. Clean well to Himayarsha Services provided to an educational institution, by way of house-
Montessori school, a play school keeping performed in such educational institution are exempt
Rs. 25,000 per month. From tax.
Therefore, house-keeping services provided to Himavarsha
Montessori Play School would be exempt from GST on the

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presumption that housekeeping services have been performed in

such play school itself.

4. Info link applied “Tracing Ans: Services provided by way of supply of online educational
Alphabets” an online educational journals or periodicals shall not be exempt from tax if it is
journal to students of UKG class provided to pre- school education and education up to higher
of Sydney Montessori secondary school or equivalent. Thus, services provided by Info
School Rs. 2,000. Link by’ way of supply’ of an online educational journal to
student^ of UKG class of Sydney Montessori School shall be liable
to tax and the taxable value of supply shall be Rs. 2,000.

QUS.7 Ayushman Medical Centre, a clinical establishment, offers the following services:

Particulars Rs.*
1. Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of 10,00,000
Section 2(h) of Clinical Establishments Act, 2010.
2. Plastic surgeries. [One suck surgery was conducted to repair cleft lip of a new born baby. 20,00,000
Consideration of Rs. 2,00,000 was charged for the same.]
3. Air ambulance services to transport critically ill patients from distant locations to 1,00,000
Ayushman Medical Centre.
4. Naturopathy services provided to ill patients 2,50,000
*excluding GST

Ayushman Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells. You are required to compute the value of supply and GST liability [CGST & SGST or
IGST] of Ayushman Medical Centre,if any, in the light of relevant GST pro visions.

Note:All the services provided by Ayushman Medical Centre are intra-State:supplies. Assume the rates of
CGST, SGST and IGST to be 9%, 9% and 18% respectively.

ANS- Health care services provided by, inter alia, a clinical establishment in India are exempt from GST vide

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Notification No. 12/2017-CT I dated 28-06-2017. The definition of ‘health care services’ stipulates that such
services must be provided in any recognized system of medicines.

As per Section 2(h) of Clinical Establishments Act, 2010, 515tilized515o system of medicine means allopathy,
yoga, naturopathy, ayurvéda, homeopathy, siddha and unani system of medicines or any other system of
medicines as may be 515tilized515o by the Central Government. Accordingly, value of supply and GST liability
of

Ayushman Medical Centre will be computed as follows (amount in Rs.) :

Reiki healing treatments [Not a recognized system of medicines] 10,00,000

Plastic surgeries [Rs. 20,00,000 – Rs. 1,00,000] [‘Health care services’ specifically excludes, 19,00,000
inter alia, cosmetic or plastic surgery except when undertaken to restore/reconstruct
anatomy/functions of body affected due to congenital defects, developmental
abnormalities, injury or trauma]
Air ambulance services to transport critically ill patients from distant locations to the Nil
Medical Centre [‘Health care services’ specifically includes services by way of
transportation of the patient to and from a clinical establishmen t]
Naturopathy services provided to ill patients [Being a recognized system of medicines] Nil
Value of supply 29,00,000
CGST @ 9% 2,61,000
SGST @ 9% 2,61,000

Note: Services provided by cord blood banks by way of preservation of stem cells or any other service in
relation to such preservation are exempt from GST. Therefore, services provided in relation to preservation
of stem cells by the cord blood bank operated by Ayushman Medical Centre will be exempt from GST.

QUS.8 Compute value of taxable supply and GST payable from following sums received by Kan Scan Diagnostic
Centre Ltd. All amounts are exclusive of GST :
(1) Receipts of Diagnostic Centre: Rs. 50 lakhs;
(2) Receipts on account of transportation of patients of clinical establishment : Rs. 5 lakhs;
Hair transplant services provided to bald persons : Rs. 8 lakhs;
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(4) Cosmetic surgery of patients çn account of injury suffered during accidents : Rs. 12 lakhs;
(5) Medical treatment receipts: Rs. 25 lakhs. (It includes Rs.2 lakhs on account of medicines consumed durin
course of provision of service)
(6) Cord Blood bank services: Rs. 15 lakhs

ANS- (1) Receipts of Diagnostic Centre Exempt

(2) Receipts on account of transportation of patients of clinical establishment Exempt
(3) Hair transplant services provided to bald persons (Liable to GST) 8,00,000
(4) Cosmetic surgery of patients on account of injury suffered during accidents Exempt
(5) Medical treatment receipts [This is a composite supply, thus, no GST will be leviable] Exempt
(6) Cord Blood bank services [The same is exempt from tax by virtue of Entry 73 of Exempt
Notification No. 12/2017-CT (Rate)]
Value of taxable supply 8,00,000
GST payable @ 18% 1,44,000

QUS.9 A builder has entered into agreement to sell a flat (carpet area 1800 sq ft) out of 50 flats to a customer. The
breakup of his charges are as follows:
(1) Price of flat (including apportioned value of cost of land): Rs. 42,00,000
(2) Prime Location Charges (PLC) (extra charges for getting sea view): Rs. 2,00,000
(3) Charges for providing space for covered parking: Rs. 1,25,000
(4) Club membership fee (for dub to be formed after construction is complete): Rs. 2,00,000
(5) Charges for carrying out modifications as required by customer : Rs. 2,00,000
(6) Stamp duty for executing sale deed on actual basis : Rs. 4,00,000
(7) Documentation Charges : Rs. 75,000
(8) Maintenance charges to maintain building till the residential complex is handed over to Housing Society
of members: Rs. 4,00,000.

The builder received payment of Rs. 15,00,000 before construction was complete and balance amount was
received after obtaining completion certificate from the Corporation. The value of land is 1/3rd of the total
consideration for the supply. Compute the value of taxable supply.

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ANS- Computation of Value of taxable supply (amount in Rs.):

(1) Price of flat (including apportioned value of cost of land) 42,00,000

(2) Prime Location Charges (PLC) (extra charges for getting sea view) (These charges are 2,00,000
part of construction service of flat. These are part of’naturally bundled services’.)
(3) Charges for providing space tor covered parking (These charges are part of construction 1,25,000
service of flat.)
(4) Club membership fee (for club to be formed after construction is complete). These are Nil
not part of construction service of flat. This is not a part of composite supply.
(5) Charges for carrying out modifications as required by customer (These charges are 2,00,000
part of construction service of fat.)
(6) Stamp duty for executing sale deed on actual basis (Stamp duty shall not form part of Nil
value of service. It is only reimbursement of expenses incurred on behalf of the customer)
(7) Documentation Charges (These charges are part of construction service of flat.) 75,000
Society of members. (Tnese are not part of construction service of flat. These are not part Nil
of ‘naturally bundled services’).
Total Consideration charged for supply 48,00,000
Less: The value of land or undivided share of land i.e. 1 /3rJ of the total amount charged 16,00,000
Taxable Value of supply 32,00,000

QUS.10 A customer ‘A’ who had booked the flat and paid Rs. 15 lakhs, subsequently cancelled his booking. (The
builder refunded Rs. 14.50 lakhs and kept Rs. 0.50 lakh as cancellation charges. Another customer who had
booked a flat sold the flat to a third person and requested builder to transfer the flat in name of the new X
booked a flat sold the flat to a third person and requested builder to transfer the flat in name of the new
buyer. The builder charged Rs. 50,000 as transfer charges. Is tax payable on these amounts? Compute tax
liability, if any.

ANS- Both the charges fall within the definition of ‘tolerating an act or situation’, which is defined as a ‘deemed
service’. Hence, these charges will be subject to tax at general rate i.e. @ 18%. The tax liability will be
determined as under-

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Computation of value of taxable supply and GST liabilityamount in Rs.)

(i) Cancellation charges received from customer on cancellation of flat booking 50,000
(ii)Transfer charges received from customer 50,000
Total Value of taxable supply 1,00,000
GST payable @ 18% 18,000

QUS.11 Y Ltd. Provided works contract services in Dec., 2019 as per following details:

Particulars Rs.
(i) Installation of machinery 2,00,000
(ii) Completion and finishing service plastering (of a building) 1,00,000
(iii) Repairs of machinery 50,000
(iv) Additions to damaged structure 2,50,000
(v) Installation of electrical fittings of immovable property 75,000

You are required to compute the taxable value of services and GST payable thereon for the month of
December, 2019 assuming rate of GST is 18%.

ANS- Computation of value of taxable supply of services and GST payable (amount in Rs.):

(i) Installation of machinery 2,00,000

(ii) Completion and finishing service plastering (of a building) 1,00,000
(iii) Repairs of machinery 50,000
(iv) Additions to damaged structure 2,50,000
(v) Installation of electrical fittings of immovable property 75,000
Total Value of taxable supply 6,75,000
GST payable @ 18% 1,21,500

QUS.12 Compute value of taxable supply of transport of passengers by air from the following data relating to sums

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received exclusive of GST for the month ending 30-09-2019 :

(1) Passengers embarking at Arunachal Pradesh : Rs. 55 lakh (out of the said sum Rs. 15 lakh relates to other
than economy class);
(2) Passengers where journey terminated at Assam : Rs. 45 lakh (out of the said sum Rs. 5 lakh relates to
other than economy class);
(3) Amount charged from passengers for flights starting from Delhi to Sydney (economy class) : Rs. 34 lakh
(including passenger taxes levied by government and shown separately on ticket : Rs. 10 lakh)
(4) Amount charged from passengers for flights starting from Delhi to Sydney (business class) : Rs. 10 lakh
(including passenger taxes levied by government and shown separately on ticket : Rs. 3 lakh).
Compute value of taxable supply and GST thereon if rate of GST is 12% in case of business class and 5% in
otherclass.

ANS- Computation of taxable value of supply and GST payable (amount in Rs.) :

Particulars Taxable Rate GST

Value
(1) Passengers embarking at Arunachal Pradesh. [The same is exempt 55,00,000 Exempt Exempt
vide Entry 15 of Notification No. 12/2017-CT (Rate)]
(2) Passengers where journey terminated at Assam. [The same is 45,00,000 Exempt Exempt
exempt vide Entry 15 of Notification No. 12/2017-CT (Rate)]
(3) Amount charged from passengers for flights starting from Delhi to 34,00,000 5% 1,70,000
Sydney (Passenger taxes levied by government even if shown separately
on ticket shall form part of taxable value of supply as per provisions of
Section 15 of the CGST ‘Act, 2017)
(4) Amount charged from passengers for flights starting from Delhi to 10,00,000 12% 1,20,000
Sydney (business class) (Passenger taxes levied by government even if
shown separately on ticket shall form part of taxable value of supply as
per provisions of Section 15 of the CGST Act, 2017)
Total GST payable 2,90,000

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QUS.13 Indian railways has provided following services – (1)Transport of passengers by general class : Rs. 15 billion;
(2)Transport of passengers by sleeper class : Rs. 10 billion;
(3)Transport of passengers by 1st Class air conditioned coach : Rs. 2 billion; (4)Transport of passengers by
2nd tier air conditioned coach : Rs.4 billion ; (5)Transport of passengers by 3rd tier air conditioned coach :
Rs.8 billion. Compute taxable value of supply and GST liability if rate of GST is 5%.

ANS Computation of taxable value of supply and GST payable (Tin billion) :

Transport of passengers by general class [Exempt vide Entry 17 of Notification No. Exempt
12/2017-CT (Rate)]
Transport of passengers by sleeper class [Exempt vide Entry 17 of Notification No. Exempt
12/2017-CT (Rate)]
Transport of passengers by 1st Class air conditioned coach (Liable for GST) 2
Transport of passengers by 2nd tier air conditioned coach (Liable for GST) 4
Transport of passengers by 3rd tier air conditioned coach (Liablefor GST) 8
Taxable Value of Supply 14
Total GST payable @ 5% 0.7

QUS.14 M/s. PQR Ltd. Is engaged in providing service of transportation of passengers by following modes in the
month of July, 2019 :
(1) Service of transportation of passengers by National Waterways : Rs. 30,00,000;
(2) Service of transportation of passengers by Air conditioned Stage carriage: Rs. 25,00,000;
(3) Service of transportation of passenger by non air conditioned Stage carriage : Rs. 25,00,000;
(4) Service of transportation of passengers by contract carriage for tourism : Rs. 20,00,000;
(5) Service of transportation of passenger for Mumbai to Chennai port in a vessel and such service is not for
tourism purpose; Rs. 10,00,000;
(6) Service of transportation of passenger in Metered Cab: Rs. 35,00,000;
(7) Service of transportation of passengers in Radio Taxis : Rs. 10,00,000;
(8) Service of transportation of passengers in Non air-conditioned contract carriages : Rs. 10,00,000;
(9) Service of transportation of passengers in air-conditioned contract carriages : Rs. 15,00,000; Compute
GST liability if applicable rate of GST is 5%.

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ANS- Computation of GST liability (amount in Rs.) :

Particulars Taxable Value Rate GST

(1) Transportation of passengers by National Waterways [Exempt 30,00,000 Exempt Nil
vide Entry 17 of Notification No. 12/2017-CT (Rate)]
(2) Transportation of passenger by Air conditioned Stage Carriage 25,00,000 5% 1,25,000

(Liable to GST)
(3) Transportation of passenger by non air conditioned Stage carriage 25,00,000 Exempt Ni!
[Exempt vide Entry 15 of Notification No. 12/2017-CT (Rate)]
(4) Transportation of passengers by contract carriage for tourism - 20,00,000 5% 1,00,000

(5) Transportation of passenger from Mumbai to Chennai port in a 10,00,000 Exempt Nil

vessel [Being a public transport in a vessel sailing in India and not for
tourism – is exempt vide Entry 17 of Notification No. 12/2017-CT
(Rate)]
(6) Transportation of passenger in Metered Cab [Exempt vide Entry 35,00,000 Exempt Nil
17 of Notification No. 12/2017-CT (Rate)]
(7) Service of transportation of passengers in Radio Taxis (l iable to 10,00,000 5% 50,000

GST)
(8) Service of transportation of passengers in non air-conditioned 10,00,000 Exempt Nil
contract carriages [Exempt vide Entry 15 of Notification No.
12/2017- CT (Rate)]
(9) Service of transportation of passengers in air-conditioned 15.00,000 5% 75,000
contractcarriages (Liable to GST)
Total GST payable 3,50,000

QUS.15 M/s. Madhur Couriers (in India) furnishes you the following information of services provided by it for the
quarter ended 30-09-2019 (all information are separate and in addition to each other) :
(1) Amounts charged from corporate customers: Rs. 55 lakhs (including Rs. 5 lakhs towards packing of goods
and documents inboxes and envelopes) ;
(2) Charges for Express Cargo Service; Rs. 25 lakhs (consignment note is not issued) ;

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(3) Charges for documents destined to Western States : Rs. 40 lakhs (for documents destined to western
states, the delivery is carried out by M/s. West Express who is paid 50%) ;
(4) Charges for services where the customers came to the office of M/ s. Madhur Couriers ; Rs. 4 lakhs
Required to compute :
(i) The value of taxable supply ; and

(ii) The net amount of GST, if any, payable thereon by M/ s. Madhur Couriers.
(iii) Rate of GST – 18%.

ANS Computation of Value of taxable supply and GST payable (amount in Rs.) -

Amounts charged from corporate customers (Charges towards packing of goods in 55,00,000
boxes and envelopes will form part of value of taxable supply,since most of the courier
agencies carry out such activities and the same fall under natural bundle of service.)
Charges for Express Cargo Service (Since consignment note is not issued, the service will 25,00,000

fall under courier service)

Charges for documents destined to Western States (M/s. Madhur Courier will be liable 40,00,000

to pay GST on fill amount charged. The amount paid to co-loader M/s. West Express will
be eligible as ‘input service’ on which ITC credit will be available)
Charges for services where the customers came to the office of M/s. Madhur Couriers 4,00,000

(Even if the customers come to the office of courier agency, the same would amount of
‘ door-to-door transportation’ and will be covered by courier agency)
Taxable Value 1,24,00,000
GST thereon @ 18% 22,32,000
Less: ITC on charges of co-loaders M/s. West Express fRs.40 lakhs * 50% × 18%] 3,60,000

Net GST payable in cash 18,72,000

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

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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.
As per Notification No. 12/2017 CT I dated 28.06.2017, services by way of health care services by a clinical
establishment, an 523tilized523o 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 523tilized523o 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

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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.

QUS.14 Composite Supply Agrawal Carriers is a Goods Transport Agency (GTA) engaged in transportation goods by
road. As per the general business practice, Agrawal Carriers also provides intermediary and ancillary services
like loading/unloading, packing/unpacking, 524tilized524on524524 and temporary warehousing, in relation to
transportation of goods by road. 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 As per Section 2(30) of CGST Act, 2017, Composite supply means a supply made by a taxable person to a
recipient consisting of two or mare 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 as principal supply.

GTA provides various intermediary and ancillary services, such as, loading/unloading, packing/unpacking,
524tilized524on524524 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,
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transportation of goods by road. The invoice issued by the G1 A for providing the said service includes the
value of intermediary and ancillary services.

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.

QUS.15 Hiring services From the following information pertaining to month ending 30-09-2017, compute the value of
taxable supply if all charges are exclusive of GST—
1) Renting of bus to state transport undertaking : Rs. 15 Lakh
2) Renting of goods vehicle to a goods transport agency : Rs. 25 Lakh
3) Renting of cars designed to carry passengers to a goods transport agency : Rs. 20 lakh
4) Renting of dumpers Rs. 15 lakh
5) Hiring of audio visual equipments for an event : Rs. 15 lakhs
6) Hiring of pandal or shamiana for organizing functions/events Rs. 20 lakh
7) Hiring of a machinery with transfer of right to use : Rs. 60 lakh [The rate of tax on sale of such
machinery(with transfer of title) is 12%]
8) Hiring of agro machinery for use in agriculture : Rs. 15 lakh

ANS Computation of Value of taxable supply (amount in Rs.)

(1) Renting of bus to state transport undertaking [Exempt vide Entry 22 of Notification No. Exempt
12/2017-CT (Rate)]
(2) Renting of goods vehicle to a goods transport agency [Exempt vide entry 22 of Notification Exempt
No. 12/2017-CT (Rate)]
(3) Renting of cars designed to carry passengers to a goods transport agency — Not exempt 20,00,000
(4) Renting of dumpers – Taxable 15,00,000
(5) Hiring of audio visual equipments for an event – Taxable 15,00,000
(6) Hiring of pandal or shamiana for organizing functions/events — Taxable 20,00,000

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(7) Hiring of a machinery with transfer of right to use. 60,00,000

(8) Hiring of agro machinery for use in agriculture [Exempt rode Entry 54 of Notification No.

Total Value of taxable supply 1,30,00,00

QUS.16 Examine whether the following independent intra-State services are exempt from GST:
(a) Legal services provided by BMC & Partners, Delhi, a partnership firm of advocates, to Vastukaar
Enterprises, registered in Delhi, providing architect services (with preceding financial year’s aggregate
turnover as ` 21 lakh).
(b) Minimum balance charges collected by Dhanvarsha Bank from current account and saving account
holders.

ANS (a) Services provided by a partnership firm of advocates or an individual as an advocate other than a senior
advocate, by way of legal servicesto a business entity with an aggregate turnover up to such amount in the
preceding financial year as makes it eligible for exemption from registration under the CGST Act, 2017, are
exempt from GST vide Notification No. 12/2017 CT I dated 28.06.2017 (hereinafter referred to as
exemption notification).

Since in the given case, services are being provided by the partnership firm of advocates – BMC & Partners to
a business entity – Vastuka Enterprises whose aggregate turnover in the preceding FY exceeded 20 lakh i.e.
the threshold limit for registration applicable to a service provider in Delhi, said services are not exempt from
GST.

(b) 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.

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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
Enterprises whose aggregate turnover in the preceding FY exceeded ` 20 lakh i.e. the threshold limit for
registration applicable to a service provider in Delhi, said services are not exempt from GST.

Qus.17 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.

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.
You are required to examine whether the stand taken by the Department is correct.

ANS 1. No, the stand taken by the Department is not correct.

Services by way of health care services by a clinical establishment, an 527tilized527o medical practitioner or
para-medics are exempt from GST vide exemption notification.
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 527tilized527o 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

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trauma.

Circular No. 32/06/2018 GST dated 12.02.2018 has clarified that the entire amount charged by the hospitals
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 clarifies 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.

QUS.18 Vedanta Hospital, Gurgaon has its own restaurant – Annapurna Bhawan – I basement which supplies
food to its in-patients (patients admitted in the hospital) as per the advice of the doctor/nutritionist.
Annapurna Bhawan also supplies food to other patients (who are not admitted) or their attendants or
visitors. The food is prepared by the employees of the hospital and nothing is outsourced to any third- party
vendors. Vedanta Hospital is of the view that all services provided by a clinical establishment are exempt
from GST and thus, it is not liable to pay any tax. You are required to test the correctness I view taken by
Vedanta Hospital.

ANS Services by way of health care services by a clinical establishment, an 528tilized528o medical practitioner or
para-medics are exempt from GST videexemption notification. Circular No. 32/06/2018 GST dated
12.02.2018 has clarified that food supplied by the hospital canteen to the in-patients as advised by the
doctor/nutritionists is a part of composite supply ofhealthcare 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.

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QUS.19 Indian Institutes of Management (IIM), Indore organizes a placement drive I 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 recognizedby 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.

QUS.19 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.

QUS.20 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

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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.

QUS.21 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 inany
530tilized530o 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.

QUS. Determine whether GST is payable in respect of 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 Mungerilal
College providing education as part of a curriculum for obtaining a qualification 530tilized530o by Indian law -
` 10,000.
(2) Bus fees collected from students by Rosemary College providing education as part of a curriculum for
obtaining a qualification 530tilized530o by Indian law - ` 2,500 per month.

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(3) Housekeeping service provided by M/s. Clean Well to Himavarsha Montessori school, a play school, for
cleaning its playground and classrooms - ` 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) Services provided by an educational institution to its students, faculty and staff are exempt from GST vide
exemption notification. 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 531tilized531o by any law
for
thetime being in force.

Since Mungerilal College provides education as part of a curriculumfor obtaining a qualification

531tilized531o by
Indian law, the services provided by it to its staff by way of conducting personality development course
would be exempt from GST.

(2) Since Rosemary College provides education as a part of a curriculum for obtaining a qualification
531tilized531o by Indian law, the transport services provided by Rosemary College to its students are exempt
from GST.

(3) Services provided to an educational institution, by way of, inter alia, house-keeping services performed
are exempt from GST vide exemption notification where such services are performed in such
educational institution. However, such exemption is available only when the said services are provided to a
pre-school education and a higher secondary school or equivalent.
In view of the above discussion, house-keeping services provided to Himavarsha Montessori Play School are
exempt from GST since housekeeping services have been performed in such play school itself.

(4) Services provided to an educational institution by way of supply of online educational journals or
periodicals is exempt from GST vide exemption notification. However, such 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 531tilized531o by any law for the time being in force.

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Therefore, supply of online journal to students of UKG class of Sydney Montessori School is not exempt from
GST.

QUS. 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:

Amount (`)
Renting of residential dwelling for use as a residence 18,00,000
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 GST liability of Sarva Sugam Charitable Trust for the month of August assuming that the above
amounts are exclusive of GST and rate of GST, wherever applicable, is 18%.

Note: The rooms/ Kalyanamandapam/ halls/ open space/ shops owned by the trust are located within the
precincts of a religious place, meant for general public, owned by the trust.

ANS- 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 are exempt from GST vide
exemption notification. However, said exemption is not available if:
(ii) charges for rented rooms are ` 1,000 per day or more;
(iii) charges for rented community halls, Kalyan mandapam, open area are` 10,000 per day or more;
(iv) charges for rented shops are ` 10,000 per month or more.
Further, services by way of renting of residential dwelling for use as residence are also exempt vide
exemption notification.

Computation of GST liability of Sarva Sugam Charitable Trust for August

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Particulars Value (`) GST@18% (`)

Renting of residential dwelling for use as residence 18,00,000 Nil
[Exempt vide exemption notification]
Renting of rooms for devotees 6,00,000 Nil
[Exempt since charges per day are below `1,000]
Renting of Kalyanamandapam 12,00,000 2,16,000
[Taxable since charges per day exceed `10,000]
Renting of halls and open spaces 10,75,000 Nil
[Exempt since charges per day are below ` 10,000]
Renting of shops for business 4,75,000 Nil
[Exempt since charges per month are below `10,000]
Renting of shops for business 7,50,000 1,35,000
[Taxable since charges per month exceed ` 10,000]
Total 3,51,000

QUS. 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:

Sr. No. Particulars Amount(`)

(i) Amount charged for service provided to recognized sports body as selector of 50,000
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 the 15,000
Urban branch of anationalized 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 alsoare exclusive of GST.

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You are required to calculate gross GST liability (ignoring ITC provisions) ofMr. 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 payGSTunder forward charge
Amount charged for service provided to recognizedsports body as 50,000 9,000
selector of national team [Note 1]
Commission received as an insurance agent frominsurance company Nil Nil
[Note 2]
Amount charged as business correspondent fortheservices provided to 15,000 2,700
the urban branch of a
534tilized534on534 bank with respect to savings bank accounts [Note 3]
Services provided to foreign diplomatic mission located in India [Note 4] 28,000 5,040
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 I 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

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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 I dated 28.06.2017. The turnover of previous year is irrelevant in this case.

Further, GST is applicable on the retention money kept by Shiva Medical Centre.
You are required to examine whether the stand taken by the Department is correct.

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REFUNDS

QUS.1 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:

Sr.No. Particulars (`)

(i) Export of product ‘A’ to UK for $ 10,000. Assessable value under customs in Indian 7,00,000
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 @ 5%] 10,00,000
[Inputs used in manufacturing of such goods are taxable @18%]
*not notified as a product, in respect of which refund of 536tilized536o ITC shall not
allowed under section 54(3)(ii) of the CGST Act, 2017
(iii) Supply of goods to Export Oriented Unit[excluding tax @ 18%] 5,00,000
[ITC has been claimed by the recipient]
(iv) Export of exempt supplies of goods 6,00,000

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

Sr.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.

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ANS- Computation of maximum amount of refund admissible to Kailash Global (P) Ltd.

Particulars (`)
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 537tilized537o ITC in the case of
zero
rated supply made without payment of tax 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 537tilized537o 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 Turnover of inverted rated supply of goods and Tax payable on such inverted
Amount services × Net ITC ÷Adjusted Total Turnover − rated supply of goods and
Where- services

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“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.

“Relevant period” means the period for which the claim has been filed.
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) = ` 3,50,000 x 10,00,000/ ` 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.

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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 of zero-rated supply of services )
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 or 1.5 times the value of like goods domestically
supplied by the same or similarly
“Adjusted total turnover” means the same as explained in point 2 above.
Here, Turnover of zero rated supply of goods = ` 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) = ` 5,32,000 x 6,00,000/ ` 28,00,000 = ` 1,14,000.

QUS.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*(`) OutputGST Rates ITC availed(`) InputGST Rates

A 500,000 5% 54,000 18%
B 350,000 5% 54,000 18%
C 100,000 18% 10,000 18%
*excluding GST

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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 540tilized540o 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 the 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 540tilized540o 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 rated supply of goods and services × Net ITC ÷
Adjusted Total Turnover – Tax payable on such inverted rated supply of goods and services
Where-
A. “Net ITC” means input tax credit availed on inputs during the relevant period other than the turnover
of supplies in respect of which refund is claimed under sub rule (4A) or (4B) or both
B. Adjusted Total Turnover means the sum total of the value of-
(a) the turnover in a State or a Union territory, as defined under section 2(112), excluding the turnover of
services; and
(b) the turnover of zero-rated supply of services determined in 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 rule 89(4A) or rule 89(4B) or both,

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GST 541

if any, during the relevant period.

C. Relevant period means the period for which the claim has been filed.
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 as clarified vide Circular No. 79/53/2018-GST, dated 31.12.2018]
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)

QUS.3 With reference to section 54(3) of the CGST Act, 2017, mention the cases where refund of 541tilized541o
input
tax credit is allowed.

ANS- As per section 54(3) of the CGST Act, 2017, a registered person may claim refund of 541tilized541o input tax
credit at the end of any tax period in the following cases:
(i) Zero rated supplies made without payment of tax: Supply of goods or services or both to an SEZ
developer/unit or export of goods or services or both qualifies as zero rated supplies. However, refund of
unutilized input tax credit shall not be allowed if:
• the goods exported out of India are subjected to export duty;
• 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.

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QUS.4 State the 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 —
(a) refund of tax paid on export of goods and/or services or on inputs or input services used in making
such exports;
(b) refund of unutilized ITC in case of zero rated supplies made without payment of tax or accumulated
ITC on account of inverted duty structure;
I 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;
(d) 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;
(e) 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
(f) the tax or interest borne by notified class of applicants.

QUS.5 Wye Ltd. Provides the following details of September 20XX 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 25,00,000
made of `5,00,000 eligible under rule 89(4A)/89(4B) of the CGST Rules, 2007
Zero rated supply of goods made during the period without payment of tax 6,00,00,000
under bond/ LUT, which include the supply of ` 1,00,00,000 for which refund
claim is made under rule 89(4A)/89(4B) of the CGST Rules, 2017
Supply of goods other than zero rated supply 3,00,00,000

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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:

Refund amount =
Turnover of zero rated supply of goods + turnover of zero rated supply of services × Net ITC
Adjusted total turnover
Net ITC excludes ITC availed for which refund is claime 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 = ` 5,00,00,000 [` 6,00,00,000 – ` 1,00,00,000];

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.

Qus.6 Y Ltd. Exported service valued at US $ 1,00,000. Supply of service was completed on 15th November 2019.
Payment for this service was received on 30th December 2019. Refund claim was filed by Y Ltd. In respect
of tax paid on inputs and inputs services for` 6,00,000 on 31st January, 2020. The refund claim was
sanctioned on 30th April, 2020. 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) of the CGST Act, 2017, 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. 30th December, 2019 [Explanation to section 54
of the CGST Act, 2017.

As per section 56 of the CGST Act, 2017, 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

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GST 544

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 January, 2020, interest @ 6% p.a. is payable.

QUS.7 Explain the term ‘zero-rated supply’ as defined under IGST Act, 2017. How are zero-rated supplies different
from exempt supplies made by a registered person in respect of issuance of invoice?

ANS- Zero rated supply means any of the following supplies of goods or services or both namely:-
(a) export of goods or services or both; or
(b) supplyof goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit
[Section2(23) of the IGST Act read with section 16 of the IGST Act].
A registered person supplying exempted goods or services or both shall issue, instead of a tax invoice, a bill
of supply whereas in case of zero- rated supplies, normal tax invoice shall be issued.

QUS.8 M/s. ABC manufactures & exporters pvt. Ltd. Furnishes following information and request you to compute
The maximum refund eligible in respect of Zero rated supplies for the relevant period:

PARTICULARS AMOUNT
1. ITC availed on inputs 2,50,000
2. ITC availed on input services 50,000
3. ITC availed on capital goods 2,00,000
4. Taxable value of goods ‘X’ exported without payment of tax (value of like goods 8,00,000
Domestically supplied by the same manufacturer : 5,00,000)
5. Taxable value of goods “Y” exported without payment of tax (value of like goods 2,50,000
Domestically supplied by the same manufacturer : 2,00,000)
6. Taxable value of goods supplied within India 35,00,000
7. Payments received towards services supplied for exports (includes 50,000 of advance 5,50,000
towards services to be supplied/exported after the current relevant period.

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8. Taxable value of services supplied within India 5,00,000

ANS-
Computation of maximum refund admissible in respect of zero rated supplies
1. Net ITC availed on inputs & input services during the relevant period (2,50,000 + 50,000) 3,00,000
2. Turnover of zero rated supply of goods i.e. value of zero rated supply of goods made 10,00,000
During the relevant period without payment of tax under bond or LUT [W.N 1]
3. Turnover of zero rated supply of services (advance received towards services to be 5,00,000
supplied/exported after the relevant period shall not be included : 5,50,000 – 50,000
4. Adjusted total turnover 55,00,000
5. Maximum refund = [2+3 ÷ 4 × 1] 81,818

Working note :
1.
The 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 or LUT or the value which is 1.5 times the value
of like goods domestically supplied by the same or similarly placed, supplier, as declared by the supplier,
whichever is less, other than the turnover of supplies in respect of which refund is claimed under rule 89(4A)
or (4B) or both. Hence, the turnover of zero rated supply of goods shall be determined as under
Particulars
1.
Taxable value of goods ‘X’ exported without payment of tax being lower of: 7,50,000
(a) value of zero rated supply of goods made during the relevant period without payment of
tax under bond or LUT : 8,00,000
(b) 1.5 times the value of like goods domestically supplied by the same manufacturer
[5,00,000 × 1.5] = 7,50,000

2.
Taxable value of goods “Y” exported without payment of tax being lower of : 2,50,000
(a) value of zero rated supply of goods made during the relevant period without payment of
tax under bond or LUT : 2,50,000
(b) 1.5 times the value of like goods domestically supplied by the same manufacturer
[2,00,000 × 1.5] = 3,00,000
Taxable value of goods exported without payment of tax under bond or LUT 10,00,000

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GST 546

2. Adjusted total turnover [ circular no. 147/03/2021]

Turnover in state excluding turnover of zero rated supply of goods and turnover of services 35,00,000
Add: turnover of zero rated supply of goods 10,00,000
Add: value of zero rated supply services without payment of tax and non zero rated supply of 10,00,000
Services [5,00,000 + 5,00,000]

QUS.9 The following particulars are furnished by Delight Exporters, Karnataka, which is duly registered under the
GST law. The entity has also filed bond/LUT in order to export goods without payment of any taxes. You are
required to calculate the refund amount in respect of input tax credit on inputs and input services relating to
goods exported in the relevant tax period.

Sr.No. Particulars of supply Value of

supply in `
1. Turnover – excluding supply of services, but includes exempt supplies of ` 76,00,000
8,00,000 and inward supplies of ` 2,00,000
2. Zero-rated supply of goods under bond/LUT 12,00,000
3. Export services under bond/LUT 48,00,000
4. Non zero-rated supply of services 10,00,000
5. Payments received towards zero-rated supply, which includes ` 12,00,000 48,00,000
against which services are yet to be supplied.
6. Advance received in the past, against which zero-rated supplies have been 14,00,000
made in the current tax period
7. Turnover on which suppliers have claimed refund under rule 89(4A) and rule
89(4B)
-Goods 6,00,000
-Services 6,00,000
8. ITC on inputs and input services during the tax period including those under 12,00,000
rule 89(4A) and rule 89(4B)
9. ITC relating to rule 89(4A) and rule 89(4B) 2,40,000

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ANS- In case of zero-rated supply of goods and services without payment of tax under bond/LUT, refund of ITC
relating to goods and services exported is granted as per the following formula:

Refund Amount =
Turnover of zero rated supply of goods + turnover of zero rated supply of services × Net ITC
Adjusted total turnover
Accordingly, the amount of refund shall be computed as follows:

Particulars `
Net ITC excluding ITC availed for which refund is claimed under rule 89(4A) 9,60,000
and 89(4B)
(` 12,00,000 - `2,40,000)
Turnover of zero-rated supply of goods excluding turnover of suppliesin respect 6,00,000
of which refund is claimed under 89(4A) and 89(4B)
Turnover of zero rated supply of services 50,00,000
[Aggregate of payments received during the relevant period and services
where supply has been completed for which payment had been received
in advance in any prior period reduced by advances received for which the supply
of services has not been completed during the relevant period]
[` 48 lakh + 14 lakh - `12 lakh]*
Adjusted total turnover = Turnover in a State excluding turnover of services + 1,14,00,000
Turnover of zero-rated supply of services determined as above + Non-zero-rated
supply of services – [Exempt supplies other than zero-rated supplies + Turnover
of supplies in respect of which refund is claimed under 89(4A) and 89(4B)]
[` 76 lakh - ` 2 lakh + ` 50 lakh + ` 10 lakh – (` 8 lakh** + `6 lakh + ` 6 lakh)]
Refund of ITC for zero rated supply of goods and zero rated supply ofservices 4,71,579
[`9,60,000 x (`56,00,000/ `1,14,00,000)] (rounded off)

Note: The above answer is based on the following assumptions made with regard to the information given in
the table in the question:
(i) Turnover at Sl. No. 1 [` 76 lakh] includes the turnover of zero rated supply of goods given at Sl. No. 2
[` 12 lakh].

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(ii) Turnover of zero rated supply of goods given at Sl No. 2 [` 12 lakh] includes turnover of supplies of goods
in respect of which refund has been claimed under rule 89(4A) and 89(4B) [` 6 lakh]
* It is assumed that Sl. No. 6. Of the table in the question belongs to zero rated supply of service and not for
zero rated supply of goods.
** The exempt supplies are logically assumed to be other than zero rated supplies.

(ii) Turnover of zero rated supply of services computed as per rule 89(4)(D) [` 50 lakh] includes the turnover
of supplies of services in respect of which the refund is claimed under rule 89(4A) and 89(4B) [` 6 lakh].

However, the above question can also be answered on the basis of alternate assumptions I., the turnover
of zero rated supply of goods given at Sl. No. 2 [` 12 lakh] excludes turnover of supplies of goods in respect of
which refund has been claimed under rule 89(4A) and 89(4B) [` 6 lakh] or the turnover at Sl. No. 1 [` 76 lakh]
does not include the turnover of zero rated supply of goods given at Sl. No. 2 [`12 lakh] and turnover of
supplies of goods in respect of which refund has been claimed under rule 89(4A) and 89 (4B) [` 6 lakh].

QUS. 10 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
I 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

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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
therefund 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. (RTP Nov 20)

ANS- Export of product ‘S’

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 549tilized549o 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 549tilized549o 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 Amount = =

Turnover of zero rated supply of goods + turnover of zero rated supply of services × Net ITC
Adjusted total turnover
Here,
Net ITC = ` 7,00,000 [Net ITC includes ITC on inputs and input services but not ITC on capital goods].

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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]
I 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.

QUS.11 DF Ltd. Exported goods valued ` 50 lakh and received refund of integrated tax paid amounting to ` 9 lakh on
16th August, 2020. He could realise export proceeds to the extent of ` 25 lakh, but did not realise the
balance export proceeds within the prescribed time limit of 9 months and has applied for extension of time
to RBI. There is no dispute about the supply of the goods as regards quality, time of supply and fulfillment of
terms and conditions of sale. He wants you to inform him of the consequences under GST law in case RBI

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does not give him the extension. (4 Marks)

ANS- Where any applicant has received the refund of integrated tax paid on export of goods but could not realize
the sale proceeds of such exported goods within the prescribed time limit (or extended time period), he
shall deposit the amount so refunded along with interest of 18% within 30 days of the expiry of the said
period (or extended time period), to the extent of non-realisation of sale proceeds.

*
It has been most logically assumed that the amounts given in the question are excluding GST wherever
required.

However, if the RBI writes off the requirement of such realization on merits, recovery shall not be made.
In view of the aforesaid provisions, DF Ltd. Has to deposit the refund of integrated tax of ` 4.5 lakh (to the
extent of non-realisation of export proceeds of ` 25 lakh) along with interest @ 18% within 30 days of the
expiry of the prescribed time-limit.

In case of failure to do so, the amount will be recovered in accordance with the provisions relating to
recovery of erroneous refund and also penalty can be imposed

QUS. List any four exceptions when theory of unjust enrichment is not applicable under the provisions of CGST
Act, 2017. (4 Marks)

ANS- Unjust enrichment is not applicable in the following cases:

(a) refund of tax paid on exports or on inputs/input services used in making such exports;
(b) refund of unutilized ITC in case of zero-rated supplies made without payment of tax or accumulated ITC
on account of inverted duty structure;
(c) 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;
(d) refund of tax paid on a transaction treated to be an intra-State supply, but which is subsequently held to
be an inter-State supply or vice-versa;
(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the

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incidence of such tax and interest to any other person;

(f) the tax or interest borne by such other class of applicants as the Government may, on the
recommendations of the Council, by notification, specify.

QUS. Is there any time limit for sanctioning of refund under section 54?

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.
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, the provisional refund has to be given within 7 days from the date of acknowledgement of the
claim of refund.

QUS. Discuss the provisions relating to refund of the amount of advance tax deposited by a casual taxable person
under section 27(2).

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)].

QUS. 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.

QUS. When is a deficiency memo issued in respect of a refund claim made under section 54?

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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.

QUS. M/s Housefull Convention Hall is in the business of letting out its halls for functions. It provides you with the
following information for determining the amount of refund out of advance received based on time of
supply for one of its clients.
S. No. Particulars Date Amount in ₹
(1) Advance paid at the time of booking the hall for a function 16.07.2019 1,00,000
from 1st to 3rd Nov., 2019
(2) Additional deposit paid 18.08.2019 2,00,000
(3) Function is held as scheduled 1st Nov. to
3rd Nov. 2019
(4) Invoice is issued (Taxable value) 25.11.2019 2,50,000
(5) Consider that there is a change in the rate of tax on 15th October,
2019 from (CGST 2.5% and SGST 2.5%) to (CGST 9% and SGST 9%)
What would be the amount of refund payable to the client?

ANS- The time of supply of services is the date of issue of invoice if the same is issued within 30 days from the
date of supply of service or the date of receipt of payment, whichever is earlier.
In the given case, invoice is issued within 30 days of the supply of service and advances have also been
received. Therefore, tax becomes payable at the time of receipt of advances on 16.07.2019 and 18.08.2019
as it is not clear at the time of receipt of such advances as to what would be the total value of the supply.
However, when invoice is issued for a lesser value on 25.11.2019, refund would become payable to the
client.

In case of change in rate of tax, where the service is supplied and invoice is issued after the change in rate of
tax and payment is received before change in rate of tax, time of supply shall be date of issue of invoice, i.e.,
25.11.2019. Hence, applicable rate of tax is new rate even though tax has been paid at old rate on advances
received.

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Therefore, refund payable to client will be computed as under:

Total advance received including GST* = ₹ 3,00,000
Less: Actual liability [₹ 2,50,000 + ₹ 2,50,000 x 18% (new rate of tax)] = ₹ 2,95,000
Amount of refund = ₹ 5,000
*It has been assumed that the advances received are inclusive of tax.

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DEMAND & RECOVERY

QUS.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 utilize 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
555tilized 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.

QUS.2 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

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Enterprises representing as tax were 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.

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QUS.3 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 ison 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 returnfor 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.

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QUS.4 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.

QUS.5 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.

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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.

QUS.6 On 05.07.20XX, 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, 20XX and also interest of ` 50,000.
Mr. Sharma raised objections and after personal hearing on 30.08.20XX, 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 02.09.20XX and informed the department on the same day.
Subsequently, on 15.09.20XX, 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

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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.

QUS.7 Checkernot has self-assessed tax liability under IGST Act, 2017, as ` 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 September, 20XX
Date of payment of tax 26th November, 20XX

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 18.09.20Xxis 20.10.20XX. However, since tax is actually paid on
26.11.20XX, interest @ 18% p.a. is payable for the period for which the tax remains unpaid [37 days] in terms

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of section 50 of CGST Act, 2017 read with Notification No. 13/2017 CT dated 28.06.2017. Amount of interest
is:
= ` 80,000 × 18% × 37/365 = ` 1,460 (rounded off)

The provisions of section 73(11) of the CGST Act, 2017 can be invoked only when the provisions of section 73
are invoked and the provisions of section 73 are generally not invoked in case of delayed filing of the return
in Form GSTR‐3B because tax along with applicable interest has already been paid.

Thus, penalty under the provisions of section 73(11) is not payable in such cases although a general penalty
may be imposed since the tax has been paid late in contravention of the provisions of the CGST Act, as
clarified vide Circular No. 76/50/2018 GST dated 31.12.2018.

QUS.8 Discuss briefly the procedure for issue of adjudication order under section 74(9) &(11) and the time limit for
passing adjudication order under section 74(10) of the CGST Act, 2017.

ANS- The procedure for issue of adjudication order under section 74 of CGST Act, 2017 is as under:-
Where a show cause notice/statement is issued to a person chargeable with tax, he may furnish a
representation to the proper officer in his defence, if he is of the view that he is not so liable to pay
whole/part of the amount mentioned in the show cause notice.

The proper officer after considering the representation, if any, made by the person chargeable with tax, pass
an order determining the amount of tax, interest and penalty due from such person [Section 74(9)].
Where any person served with an adjudication order pays the tax along with interest payable thereon under
section 50 and a penalty equivalent to 50% of such tax within 30 days of communication of the order, all
proceedings in respect of the said notice shall be deemed to be concluded [Section 74(11)].

As per section 74(10) of CGST Act, 2017, the proper officer shall issue the adjudication order within 5 years

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from the due date for furnishing of Annual Return for the financial year to which the tax not paid/short
paid/input tax credit wrongly availed/utilized relates to or within 5 years from the date of erroneous refund.

QUS.9 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.

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QUS.10 Mr. X, registered under GST Act, had made short payment of GST for the month of July 20XX.
1. It has been assumed that order demanding higher tax has been made, but the rectification of show cause
notice has not been done.
2.It has been assumed that corrigendum has been issued in respect of show cause notice.
He does not want a show cause notice to be served on him by proper officer. Advice Mr. X, if :
(i) Short payment of tax is on account of reasons other than fraud
(ii) Short payment of tax is on account of fraud.

ANS- (i) Short payment of tax is on account of reasons other than fraud
As per section 73 of the CGST Act, 2017, the show cause notice will not be issued by the proper officer, if Mr.
X pays the amount of tax short paid along with interest payable thereon on the basis of his own
ascertainment of such tax or the tax as ascertained by the proper officer, before the service of notice and
inform the proper officer in writing of such payment.

(ii) Short payment of tax is on account of fraud

As per section 74 of the CGST Act, 2017, the show cause notice will not be issued by the proper officer, if Mr.
X pays the amount of tax short paid along with interest payable thereon and a penalty equal to 15% of such
tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer, before
the service of notice and inform the proper officer in writing of such payment.

QUS.11 On 05.07.2019, 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, 2019 and also interest of ` 50,000.
Mr. Sharma raised objections and after personal hearing on 30.08.2019, 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 02.09.2019 and informed the department on the same day.
Subsequently, on 15.09.2019, 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.

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Examine with a brief note the validity of the action taken by the Department with reference to provisions of
the CGST Act, 2017. (MTP NOV 20)

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.

QUS.12 (a) A taxpayer has suppressed certain facts resulting in short payment of tax. The mistake is pointed out by
the Department, but no show cause notice (SCN) has been issued. As per the taxpayer, suppression is
accepted at ` 12,00,000 and he agrees that the suppression has taken place in the month of January, 2019.
He clears the dues on 20th April, 2019. However, the Department, on verification, identifies additional
suppression of ` 2,00,000 in the same month of January, 2019. SCN is issued and the taxpayer represents
before the proper officer, which results into an adverse order against the taxpayer. The order is passed on
25.05.2019 and the taxpayer complies with the adverse adjudication order on 27.06.2019.
Determine the tax, interest and penalty payable at each stage. (5 Marks)

ANS- (a) Note: In the given question, suppression accepted at ` 12 lakh may be assumed to be either the value or
the tax amount. Further, where the amount of ` 12 lakh is assumed to be the value of suppression, rate for X
tax payable would also need to be assumed.

Further, as per explanation 2 to section 74 of the CGST Act, 2017, the expression “suppression” means non-
declaration of facts or information which a taxable person is required to declare in the return, statement,
report or any other document furnished under this Act or the rules made thereunder, or failure to furnish

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any information on being asked for, in writing, by the proper officer. Therefore, the question can be
answered either by assuming that the information has been suppressed in the return/statement/report filed
IN the month of January (interest would become payable from 21st January in this case) or by assuming that
suppression activity has taken place in January and the same has been reported in the
return/statement/report filed IN the month of February (interest would become payable from 21st February
in this case).

In view of the above assumptions, following alternative answers are possible:

Alternative 1- Where amount of ` 12 lakh is assumed to be the value of suppression and tax rate assumed to
be 18%*
Tax, interest and penalty payable before the issue of the SCN: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short-paid tax and applicable interest before the issuance of
show cause notice, penalty equal to 15% of such tax is payable.
Value suppressed = ` 12,00,000 Tax @ 18% = ` 2,16,000
Interest = ` 2,16,000 × 18% × 90/365 = ` 9,587 (rounded off) [From 21st January to 20th April]**

* Any other tax rate may also be assumed. Answer will change accordingly.
** It has been assumed that the information has been suppressed in the return/statement/report filed in the
month of January and thus, interest would become payable from 21st January in this case.
OR
Interest = ` 2,16,000 × 18% × 59/365 = ` 6,285 (rounded off) [From 21st February to 20th April]*
Penalty = ` 2,16,000 × 15% = `32,400
Tax, interest and penalty payable after the adjudication order: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short-paid tax and applicable interest after 30 days of
communication of the adjudication order penalty equal to 100% of such tax is payable.
Value suppressed = ` 2,00,000 Tax @ 18% = ` 36,000
Interest = ` 36,000 × 18% × 158/365 = ` 2,805 (rounded off) [From 21st January to 27th June]**
OR
Interest = ` 36,000 × 18% × 127/365 = ` 2,255 (rounded off) [From 21st February to 27th June]***
Penalty = `36,000 x 100% = 36,000

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Alternative 2- Where amount of ` 12 lakh is assumed to be the suppressed amount of tax

Tax, interest and penalty payable before the issue of the SCN: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short-paid tax and applicable interest before the issuance of
show cause notice, penalty equal to 15% of such tax is payable.
Tax payable = ` 12,00,000
Interest = ` 12,00,000 × 18% × 90/365 = ` 53,260 (rounded off) [From 21st January to 20th April] ****

* It has been assumed that suppression activity has taken place in January and the same has been reported
in the return/statement/report filed in the month of February and thus, interest would become payable
from 21st February in this case.
*It has been assumed that the information has been suppressed in the return/statement/report filed in the
month of January and thus, interest would become payable from 21st January in this case.
*** It has been assumed that suppression activity has taken place in January and the same has been
reported in the return/statement/report filed in the month of February and thus, interest would become
payable from 21st February in this case.
****It has been assumed that the information has been suppressed in the return/statement/report filed in
the month of January and thus, interest would become payable from 21st January in this case.
OR
Interest = ` 12,00,000 × 18% × 59/365 = ` 34,915 (rounded off) [From 21st February to 20th April] *
Penalty = ` 12,00,000× 15% = `1,80,000
Tax, interest and penalty payable after the adjudication order: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short- paid tax and applicable interest after 30 days of
communication of the adjudication order penalty equal to 100% of such tax is payable.
Tax payable = ` 2,00,000
Interest = ` 2,00,000 × 18% × 158/365 = ` 15,584 (rounded off) [From 21st January to 27th June]1**
OR
Interest = ` 2,00,000 × 18% × 127/365 = ` 12,526 (rounded off) [From 21st February to 27th June] ***
Penalty = ` 2,00,000
*It has been assumed that suppression activity has taken place in January and the same has been
reported in the return/statement/report filed in the month of February and thus, interest would become

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payable from 21st February in this case.

** It has been assumed that the information has been suppressed in the return/statement/report filed in
the month of January and thus, interest would become payable from 21st January in this case.
*** It has been assumed that suppression activity has taken place in January and the same has been
reported in the return/statement/report filed in the month of February and thus, interest would become
payable from 21st February in this case.

QUS.13 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.

QUS.14 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 suchVperson.
(b) Recovery by way of detaining and selling any goods belonging to such person;
I 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 amountpayable 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

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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 [Section79].

QUS.15 Inoba Bhave is engaged in supply of taxable services. He supplies some services in the month of April and
collects IGST of ` 15,50,000 on said supply on 18th April. However, he fails to pay the tax so collected within
30 days from the due date of payment of such tax.
No Show Cause Notice (SCN) has been issued to him so far. Inoba Bhave decides to discharge his tax liability,
before the SCN is issued to him. He is of the view that no penalty is leviable if the payment of tax is made
before issue of SCN.
Therefore, he self-assesses his tax liability at ` 15,50,000 and pays the same on 26th June. Determine the
interest and penalty, if any, payable by Inoba Bhave. (RTP MAY 20)

ANS- Due date for payment of tax collected on 18th April is 20th May. However, since tax is actually paid on 26th
June, 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:
= ` 15,50,000 × 18% × 37/365 = ` 28,282 (rounded off)

The provisions of section 73(11) of the CGST Act, 2017 can be invoked only when the provisions of section 73
are invoked and the provisions of section 73 are generally not invoked in case of delayed filing of the return
in Form GSTR‐3B because tax along with applicable interest has already been paid.

Thus, penalty under the provisions of section 73(11) is not payable in such cases although a general penalty
may be imposed since the tax has been paid late in contravention of the provisions of the CGST Act, as
clarified vide Circular No. 76/50/2018 GST dated 31.12.2018.

QUS.16 A taxpayer has suppressed certain facts resulting in short payment of tax. The mistake is pointed out by the
Department, but no show cause notice (SCN) has been issued. As per the taxpayer, suppression is accepted
at ` 12,00,000 and he agrees that the suppression has taken place in the month of January, 2019. He clears
the dues on 20th April, 2019. However, the Department, on verification, identifies additional suppression of

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`2,00,000 in the same month of January, 2019. SCN is issued and the taxpayer represents before the proper
officer, which results into an adverse order against the taxpayer. The order is passed on 25.05.2019 and the
taxpayer complies with the adverse adjudication order on 27.06.2019.
Determine the tax, interest and penalty payable at each stage. (Nov 19 Exam)

ANS Note: In the given question, suppression accepted at ` 12 lakh may be assumed to be either the value or the
tax amount. Further, where the amount of ` 12 lakh is assumed to be the value of suppression, rate for tax
payable would also need to be assumed.
Further, as per explanation 2 to section 74 of the CGST Act, 2017, the expression “suppression”
the return, statement, report or any other document furnished under this Act or the rules made thereunder,
or failure to furnish any information on being asked for, in writing, by the proper officer. Therefore, the
question can be answered either by assuming that the information has been suppressed in the
return/statement/report filed IN the month of January (interest would become payable from 21st January in
this case) or by assuming that suppression activity has taken place in January and the same has been
reported in the return/statement/report filed IN the month of February (interest would become payable
from 21st February in this case).

In view of the above assumptions, following alternative answers are possible:

Alternative 1- Where amount of `12 lakh is assumed to be the value of suppression and tax rate assumed to
be 18%11
Tax, interest and penalty payable before the issue of the SCN: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short-paid tax and applicable interest before the issuance of
show cause notice, penalty equal to 15% of such tax is payable.
Value suppressed = ` 12,00,000 Tax @ 18% = ` 2,16,000 Interest = ` 2,16,000 × 18% × 90/365 = ` 9,587
(rounded off)
[From 21st January to 20th April]12
11 Any other tax rate may also be assumed. Answer will change accordingly. 12 It has been assumed that
the information has been suppressed in the return/statement/report filed in the month of January and
thus, interest would become payable from 21st January in this case.
OR

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Interest = ` 2,16,000 × 18% × 59/365 = ` 6,285 (rounded off) [From 21st February to 20th April]*
Penalty = ` 2,16,000 × 15% = `32,400
Tax, interest and penalty payable after the adjudication order: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short-paid tax and applicable interest after 30 days of
communication of the adjudication order penalty equal to 100% of such tax is payable.
Value suppressed = ` 2,00,000 Tax @ 18% = ` 36,000
Interest = ` 36,000 × 18% × 158/365 = ` 2,805 (rounded off) [From 21st January to 27th June]**
OR
Interest = ` 36,000 × 18% × 127/365 = ` 2,255 (rounded off) [From 21st February to 27th June]***
Penalty = `36,000 x 100% = 36,000
Alternative 2- Where amount of ` 12 lakh is assumed to be the suppressed amount of tax
Tax, interest and penalty payable before the issue of the SCN: In case of short payment of tax by reason of
suppression of facts, if the taxpayer pays such short-paid tax and applicable interest before the issuance of
show cause notice, penalty equal to 15% of such tax is payable.
Tax payable = ` 12,00,000
Interest = ` 12,00,000 × 18% × 90/365 = ` 53,260 (rounded off) [From 21st January to 20th April] ****
* It has been assumed that suppression activity has taken place in January and the same has been reported
in the return/statement/report filed in the month of February and thus, interest would become payable
from 21st February in this case.
** It has been assumed that the information has been suppressed in the return/statement/report filed in the
month of January and thus, interest would become payable from 21st January in this case.
*** It has been assumed that suppression activity has taken place in January and the same has been reported
in the return/statement/report filed in the month of February and thus, interest would become payable
from 21st February in this case.
**** It has been assumed that the information has been suppressed in the return/statement/report filed in
the month of January and thus, interest would become payable from 21st January in this case.
OR
Interest = ` 12,00,000 × 18% × 59/365 = ` 34,915 (rounded off) [From 21st February to 20th April] *
Penalty = ` 12,00,000× 15% = `1,80,000
Tax, interest and penalty payable after the adjudication order: In case of short payment of tax by reason of

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suppression of facts, if the taxpayer pays such short-paid tax and applicable interest after 30 days of
communication of the adjudication order penalty equal to 100% of such tax is payable.
Tax payable = ` 2,00,000
Interest = ` 2,00,000 × 18% × 158/365 = ` 15,584 (rounded off) [From 21st January to 27th June]**
OR
Interest = ` 2,00,000 × 18% × 127/365 = ` 12,526 (rounded off) [From 21st February to 27th June] ***
Penalty = ` 2,00,000
* It has been assumed that suppression activity has taken place in January and the same has been reported
in the return/statement/report filed in the month of February and thus, interest would become payable
from 21st February in this case.
**It has been assumed that the information has been suppressed in the return/statement/report filed in the
month of January and thus, interest would become payable from 21st January in this case.
*** It has been assumed that suppression activity has taken place in January and the same has been
reported in the return/statement/report filed in the month of February and thus, interest would become
payable from 21st February in this case.

QUS.17 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- 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.

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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.

QUS.18 On 05.07.2019, 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, 2019 and also interest of `50,000.
Mr. Sharma raised objections and after personal hearing on 30.08.2019, 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 02.09.2019 and informed the department on the same day.
Subsequently, on 15.09.2019, 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. (MTP NOV 20)

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.

QUS.19 Mr. Jagjeevan has filed Form GSTR 3B after the due date prescribed for filing it. The adjudicating authority is
of the opinion that penalty has to be levied under section 73(9) & (11) of the CGST Act, 2017 and has decided
to pass an order for levyingpenalty of 10% of the tax or ` 10,000, whichever is higher, on the grounds that

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amountcollected as tax has not been paid within a period of 30 days from the due date of payment of tax.
Discuss the decision of the adjudication authority as to its correctness or otherwise.
Also, discuss the law of limitation period for issuing the show cause notice and passing the adjudication
order under section 73 of the CGST Act, 2017. (Nov 20 exam)

ANS The decision of the adjudicating authority is not correct in law.

The provisions of section 73(11) of the CGST Act, 2017 can be invoked only when the provisions of section 73
are invoked and the provisions of section 73 are generally not invoked in case of delayed filing of the return
in Form GSTR‐3B because tax along with applicable interest has already been paid.

Thus, penalty under the provisions of section 73(11) is not payable in such cases although a general penalty
may be imposed since the tax has been paid late in contravention of the provisions of the CGST Act, as
clarified vide Circular No. 76/50/2018 GST dated 31.12.2018.
The time-limit for issuance of SCN is 2 years and 9 months and time-limit for passing the adjudication order is
within 3 years from:
(i) the due date of filing annual return for the financial year to which the demand pertains or
(ii) the date of erroneous refund, as the case may be.

QUS.20 Jaiveer & Co. self-assessed its tax liability as Rs. 1,17,000 for the month of April, but failed to make the
payment.
Subsequently the Department initiated penal proceedings against Jaiveer & Co. for recovery of penalty under
section 73 of the CGST Act, 2017 for failure to pay GST and issued show cause notice on 10th August which
was received by Jaiveer & Co. on 14th August.
Jaiveer & 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 Rs. 58,500 (i.e. 50% ofRs. 1,17,000).

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.

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ANS Due date for payment of tax for the month of April is 20th May.
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 Rs. 10,000, whichever is higher, is payable. Thus,
option to pay tax within 30 days of issuance of show cause notice to avoid penalty, is not available in case of
self- assessed tax.

Since in the given case, Jaiveer & 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., Rs. 11,700 (10% of Rs. 1,17,000) or
(ii) Rs. 10,000,
whichever is higher, is payable by him. Thus, penalty payable is Rs. 11,700.

Hence, the stand taken by the Department that penalty will be levied on Jaiveer & Co. is correct, but the
amount of penalty of Rs. 58,500 is not correct.

QUS.21 Shubi 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 Shubi 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 show cause notice(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

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determined alongwith interest at the rate specified under section 50 of the CGST Act, 2017 from the date
such amount was collected by him to the date such amount is paid by him to the Government.

QUS.22 Mohan Enterprises is entitled for exemption from tax under GST law. However, it collected tax from its
buyers worth ` 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, butnot
depositing the same with Government as provided under section 76.

ANS It is mandatory to pay amount, collected from other person representing tax under GST law, to the
Government. Every person who has collected fromany other person any amount as representing the tax
under GST law, andhas 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 recoveryof 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 fromsuch person and thereupon such person shall pay the amount so
determined alongwith interest at the rate specified under section 50 from the date such amount was
collected by him to the date such amount is paidby him to the Government.

QUS. Discuss the amount of tax and penalty to be paid, if any, in the following independent cases where show
cause notices are issued under section 74 of the CGST Act, 2017.

S.No. Date on which credit Amount of input tax credit Present status
was taken wrongly taken wrongly (` in lakh)
1 31st January, 2018 200 Adjudication order passed on 26th July,
2020 demanding the entire amount of
credit with interest and imposing amount
equal to the credit as penalty.

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2 30th June, 2018 250 Adjudication order passed on 26th

August, 2020 demanding the entire
amount of credit with interest and
imposing amount equal to the credit as
penalty.
3 30th October, 2018 120 Show cause notice has been issued on 5th
September, 2020 demanding the entire
amount of credit with interest and
proposing penalty equal to 100% of the
credit taken.
4 30th January, 2019 50 Statement of the Managing Director has
been recorded on 6th September, 2020
wherein he has admitted the non-receipt
of the inputs and availing the credit
wrongly.
Note: In all the cases, assessee wants to pay the amount on 20-09-2020. (5 Marks)

(b) Discuss the validity of the following independent cases under the provisions of CGST Act, 2017:

(i) CGST officer had issued a notice under section 74(1) against which appeal was preferred by the assesse.
Appellate Authority concluded that the notice issued under section 74(1) was not sustainable for the
reason that charges of fraud had not been established. Now the officer wishes to determine the tax
payable by treating the said notice as if it was issued under section 73(1). Is the action of the officer valid ?

(ii) CGST officer issued an adjudication order which did not specify payment of interest on the tax short paid
by the registered person. So, the assesse contends that interest cannot be demanded as the said order is
silent on the same. Is the contention of the assesse correct? (4 Marks)

ANS-(a) S.No. Date on which credit Amount of ITC wrongly Tax & penalty under section 74
was taken wrongly taken (` in lakh)

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1 31st January 2018 200 Adjudication order is passed on 26th July,

2020 and payment is made on 20.09.2020
i.e., after 30 days of the communication of
the adjudication order5. Therefore, entire
amount of ITC wrongly availed which is
` 200 lakh and equal amount of penalty i.e.,
` 200 lakh shall be payable.
2 30th June 2018 250 Adjudication order is passed on 26th
August, 2020 and payment is made on
20.09.2020 i.e., within 30 days of the
communication of the adjudication order6.
Therefore, entire amount of ITC wrongly
availed which is ` 250 lakh and 50% of the
penalty imposed i.e., ` 125 lakh shall be
payable.
3 30th October 2018 120 Show cause notice is issued on 5th
September 2020 and payment is made on
20.09.2020 i.e., within 30 days of issue of
show cause notice. Therefore, entire
amount of ITC wrongly availed which is
` 120 lakh and 25% of the penalty imposed
i.e., ` 30 lakh shall be payable.
4 30th January 2019 50 Alternative-I: It is assumed that payment
has been made within 30 days of issue of
show cause notice.
Entire amount of ITC wrongly availed which
is ` 50 lakh and 25% of the penalty imposed
i.e., ` 12.5 lakh shall be payable.
Alternative-II: It is assumed that show
cause notice has not yet been issued.

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Payment made on 20.09.2020 is before

issuance of show cause notice. Therefore,
amount of ITC admitted to be taken
wrongfully which is ` 50 lakh and penalty
equal to 15% of such ITC i.e., ` 7.5 lakh shall
be payable.

(b) (i) Valid. As per section 75 of the CGST Act, 2017, if the Appellate Authority concludes that the
notice issued under section 74(1) is not sustainable for the reason that the charges of fraud has not
been established, the proper officer can determine the tax payable by deeming as if the notice was
issued under section 73(1).
(ii) Incorrect. As per section 75 of the CGST Act, 2017, the interest on the tax short paid or not paid
shall be payable whether or not the same is specified in the order determining the tax liability.

QUS. Mr. Arihant is engaged in supply of taxable goods and is registered in the State of Orissa. A demand notice
under GST law of ` 50 lakh is served on him on 5th April. On 10th April, despite having knowledge of said
notice, Mr. Arihant transferred his ancestral property located in Punjab in the name of his wife Soma for a
consideration of ` 2 lakh without taking any permission from the authorities under GST. The value for the
purpose of stamp duty valuation was ` 80 lakh.

Subsequently, he filed a reply to said demand notice on 15th April stating that he would not be able to pay
the amount of tax demanded in the notice due to his distressed financial situation.
Determine the validity of the act of transferring of property by Mr. Arihant to his wife Soma, under the
provisions of the GST law.

ANS- Section 81 of the CGST Act, 2017 stipulates that where a person, after any amount has become due from
him, creates a charge on or parts with the property belonging to him or in his possession by way of sale,
mortgage, exchange, or any other mode of transfer whatsoever of any of his properties in favour of any
other person with the intention of defrauding the Government revenue, such charge or transfer shall be void
as against any claim in respect of any tax or any other sum payable by the said person.
However, such charge or transfer shall not be void if it is made for adequate consideration, in good faith and

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without notice of the pendency of such proceedings under this Act or without notice of such tax or other
sum payable by the said person, or with the previous permission of the proper officer.
In view of the above provisions, in the given case, transfer of property by Mr. Arihant to his wife Soma is void
and the property will still be considered in the hands of Mr. Arihant under GST law for the purpose of
recovery of dues under GST from him.

QUS. In the month of March 2021, during the course of Departmental GST audit under section 65 of the CGST Act,
2017 of Always Right Private Limited, audit team observed that input tax credit claimed by the company was
blocked under section 17(5) of the CGST Act, 2017. Audit memo was given to the company for submission of
reply on the audit observations mentioned in the memo. Company submitted its reply contending that the
said credit was not blocked under section 17(5) and had been rightly claimed. Department was not satisfied
with the reply submitted by the company. Audit team served a show cause notice under section 74 of the
CGST Act, 2017 and transferred the matter to adjudicating officer and also started recovery process under
sections 78 and 79 of the CGST Act, 2017 for recovery of the input tax credit wrongly availed.
You are required to comment whether action of the Department to recover the amount is justified with the
reference to the legal provisions of the GST law. (4 Marks)

ANS- The action of the Department to initiate the recovery proceedings without adjudication order being passed
is not valid.
Recovery proceedings can be initiated under GST law if a taxable person fails to pay any amount payable in
pursuance of an order passed under this law within a period of 3 months (or reduced period by proper
officer) from the date of service of such order.
However, in the given case, the recovery proceedings have been initiated only after serving the show cause
notice and transferring the matter to the adjudicating officer. The adjudication order has not yet been
passed in the given case.

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APPEALS AND REVISIONS

QUS.1 In an order dated 20.08.20XX issued to GH (P) Ltd., the Joint Commissioner of CGST has confirmed a IGST
demand of ` 280 crore. The company is disputing the entire demand of IGST and wants to know how much
pre- deposit it has to make under the IGST 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 IGST Act, 2017 for filing the said appeal?

ANS- Section 107(6) of the CGST Act, 2017 read with section 20 of 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 anappeal with Appellate Authority cannot exceed ` 50 crore.

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) 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 ` 100 crores.

Thus, in the given case, the amount of pre-deposit for filing an appeal with the Appellate Tribunal against the

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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.

QUS.2 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
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).

QUS.3 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 as referred to insection 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 581tiliz. 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-

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(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.
I the order has already been taken up for revision under this section at any earlier stage.
(d) the order is a revisional order.

QUS.4 Mr. A had filed an appeal before the Appellate Tribunal against an order of the Appellate Authority where
the issue involved relates 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.

QUS.5 Pursuant to audit conducted by the tax authorities under section 65 of the CGST Act, 2017, 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, 20XX. In the absence of a satisfactory
reply from Home Furnishers, Joint Commissioner of Central Tax passed an adjudication order dated

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20.08.20XX (received by Home Furnishers on 22.08.20XX) confirming a tax demand of ` 50,00,000 and
imposing a penalty of equal amount under section 122 of the CGST Act, 2017.

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- 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) of the CGST Act]. 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) of the CGST Act]. Thus, Home Furnishers can file the appeal to Appellate Authority on or
before 22.11.20XX. 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 so as to
ensure that if a proper officer of one Act (say CGST) passes an order with respect to a transaction, he will
also act as the proper officer of SGST for the same transaction and issue the order with respect to the CGST
as well as the SGST/ UTGST component of the same transaction.

The law further 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
only (CGST Act). Similarly, if any order is passed by the proper officer of SGST, any appeal/ review/ revision/

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rectification will lie with the proper officer of SGST only. 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) of the CGST Act 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 twenty-five crore rupees.

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.

QUS.6 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- (1) 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.
(2) 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.
(3) 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 (onaccount of monetary limits).
(4) 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.

Qus.7 XY Company received an adjudication order passed by the Assistant Commissioner of Central Tax on 01-11-
20XX under section 73 of the CGST Act, 2017 wherein it was decided as follows
Particulars
CGST due ` 6,00,000

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Interest @ 18% p.a. for number of delayed days

Penalty `60,000
The assessee filed an appeal before the Appellate Authority on 26-11- 20XX.Case I
How much the company has to pay as pre-deposit of tax under section 107(6) of the CGST Act, 2017?

Case II
Whether your answer would be different if the assessee appeals only against part of the demanded amount
say ` 4,00,000 and admits the balance liability of tax amounting to ` 2,00,000 arising from the said order.

ANS- Section 107(6) of the CGST Act, 2017 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 twenty-five
crore rupees, in relation to which the appeal has been filed.
Thus, in Case-I, XY Company has to make a pre-deposit of 10% of ` 6,00,000, which is ` 60,000 assuming that
XY Company disagrees with the entire tax demanded.

However, in Case-II, since XY Company admits the CGST liability of ` 2,00,000 and disputes the tax demanded
of only `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.

QUS.8 Rule 112 of the CGST Rules lays down that the appellant shall not be allowed to produce before the
Appellate authority (AA) or the Tribunal any evidence, whether oral or documentary, other than the
evidence produced by him during the course of the proceedings before the adjudicating authority or, as the
case may be, the AA.

What are the exceptional circumstances specified in the rule where the production of additional evidence
will be allowed? Can AA or the Tribunal direct production of any document or examination of any witness?

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ANS- Exceptional circumstances specified in rule 112 of the CGST Rules, 2017 where the production of additional
evidence will be allowed are as follows:
(a )where the adjudicating authority/ appellate authority (AA) has refused to admit evidence which ought to
have been admitted.
(b) where the appellant was prevented by sufficient cause from producing the evidence which he was called
upon to produce by the adjudicating authority/ AA.
where the appellant was prevented by sufficient cause from producing before the adjudicating authority/
AA any evidence which is relevant to any ground of appeal; or
(d) where adjudicating authority/ AA has made the order appealed against without giving sufficient
opportunity to the appellant to adduce evidence relevant to any ground of appeal.

Yes, the AA or the Tribunal can direct the production of any document or examination of any witness to
enable it to dispose of the appeal.

QUS.9 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).

QUS.10 Explain briefly the provisions regarding mandatory pre-deposit to be made before filing an appeal before
Appellate Authority and Tribunal as per CGST Act, 2017.

ANS- As per section 107(6) of the CGST Act, 2017, no appeal shall be filed before Appellate Authority, unless the

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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 twenty five
crore rupees.1

Section 112(8) of the CGST Act, 2017 provides that no appeal shall be filed before Tribunal, unless the
appellant pays:-
(a) in full, tax, interest, fine, fee and penalty arising from impugned order, as is admitted by him, and
(b) 20% of the remaining tax in dispute [in addition to amount deposited before Appellate Authority] arising
from the order appealed against subject to a maximum of fifty crore rupees2.
On making the pre-deposit as above, the recovery proceedings for the balance amount shall be deemed to
be stayed till the disposal of the appeal.

QUS.11 The original adjudicating authority confirmed a demand of GST of ` 42,50,000 with interest and imposed a
penalty of ` 4,25,000 in its order dated 1stMarch, 20XX. The assessee filed an appeal before appellate
authority challenging the demand as well as penalty. The internal audit party, after an audit of the records of
the assessee, submitted a note to the Commissioner that actual amount demanded should have been `
48,50,000. While the issue was pending before the appellate authority, based on the note, the Commissioner
stayed the order of the original authority and issued a show cause notice on 15thSeptember, 20XX,
proposing revision of the order of the original authority and revise the demand on the basis of the audit
note. Examine the correctness of the action taken by the Commissioner in accordance with the provisions of
GST law.

ANS- As per section 108 of the CGST Act, 2017, Revisional Authority cannot revise an order if, inter alia, such order
has been subject to an appeal before Appellate Authority or Tribunal or High Court or Supreme Court.

The Revisional Authority may, however, pass an order on any point which has not been raised and decided in
an appeal before Appellate Authority/Tribunal/High Court/Supreme Court.
In the given case, the Commissioner wants to revise the order on the point which is the subject matter in the
appeal.

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Therefore, the Commissioner cannot exercise the power of revision in respect of such order.

Note: It is assumed that the given rectification is not an error which is apparent on the face of record.
However, if the rectification is done on the base of error which is apparent on the face of record, Section 161
of CGST Act 2017 shall apply and rectification order may be passed by the commissioner instead of
revisionary authority.
 It has been logically assumed that the revision is on the point which is the subject matter in appeal in the
absence of the specific mention of the issue involved.

QUS.12 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 anappeal before the appellate forum higher
than the AppellateTribunal.

ANS- As per section117(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 persection 109(5) of the CGST Act, only the National Bench or
RegionalBenches of the Tribunal can decide appeals where one of the issues involved relates to the place
of supply.

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Since the issue involved in Hariharan’scase 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.

QUS.13 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. ?
(Jan 21 exam)

ANS- (i) Yes, Anirudh Ltd. Can file an appeal against the order of the first Appellate Authority to the Appellate
Tribunal. National Bench/ Regional Benches of the Tribunal will have jurisdiction to hear the appeal as place
of supply is one of the issues in dispute.
(ii) No, Authority can’t insist, because once a valid appeal is filed i.e., on payment of requisite pre-deposit,
the recovery proceedings for the balance amount of the demand in dispute gets stayed till the disposal of
appeal.
(iii) Yes, Anirudh Ltd. Can file another appeal against the decision of the National Bench/Regional Bench of

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the Tribunal, directly before the Supreme Court.

(iv) No, there will be no interest liability on Anirudh Ltd. If it loses at all levels. A registered person who has
paid IGST on a transaction considered by him to be an inter-State supply, but which is subsequently held to
be an intra-State supply, is not required to pay any interest on the amount of CGST and SGST payable
because there is no shortfall of overall tax amount.

QUS.14 Mr. Mahendran is aggrieved by the order of the Revisional Authority (RA) and wants to make an appeal to
the First Appellate Authority. While commenting on the decision of Mr. Mahendran, you are also required to
state thepowers of the Revisional Authority to revise the orders passed by the subordinate officers under
section 108 of the CGST Act, 2017.

What is the time period for the Revisional Authority to exercise the power of revision? (Nov 20 exam)

ANS- The decision of Mr. Mahendran of making an appeal to the First Appellate Authority against the order of the
RA is not valid in law. Any person aggrieved by an order passed against him by RA under CGST Act may
appeal to the Appellate Tribunal, the second level of appeal

The powers of the RA to revise the orders passed by the subordinate officers under section 108 of the CGST
Act, 2017 are as under: -
(i) The RA may, on his own motion, or upon information received by him or on request from the SGST/
UTGST Commissioner, call for and examine the record of any proceedings.
(ii) On examination of the case records, if RA is of the view that the decision/order passed by any officer
subordinate to him is erroneous and illegal/improper or has not taken into account material facts, he may
stay the operation of such order for such period as he deems fit.
(iii) The RA, after giving the person concerned an opportunity of being heard and after making necessary
further inquiry, pass such order, as he thinks just and proper, including enhancing or modifying or annulling
the said order.

The RA can revise an order after the expiry of a period of 6 months from the date of communication of the
said order but not later than expiry of a period of 3 years from the passing of the said decision/order.

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In case of an order subject to an appeal before Appellate Authority (AA)/Tribunal/High Court/ Supreme
Court, the RA can pass an order on any point which has not been raised and decided in the appeal, before
the expiry of a period of 1 year from the date of the order in such appeal or before the expiry of a period of 3
years from the date of initial order, whichever is later.

QUS.15 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].

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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.

QUS.16 Ms. Kiya had filed an appeal before the Appellate Tribunal against an order of the Appellate Authority
where the issue involved relates to place of supply. The order of Appellate Tribunal is also in favour of the
Department. Ms. Kiya now wants to file an appeal against the decision of the Appellate Authority as she feels
the stand taken by her is correct.

You are required to advise her 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 would lie 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 would lie
to the Supreme Court and not High Court. As per section 109(5) of the CGST Act 2017, 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 Ms. Kiya’s case relates to place of supply, the appeal in her case would have been
decided by the National Bench or Regional Bench of the Tribunal. Thus, Ms. Kiya will have to file an appeal
with the Supreme Court and not with the High Court.

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QUS.17 Mr. Anni had filed an appeal before the Appellate Tribunal against an order of the Appellate Authority where
the issue involved relates to place of supply. The order of Appellate Tribunal is also in favour of the
Department. Mr. Anni 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 appellateforum 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 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 Mr. Anni’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.Anni will have to file
an appeal with the Supreme Court and not with the High Court.

QUS.18 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 JointCommissioner 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 shallbe filed with the Appellate

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Authority unless the applicant has paid in full, such I 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 oftax 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 I 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.

QUS. 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-

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GST 595

deposit by the appellant.

However, no appeal can be filed against the following orders in terms of section 121:
(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, register and other documents; or
(c) an order sanctioning prosecution under the Act; or
(d) an order passed under section 80 (payment of tax in installments).

QUS. Describe the provisions relating to Departmental appeal to Appellate Authority under section 107.

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.

QUS. 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

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GST 596

• 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 ₹ 50,000.

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GST 597

ACCOUNTS AND RECORES; E-WAY BILL

QUS.1 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 Prasannaa in Delhi, goods are transported to Prasannaa 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).

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GST 598

ANS- (i) (a) Rule138(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)].
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GST 599

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)].

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)].

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,
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GST 600

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 Electricals 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.

QUS.2 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
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GST 601

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 X
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.

QUS.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
(iii) 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 e-way bill shall be generated by the said person irrespective of the
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GST 602

value of the consignment.

QUES.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 taxperiod.

QUS.5 Mr. Bala, a registered person at Chennai wants to maintain proper accounts and records relating to GST.
Advise him about the accounts and other records to be maintained under section 35(1) of the CGST Act,
2017.

ANS- Mr. Bala, is required to maintain a true and correct account of following under section 35(1) of the CGST Act,
2017:-
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
I stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) other prescribed particulars
The records may be maintained electronically. Where more than one place of business is specified in the
certificate of registration, the accounts relating to each place of business should be kept at such places of
business.
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GST 603

QUS. (a) M/s. ABC Manufacturers, registered in West Bengal, sold air-conditioner to a retail seller in
Bhubaneswar, at a value of ` 49,000 (excluding GST leviable @ 18%). Now, it wants to send the consignment
of air-conditioning machine to the retail seller in Bhubaneswar. You are required to advise M/s. ABC
Manufacturers on the following issues along with suitable explanations:
(i) Whether e-way bill is mandatorily required to be generated?
(ii) What will be the consequence for non-issuance of e-way bill? (Jan 21 exam)

ANS- (a) (i) E-way bill is mandatorily required to be generated whenever there is a movement of goods of
consignment value exceeding ` 50,000, inter alia, in relation to a supply.
Consignment value of goods includes the central tax, State/Union territory tax, integrated tax and cess
charged, if any.

Thus, the consignment value of goods, in the given case, will be ` 57,820 [` 49,000+ (` 49,000 ×18%)].
Since in the given case 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 generated in respect of movement of goods from
West Bengal to Bhubaneswar.

(ii) Non-issuance of e-way bill may result in the following consequences:

(a) imposition of penalty of ` 10,000/- or tax sought to be evaded (wherever applicable), whichever is greater
(b) detention and seizure of goods and the conveyance used to transport the said goods and the same will
be released only on payment of appropriate tax and penalty
I confiscation of goods and the conveyance used to transport the said goods if the tax and penalty is not
paid within 14 days of detention or seizure

QUS. Whether the transporters, who are not registered under the GST, are required to maintain any records under
the provisions of CGST Act, 2017? Also explain, if any other unregistered persons who are required to
maintain records under GST. (Jan 21 exam)

ANS- The transporters, who are not registered under GST, shall obtain a unique enrollment number on GST
common portal and maintain records of goods transported, deliveredand goods stored in transit by them
along with GSTIN of the registered consignor and consignee for each of his branches.
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GST 604

Every owner or operator of warehouse/godown/any other place used for storage of goods, even if
unregistered, is also required to maintain records under GST.

QUS. Orip 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 Rs.
60,000. Orip 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 generatedin this case.
You are required to examine the technical veracity of the claim made by Orip Electricals Ltd.

ANS- 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:
(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 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 Rs. 50,000, e-way bill is requiredto be
mandatorily generated. Therefore, the claim of Orip Electricals 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.

QUS. 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 Rs. 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,
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GST 605

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 Rs. 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 e- way bill shall be generated by the said person irrespective of the
of the value of the consignment.

QUS. Decide with reason whether e-way bill is required to be issued under CGST Act, 2017 in the following
independent cases:
(a) Square Ltd., registered in Andhra Pradesh, sends goods to its job worker Cube & Co. in Karnataka, which
is also registered under GST. Value of the consignment was ` 45,000 (including GST). (2 Marks)

(b) Mr. Bheeshma of Telangana started doing business in notified handicraft products as a casual taxable
person. He got his first order of ` 30,000 from Tamil Nadu which he transports. He is not registered under
GST since he has a threshold limit of ` 20 lakh. (2 Marks)

ANS- (a) E-way bill is mandatorily required to be issued in case of inter-State transfer of goods by
principal to job-worker, irrespective of the value of the consignment.
In view of the same, e-way is mandatorily required to be issued in the given case.

(b) E-way bill is mandatorily required to be issued in case of inter-State transfer of handicraft goods
by a person exempted from obtaining registration.

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GST 606

In view of the same, e-way bill is mandatorily required to be issued in the present case.

QUS. List any four records required to be maintained by an agent under the CGST Rules, 2017. (4 Marks)

ANS- 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.

QUS. 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 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.

QUS. 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).
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GST 607

ANS- Rule 56(11) 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.

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GST 608

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GST 609

INSPECTION, SEARCH, SEIZURE AND ARREST

QUS.1 Explain the situation in which access to business premises is allowed under section 71 of the CGST Act, 2017?
Also, list the records which are to be produced during access to business premises?

ANS- During the course of any enquiry under this Act, the duly empowered officer can have access to any business
premises, which may be required for the purpose of such enquiry. During such access, the officers can
inspect the books of accounts, documents, computers, computer programs, computer software and such
other things as may be required.

It is the duty of the persons in charge of such premises to furnish the required documents. Similarly, the
persons in charge of business premises are also duty bound to furnish such documents to the audit party
deputed by the proper officer or the Chartered Accountant or Cost Accountant, who has been deputed by
the Commissioner to carry out special audit. The following records are covered by this provision and are to
be produced, if called for.
(i) the records prepared and maintained by the registered person and declared to the proper officer in the
prescribed manner.
(ii) trial balance or its equivalent.
(iii) statements of annual financial accounts, duly audited.
(iv) cost audit report, if any.
(v) the income – tax audit report, if any.
(vi) any other relevant record.

QUS.2 Explain the safeguards provided under section 69 of CGST Act, 2017, to a person who is placed under arrest?

ANS- Section 69 of CGST Act, 2017 provides following safeguards to a person who is placed under arrest:
(a) If a person is arrested for a cognizable offence, he must be informed of the grounds of arrest and be
produced before a magistrate within 24 hours.
(b) If a person is arrested for a non-cognizable offence, he shall be admitted to bail or in default of bail,

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GST 610

forwarded to the custody of the Magistrate.

I All arrest must be in accordance with the provisions of the Code of Criminal Procedure relating to arrest
in terms of section 69(3) ofCGST Act, 2017.

QUS. Who can order for carrying out ‘inspection’ and under what circumstances?

ANS- As per section 67, inspection can be carried out by an officer of CGST/SGST only upon a written authorization
given by an officer of the rank of Joint Commissioner or above. A Joint Commissioner or an officer higher in
rank can give such authorization only if he has reasons to believe that the person concerned has done one of
the following:
i. suppressed any transaction of supply;
ii. suppressed stock of goods in hand;
iii. claimed excess input tax credit;
iv. contravened any provision of the CGST Act to evade tax;
v. a transporter or an owner/operator of a warehouse/godown/any other place 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.

QUS. Who can order for search and seizure under the provisions of the CGST Act?

ANS- An officer of the rank of Joint Commissioner or above can authorize an officer in writing to carry out search
and seize goods, documents, books or things. Such authorization can be given only where the Joint
Commissioner/an officer above his rank has reasons to believe that any goods liable to confiscation or any
documents or books or things relevant for any proceedings are hidden in any place. The Joint
Commissioner/an officer above his rank can himself search and seize such goods, documents or books or
things.

QUS. Describe the powers that can be exercised by an officer during a valid search.

ANS- An officer carrying out a search has the power to search for and seize goods (which are liable to confiscation)
and documents, books or things (relevant for any proceedings under the CGST Act) from the premises

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searched. During search, the officer has the power to break open the door of the premises authorized to be
searched if access to the same is denied. Similarly, while carrying out search within the premises, he can
break open any almirah or box if access to such almirah or box is denied and in which any goods, account,
registers or documents are suspected to be concealed. He can also seal the premises if access to it denied.

QUS. Discuss the responsibilities of the person to whom summons has been issued.

ANS- A person who is issued summon is legally bound to attend either in person or by an authorized
representative and he is bound to state the truth before the officer who has issued the summon upon any
subject which is the subject matter of examination and to produce such documents and other things as may
be required.

QUS. Explain the meaning of ‘arrest’.

ANS- The term ‘arrest’ has not been defined in the CGST Act. However, as per judicial pronouncements, it
denotes ‘the taking into custody of a person under some lawful command or authority’. In other words, a
person is said to be arrested when he is taken and restrained of his liberty by power or colour of lawful
warrant.

QUS. 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

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LIABILITY TO PAYTAX IN CERTAIN CASES

QUS.1 Discuss the liability to pay tax 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/ merged in
pursuance of an order of court or 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/ received any goods and/or
services to or from each other during the period commencing on the date from which the order takes effect
till the date 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.

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.

QUS.2 Discuss the liability to pay tax, interest or penalty on death of a person liable to pay tax, interest or penalty
as per the provisions of section 93(1) of the CGST Act, 2017.

ANS- Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person, liable to pay tax,
interest or penalty under CGST Act, dies, then:
Business is continued after his death: 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
pay tax, interest or penalty due from such person under this Act.

Business is discontinued after his death: if the business carried on by the person is discontinued, whether
before or after his death, his legal representative shall be liable to pay, out of the estate of the deceased, to
the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such
person under this Act,

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whether such tax, interest or penalty has been determined before his death but has remained unpaid or is
determined after his death.

QUS.3 With reference to the provisions of CGST Act, 2017, explain the liability of partners of firm to pay tax?

ANS- Section 90 of the CGST Act explains the liability of partners of firm to pay tax as under:-
Partners of the firm jointly and severally liable to pay any tax, interest or penalty of the firm:
Notwithstanding any contract to the contrary and any other law for the time being in force, where any firm
is liable to pay any tax, interest or penalty under this Act, the firm and each of the partners of the firm shall,
jointly and severally, be liable for such payment.

Retiring partner liable to pay any tax, interest or penalty of the firm due up to the date of his retirement:
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 and 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.

QUS.4 Explain the provisions relating to liability for GST in case of company in liquidation (section 88 of the CGST
Act, 2017).

ANS- The provisions relating to liability for GST in case of company in liquidation provided under section 88 of the
CGST Act, 2017 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

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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.

QUS.5 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 of
the CGST Act, 2017].

QUS. 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

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whomthe business is so transferred shall, jointly and severally, be liable wholly orto the extent of such
transfer, to pay the tax, interest or any penalty duefrom 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.

QUS. ABC Manufacturers Ltd. Engages Raghav & Sons as an agent to sell goods onits behalf. Raghav & Sons sells
goods to Swami Associates on behalf of ABC Manufacturers Ltd. Determine the liability to pay GST payable
on such goodsas per the provisions of section 86

ANS- Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his principal
shall, jointly and severally, be liable to pay the tax payable on such goods under this Act.

Thus, in the given case, ABC Manufacturers Ltd. And Raghav & Sons shall,jointly and severally, be liable to
pay GST payable on such goods.

QUS. 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
carriedon 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 byhis 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.

QUS. In the above question, would your answer be different if the businesscarried on by the person who has died,

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is discontinued after his death.

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 discontinued, whether
before or after his death, his legal representative shall be liable to pay, out of the estate of the deceased, to
the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such
person underthis Act, whether such tax, interest or penalty has been determined beforehis death but has
remained unpaid or is determined after his death.

QUS. 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 whichany 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 I determined and recoverable from a taxable person.

QUS. Discuss the liability of partners of firm to pay tax, interest and penalty under section 90 of the CGST Act,
2017. (4 Marks)

ANS- Where any firm is liable to pay any tax, interest or penalty under the CGST Act 2017, the firm and each of
the partners of the firm are jointly and severally liable for such payment.

Where any partner retires from the firm, he or the firm, is required to intimate the date of retirement of
the said partner to the Commissioner by a notice in writing and such partner would 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 would continue until the date on which such intimation is received by the Commissioner.

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QUS. Mr. Ajit Basu is the director of Dharma Private Limited of Kolkata for past 5 years. He resigned from the
company on 1st April of the current financial year. He receives a notice of demand on 5th July for the
recovery of tax dues of Dharma Private Limited pertaining to the preceding financial year as the said dues
cannot be recovered from the company owing to its poor financial condition. Mr. Ajit Basu is of the view
that the tax dues of Dharma Private Limited cannot be recovered from him as he is no more a director in the
company. You are required to advice him on the same taking into count the relevant provisions of the GST
law.

ANS- Section 89 of the CGST Act, 2017 stipulates that notwithstanding anything contained in the Companies Act,
2013, where any tax, interest or penalty due from a private company in respect of any supply of goods or
services or both for any period cannot be recovered, then, every person who was a director of the private
company during such period shall, jointly and severally, be liable for the payment of such tax, interest or
penalty unless he proves 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.

Thus, in the given case, since Mr. Ajit Basu was the director of Dharma Private Limited during the preceding
financial year for which the demand is raised, he shall, jointly and severally, be liable for the payment of the
tax dues unless he proves 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.

QUS. With reference to the provisions of CGST Act, 2017, explain the liability of directors of private company?

ANS- The provisions relating to liability of directors of private company are contained in section 89 of the CGST
Act. It provides that notwithstanding anything contained in the Companies Act, 2013, where any tax, interest
or penalty due from a private company in respect of any supply of goods or services or both for any period
cannot be recovered, then, every person who was a director of the private company during such period
shall, jointly and severally, be liable for the payment of such tax, interest or penalty unless he proves 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.
Where a private company is converted into a public company and the tax, interest or penalty in respect of
any supply of goods or services or both for any period during which such company was a private company

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cannot be recovered before such conversion, then, above provisions shall apply to any person who was a
director of such private company in relation to any tax, interest or penalty in respect of such supply of goods
or services or both of such private company. However, this exception does not apply to any personal penalty
imposed on such director.

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OFFENCES AND PENALTIES

QUS.1 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?
OR
Department initiated prosecution proceedings against a taxable person who had evaded GST of ` 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 ` 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? (4 Marks)

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.
OR
(b) As per section 138 of the CGST Act,2017,
the minimum limit for compounding amount is higher of the following amounts:-

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(i) 50% of tax involved,or (ii) `10,000, and

the upper limit for compounding amount is higher of the following amounts: -
(i) 150% of tax involved or
(ii) `30,000
In the present case, the minimum limit for compounding is ` 2.10 crores. [` 2.10 crores (50% x ` 4.2 crores) or
` 10,000, whichever is higher].
The maximum limit for compounding in this case is ` 6.3 crores [` 6.3 crore (150% x `4.2 crores) or ` 30,000,
whichever is higher].

Thus, the amount fixed by the Commissioner at ` 2.5 crores is within the limits prescribed under the law.
If the taxable person pays the compounding amount decided by the Commissioner, no further proceedings
shall be initiated under GST law against the accused person in respect of the same offence and any criminal
proceedings, if already initiated in respect of the said offence, shall stand abated.

QUS.2 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, Mangeshwarhas 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 belevied.

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

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(a) to section 126(1), a breach shall be considered as “minor breach”, if tax involved is less than 5,000.
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. Thus,
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 Mangeshwaras when no specific penalty is
provided for any contravention, a general penalty may be imposed

QUS.3 What are cognizable and non cognizable offence under section 132 of CGSTAct ,2017?
(a) Supply without issuance of invoice with the intention to evade tax
(b) Issuance of any invoice/bill without supply leading to wrongful availment/utilisationof 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.

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QUS.4 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;
the Central Government. It is found that he has falsified financial records and has not maintained proper
records. With the Central Government.

What will be the implications with regard to punishment on prosecution of ‘X’ and ‘Y’ for the offences? What
would be the position, if ‘X’ and ‘Y’ repeat the offences? It may be assumed that offences are proved in the
court.

ANS- (i) As per section 132(1)(d)(iii) of the CGST Act, 2017, failure to pay any as tax by ‘X’ will not be punishable
with imprisonment.

Further, falsification of financial records by ‘X’ 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.

(i) 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 ` 500 lakh in terms of section
132(1)(d)(i) of the CGST Act,2017.

Since the amount of tax evaded by ‘Y’ exceeds ` 500 lakh (` 550 lakh - ` 30 lakh), ‘Y’ is liable to imprisonment
upto 5 years and with fine. It has been assumed that amount of ` 520 lakh collected as tax is not paid to the
Government beyond 3 months from the due date of payment of tax. 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 ‘X ’and ‘Y’ 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 monthsin the absence of special and adequate reasons to the

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contrary to be recorded in the judgment.

QUS.5 From the details given below determine the maximum amount of fine in lieu of confiscation leviable under
section 130 of CGST, Act, 2017on:
(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 before 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. (5 Marks)

ANS- (i) As per section 130(2) of the CGST Act, 2017, in case of goods liable for confiscation, the maximum amount
of fine leviablein 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
Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty
equal to 100 % of the tax payable on such goods
(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

QUS.6 Sagar, managing director of Telecom Solutions Ltd., is issued a summon to appear before the central tax
officer to produce the books of accounts of Telecom Solutions Ltd. In an inquiry conducted on said company.

Determine the amount of penalty, if any, that may be imposed on Sagar, if he failsto appear before the
Central tax officer.

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ANS- 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 Rs. 25,000.Therefore,penalty upto Rs.25,000 can be
imposed on Sagar, in the given case.

QUS.7 Answer the following questions:

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 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.

(ii) Sagar, managing director of Telecom Solutions Ltd., is issued a summon to appear before the central tax
officer to produce the books of accounts of Telecom Solutions Ltd. In an inquiry conducted on said company.
Determine the amount of penalty, if any, that may be imposed on Sagar, if he fails to appear before the
Central tax officer.

ANS- (i) Where the aggregate turnover of a supplier making supplies from a State/UT exceeds `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) ` 10,000
Or
(b) an amount equivalent to the tax evaded [` 1,26,000 in the given case], whichever is higher.
Thus, the amount of penalty that can be imposed on Shagun is ` 1,26,000.

(iii) Section 122(3)(d) of the CGST Act, 2017 stipulates that any person

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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 Sagar, in the given case.

QUS.8 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 ManikaranTransporters] 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 leviableunder 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.
(2) 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 accordance 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 leviablein lieu of confiscation in termsof third proviso to section 130(2) of the CGST Act, 2017 is equal
to tax payable on the goods being transported thereon.

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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 CGSTAct, 2017,interalia, 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‘minorbreach ’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.

QUS.9 Discuss the penalty for failure to furnish information return, under section 123 of the CGST Act, 2017.

ANS- If a person who is required to furnish an information return under section 150 fails to do so within the period
specified in the notice issued under sub- section (3) thereof, the proper officer may direct that such person
shall be liable to pay a penalty of ` 100 for each day of the period during which the failure to furnish such
return continues.

However, the penalty imposed under this section shall not exceed ` 5,000 [Section 123 of the CGST Act].

QUS.10 Tripathi, 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, Tripathi argues that it is a minor breach and therefore, no penalty is imposable.
In another instance, Tripathi 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.

Tripathi 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 Tripathihas 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.

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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 Rs. 5,000. Breach made by Tripathiis not a ‘minor breach’ since the amount
involved is not less than Rs. 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. Thus,
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 Tripathi 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 Rs. 25,000. Therefore, general penalty uptoRs. 25,000 may be imposed on Tripathias when no
specific penalty is provided for any contravention, a general penalty may be imposed.

QUS.11 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:

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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 628tilize againsthim,
(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.

QUS.12 Answer the following questions:

(1) Ishika started supply of goods in Jaipur, Rajasthan from 05.01.20XX. Her turnover exceeded Rs. 20 lakh on
23.01.20XX. However, she didn’t apply for registration. Determine the amount of penalty, if any, that may be
imposed on Ishikaon 31.03.20XX, if the tax evaded by her, as on said date, on account of failure to obtain
registration is Rs.5,33,000. (3Marks)

(2) Madhusudan, managing director of Quantscore Technologies Ltd., is issued a summon to appear before
the central tax officer to produce the books of accounts of QuantscoreTechnologies Ltd. In an inquiry
conducted on said company. Determine the amount of penalty, if any, that may be imposed on
Madhusudan, if he fails to appear before the central tax officer.

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

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within 30 days from the date on which he becomes liable to registration.

However, in the given case, although Ishika became liable to registration on23.01.20XX, she didn’t apply for
registration within 30 days of becoming liable to registration.
Section 122(1)(xi) of the CGST Act 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. 5,33,000 in the given case] whichever is higher.

Thus, the amount of penalty that can be imposed on Ishikais Rs. 5,33,000.
(2) Section 122(3)(d) of the CGST Act 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 Rs. 25,000.Therefore, penalty upto Rs.25,000 can be
imposed on Madhusudan, in the given case.

QUS.13 (a) Ganesh Enterprises, a registered supplier under the GST law, has committed an offence that is
compoundable. The Department has instituted prosecution against the proprietor of Ganesh Enterprises and
he is of the opinion that he shall not be able to apply for compounding of the offence as the prosecution has
been launched. He seeks your advice whether he has the opportunity to apply for compounding of the
offence and the consequences arising therefrom. (4 Marks)

ANS- A person accused of an offence is permitted to make an application for compounding of an offence even
after the institution of prosecution against him.
Therefore, in the given case, Ganesh Enterprises can apply for compounding of offence even though
prosecution has been instituted/launched against him.

On payment of compounding amount determined by the Commissioner, the criminal proceedings which
have been initiated against Ganesh Enterprises in respect of the said offence, shall stand abated.
The lower limit for compounding amount is to be the greater of the following amounts: -
• 50% of tax involved, or
• `10,000.

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The upper limit for compounding amount is to be greater of the following amounts: -
• 150% of tax involved or
• `30,000.

QUS.14 (a) Mr. Pankaj, an unregistered person under GST, purchases the goods supplied by Mr. Raman, who is a
registered person without receiving a tax invoice from Mr. Raman and thus helps in tax evasion by Mr.
Raman. What disciplinary action may be taken by tax authorities to curb such type of cases and on whom?
(4 Marks)

(b) Neurological Systems Private Limited has been subject to confiscation of goods on the ground that it has
not accounted for the goods that are liable to tax under the CGST Act, 2017. The directors would like to
know from you as to how such goods are to be released from the Department. You are required to advise
the directors regarding the provisions of law on this matter. (5 Marks)

ANS- (a) Supply of goods without issue of any invoice with regard to such supply by a taxable person and the act of
aiding or abetting said offence by any person are punishable with penalty and imprisonment.
Penalty would be as follows:
Since Mr. Raman – a taxable person – has supplied goods without invoice, he is punishable with:
Penalty: higher of (a)`10,000/- or
100% of tax evaded

Since Mr. Pankaj helped in tax evasion by Mr. Raman, he is punishable with: Penalty: up to ` 25,000/-
Imprisonment would be as follows:
In case of first time offence, where
(a) tax evaded > ` 5 crore, imprisonment upto 5 years and fine
(b) Exceeds ` 2 crore tax evaded ≤ ` 5 crore, imprisonment upto 3 years and fine
I Exceeds ` 1 crore tax evaded ≤ ` 2 crore, imprisonment upto 1 years and fine
(d) In case of subsequent offence, imprisonment up to 5 years and fine
(b) To get the confiscated goods released from the Department, the directors of Neurological Systems

Private Limited are advised as under:-

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Neurological Systems Private Limited shall get an option to pay redemption fine in lieu of confiscation.
Such fine should be less than or equal to ≤ *Market value of the goods confiscated – Tax chargeable thereon]
Neurological Systems Private Limited can get its confiscated goods released on payment of such redemption
fine plus the tax, penalty and charges payable in respect of such goods.

QUS. Examine whether the offences committed in each of the following independent cases are bailable. Further,
determine the quantum of punishment on prosecution under the CGST Act, 2017, in each of these cases:
‘Homi Gabha’ collects ` 240 lakh as tax from its clients and deposits ` 150 lakh with the Central Government.
Balance amount of tax is not paid to the Central Government. It is found that he has falsified financial
records and has not maintained proper records, to evade the tax.

‘Datukeshwar Dutt’ collects ` 630 lakh as tax from its clients, but deposits only ` 120 lakh with the Central
Government. Balance amount of tax is not paid to the Central Government.
What would be the implications in above cases if ‘Homi Gabha’ and ‘ Datukeshwar Dutt’ repeat the offences?

Note – It may be assumed that offences are proved in the court. (RTP MAY 20)

ANS- (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` 100 lakh.

Therefore, failure to deposit ` 90 lakh (` 240 lakh - ` 150 lakh) collected as tax by ‘Homi Gabha’ will not be
punishable with imprisonment.

However, falsification of financial records by ‘Homi Gabha’ 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.

(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 `500 lakh in terms of section
132(1)(d)(i) of the CGST Act, 2017.

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Since the amount of tax evaded by ‘Datukeshwar Dutt’ exceeds ` 500 lakh (` 630 lakh - ` 120 lakh = ` 510
lakh), ‘Datukeshwar Dutt’ 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 [Section132(3) of the CGST Act, 2017]. Such offence is non-bailable in terms of section 132(5)
of the CGST Act, 2017.

If ‘Homi Gabha’ and ‘Datukeshwar Dutt’ 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 for minimum 6 months in the absence of special and
adequate reasons to the contrary to be recorded in the judgment.

QUS. Ganesh Enterprises, a registered supplier under the GST law, has committed an offence that is
compoundable. The Department has instituted prosecution against the proprietor of Ganesh Enterprises and
he is of the opinion that he shall not be able to apply for compounding of the offence as the prosecution has
been launched. He seeks your advice whether he has the opportunity to apply for compounding of the
offence and the consequences arising therefrom. (Nov 19 exam)

ANS- A person accused of an offence is permitted to make an application for compounding of an offence even
after the institution of prosecution against him.
Therefore, in the given case, Ganesh Enterprises can apply for compounding of offence even though
prosecution has been instituted/launched against him.
On payment of compounding amount determined by the Commissioner, the criminal proceedings which
have been initiated against Ganesh Enterprises in respect of the said offence, shall stand abated.

The lower limit for compounding amount is to be the greater of the following amounts:
• 50% of tax involved, or
• `10,000.
The upper limit for compounding amount is to be greater of the following amounts: -
• 150% of tax involved or
• `30,000.

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QUS. Mr. Pankaj, an unregistered person under GST, purchases the goods supplied by Mr. Raman, who is a
registered person without receiving a tax invoice from Mr. Raman and thus helps in tax evasion by Mr.
Raman. What disciplinary action may be taken by tax authorities to curb such type of cases and on whom?
(Nov 19 exam)

ANS- Supply of goods without issue of any invoice with regard to such supply by a taxable person and the act of
aiding or abetting said offence by any person are punishable with penalty and imprisonment.
Penalty would be as follows:
Since Mr. Raman – a taxable person – has supplied goods without invoice, he is punishable with:
Penalty: higher of `
(a) 10,000/- or
(b) 100% of tax evaded

Since Mr. Pankaj helped in tax evasion by Mr. Raman, he is punishable with: Penalty: up to ` 25,000/-
Imprisonment would be as follows:

In case of first time offence, where

(a) tax evaded > ` 5 crore, imprisonment upto 5 years and fine
(b) Exceeds ` 2 crore tax evaded ≤ ` 5 crore, imprisonment upto 3 years and fine
I Exceeds ` 1 crore tax evaded ≤ ` 2 crore, imprisonment upto 1 years and fine In case of subsequent
offence, imprisonment up to 5 years and fine

QUS. Neurological Systems Private Limited has been subject to confiscation of goods on the ground that it has not
accounted for the goods that are liable to tax under the CGST Act, 2017. The directors would like to know
from you as to how such goods are to be released from the Department. You are required to advise the
directors regarding the provisions of law on this matter. (Nov 19 exam)

ANS- To get the confiscated goods released from the Department, the directors of Neurological Systems Private
Limited are advised as under:-
Neurological Systems Private Limited shall get an option to pay redemption fine in lieu of confiscation.

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Such fine should be less than or equal to ≤ *Market value of the goods confiscated – Tax chargeable thereon]
Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty
equal to 100% of the tax payable on such goods

Neurological Systems Private Limited can get its confiscated goods released on payment of such redemption
fine plus the tax, penalty and charges payable in respect of such goods.

QUS. Shagun started supply of services in Vasai, Maharashtra from 01.01.2020. Her turnover exceeded `20 lakh on
25.01.2020. However, she didn’t apply for registration. Determine the amount of penalty, if any, that may be
imposed on Shagun on 31.03.2020, if the tax evaded by her, as on said date, on account of failure to obtain
registration is `1,26,000 (MTP NOV 20)

ANS- Where the aggregate turnover of a supplier making supply of services from a State/UT exceeds `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 25.01.2020, 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) ` 10,000
Or
(b) an amount equivalent to the tax evaded [`1,26,000 in the given case], whichever is higher.
Thus, the amount of penalty that can be imposed on Shagun is ` 1,26,000.

QUS. Explain the safeguards provided under section 69 of CGST Act, 2017, to a person who is placed under arrest?
(MTP Nov 20)

ANS- Section 69 of CGST Act, 2017 provides following safeguards to a person who is placed under arrest:
(a) If a person is arrested for a cognizable offence, he must be informed of the grounds of arrest and be
produced before a magistrate within 24 hours.

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(b) If a person is arrested for a non-cognizable offence, he shall be admitted to bail or in default of bail,
forwarded to the custody of the Magistrate.
I All arrest must be in accordance with the provisions of the Code of Criminal Procedure relating to arrest
in terms of section 69(3) of CGST Act, 2017.

QUS, Elaborate about cognizable and non-cognizable offences under the CGST Act, 2017. What is the difference
between these two while exercising powers by the GST authorities? (Jan 21 exam)

ANS- All offences specified under section 132 except the offences that are cognizable and non-bailable (as
mentioned below) are non-cognizable offences under the CGST Act, 2017.
Cognizable offences under the CGST Act, 2017 are the following offences, where amount of tax evaded or
input tax credit wrongly availed or utilized or refund wrongly taken more than (exceeding) `5 crores, namely:
(a) Supply without issue of any invoice, in violation of the provisions of GST law, with the intention to evade
tax;
(b) Issue of any invoice/bill without any supply in violation of the provisions of GST law leading to wrongful
availment or 635tilized635on of ITC/refund of tax;
I Avails ITC using such invoice/bill referred to in clause (b);
(d) Collects any amount as tax but fails to pay the same to the Government beyond a period of 3 months
from the date on which such payment becomes due;

In case of a cognizable offence, the officer 635tilized635o to arrest the person shall inform such person of the
grounds of arrest and produce him before a Magistrate within 24 hours.
In case of a non-cognizable offence, the arrested person shall be admitted to bail or in default of bail,
forwarded to the custody of the Magistrate.

The Deputy/Assistant Commissioner shall for the purpose of releasing an arrested person on bail or
otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police
station.

QUS. State the circumstances when the proper officer can authorize ‘arrest’ of any person under theCGST Act,
2017

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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) of the CGST Act, 2017. This essentially means that a person can be arrested only where
the tax evasion is more than Rs. 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.

QUS. 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 636tilized636o 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.

ANS- 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

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(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.

QUS. 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.

ANS- 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 appearanceto 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.

QUS. 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 department?

ANS- 1. The levy of penalty is subject to a certain disciplinary regime which is basedon 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 637tilize against him,
person proceeded against to rebut the allegations 637tilize against him,
• 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.

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QUS. 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 recording 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 penalty equal to 200 % 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/- whicheveris less.

Where owner does not come forward: - Such goods shall be released on payment of penalty equal to 50 % of

the value of the goods or 200 % of the tax payable on such goods, whichever is higher, 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.

QUS. From the following details, calculate the amount to be paid, for release ofgoods 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

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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, on payment of penalty
equal to 50 % of the value of the goods or 200 % of the tax payable on such goods, whichever is higher,
Therefore, in the given case, the amount payable shall be the higher of the following
[ 50% of ₹ 30,00,000 or 200 % of ₹ 5,40,000] = 15,00,000

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, whicheveris less.
= 5% of ` 30,00,000 or ` 25,000, whichever is less
= ` 1,50,000 or ` 25,000, whichever is less
= ` 25,000

QUS. State the prosecution, arrest and bail implications, if any, in respect of the following independent cases
pertaining to June:
(i) ‘Ashuram’ fraudulently avails input tax credit of ` 200 lakh without any invoice or bill. However, he is yet to
utilize the same.
(ii) ‘Bahubali’ fraudulently avails the refund of tax of ` 550 lakh. The said tax has been recovered from the
buyer also.
(iii) ‘Chintamani’ knowingly supplies false information sought by the CGST Officer. The amount of tax
involved is ` 250 lakh.
(iv) ‘Deendayal’ collects ` 650 lakh as tax in January from its clients but has deposited only ` 50 lakh with the
Central Government till date.
Note: Assume that in all above cases, offence, if any, has been committed for the first time.

ANS- Person Offence Prosecution Arrest Bail

‘Ashuram’
Non-cognizable offence Upto 1 year No arrest Bailable offence
[Section 132(1)(c) read [Section 132(1)(c)(iii)] [Section 69(1)] [Section 132(4)]
with section 132(4)]

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‘Bahubali’ Non-cognizable offence Upto 5 years No arrest Bailable offence

[Section132(1)(e) read [Section 132(1)(e)(i)] [Section 69(1)] [Section 132(4)]
with section 132(4)]
‘Chintamani’ Non-cognizable offence Upto 3 years No arrest Bailable offence
[Section 132(1)(f) read [Section 132(1)(f)(ii)] [Section 69(1)] [Section 132(4)]
with section 132(4)]
‘Deendayal’ Cognizable offence Upto 5 year Arrest can be Non-Bailable
[Section 132(1)(d) read [Section 132(1)(d)(i)] ordered by Offence
with section 132(5)] Commissioner [Section 132(4)]
without arrest
warrant
[Section 69(1)]

QUS. M/s Fly-by-Night Traders, a taxable person, issued an invoice on 15th April 2021 involving input tax credit
(ITC) of ` 25 lakh to M/s Runaway Traders who utilised the same. No supply of goods was involved in this
transaction between the two traders. M/s Fly-by-Night Traders conducted this transaction at the instance of
its tax consultant who was not a qualified professional.
Explain the relevant provision in brief and determine the amount of penalty leviable under COST Act, 2017, if
any, on the persons involved in respect of the above referred transaction. (5 Marks)

ANS- (A) Where a taxable person:

(a) issues any invoice without supply of goods, or
(b) takes/utilises ITC without actual receipt of goods, either fully or partially, in contravention/violation of
the provisions of the GST law or the rules made thereunder, such person shall be liable to pay a penalty of
(i) ` 10,000
Or
(ii) an amount equivalent to the ITC availed of or passed on (` 25 lakh), whichever is higher.
Thus, M/s Fly-by-Night Traders and M/s Runaway Traders, both are liable to pay a penalty of ` 25 lakh each.
Further, any person at whose instance above transactions are conducted, shall be liable to a penalty of an
amount equivalent to ITC availed of/passed on. Thus, the tax consultant will be liable to pay a penalty of ` 25
lakh.

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MISCELLANEOUS

QUS.1 Elaborate the duties of Anti-profiteering Authority.

ANS- The duties of the Anti-profiteering Authority are:

(i) to determine whether the reduction in tax rate or the benefit of input tax credit has been passed on by
the seller to the buyer (hereinafter collectively referred to as ‘benefit’) by reducing the prices
(ii) to identify the taxpayer who has not passed on the benefit
(iii) to order
(a) reduction in prices
(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate
reduction in prices along with interest at the rate of 18% from the date of collection of the higher amount till
the date of the return of such amount or recovery of the amount not returned, as the case may be.

If the eligible person does not claim return of the amount or is not identifiable, the amount must be
deposited in the Consumer Welfare Fund;
I imposition of penalty
(d) cancellation of registration
(iv) to furnish a performance report to the GST Council by the 10th of the month succeeding each quarter
[Rule 127 of the CGST Rules, 2017]

QUS.2 Explain the provisions relating to rectification of errors apparent on the face of record under section 161 of
the CGST Act, 2017?

ANS- Section 161 lays down that any authority, who has passed or issued any decision or order or notice or
certificate or any other document, may rectify any error which is apparent on the face of record in such
decision or order or notice or certificate or any other document, either on its own motion or where such
error is brought to its notice by any GST officer or by the affected
person within a period of three months from the date of issue of suchdecision or order or notice or
certificate or any other document, as the case may be.

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However, no such rectification shall be done after a period of six months from the date of issue of such
decision or order or notice or certificate or any other document. Further, the said period of six months shall
not apply in such cases where the rectification is purely in the nature of correction of a clerical or
arithmetical error, arising from any accidental slip or omission.
Principles of natural justice should be followed by the authority carrying out such rectification, if it adversely
affects any person.

QUS.3 When shall the particulars relating to any proceedings or prosecution be published under GST laws?

ANS- When the Commissioner/642tilized642o officer is of opinion that it is necessary or expedient in the public
interest to publish the name of any person and any other particulars relating to any proceedings or
prosecution under the CGST Act in respect of such person, it may cause to be published such name and
particulars [Section 159(1) of the CGST Act,2017]

No publication under this section shall be made in relation to anypenalty imposed under the CGST Act until
the time for presenting an appeal to the Appellate Authority under section 107 has expired without an
appeal having been presented or the appeal, if presented, has been disposed of [Section 159(2) of the CGST
Act,2017].

QUS. Enumerate any five matters on which the GST Council may make recommendations under Article 279A of
the Constitution of India.

ANS- The matters on which the GST Council may make recommendations under Article 279A of the Constitution of
India are as under:-
(i) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be
subsumed in GST;
(ii) the goods and services that may be subjected to, or exempted from GST;
(iii) model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-State
trade or commerce and the principles governing the place of supply;
(iv) the threshold limit of turnover below which goods and services may be exempted from GST;

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(v) the rates including floor rates with bands of GST;

(vi) any special rate or rates for a specified period, to raise additional resources during any natural calamity
or disaster;
(vii) special provision with respect to Special Category States
(viii) the date on which the GST be levied on petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel.
(ix) any other matter relating to the GST, as the Council may decide. Note: Any five points may be
mentioned.

QUS. Mr. N has, over three consignments of 200, 400 and 400 units, imported a total of 1,000 units of an article
“ZEP”, which has been valued at ` 1,150 per unit. The customs duty on this article has been assessed ` 250
per unit. He adds his profit margin `350 per unit and sells the article for `1,750 per unit.

After one month of selling the entire consignment of article “ZEP”, Mr. N found that there had been an error
in payment of amount of duty, in which duty for the consignment of 200 units was paid as if it was 400 units,
resulting in excess payment of duty. Mr. N files an application for refund for ` 50,000 (200 X 250). Is the bar
of unjust enrichment attracted? (MTP Nov 20)

ANS- Mr. N’s invoices show that he collected duty of ` 250 per unit on 1,000 items. However, he paid duty on 200
items more. This payment, in the normal course, was made before the order permitting the clearance of the
goods. It would be evident from the bill of entry that the amount paid was more than the amount of duty
assessed. Thus, Mr N’s case falls within the exception to unjust enrichment listed at clause (g) of the first
proviso to section 27(2). He will be able to refute the charge of unjust enrichment. Furthermore, clause (a) of
the same sub-section provides that the doctrine of unjust enrichment will not apply to the refund of duty
and interest, if any, paid on such duty if such amount is relatable to the duty and interest paid by the
importer/exporter, if he had not passed on the incidence of such duty and interest to any other person. Mr.
N’s invoices will show how much duty he collected from his customers, hence he may be covered by this
clause also to escape the bar of unjust enrichment.

QUS. Explain the provisions relating to rectification of errors apparent on the face of record under section 161 of
the CGST Act, 2017.

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ANS- Section 161 of the CGST Act, 2017 lays down that any authority, who has passed or issued any decision or
order or notice or certificate or any other document, may rectify any error which is apparent on the face of
record in such decision or order or notice or certificate or any other document, either on its own motion or
where such error is brought to its notice by any GST officer or by the affected person within a period of three
months from the date of issue of such decision or order or notice or certificate or any other document, as
the case may be.

However, no such rectification shall be made after a period of six months from the date of issue of such
decision or order or notice or certificate or any other document. Further, the sa id period of six months shall
not apply in such cases where the rectification is purely in the nature of correction of a clerical or
arithmetical error, arising from any accidental slip or omission.

Principles of natural justice should be followed by the authority carrying out such rectification, if it adversely
affects any person.

QUS. Elaborate the duties of Anti-profiteering Authority.

ANS- 1. The duties of the Anti-profiteering Authority are:

(i) to determine whether the reduction in tax rate or the benefit of input tax credit has been passed on by
the seller to the buyer (hereinafter collectively referred to as ‘benefit’) by reducing the prices
(ii) to identify the taxpayer who has not passed on the benefit
(iii) to order
(a) reduction in prices
(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate
reduction in prices along with interest at the rate of 18% from the date of collection of the higher amount
till the date of the return of such amount or recovery of the amount not returned, as the case may be.

If the eligible person does not claim return of the amount or is not identifiable, the amount must be
deposited in the Consumer Welfare Fund;
I imposition of penalty

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(d) cancellation of registration

(iv) to furnish a performance report to the GST Council by the 10th of the month succeeding each quarter
[Rule 127 of the CGST Rules, 2017]

QUS. State the various modes of service of a notice, decision, order, summons, or any other communication under
the CGST Act, on the taxable person or any other person to whom it is intended.

ANS- Section 169(1) provides that any decision, order, summons, notice or other communication under the CGST
Act and the rules made thereunder can be served by any one of the following methods:
(a) Giving/tendering directly including by a courier to the addressee or utilized representative or to any
adult member of family residing with the taxable person; or
(b) By Registered post/speed post/courier with acknowledgement due at the last known place of business or
residence; or
I By Email to the e-mail address provided at the time of registration or as amended from time to time; or
(d) By making the same available at common portal; or
(e) Publication in newspaper circulating in the locality in which the addressee is last known to have resided,
carried on business or personally worked for gain; or
(f) If none of the above modes is practicable then by Affixing at last known place of business or residence and
if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the
office of the concerned officer or authority concerned.

QUS. Section 158(1) lays down that the information obtained by a public servant from the record of any
proceeding under the CGST Act is confidential andcannot be disclosed.
Is there any exception to this rule? Discuss in brief.

ANS- Yes, the confidential information can be disclosed by the public servant for certain specific purposes in terms
of section 158(3). Such specific purposes are given in brief hereunder:
(i) For prosecution
(ii) For carrying out the objects of the CGST Act
(iii) For service of notice or recovery of demand
(iv) For furnishing information to Court in a proceeding where Government is a party

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(v) For audit of tax receipts or refunds

(vi) For inquiry into the conduct of a GST officer
(vii) For enabling levy, 646tilized646on of any tax or duty
(viii) In lawful exercise of powers
(ix) For enquiry into a charge of misconduct by any professional
(x) For data entry on automated system
(xi) For fulfilling the requirement under any other law and in public interest.

QUS. Explain the scope of circulars and instructions issued by the Board.

ANS- Section 168 empowers the Board (CBIC) to issue orders, instructions or directions to the CGST officers for the
purpose of uniformity in the implementation of the CGST Act. All officers and all other persons employed in
the implementation of the Act observe and follow such orders, instructionsor directions.

The binding nature of such orders, instructions and directions has been a matter of debate and scrutiny. The
general understanding that prevails nowis that a circular is binding on the officers, but not on the assessee.
However, in case such circular states something contrary to the law, the law shall prevail over the circular.

QUS. The time limits provided under the CGST Act cannot be extended.’
Do you agree with the statement? Give your views with reference to section168A.

ANS- The statement is not correct.

The Government has power to extend the time limits provided under theCGST Act. However, such powers
are not unbridled powers. Section 168A empowers the Government to extend the time limits only when the
actions cannot be completed or complied with due to force majeure. Here, force majeure means war,
epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the
implementations of provisionsof the CGST Act. This power can also be exercised retrospectively.

QUS. 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,

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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.

ANS- 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).

QUS. Explain the provisions relating to assessment of unregistered persons by the proper officer under section 63
of the CGST Act, 2017. (5 Marks)

ANS- Not with standing anything to the contrary contained in section 73 or section 74 of the CGST Act, 2017,
where a taxable person−
 fails to obtain registration even though liable to do so; or
 whose registration has been cancelled for any of the specified reasons*, but who was liable to the proper
officer may proceed to assess the tax liability of said taxable person to the best of his judgement for the
relevant tax periods.

* Specified reasons for cancelation are as under

(a) registered person has contravened such provisions of the CGST Act or the rules made there under as may
be prescribed; or

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(b) a person paying tax under composition levy under section 10 of the CGST Act has not furnished returns
for three consecutive tax periods; or
I any registered person, other than a person specified in clause (b), has not furnished returns for a
continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section 25 of the CGST Act has
not commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, willful misstatement or suppression of facts:

The assessment order shall be issued by proper officer within a period of 5 years from the due date for
furnishing the annual return for the financial year to which non-payment of tax relates.

However, no such assessment order shall be passed without giving the person an opportunity of being
heard.

QUS. 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 on19.02.20XX.
Consequent to the final assessment order passed by the Assistant Commissioner of Central Tax on
21.03.20XX, a tax of ` 1,80,000 becomes due on 1st consignment whereas a tax of ` 4,20,000 becomes
refundable on 2nd consignment.

Kulbhushan& Sons pays the tax due on 1stconsignment on 09.04.20XX and applies for the refund of the
tax on 2ndconsignment same day. Tax was actually refunded to it on 05.06.20XX.
Determine the interest payable and receivable, if any, by Kulbhushan & Sons in the above case.

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ANS- 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 1stconsignment:
= ` 1,80,000 × 18% × 48/365
= ` 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.

QUS. Divy Trader obtained permission for provisional assessment and supplied three consignments of furniture on
28th April, 2018. The tax payment on provisional basis was made in respect of all the three consignments on
20th May,2018.

Consequent to the final assessment order passed by the Assistant Commissioner on 21st June, 2018, 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

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due on 2nd consignment. Divy Trader applies for the refund of the tax on 1st and 3rd consignments on
12th July, 2018 and pays the tax due on 2nd consignment on the same day. Tax was actually refunded to it
Of 1st consignment on 8thSeptember, 2018, whereas of 3rdconsignment on 18th September, 2018.
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 28.04.2018 under provisional assessment
is 20.05.2018.
Thus, interest payable in respect of 2ndconsignment
= ` 1,20,000 × 18% × 53 [21.05.2018 – 12.07.2018]/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 1stconsignment has been paid on 08.09.2018 which is within 60 days
from the date of receipt of application of refund (12.07.2018), interest is not receivable on tax refunded in
respect of 1st consignment.

However, interest receivable in respect of 3rdconsignment is as follows:

60 days from the date of receiving the refund application expire on 10.09.2018.
= ` 1,50,000 × 6% × 8 [11.09.2018-18.09.2018]/365
= `197 (rounded off).

QUS. Director General of Anti-Profiteering Authority, determines that a registered person, has not passed on the
benefits of reduction of GST tax rates. List the different possible orders that may be passed by the said

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authority for the above finding. (5 Marks)

ANS- Where the Authority determines that a registered person has not passed on the benefit, it may order-
(a) reduction in prices;
(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate
reduction in prices along with interest @ 18% or recovery of the amount including interest not returned, as
the case may be
(c) the deposit of an amount equivalent to 50% of the amount determined under the above clause along
with interest @ 18% and the remaining 50% of the amount in the Consumer Welfare Fund of the concerned
State, where the eligible person does not claim return of the amount or is not identifiable
(d) imposition of prescribed penalty; and
(e) cancellation of registration under GST.

Note – Students are advised to read ‘Director General of Anti-Profiteering Authority’ as ‘Anti- Profiteering
Authority’.

QUS. ABC Limited is a supplier of medical equipment to various hospitals. While supplying the equipment ABC
Limited is not sure about the rate of IGST applicable on such supplies, i.e. 18% or 28%. You are required to
advise ABC Ltd. in this situation.

ANS- In such an event, ABC Limited can move an application for provisional assessment for seeking permission to
discharge the tax liability provisionally @ 18% upon the submission of bond and security and subject to
finalization of the assessment.

Upon finalization of the assessment, ABC Limited would be liable to pay the differential tax liability along
with applicable interest if it is found that the applicable rate was 28% whereas ABC Limited paid the tax @
18% pursuant to the order passed initially on its application for seeking provisional assessment.

QUS. Is summary assessment order to be necessarily passed against the registered person?

ANS- No. In certain cases, like when goods are under transportation or are stored in a warehouse, and the

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registered person in respect of such goods cannot be ascertained, the person in charge of such goods shall
be deemed to be the registered person and will be assessed to tax.

QUS. How many types of audit are prescribed under GST Act. Briefly explain each one of them.

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 (Section 65 of the CGST Act)

(c) Special Audit: If at any stage of scrutiny, inquiry, investigations or any other proceedings, if the
department is of the opinion that the value has not been correctly declared or credit availed is not with in
the normal limits, the department may direct special audit by Chartered Accountant or Cost Accountant,
nominated by the department. (Section 66 of the CGST Act)

QUS. Explain in what cases, assessment order passed by proper officer may be withdrawn under CGST Act, 2017?

ANS- Assessment order passed by the proper officer may be withdrawn in following cases:-
(i) Assessment of non-filers of returns-The best judgement order passed by the proper officer under section
62 of the CGST Act shall automatically stand withdrawn where a registered person files a valid return within
30 days of the service of the best judgment assessment order. However, the liability for payment of interest
under section 50(1) of the CGST Act, 2017or for payment of late fee under section 47 of the CGST Act, 2017
shall continue.

(ii) Summary Assessment-As per section 64(2) of the CGST Act, 2017, a taxable person against whom a
summary assessment order has been passed can apply for its withdrawal to the jurisdictional Additional/
Joint Commissioner within 30 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

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determination of tax liability in terms of section 73 or 74 of the 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.

QUS. Explain the difference between Audit by Tax Authorities under section 65 and Special Audit under section 66
of the CGST Act, 2017.

ANS- Audit by Tax authorities under section 65 of the CGST Act, 2017:-
(i) The Commissioner or any officer authorized by him can undertake audit of any registered person for such
period, at such frequency and in such manner as may be prescribed.
(ii) The audit shall be completed within a period of 3 months from the date of commencement of audit.
However, the Commissioner can extend this period by a further period upto maximum 6 months.

Special Audit under section 66 of the CGST Act, 2017:-

(i) The registered person can be directed to get his records including books of account examined and audited
by a chartered accountant or a cost accountant during any stage of scrutiny, inquiry, investigation or any
other proceedings; depending upon the complexity of the case. Any officer not below the rank of Assistant
Commissioner may order special audit, with the prior approval of the Commissioner, if he is of the opinion
that the value has not been correctly declared or the credit availed is not within the normal limits.
(ii) Audit is to be completed within 90 days. However, the Assistant Commissioner can extend this period by
a further period of 90 days.

QUS. 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 of returns 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
of returns under section 61 of the CGST Act, 2017 of a registered person, the proper officer may:
(i) conduct audit of the registered person; or
(ii) direct the registered person to get his records including books of account examined and audited by a
Chartered Accountant or a Cost Accountant nominated for this purpose by the Commissioner; or.

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(iii) exercise the powers of inspection, search and seizure with respect to the registered person, or
(iv) proceed to determine the tax and other dues of the registered person under Sections 73 or 74 of the Act.

QUS. Write a brief note on Summary Assessment in certain special cases as per section 64 of the CGST Act, 2017.

ANS- As per section 64 of the CGST Act, 2017, summary assessments can be initiated to protect the interest of
revenue with the previous permission of Additional/Joint Commissioner when the proper officer has
evidence that a taxable person has incurred a liability to pay tax under the Act, and any delay by him in
passing an assessment order may adversely affect the interest of revenue.

Additional/Joint Commissioner may withdraw summary assessment order on an application filed by taxable
person within 30 days from the date of receipt of order or on his own motion, if he finds such order to be
erroneous and may instead follow the procedures laid down in section 73 or section 74 to determine the tax
liability of such taxable person.

Where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to
supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be
assessed and liable to pay tax and any other amount due under this section.

QUS. Whether principal of natural justice is must to be followed before passing assessment order against the
unregistered person?

ANS- Yes, principal of natural justice is must to be followed before passing assessment order against an
unregistered person seeking to impose any financial burden on him.

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COMPUTATION OF GST LIABILITY

QUS.1 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 5,00,000
Orochem 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 LUT 90,00,000
[Consideration received in convertible foreign exchange]
Drug development services provided to UnipharmaLtd., a drug 6,00,000
manufacturer, located in Delhi

You are required to determine the GST liability [CGST & SGST or IGST, as the case may be] of Allfit

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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
All fit 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 Rs.
60,00,000 and Rs. 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 Rs. 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 Rs. 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 servicessupplied to 45,000 45,000
Orochem Ltd., a drug manufacturer, located in Delhi [Note – 1] [5,00,000 [5,00,000 ×
× 9%] 9%]
Advance received for bulk drugs to be supplied to Novick Nil
Pharmaceuticals, a wholesale dealer of drugs in Gurgaon,

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Haryana [Note – 2]
Supply of bulk drugs to wholesale dealers of drugs in Delhi [Note – 3] 1,50,000 1,50,000
[60,00,000 [60,00,000
× 2.5%] × 2.5%]
Bulk drugs supplied to Anchor Pharmaceuticals Inc., USA under Nil
LUT [Note – 4]
Supply of drug development services to Uni pharma Ltd., a 54,000 54,000
drug manufacturer, located in Delhi [Note – 5] [6,00,000 [6,00,000×
× 9%] 9%]
Supply of bulk drugs to consignment agents Cardinal Pharma Pvt. Ltd. 4,95,000
and Rochester Medicos of Punjab and Haryana [Note – 6] [99,00,000
× 5%]
Supply of bulk drugs to Ronn Medicos of Gurgaon, Haryana 1,50,000
[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.

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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 Pharmaceuticals 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 Pharmaceuticals 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 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 PharmaPvt. 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.

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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%.

QUS.2 Jaskaran, a registered supplier of Delhi, has made the following supplies in the month of January, 20XX:

Sr. No. Particulars Amount* (`)

(i) Supply of 20,000 packages at ` 30 each to SukhijaGift 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 2,50,000
[including cost of 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 brother’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

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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:

Goods/services supplied CGST SGST IGST

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

Particulars CGST (`) SGST (`) IGST (`)

Supply of 20,000 packages to Sukhija Gift Shop, Punjab [Note-1] 1,09,526
[6,08,475
×18%]
Renting of 10generators to Morarji Banquet Halls, Chandigarh [Note-2] 45,000
[2,50,000
×18%]
500 packages given as free gift to the customers [Note-3] Nil Nil Nil
Catering services provided free of cost for elder brother’s business Nil Nil
inaugural function in Delhi [Note- 3]
Total GST liability (rounded off) 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.

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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)]

2. 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 I 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.

3. As per section 7(1)I 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.

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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 brother without consideration will also not be
treated as supply. 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.

In this case, Jaskaran has provided free of cost catering services to his elder brother. However, in view of
section 2(49)(ii) above, Jaskaran and his brother cannot be considered as related as Jaskaran’s brother has
his own business and is not wholly/ mainly dependent on Jaskaran. Consequently, catering services provided
by Jaskaran to his brother would not be treated as supply under section 7 of the CGST Act read with Schedule
and hence, no tax is leviable on the same.

5. As per Notification No. 13/2017 CTI 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.

QUS.3 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 property, situated all over India. The
company has its Head Office at Bangalore, Karnataka 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 equipments, 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

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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) from where it is further sent to
client locations for repairs.

Work out the GST liability [CGST & SGST or IGST, 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 `

A. Truck sent to own location in Tamil Nadu
(i) Value of items contained in the truck - ` 3,00,000
(ii) Value of truck - ` 25,00,000
B. 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 – `2,85,000
(ii) Value of stand-alone machine - ` 4,00,000
(iii) Value of truck - ` 20,00,000 (Billing for repairs to be done afterwards
depending upon the actual items used)
C. Truck sent to a client location in Karnataka forcarrying out repairs
(i) Value of items contained in the truck - ` 1,06,000
(ii) Value of truck - ` 20,00,000 (Billing for repairs to be done afterwards
depending upon the actual items used)
D. Invoices raised for repair work carried out in Tamil Nadu [including the invoice 70,00,000
for repair work done in ‘B’+ -
E. Invoices raised for repair work carried out in Karnataka [including the invoice 12,00,000
for repair work done in ‘C’+

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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 – 12%
Container truck, Stand-alone machines
CGST – 2.5% SGST – 2.5% IGST – 5%
Works contract for repairs and maintenance of immovable property
CGST – 9% SGST – 9% IGST – 18%
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 `
A. Items sent in container truck to own location inTamil Nadu – IGST @ 12% 36,000
[Note 1]
Container truck sent to own location in Tamil Nadu[Note 2] -
B. Stand-alone machine sent in container truck to client location in Tamil -
Nadu, for carrying out repairs [Note 3]
Container truck sent to client location in Tamil Nadu[Note 3] -
Items sent in container truck to client location inTamil Nadu, for carrying -
out repairs [Note 4]
C. Container truck sent to client location in Karnataka[Note 3] -
Items sent in container truck to client location inKarnataka, for carrying -
out repairs [Note 4]
D. Invoices raised for repair work carried out in TamilNadu: IGST @ 18% 12,60,000
[Note 5 and Note 6]
E. Invoices raised for repair work carried out in Karnataka: CGST 9% + SGST 9% 2,16,000
[Note 5 and Note 7]

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Total GST liability 15,12,000

Notes:
(1) Movement of goods without any consideration to a ‘distinct person’ as specified in section 25(4) of the
CGST Act, 2017 is deemed to be a supply in terms of section 7 read with Schedule I of the said Act. The
purchase value is taken as taxable value, being the open market value 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 proviso to the
same rule.)

In the given case-

• the location of the supplier is in Bangalore (Karnataka); and
• the place of supply of items contained in the truck is the location of such goods at the time 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.

(2) As per section 25(4) of the CGST Act, 2017, a person who has 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, be treated as ‘distinct persons’.

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.

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However, in view of the GST Council’s recommendation, it has been clarified that the inter-State movement
of various modes of conveyance between ‘distinct persons’ as specified in section 25(4), not involving further
supply of such conveyance, including trucks carrying goods or passengers or both; or for repairs and
maintenance, may be treated ‘neither as a supply of goods nor supply of service’ 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 IGST 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)I of CGST Rules, 2017 for
sending the truck to its own location in Tamil Nadu.

(3) Supply of goods without consideration is deemed to be a supply inter alia when the goods are supplied
to a ‘distinct person’. However, in this case, stand-alone machine and container truck are moved 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)I of CGST Rules, 2017 for sending the
stand-alone machines and container truck to client location.

(4) 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 repairs. Hence, 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

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Schedule II to the 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 property in goods is incidental to a 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 charged to tax at that point of time.

Here again, a delivery challan is to be issued in terms of rule 55(1)I of CGST Rules, 2017 for sending the
items for carrying out the repairs.

(5) 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 there in
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.

(6) 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 of
services are in twodifferent States [Section 7(3)(a) of IGST Act, 2017]. Thus, the supply will be leviable to IGST
in terms of section 5(1) of the IGST Act, 2017.

(7) 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(2) of IGST Act, 2017
and thus, chargeable to CGST and SGST.

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QUS.4 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:
- Maintenance services for excavators;
- 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:
- 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 payable by M/s XYZ

Particulars GST payable(`)

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Gross GST liability [Refer Working Note 1 below] 2,63,400

Less: Input tax credit [Refer Working Note 2 below] 2,00,000
Net GST liability 63,400

Working Notes
(1) Computation of gross GST liability

Particulars Value Rate of GST

received (`) GST payable (`)
Hiring charges for excavators 18,00,000 12% 2,16,000
Service charges for supply of manpower for operation of 20,000 12% 2,400
excavators [Refer Note 1]
Service charges for soil testing and seismic evaluation [Refer 2,50,000 18% 45,000
Note 2]
Gross GST liability 2,63,400

Notes:
(i) Since the excavators are invariably 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.

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%.

(ii) 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 18%.

(2) Computation of input tax credit available for set off

Particulars GST paid(`) ITC available(`)

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Maintenance services for excavators[Refer Note 1] 1,00,000 1,00,000

Health insurance for excavatoroperators [Refer Note 2] 11,000 -
Scientific and technical consultancy[Refer Note 1] 1,00,000 1,00,000
Total input tax credit available 2,00,000

Notes:
(i) Excavators are special purpose vehicles whose credit is not restricted under section 17(5)(a), therefore, ITC
on maintenance service for excavators shall be allowed in terms of section 17(5)(ab). Further, section
17(5)(d) of the CGST Act, 2017 blocks credit on goods and/or services received by a taxable person for
construction of an immovable property on his own account. Here, though the excavators are used for
building projects, 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 machinery.

Therefore, the maintenance service for the excavators does not get covered by the bar under 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.

(ii) Section 17(5)(b)(i) of the CGST Act, 2017 allows input tax credit on health insurance only where an inward
supply of such services 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 or where it is
obligatory for an employer to provide the same to its employees under any law for the time being in force.

In the given case, it is assumed that it is not obligatory for employer to provide health insurance to its
employees under any law for the time being in force, therefore the credit thereon will not be allowed.

QUS.5 V-Supply 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.

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The company reports the following details for the month of November, 20XX:

Payments ` (inlakh) Receipts ` (inlakh)

Raw material 3.5 Sales 15
Consumables 1.25
Transportation charges forbringing the raw material to 0.70
Factory
Salary paid to employees on rolls 5.0
Premium paid on life insurance policies taken for 1.60
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:
(i) 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 ` 0.29781 lakh are paid
on the imported raw material. Remaining raw material is procured from suppliers 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.

(ii) Consumables are procured from registered suppliers located in Kolkata and include diesel worth ` 0.25
lakh for running the generator in the factory.

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(iii) Transportation charges comprise of ` 0.60 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%.

(iv) Life insurance policies for specified employees have been taken by the company to fulfill a statutory
obligation in this regard.. The life insurance service provider is registered in West Bengal.

(v) 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.

(vi) 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 in West Bengal.

(vii) Bank charges are towards company’s current account maintained with a Private Sector Bank registered
in West Bengal.

(viii) The breakup of sales is as under: Sales in West Bengal – ` 7 lakh

Sales in States other than West Bengal – ` 3 lakh Export under LUT – ` 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 - ` 0.09 lakh
Compute eligible input tax credit and net GST payable [CGST, SGST or IGST, as the case may be] by V-Supply
Pvt. Ltd. For the month of November 20XX.

Note-
(i) CGST, SGST & IGST rates to be 9%, 9% and 18% respectively, wherever applicable.
(ii) The necessary conditions for availing input tax credit have been complied with by V-Supply Pvt. Ltd.,
wherever applicable.
You are required to make suitable assumptions, wherever necessary.

ANS- Computation of input tax credit available with V-Supply Pvt. Ltd. In the month of November 20XX

Sr.No. Particulars Eligible input tax credit

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CGST* ` SGST* ` IGST* ` Total `

1. Raw material purchasedfrom Bihar [Refer 14,400 14,400
Note 1(i)]
Raw material importedfrom China [Refer 29,781 29,781
Note 1(ii)]
Raw material purchasedfrom unregistered Nil Nil Nil
suppliers within West Bengal [Refer Note 1(iii)]
Raw material destroyed due to seepage [Refer Nil Nil Nil
Note 1(iv)]
Remaining raw materialpurchased from West 7,650 7,650 15,300
Bengal [Refer Note 1(i)] [Rs. 3.5 – Rs.1.5 – Rs.0.80
– Rs. 0.30 – Rs.0.05] = Rs. 0.85]
Total 7,650 7,650 44,181 59,481

2. Consumables [ReferNote 2] 9,000 9,000 18,000

3. Transportation chargesfor bringing the raw 1,500 1,500 3,000
material to factory [Refer Note 3]
4. Salary paid to employees on rolls [Refer Note 4] Nil Nil Nil Nil
5. Premium paid on life insurance policies takenfor 14,400 14,400 - 28,800
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 [ReferNote 6] 900 900 1,800
40,650 40,650 44,181 1,25,481

Computation of net GST payable

Particulars CGST* ` SGST*` IGST* ` Total `

On Intra-state sales in WestBengal 63,000 63,000 1,26,000
On Inter-state sales other thanWest Bengal 54,000 54,000
On exports under LUT [Note 7] Nil Nil Nil Nil
On inward supply of GTA services under reverse 1,500 1,500 3,000

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GST 674

charge [Note 3]
Total output tax liability 64,500 64,500 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 taxcredit on 01.11.20XX (15,000) (8,000) (9,000) (33,000)
Input tax credit availed duringthe month (40,650) (40,650) (44,181) (1,25,481)
Net GST payable 7,350 14,350 819 22,519

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) Tax on intra-State procurements made by a registered person from an unregistered supplier shall be
leviable only on notified categories of goods and services. [Section 9(4) as amended vide CGST (Amendment)
Act 2018].

(iv) 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 CGST @ 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

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GST 675

person who receives the service[Notification No. 13/2017 CT I dated 28.06.2017]. Thus, V- Supply Pvt. Ltd.
Will pay GST under reverse charge on transportation service received from 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 I 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 III to the CGST Act. Therefore, since no GST is paid on such
services, there cannot be any input tax credit on such services

5. Input tax credit on supply of life insurance service is not blocked if it is obligatory for an employer to
provide such service to its employees under any law for the time being in force. [Proviso to 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 or 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 LUT 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].

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9. As per section 49(5) of the CGST Act read with rule 88A, input tax credit of-
(i) IGST is 676tilized towards payment of IGST first and then CGST and SGST in anyorder.
(ii) CGST is 676tilized towards payment of CGST and IGST in that order.
(iii) SGST is 676tilized 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.

QUS.6 Mr. Nagarjun, a registered supplier of Chennai, has received the following amounts in respect of the activities
undertaken by him during the month ended on 30th September, 20XX:

Sr.No. Particulars Amount(`)

(i) Amount charged for service provided to recognized sports body as selector of 50,000
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 the 15,000
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 value of taxable supply on which GST is to be paid by Mr. Nagarjun for

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the month of September, 20XX. Working notes should form part of your answer.

ANS- Computation of gross value of taxable supply on which GST is to be paid by Mr. Nagarjun

Particulars Amount (`)

Supplies on which Mr. Nagarjun is liable to pay GSTunder forward charge
Amount charged for service provided to recognized sportsbody as selector of 50,000
national team [Note 1]
Commission received as an insurance agent from insurancecompany [Note 2] Nil
Amount charged as business correspondent for the services provided to the urban 15,000
branch of a nationalized bank with respect to savings bank accounts [Note 3]
Services provided to foreign diplomatic mission located inIndia [Note 4] 28,000
Funeral services [Note 5] Nil
Supplies on which Mr. Nagarjun is liable to pay GST underreverse charge
Services received from GTA [Note 6] 45,000
Value of taxable supply on which GST is to be paid 1,38,000

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 No. 12/2017 CTI dated 28.06.2017. Thus, service provided as selector of
team is liable to GST.

(2) Though commission for providing insurance agent’s services is liable to GST, 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 CTI 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 No. 12/2017 CTI dated 28.06.2017. Thus,
such services provided in respect of urban area branch will be taxable.

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(4) While services provided by a foreign diplomatic mission located in India are exempt from GST vide
Exemption Notification No. 12/2017 CTI dated 28.06.2017, services provided to such mission are taxable.

(5) Funeral services being covered in entry 4 of Schedule III to CGST Act, 2017 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
CTI dated 28.06.2017. The turnover of previous year is irrelevant in this case.

QUS.7 ABC Company Ltd. Of Bengaluru is a manufacturer and registered supplier of machine. It has provided the
following details for the month of November, 20XX.

Details of GST paid on inward supplies during the month:

Items GST paid (`)

Health insurance of factory employees as required byFactory Act 20,000
Raw materials for which invoice has been received and GST has also been paid for full 18,000
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 directly sent to job worker’s premises under 50,000

challan.

Purchase of car used by director for the business meetingsonly. 25,000

Outdoor catering service availed for business meetings. 8,000

ABC Company Ltd. Also provides service of hiring of machines along with man power 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.

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Receipts on outward supply (exclusive of GST) for the month of November, 2019 are as follows:

Items Outward Supply (`)

Hiring receipts for machine 5,25,000
Service charges for supply of man power operators 2,35,000

Assume all the transactions are inter State and the rates of IGST to be as under:
(i) Sale of machine 5%
(ii) Service of hiring of machine 12%
(iii) Supply of man power operator service 18%
Compute the amount of input tax credit available and also the net GST payable for the month of November
20XX by giving necessary explanations for treatment of various items.

Note: Opening balance of input tax credit 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 liability 9,200

Working Notes:
(1) Computation of Input Tax Credit (ITC) available with ABC Company Ltd. In the month of November 2017

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 ofplant and machinery 12,000
[Note -3]
Manufacturing machinery directly sent to job worker’s premises under challan 50,000

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[Note -4]
Purchase of car used by director for business meetingsonly [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) of the CGST Act,
2017 since it is obligatory for employer to provide health insurance to its employees under Factory Act -.

2. Where the goods against an invoice are received in lots/ installments, ITC is allowed upon receipt of the
last lot/ installment vide first proviso to section 16(2) of the CGST Act, 2017. Therefore, ABC Company Ltd.
Will be entitled to ITC of raw materials on receipt of second installment in December, 20XX.

3. Section 17(5)I of CGST Act, 2017 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) of CGST Act, 2017 read with rule 45(1) of CGST Rules, 2017.

5. Section 17(5)(a) of CGST Act, 2017 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 goods or
any other use as specified, ITC thereon will not be available.

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6. Section 17(5)(b)(i) of CGST Act, 2017 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 Rate of GST GST

Received (`) payable(`)
Hiring receipts formachine 5,25,000 12% 63,000
Service charges for supply of manpower operators 2,35,000 12% 28,200
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) of the CGST Act, 2017 read with section 2(90) of that Act]. 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) of the CGST Act, 2017.

QUS.8 Pari Ltd. Of Jodhpur (Rajasthan) is a registered manufacturer of cosmetic products. Pari Ltd. Has furnished
following details for the month of April, 20XX:

Particulars `
Receipts Details of 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
Payments
Raw materials

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(i) Purchased from registered suppliers located inRajasthan 1,06,250

(ii) Purchased from unregistered suppliers located inRajasthan 37,500

(iii) Purchased from Punjab from registered supplier 1,00,000
(iv) Integrated tax paid on import from USA 22,732
Consumables purchased from registered suppliers located in Rajasthan including 1,56,250
high speed diesel (Excise and Vat paid) worth ` 31,250 for running the machinery
in the factory
Monthly rent for the factory building to the owner in Rajasthan 1,00,000
Salary paid to employees on rolls 6,25,000
Premium paid on life insurance policies taken for specified employees. Life 2,00,000
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 balance of Input Tax Credit (ITC) with Pari Ltd. As on 1st April, 20XX 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 eligible input tax credit have been complied with
by Pari Ltd., wherever applicable.
Compute eligible input tax credit and net GST payable (CGST and SGST or IGST as the case may be) by Pari
Ltd. For the month of April, 20XX.

ANS- Computation of eligible input tax credit available with Pari Ltd. In the month of April, 20XX

Sr. No. Particulars Eligible input tax credit

CGST ` SGST` IGST`
1. Raw Material:
Purchased from local registeredsuppliers [Note 1(i)] (` 9,562.50 9,562.50
1,06,250 x 9%)

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Purchased from local unregistered suppliers [Note1(ii)] Nil Nil

Purchased from Punjab from registered supplier 18,000
[Note 1(i)] (` 1,00,000 x 18%)
Raw material imported fromUSA [Note 1(iii)] 22,732
2. Consumables [Note 2] [(1,56,250-31,250) x 9%] 11,250 11,250
3. Monthly rent for the factorybuilding to the owner in 9,000 9,000
Rajasthan [Note 3]
4. Salary paid to employees onrolls [Note 4] Nil Nil Nil

5. Premium paid on life insurancepolicies taken for 18,000 18,000 -

specified employees[Note 5] (` 2,00,000 x 9%)

Total 47,812.50 47,812.50 40,732
Add: Opening balance of ITCon 01.04.20XX 20,000 15,000 15,000
Eligible ITC [Note 7] 67,812.50 62,812.50 55,732

Computation of net GST payable for the month of April, 20XX

Particulars CGST` SGST` IGST`

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: Eligible 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 of the CGST Act.
(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 input tax credit (ITC) on such raw material.
(iii) IGST paid on imported goods qualifies as input tax in terms of section 2(62) of CGST Act, 2017. Therefore,

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credit of IGST paid on imported raw materials used in the course or furtherance of business is available in
terms of section 16 of the CGST Act.

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.

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 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).

QUS.9 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 20XX:

Source Purchases(`) Sales (`) Tax Rate

New Delhi 5,00,000 10,00,000 18%
Trivandrum 2,50,000 8,00,000 9% 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 01-04-20XX:

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Source Taxes (`) Interest (`) Penalty (`)

CGST 50,000 1500 500
SGST 30,000 1500 500
IGST 1,00,000 2000 500

Compute the minimum net CGST, SGST and IGST payable by Mr. George during April 20XX in cash ?

ANS- Computation of net CGST, SGST and IGST payable in cash by Mr. George during April 20XX

Particulars Amount(`) CGST @9% (`) SGST @9% (`) IGST@18% (`)
Sales made outside Kerala(New Delhi) – 10,00,000 1,80,000
[Being inter-State sale, the same is liable
to IGST.]
Sales made in Trivandrum 8,00,000 72,000 72,000
Less: ITC available duringApril 2018 for set (72,000)CGST (10,000)IGST (1,80,000)
off [Refer Working Note Below] (52,500)SGST
Net tax liability payable in cash Nil 9,500 Nil
Net ITC available 500 Nil Nil
Working Note: ITC available during April 20XX is computed as under:
Opening balance of ITC 50,000 30,000 1,00,000
Purchases from New Delhi[Being inter- 5,00,000 90,000
State purchase, IGST would have been
paid on it.]
Purchases from Trivandrum 2,50,000 22,500 22,500
Total input tax credit 72,500 52,500 1,90,000

Note: Since sufficient balance of ITC of CGST is available for paying CGST liability and cross-utilization of ITC
of CGST and SGST is not allowed, ITC of IGST has been used to pay SGST (after paying IGST liability) to
minimize cash outflow. Interest and penalty paid are not available as credit.

QUS.10 Flowchem Palanpur (Gujarat) has entered into a contract with R Refinery, Abu Road (Rajasthan) on 1st July,

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20XX 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 20thJuly, 20XX and they reached the destination at Abu-
Road on 21stJuly, 20XX. 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, 20XX on which it has paid CGST
and SGST as under:

Sr. No. Particulars Amount paid Amount paid

CGST (`) SGST (`)
1. It has availed services of works contractor to erect foundation 5,000 5,000
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 10,000 10,000
to the factory for the purpose of production facility.
3. For the purpose of smooth and convenient communication in its 5,000 5,000
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 company to 2,500 2,500
provide home travel facility to its employees when they are on
leave.
5. It has entered into an agreement with a fitness centre to provide 2,000 2,000
wellness services to its employees after office hours

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Work out the GST liability [CGST& SGST or IGST, as the case may be] of Flowchem Palanpur (Gujarat) for July,
20XX after making suitable assumptions, if any.

ANS- Computation of GST liability of Flowchem, Palanpur (Gujarat) for July 20XX

Particulars CGST @9% (`) SGST @9% (`) IGST @18% (`)

Output tax liability [Working Note 1] 1,88,100

Less: ITC available for set off[Working Note 2] 25,000 25,000
(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 20XX

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.

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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, the value shall be included in taxable value.

(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 20XX

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 travelfacility to Nil Nil
employees Note 3]

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Services of fitness centre to provide wellnessservices to Nil Nil

employees [Note 3]
Total ITC 25,000 25,000

Notes:
(1) 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.

(2) 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.

(3) 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.

QUS.11 Mr. NY, a supplier of goods pays GST under regular scheme. Mr. NY is not eligible for any threshold
exemption. He has made the following outward taxable supplies during September 20XX:

Particulars Rate of Tax Amount (`)

CGST SGST IGST
Intra State Supply of goods
Product A 6% 6% - 8,00,000
Product B 9% 9% - 2,00,000
Inter State Supply of goods
Product A - - 12% 3,00,000
Product B - - 18% 1,50,000

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He has also furnished the following information in respect of supplies received by him during September
20XX:

Particulars Rate of Tax Amount (`)

CGST SGST IGST CGST
Intra State Supply of goods
Product A 6% 6% - 2,00,000
Product B 9% 9% - 1,00,000
Inter State Supply of goods
Product A - - 12% 1,50,000
Product B - - 18% 80,000

Mr. NY has following ITCs with him at the beginning of September 20XX:

Particulars `
CGST 40,000
SGST 28,000
IGST 44,600

Note:
(i) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(ii) All the conditions necessary for availing the ITC have been fulfilled.
Compute net GST payable by Mr. NY for the month of September 201XX. Make suitable assumptions
wherever required.

ANS- Computation of GST payable by Mr. NY for the month of September,

Sr.No. Particulars CGST (`) SGST (`) IGST (`)

(i) Intra-State supply of goods
Product A 48,000 48,000
Product B 18,000 18,000

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(ii) Inter-State supply of goods

Product A 36,000
Product B 27,000
Total 66,000 66,000 63,000

Computation of total ITC available

Sr.No. Particulars CGST (`) SGST (`) IGST (`)

(i) Opening balance 40,000 28,000 44,600
(ii) Intra-State supply of goods
Product A 12,000 12,000
Product B 9,000 9,000
(iii) Inter-State supply of goods
Product A 18,000
Product B 14,400
Total 61,000 49,000 77,000

Computation of net GST payable (from cash ledger)

Particulars CGST (`) SGST (`) IGST (`)

GST payable 66,000 66,000 63,000
Less: ITC (61,000)-CGST (14,000)-IGST (63,000)-IGST
(49,000)-SGST
Net GST payable 5,000 3,000 Nil

Note 1. ITC of IGST shall be first utilize fully to pay IGST, CGST and SGST in that order.

Note 2. IGST credit after setting it against IGST liability of Rs. 63,000/- i.e. Rs. 14,000/- to be adjusted first
with SGST liability since CGST credit is almost sufficient to set off CGST liability.

QUS.12 Determine the value of supply and the GST liability, to be collected and paid by the owner, with the following

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particulars:

Rent of the commercial building 18,00,000

Maintenance charges collected by local society from the owner and reimbursed 2,50,000

by the tenant

Owner intends to charge GST on refundable advance, as GST is applicable on 6,00,000

advance
Municipal taxes paid by the owner 3,00,000

GST rates applicable on renting of business premises are as follows: CGST 9% SGST 9%
Provide suitable explanations where required.

ANS- Computation of Value of Supply and GST liability:

Particulars Amount (`)

Rent of the commercial buiding 18,00,000
Maintenance charges collected by the local society I owner and reimbursed 2,50,000
by the tenant [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]
Refundable advance [Being refundable, the advance is I nature of security Nil
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]
Municipal taxes paid by the owner [Being an expenditureincurred by the supplier, Nil
the same is not includible in the value, assuming that such taxes are not charged to
the recipient.]
Value of supply 20,50,000
CGST @ 9% 1,84,500
SGST @ 9% 1,84,500

Note: Rent and maintenance charges are assumed to be exclusive of GST.

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QUS.13 Quanto Ltd. Is not required to register under CGST Act, 2017, but it wishes to obtain voluntary registration, so
it applied for voluntary registration on 17th September, 20Xxand registration certificate has been granted to
it on 25th September, 20XX. The CGST and SGST liability for the month of September, 20XX is ` 24,000 each.
Quanto Ltd. Provides the following information of inputs and capital goods held in stock on 24th September,
20XX. It is not engaged in making inter-State outward taxable supplies.

Particulars Amount (`)

Input procured on 02-09-20Xxlying in stock
- CGST @ 6% 4,500
- SGST @ 6% 4,500
Input received- on 21-07-20Xxcontained 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 were procured
on 19-09-20XX (Last Year)
- IGST @ 18% 36,000
Inputs valued at ` 50,000 procured on 13-09-20Xxlying in stock:
- IGST @ 18% 9,000
Capital goods procured on 12-09-20XX
-CGST @ 6% 12,000
-SGST @ 6% 12,000

You are required to compute the amount of tax to be paid in cash by Quanto Ltd. For the month of
September, 20XX.
You are also required to mention reasons for treatment of all above items.

ANS- Computation of net GST liability (to be paid in cash) by Quanto Ltd. For the month of September, 20XX:

Particulars CGST (Rs) SGST (Rs)

Output tax liability for the month 24,000 24,000

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Less: Input tax credit (ITC) [Refernote-2below] 9,000 (IGST) 12,000 (SGST)
12,000 (CGST)
Net GST payable (in cash) 3,000 12,000

Notes:
1. Credit of IGST shall be utilized towards payment of IGST, CGST and SGST in that order. Since Quanto Ltd.
Does not make any inter-State supply, credit of IGST has been utilized towards payment of CGST [Section
49(5) of the CGST Act, 2017].

2. As per section 18(1)(b) of the CGST Act, 2017-

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) of the CGST Act, 2017].

In this case, since Quanto Ltd. Has been granted voluntary registration on 25.09.20XX, it will be entitled to ITC
on inputs held in stock and inputs contained in semi-finished/ finished goods held in stock, on 24.09.20XX. In
view of the said provisions, eligible ITC for Quanto Ltd.is computed as follows:

Particulars CGST (`) SGST (`) IGST(`)

Inputs held in stock since 02.09.20XX 4,500 4,500
Inputs received on 21.07.20XX contained in semi-finished goods 7,500 7,500
held in stock
Inputs contained in finished goods held in stock which were Nil
procured on 19.09.20XX (Last Year)
[Procured prior to one year,hence ITC cannot be availed]

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Inputs held in stock since 13.09.20XX 9,000

Capital goods procured on 12.09.20XX Nil Nil
Total ITC 12,000 12,000 9,000

QUS.14 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% (other than to sister concerns) on total amount of freight paid (inclusive
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

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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%.

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 I & 9/2017 IT I
both dated 28.06.2017.]
Transportation Railways 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 I
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 I dated 28.06.2017.]
Transportation of flour by GTA 55,000 Nil
[Services provided by GTA by way of transport (in a goods carriage)
inter alia, flour are exempt from GST vide Notification No. 9/2017 IT
of, I dated 28.06.2017.]

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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 I 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 Notification No. 10/2017 IT I
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 Notification No. 9/2017 IT
I dated 28.06.2017.]
Transportation of biscuits by GTA to sisterconcern 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 I
dated 28.06.2017.]
Total tax payable by XYZ Ltd. Onavailing 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 Particulars GST paidon Freight billed GST Charged

Freight paid [`] Freight [`] [B] (with mark- @ 12% [`]
[A] up @ 2% on

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[A] + [B]) [`]

Transportation of biscuits in a local minivan 54,000 - 55,080 6,610
belonging to an individual
Transportation of biscuits by IndianRailways 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

Qus.15 Skylark Pvt. Ltd., Noida (Uttar Pradesh) is engaged in various kinds of commercial activities. It manufactures
taxable goods as also provides certain services. The company has branch office in New Delhi. The Head office
at Noida and the branch office in New Delhi are registered under GST. The branch office at New Delhi is
eligible for full input tax credit.
The company has reported a total turnover of Rs 256 crore (exclusive of GST) for the month of August 20XX.

The following information is provided by the company in relation to such turnover:

(i) The turnover includes Rs 45 crore from sale of securities which were purchased for Rs 30 crore in the
month of January last year.

(ii) The company supplied goods worth Rs 50 crore to ABC Ltd. In UK under a letter of undertaking (LUT). The
total export proceeds are received in the month of August 20XX itself; Rs 30 crore in foreign currency and
balance Rs 20 crore in Indian rupees.

(iii) The company provided consulting services to Sherpa & Sons in Nepal for ` 30 crore under a LUT. The
entire consideration is received in Indian rupees in the month of August 20XX itself, with the permission of
RBI.

(iv) The turnover includes supply of goods worth Rs 10 crore to Shanghai Jianguo Trading Company Ltd., a
company based in China. As per the sale contract, the goods were to be assembled at Shanghai Jianguo
Trading Company Ltd.’s office in Gurugram, Haryana. The payment of the goods is received in convertible
foreign exchange in the month of August 20XX itself.

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(v) Goods worth Rs 20 crore are supplied under a LUT to DEF Pvt. Ltd. Located in a SEZ in the State of Uttar
Pradesh.

(vi) Goods worth Rs 40 lakh were being procured from a vendor in Japan. While the goods were in transit,
the company secured an order for the said goods for Rs 50 lakh from a buyer in Thailand. Thus, the goods
were directly sent to Thailand without entering India.

(vii) The company owns three immovable properties in Noida. The first building is let out for running a
printing press at Rs 10 lakh per month. The second building is let out for residential purpose at Rs 5 lakh per
month. The third building is let out to a Cold Storage operator at Rs 5 lakh per month. The cold storage
operator sub-lets the building as a warehouse to store potatoes.

(viii) The remaining turnover comprised of taxable goods sold within the State and outside the State in he
ratio of 3:2.

Total turnover of Rs 256 crore includes the turnover referred to in points (i) to (vii) above. In addition to
above –
(i) the company transferred its stock (taxable goods) from Noida to Delhi branch without any consideration;
the value declared in the invoice is Rs 4.5 crore (exclusive of GST). The cost of production of such goods is Rs
10 crore. Such stock is sold to independent buyers at Rs 15 crore (exclusive of GST).

(ii) the company had sent goods worth Rs 12 crore (exclusive of GST) to M/s Sharma Traders in Haryana on
approval basis on 15th January, 20XX, 15th February 20XX & 15th March 20XX (Rs 4 crore each month).
Goods sent during all the three months are approved in the month of September 20XX.
Compute the GST liability [CGST & SGST or IGST, as the case may be] of Skylark Pvt. Ltd., Noida for the month
of August 20XX. Make suitable assumptions wherever required. (RTP MAY 20)

Assume the rates of taxes to be as under:

CGST SGST IGST

Goods 6% 6% 12%

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Services 9% 9% 18%

ANS- Computation of GST liability of Skylark Pvt. Ltd. For the month of August 20XX

Sr.No. Particulars Value CGST @ 6% SGST @6% IGST@12%

(`in crores) (`in crores) (`in crores) (`in crores)
(i) Export of goods to ABC Ltd. In UK under a 50 Nil
letter of undertaking (LUT) [Note 1]
(ii) Supply of goods to Shanghai Jianguo Trading 10 1.20
Company Ltd. [Note 2]
(iii) Goods supplied to DEF Pvt. Ltd.located in a 20 Nil
SEZ [Note 3]
(iv) Sale within the State [Note 4] 60. 18 3.6108 3.6108 -
(v) Sale outside the State [Note 4] 40.12 4.8144
(vi) Stock transfer from Noida toDelhi [Note 5] 4.5 0.54
(vii) Goods sent for sale on approval 4.00 0.48
basis on 15th February, 20XX [Note 6]
Total tax liability on goods [A] 3.6108 3.6108 7.0344

Services CGST @ 9% SGST @ 9% IGST@18%

(` in crores) (` in crores) (` in crores)
(i) Export of services to Nepal under a LUT 30 Nil
[Note 7]
(ii) Receipts from renting of buildings [Note 8] 0.15 0.0135 0.0135
Total tax liability on services [B] 0.0135 0.0135
Neither goods nor services
(i) Sale of securities [Note 9] 45 Nil Nil Nil
(ii) Goods procured from vendor inJapan and 0.50 Nil
supplied to buyer in Thailand [Note 10]
Total tax liability on goods andservices 3.6243 3.6243 7.0344

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[(A) + (B)]

Notes:
(1) As per section 2(5) of the IGST Act, 2017, export of goods means taking goods out of India to a place
outside India. Receipt of consideration in foreign exchange is not a pre-requisite for export of goods. Export
of goods is a zero rated supply in terms of section 16(1)(a) of the IGST Act, 2017. A zero rated supply is
supplied without payment of tax under a LUT in terms of section 16(3)(a) of that Act.

(2) As per section 2(5) of the IGST Act, 2017, export of goods means taking goods out of India to a place
outside India. Since, in the given case, the goods are being assembled in India (Gurugram, Haryana), the
same are not exported.

Hence, the place of supply thereof will be governed by section 10 of the IGST Act, 2017 which prescribes the
provisions for determining the place of supply of goods other than supply of goods imported into or
exported from India. As per section 10(1)(d) of the IGST Act, 2017, where the goods are assembled or
installed at site, the place of supply shall be the place of such installation or assembly. Therefore, in the given
case, the place of supply will be Gurugram, Haryana.

Since the location of the supplier (Uttar Pradesh) and the place of supply (Haryana) are in two different
States, the same is an inter-State supply liable to IGST [Section 7(1)(a) of the IGST Act, 2017 read with section
5(1) of that Act].

(3) As per section 7(5)(b) of the IGST Act, 2017, supply of goods and/or services to a special economic zone
(SEZ) unit is treated to be a supply of goods and/or services in the course of inter-State trade or commerce.
Therefore, supply of goods to a SEZ unit located within the same State shall be liable to IGST [Section 5(1) of
the IGST Act, 2017].

Supply of goods and/or services to a SEZ unit is a zero rated supply in terms of section 16(1)(b) of the IGST
Act, 2017. A zero rated supply is supplied without payment of tax under a LUT in terms of section 16(3)(a) of
that Act.

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(4) Remaining turnover will be calculated as under

256 crore – ( 45 crore + 50 crore + 30 crore + 10 crore + 20 crore + 0.50 crore + 0.10 crore + 0.05
crore + 0.05 crore)= 100.30 crore
Supply within the State - `100.30 crore x 3/5 = ` 60.18
Supply outside the State - ` 100.30 crore x 2/5 = ` 40.12

Supply within the State is intra-State supply in terms of section 8(1) of IGST Act, 2017 and thus, chargeable to
CGST and SGST. Supply outside the State is inter- State supply chargeable to IGST [Section 7(1) of IGST Act,
2017 read with section 5(1) of the said Act].

(5) As per section 25(4) of the CGST Act, 2017, a person who has 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, be treated as ‘distinct persons’.

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.

In the given case-

• the location of the supplier is in Noida (Uttar Pradesh); and
• the place of supply is the location of such goods at the time at which the movement thereof terminates for
delivery to the recipient i.e., Delhi, in terms of section 10(1)(a) of the IGST Act, 2017.

Therefore, the stock transfer by Noida office to Delhi branch 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.

Rule 28 of the CGST Rules, 2017 prescribes the provisions to determine the value of supply of goods or
services or both between distinct or related persons, other than through an agent. Second proviso to the
said rule lays down that where the recipient is eligible for full input tax credit, the value declared in the

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GST 703

invoice shall be deemed to be the open market value of the goods or services. Therefore, the value of supply
in this case will be ` 4.5 crore and open market value and cost of production of the goods will be irrelevant.

(6) As per section 31(7) of the CGST Act, 2017, 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 before or at the time of
supply or six months from the date of removal, whichever is earlier.

In the given case, the time period of six months for goods sent on 15th February, 20XX expires on
15.08.20XX. Therefore, the invoice for the said goods shall be issued on 15.08.20XX and in terms of section
12(2)(a) of the CGST Act, 2017 read with Notification No. 66/2017 CT dated 15.11.2017, this date would also
be the time of supply of such goods. Thus, such goods will be liable to tax in the month of August 20XX.
Goods sent in the month of January would have been taxed in the month of July and goods sent in the
month of March would be taxed in the month of September.
Here,
• the location of the supplier is in Noida (Uttar Pradesh); and
• the place of supply is the location of the goods at the time at which the movement thereof terminates for
delivery to the recipient i.e., Haryana in terms of section 10(1)(a) of the IGST Act, 2017.

Since the location of the supplier (Uttar Pradesh) and the place of supply (Haryana) are in two different
States, the same is an inter-State supply liable to IGST [Section 7(1)(a) of the IGST Act, 2017 read with section
5(1) of that Act]

(7) The given case is an export of service as per section 2(6) of the IGST Act, 2017, as-
(i) the supplier of service is located in India (Noida);
(ii) the recipient of service is located outside India (Nepal);
(iii) the place of supply of service is outside India (Place of supply of consulting service will be the location of
recipient, i.e. Nepal);
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange
or in Indian rupees wherever permitted by the Reserve Bank of India (Receipt of export consideration in
Indian rupees is permitted by RBI in the given case); and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in

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accordance with Explanation 1 in section 8.

Export of services is a zero rated supply in terms of section 16(1)(a) of the IGST Act, 2017. A zero rated
supply is supplied without payment of tax under a LUT in terms of section 16(3)(a) of that Act.

(8) Letting out of the building including a commercial, industrial or residential complex for business or
commerce, either wholly or partly, is a supply of service in terms of para 2(b) of the Schedule II to the CGST
Act, 2017. Services by way of renting of residential dwelling for use as residence is exempt from tax
[Notification No. 12/2017 CT I dated 28.06.2017]. Therefore, rent of ` 10 lakh received from letting out of
building for printing press will be liable to tax and rent of ` 5 lakh received from letting out of building for
residential purposes will be exempt from tax.

Further, services by way of loading, unloading, packing, storage or warehousing of agricultural produce is
exempt from tax [Notification No. 12/2017 CT I dated 28.06.2017]. However, in the given case, the Cold
Storage Operator and not Skylark Pvt. Ltd. Is engaged in warehousing of agricultural produce. Therefore,
the Cold Storage Operator providing warehousing services for potatoes, being an agricultural produce, will
be eligible for such exemption and services provided by Skylark Pvt. Ltd., being services of renting of
immovable property (` 5 lakh), will be liable to tax.

In case of letting out of first and third buildings,

• the location of the supplier is in Noida (Uttar Pradesh); and
• the place of supply is the location of the immovable property, i.e. Noida in terms of section 12(3)(a) of the
IGST Act, 2017.

Since the location of the supplier (Uttar Pradesh) and the place of supply (Noida) are in the same State, 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.

(9) GST is leviable on supply of goods and/or services [Section 9(1) of the CGST Act, 2017]. Securities are
specifically excluded from the definition of goods and services as provided under clause (52) and clause (102)
respectively of section 2 of the CGST Act, 2017. Therefore, sale of securities will not be liable to GST.

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(10) Paragraph 7 of the Schedule III to CGST Act, 2017 provides that 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 (third
country shipments) is treated neither as a supply of goods nor a supply of services. Thus, there is no GST
liability on such sales. Further, since such goods do not enter India at any point of time, customs duty and
IGST leviable on imported goods will also not be leviable on such goods.

QUS.16 Sukhdev is a mining engineer. He has crossed the threshold limit for registration under the GST law and is
duly registered in the State of Maharashtra. He effects the following transactions in the month of March,
2019 and wants you to compute the tax payable in cash. He has filed bond/ LUT to claim benefits from zero-
rated supplies. The following are the particulars furnished by him. (NOV 19 Exam)

Sr. No Particulars Value of

supply in `
(a) Sukhdev, being an operating member in mining and exploration 12,00,000
services at Mumbai High, has provided certain services to the Joint
Venture (JV) in which he is also a participant. He believes that the
consideration received from the JV is ‘Cost Petroleum’ and not taxable.
(b) He has purchased certain machinery from outside the State, to 6,00,000
render services to the JV at Mumbai High.
I He has obtained legal opinion from a local firm of advocates to 1,00,000
enter into the contract with the JV, for providing services to
it.
(d) He has obtained accommodation from the State Government to 2,00,000
locate his office close to the sea shore.
(e) He gets a portion of the petroleum silt as part of the 6,00,000
compensation while exploring the petroleum reserves in the
Bombay High- which as per the contract with the Government is part
of ‘Cost Petroleum’.
(f) He sells the petroleum silt to a SEZ Developer in Mumbai 6,80,000
(g) Consideration is received towards transfer of tenancy rights,which 8,00,000
according to Sukhdev is not liable to GST as it has suffered stamp duty.

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(h) On violation of the terms in production sharing agreement, 3,00,000

Sukhdev has paid liquidated damages to the Government.
(i) He has been assigned the right to collect royalty on behalf of --
Maharashtra Government, as ‘Excess Royalty Collection Contractor’. He
has noticed that the mining lease holders have short paid 2,00,000 as
IGST from what had been exempted to him under the assignment.
(j) He has sold self-fabricated machinery through his agent in Mumbai, 10,00,000
that has been used for 2 years, the value of which is not available in the
open market. The agent sells it immediately to an unrelated customer
in Mumbai.
(k) Opening Balance and brought forward tax credits are as follows:
- Electronic Cash Ledger – CGST 12,000
- Electronic Credit Ledger – CGST 18,000
- Electronic Credit Ledger – SGST 12,000
- Electronic Credit Ledger – IGST 60,000
(I) Supply value is exclusive of taxes. Supply of services are taxable atCGST 9%,
SGST 9% and IGST 18% and supply of goods are taxable at CGST 2.5%, SGST
2.5% and IGST 5%. Determine the tax payable in cash.
Provide suitable notes where required.

(i) He has been assigned the right to collect royalty on behalf of Maharashtra --
Government, as ‘Excess Royalty Collection Contractor’. He has noticed that
the mining lease holders have short paid 2,00,000 as IGST from what had
been exempted to him under the assignment.
(j) He has sold self-fabricated machinery through his agent inMumbai, that has 10,00,000
been used for 2 years, the value of which is not available in the open market.
The agent sells it immediately to an unrelated customer in Mumbai.
(k) Opening Balance and brought forward tax credits are as follows:
- Electronic Cash Ledger – CGST 12,000
- Electronic Credit Ledger – CGST 18,000
- Electronic Credit Ledger – SGST 12,000

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- Electronic Credit Ledger – IGST 60,000

(I) Supply value is exclusive of taxes. Supply of services are taxable at CGST
9%, SGST 9% and IGST 18% and supply of goods are taxable at CGST 2.5%,

IGST(`
ANS- Sr.No. Particulars Amount(`) CGST(`) SGST(`) )
A. GST liability on outward supply
(ii) Compensation received in the form of 6,00,000 Nil Nil
petroleum silt, which, as per the
contract with the Government, is part of cost
Petroleum
[Cost petroleum is not a consideration for
service to the Government and thus, is not
taxable.]
(iii) Sale of petroleum silt to a SEZ developer 6,80,000 Nil
[Supply to SEZ developer is a zero- rated
supply and no tax is payable on the same if
made under a bond/LUT.]
(iv) Consideration for transfer oftenancy 8,00,000 72,000 72,000
Rights
[Transfer of tenancy rights to a new tenant
against consideration in the form of tenancy
premium is taxable even though stamp duty
has been paid on the same.]
(v) Sale of self-fabricated machinery* 9,00,000 22,500 22,500
[Since open market value of the machine is
not available, the value will be 90% of the
price charged for the supply of machinery by
the agent to his unrelated customer.]**
Total tax liability on outward supplies 2,02,500 2,02,500

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GST 708

B. GST liability on inward supplies under

reverse
Charge
(i) Legal services provided by a firm of 1,00,000 9,000 9,000
advocates to Sukhdev, i.e. a business entity***

* It has been assumed that the value of ` 10 lakh at which the agent sells the self- fabricated machinery to
unrelated customer is known to Sukhdev at the time he sells the machinery to the agent.

**It has been assumed that the supplier has opted to value the goods at 90% of the value charged by the
agent to the unrelated customer.

*** It has been assumed that aggregate turnover of Sukhdev in the preceding financial year exceeds 20 lakh.

(ii) Renting of immovable property provided by 2,00,000 18,000 18,000

the State Government to Sukhdev (a
registered person)
(iii) Assignment, by the State Government, of 2,00,000
the right to collect royalty from mining lease
holders to the extent the exemption is not
Available
Total tax liability on inward supplies under reverse 27,000 27,000 2,00,000
charge

C. Input tax credit

(i) Opening balance 18,000 12,000 60,000
(ii) Inter-State Since the goods and 6,00,000 30,000
Purchase of services are used for
Machinery effecting taxable
(iii) Legal services supplies including zero 1,00,000 9,000 9,000
(iv) Renting of rated supplies, full ITC 2,00,000 18,000 18,000

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GST 709

immovable thereon will be

Property Allowed
(v) Assignment of 2,00,000
right to collect
Royalty
Total ITC 45,000 39,000 2,90,000
[ITC may be availed for making zero rated
supply even if such a supply is an exempt
supply. Sale of petroleum silt, being a non-
taxable supply, is an exempt supply but since
it is also a zero-rated supply, ITC can be
availed for making such supply.]

D. Computation of tax payable in cash

Total tax liability on outwardsupplies 2,02,500 2,02,500
Less: ITC of IGST 1,26,500 1,63,500
Less: ITC of CGST and SGST 45,000 39,000
(CGST) (SGST)
Forward charge liability on outward supplies 31,000
payable in cash after set off of ITC
Reverse charge liability payable incash 27,000 27,000 2,00,000
without set off of ITC
[Tax payable under reverse charge, being not
an output tax, cannot be set off against ITC
and thus, will have to be paid in cash.]
Total tax liability payable in cash 58,000 27,000 2,00,000
[Since `12,000 (CGST) is available in Electronic Cash
Ledger as opening balance, additional ` 46,000
(CGST) needs to be paid in cash.]
Payment of liquidated damages to the 3,00,000 Nil Nil
Government

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[Services provided by the Government by way of

tolerating non-performance of a contract for which
consideration in the form of liquidated
is payable to the Government under such
contract, is exempt from GST. Hence, no tax
will be payable by Sukhdev on such input service.]

Note: In terms of section 49B of the CGST Act, 2017, full (100%) IGST credit of ` 2,90,000 must be utilised
first before using CGST or SGST credit. However, the said IGST credit can be set off against the CGST and
SGST liability in any order and in any proportion. Thus, the final answer in each case would vary.

QUS.17 Raman Row, a registered supplier under GST in Mumbai, Maharashtra is directed by Nero Enterprises,
Kolkata, West Bengal to deliver goods valued at ` 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. (MTP Nov 20)

ANS- The supply between Raman Row (Mumbai, Maharashtra) and Nero Enterprises (Kolkata, West Bengal) is a
bill to ship to supply where the goods are delivered by the supplier [Raman Row] to a recipient [Fabricana
(Aurangabad, Maharashtra)] or any other person on the direction of a third person [Nero Enterprises]. In
such a case, it is deemed that the said third person has recei ved the goods and the place of supply of such
goods is the principal place of business of such person [Section 10(1)(b) of IGST Act, 2017].

Accordingly, the place of supply between Raman Row (Mumbai, Maharashtra) and Nero Enterprises
(Kolkata, West Bengal) will be Kolkata and thus, it will be an inter- State supply liable to IGST. Hence, Raman
Row should charge 18% IGST on ` 12,00,000, which comes out to`2,16,000
This situation involves another supply between Nero Enterprises (Kolkata, West Bengal) and Fabricana
(Aurangabad, Maharashtra). 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, Maharashtra in
terms of section 10(1)(a) of IGST Act, 2017. Thus, being an inter- State supply, the same will also be

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chargeable to IGST.

QUS.18 Mr. Rishi, a registered supplier under GST in the State of Maharashtra, provides the following information for
the month of January 2020: (Nov 20 exam)
Sr. No. Particulars Amount in `
OUTWARD SUPPLY:
(i) Supplied computers (which were purchased from an unregistered supplier) Nil
without any consideration to his brother-in-law in Ranchi (market value of
supply was ` 62,000)
(ii) Supplied a consignment of 10 laptops to M/s NK & Co. in the State of 6,00,000
Maharashtra at the instruction of third person being M/s ZX Computers of Tamil
nadu.
(iii) Provided stock counting service to M/s XY Impex registered with GST in the 80,000
State of Gujarat, whereas the place where the stock counting was carried out
was at the godown located in Mumbai
(iv) 30,000
Provided renting services of his service apartment in Mumbai at a daily rent of
1500 for residential purpose
(v) Recovery agent services provided to Apex Finance Ltd., an NBFC located in Delhi 2,00,000
(vi) Advance received during the month for future intra-State supply 9,00,000
INWARD SUPPLY:
(i) Imported computer accessories from Korea and the goods landed in Mumbai 5,00,000
Port and reached at his registered premises on 31.01.2020
(ii) Availed GTA services from M/s Speed Trans of Kolkata with regard to 1,00,000
transport of traded goods where rate of CGST/SGST @ 2.5% each IGST @ 5%
was applicable
(iii) Apart from the above, received 15 invoices involving IGST of ` 1,00,000 during --
the current month

Mr. Rishi provided the following additional information:

(a) Turnover for the previous financial year was ` 21 lakh.
(b) He had availed services in an inter-State transaction with a taxable value of ` 4,00,000 and a tax rate of

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GST 712

18%. This transaction was liable to tax under reverse charge. Payment for the same to the supplier was not
made till the current month (overdue for 181 days as at 01.01.2020). However, tax due under the said
transaction was paid to Government and credit availed in the month of transaction itself.
(c) Out of the 15 invoices as per above, 12 invoices involving IGST of ` 95,000 were uploaded by the suppliers
in their GSTR-1 Return. All the invoices are eligible for claiming as ITC.
(d) He had sent goods valued ` 1,00,000 to his job worker, in the State of Kerala, who further processed the
said goods and made direct supply on 31.01.2020 from Kerala to a buyer in the State of Maharashtra.
(e) Out of advance received for future supply, ` 5,00,000 related to supply of goods and the rest related to
service.
(f) Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively for both inward and outward supply of
goods and services. Same rate is also applicable for inward supplies received, except where otherwise
provided.
(g) All the amounts given are exclusive of taxes wherever applicable.
From the information given above, you are required to compute the net GST liability payable in cash (CGST
and SGST or IGST, as the case may be) for the month of January, 2020. Assessee wants to make the cash
payment of GST under SGST head as far as possible. (14 Marks)

ANS- Computation of net GST payable in cash for the month of January 2020

Sr.No. Particulars Amount(`) CGST (`) SGST (`) IGST (`)

A. GST liability on outward supply
(i) Computers supplied without consideration Nil - - -
[Not a supply as it is made without
consideration and is also not covered in
Schedule I because computers have been
supplied to an unrelated person and ITC has
also not been availed on the same.]
(ii) Consignment of laptops supplied at the 6,00,000 1,08,000
instruction of third person [6,00,000
[Since supply is a bill to ship to supply where ×18%]
the goods are delivered on the direction of a

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third person-ZX Computers, goods are

deemed to be received by ZX Computers and
thus, the place of supply is Tamil Nadu.
Hence, it is an inter- State supply.]
(iii) Stock counting service to M/s XY Impex of 80,000 7,200 7,200 NIL
Gujarat [80,000 [80,000
[Intra-State supply as the place of supply is × 9%] × 9%]
the location of recipient, viz. Mumbai.
Godown at Mumbai being a fixed
establishment is the location of recipient.]
(iv) Service 30,000 2,700 2,700
[Taxable, since the value of supply of the [30,000 [30,000
accommodation unit exceeds ` 1,000 per × 9%] × 9%]
day. Intra-State supply since place of supply
is Maharashtra as property is located in
Mumbai.]
(v) Recovery agent servicesprovided to 2,00,000 - - -
an NBFC
[Tax is payable by the NBFCunder
reverse charge.]
(vi) Advance received for intra- State supply 4,00,000 36,000 36,000
[Tax on advance received forsupply of goods [4,00,000 [4,00,000
of ` 5,00,000 will be payable at the time of × 9%] × 9%]
issuance of invoice.]
(vii) Finished goods sold from the premises of 1,00,000 9,000 9,000
the job worker* [Supply of goods by [1,00,000 [1,00,000
principal from the job worker’s premises is × 9%] × 9%]
Regarded as supply by principal only
irrespective of the location of job worker.
Therefore, since the place of supply is
the location where movement of goods

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GST 714

terminates for delivery to recipient, i.e.,

Maharashtra, it is an intra- State supply.]
Total tax liability on outward supplies 54,900 54,900 1,08,000

B. GST liability on inward supplies under reverse

charge
(i) GTA services availed from M/s Speed Trans 1,00,000 5,000
[Tax is payable under reverse charge on the GTA [1,00,000
services received by a registered person and on × 5%]
which tax is payable @ 5%. Further, it is an inter-
State supply since supplier is located in Kolkata
and place of supply is Maharashtra (location of
registered recipient)]

*It has been assumed that either Mr. Rishi has declared the job worker’s place of business / premises as his
additional place of business or the job worker is registered. Further, it has been assumed that the goods
have been sold from the job worker’s premises at a price of ` 1,00,000 itself.

C. Input tax credit

Import of computer accessories *5,00,000 90,000
[Input tax, inter alia, includes IGST charged [5,00,000
on import of goods]*inclusive of BCD & SWS × 18%]
GTA services availed 1,00,000 5,000
IGST on invoices received during the month 95,000
[Full ITC can be claimed on the invoices
uploaded by supplier in Form GSTR-1.

Further, where invoice has not been

uploaded by the supplier in its GSTR-1,
NO ITC can be availed as per amended rule
of 36 (4).

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ITC in respect of only invoices uploaded In

GSTR 1 can be availed.
Less: Input tax reversed [Outward supply, tax (20,419)
on which is payable under reverse
charge is considered as exempt supply for the
Purpose of reversal of ITC. = ` 1,95,000 x `
2,00,000/ ` 19,10,000 (` 1,95,000 x
Turnover of exempt supply/ total turnover)
[The condition for making the payment for
the supply within 180 days so that the ITC
availed does not get added to the output tax
liability does not apply to reverse charge
supplies. Thus, ITC on `4,00,000 will not be
affected.]
Total ITC available for set off - - 1,69,581

D. Computation of net GST payable in cash

Total tax liability on outward supplies 54,900 54,900 1,08,000
Less: ITC of IGST (54,900) (6,681) (1,08,000)
Forward charge liability on outward supplies -
payable in cash after set off of ITC
Reverse charge liability on inward supplies 5,000
payable in cash without set off of ITC [Tax
payable under reverse charge, being not an
output tax, cannot be set off against ITC and
thus, will have to be paid in cash.]
Total net GST liability payable in cash4 - 48,219 5,000

QUS.19 (a) M/s All-in-One, a partnership concern and a registered supplier under GST, is engaged in providing
various services under one roof. The concern provides the following information pertaining to supply
made/input services availed by it during the month of March 2020:

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Particulars `
(i) Provided Direct Selling Agent service to Y Bank Ltd. 4,00,000
(ii) Provided security services to ABC P. Ltd., a registered person under GST 60,000
(iii) Provided security services to PSR Trust, an unregisteredperson under GST 1,00,000
(iv) Provided renting of motor vehicle to Amaze Tours Ltd. and supply value included 75,000
cost of fuel
(v) Provided renting of motor vehicle to Priti & Co., CA firm and supply value 40,000
included cost of fuel

Determine the GST liability of M/s All-in-One for the month of March, 2020 by giving necessary explanations
for treatment of various items. Rate of tax for both inward and outward supply is CGST/SGST@ 9% each
except renting a vehicle, for which CGST/SGST @ 2.5% each is applicable. M/s All-in- One commenced its
business from February, 2020. All the supplies are intra-State only.

It has been assumed that IGST has been paid on imported goods before January 2020. Therefore, the same
has not been considered as being paid in cash in the month of January 2020.

ANS- (a) GST liability of M/s All-in-One

Particulars Value [`] CGST SGST

Payable [`] Payable [`]
A. GST liability on outward supply
(i) Direct selling agent service to Y Bank Ltd. 4,00,000 36,000 36,000
[Tax is payable under forward charge since the [4,00,000 [4,00,000
supplier of such service is a partnership firm and not x 9%] x 9%]
an individual.]
(ii) Security services5 to ABC P. Ltd., a registered person6 -
[Tax is payable under reverse charge by the recipient
since security services are provided by a non-body

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GST 717

corporate to a registered person.]

(iii) Security services to PSR Trust, an unregistered 1,00,000 9,000 9,000
Person [1,00,000 [1,00,000
[Tax is payable under forward charge since security x 9%] x 9%]
services are provided by a non-body corporate to an
unregistered person.]
(iv) Renting of motor vehicle to Amaze Tours Ltd. where -
value included cost of fuel [Tax is payable under reverse
charge by recipient since such services are provided by a
non-body corporate to a body corporate and GST is
payable @ 5%.]
(v) Renting of motor vehicle to Priti & Co., CA firm, where 40,000 1,000 1,000
supply value included cost of fuel [40,000 [40,000
[Tax is payable under forward charge since X 2.5%] X 2.5%]
such services are provided by a non-body corporate to a
non-body corporate.]
Total GST liability on outward supplies 46,000 46,000

It is assumed that security services are the services provided by way of supply of security personnel. 6It is
assumed that ABC Pvt. Ltd. pays tax under section 9 of the CGST Act, 2017.

B. GST liability on inward supplies under reverse charge

(vi) Availed representational service from PB and Co, a law 70,000 - -
firm [Legal services provided by a partnership firm of
advocates/individual advocate other than a senior
advocate to a business entity with an aggregate turnover
up to such amount in the preceding financial year as
makes it eligible for exemption from registration, are
exempt from GST.
Since M/s All-in-One started its business in February 2020,
its turnover in the preceding financial year is zero making

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GST 718

it eligible for exemption from registration in the preceding

financial year and hence,
GST liability on inward supplies under reverse charge - -

QUS.20 Sahu Parivar, pumps manufacturer in Vadodra (Gujarat) has provided following details for the monthof May:

1. As a staff welfare measure, Sahu Parivar has entered into an agreement with PNS Insurance Company to
provide life insurance to its employees. PNS charged Rs. 35,00,000 for the same.
2. It has entered into an agreement with a travel company to provide home travel facility to its employees
when they are on leave. Travel company charged Rs. 1,00,000 for such facility.
3. It has entered into an agreement with a fitness center to provide wellness services to itsemployees after
office hours for a consideration amounting to Rs.80,000.
4. It has availed services of the works contractor to erect foundation for fixing the machinery toearth, in the
factory. It paid Rs. 50,000 for the same.
5. It laid pipelines (from the water source outside the factory) upto the gate of the factory for the purpose of
production facility. The cost incurred for the same is Rs. 4,00,000.
6. For the purpose of smooth and convenient mobile communication in its factory, It has installed
telecommunication tower of a mobile company (with due permission) by incurring Rs. 2,00,000.

Note: All the above transactions are intra-State in nature.

Sahu Parivar has also entered into a contract with AP Refinery, Sambhra (Rajasthan) on 1st May to supply
and install 16 pumps on FOR basis. The following information is provided in this regard:

List price per pump is Rs. 1,60,000, exclusive of taxes. One of the conditions of the contract is that Sahu
Parivar should ensure a two stage third party inspection for the pumps during the manufacturing process.
Cost of inspection of Rs. 24,000 (for 16 pumps) is directly paid by AP Refinery to testing agency. AP Refinery
requires a special packing for the pumps and the cost of such special packing is Rs. 86,000 (for 16 pumps).

Sahu Parivar arranges for erection and testing of the pumps supplied by it at AP Refinery’s site. Cost of
erection etc. is Rs. 24,000 (for 16 pumps). Goods are dispatched with tax invoice on 20th May and they reach
the destination at Sambhra on 21st May. Lorry freight (for 16 pumps) of Rs. 16,000 has been paid by AP

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Refinery directly to the lorry driver.

Assume CGST, SGST and IGST rates to be 9%, 9% and 18% respectively. For the relevant month, the opening
balance of ITC of IGST is Nil, CGST is Rs. 32,500 and SGST is Rs. 32,500. All the given amounts are exclusive of
GST, wherever applicable.

You are required to work out the net GST [CGST and SGST or IGST, as the case may be] payable from
Electronic Cash Ledger of Sahu Parivar for the month of May after making suitable assumptions,if any.
(MTP MAY 21)

ANS- Computation of net GST payable by Sahu Parivar for the month of May

Particulars CGST (Rs.) SGST(Rs.) IGST (Rs.)

Output tax liability [Working Note 1] 4,87,800
Less: ITC of CGST [Working Note 2] (37,000)
Less: ITC of SGST has been utilized only after ITC
of CGST has been utilized fully in terms of proviso to section (37,000)
49(5)(c) [Working Note 2]
Net GST payable from Electronic CashLedger 4,13,800

Working Note 1
Computation of output tax liability of Sahu Parivar for the month of May

Particulars Amount (Rs.)

List price of 16 pumps (Rs. 1,60,000 x 16) 25,60,000
Add: Amount paid by AP Refinery to testing agency [Note 1(i)] 24,000
Add: Special packing [Note 1(ii)] 86,000
Add: Erection and testing at site [Note 1(ii)] 24,000
Add: Freight [Note 1(iii)] 16,000
Value of taxable supply 27,10,000
IGST @ 18% [Note 2] 4,87,800

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Notes:
(1) As per section 15(2) of the CGST Act, 2017:-
(i) 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, 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, the value shall be included in taxable value.

(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 shall be included in the value of supply.

(iii) 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.

(2) 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 Sambhra (Rajasthan). Sincethe 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 Sahu Parivar for the month of May

Particulars CGST @ 2.5% (Rs.) [email protected]% (Rs.)

Opening ITC 32,500 32,500

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Services of PNS Insurance company to provide life insuranceto Nil Nil

employees [Note 1]
Services of travel company to provide home travel facility to Nil Nil
employees Note 1]
Services of fitness center to provide wellness services to employees Nil Nil
[Note 1]
Wok contract services availed for erecting foundation for fixing the 4,500 4,500
machinery to the earth in the factory [Note 2]
Laying of pipeline up to the gate of factory from water source located Nil Nil
outside the factory [Note 3]
Installation of telecommunication towers [Note 3] Nil Nil
Total ITC 37,000 37,000

Notes:
As per section 17(5) of the CGST Act, 2017
(1) ITC on life insurance is blocked unless it is used in case of sub-contracting or the same is provided under
any statutory obligation. ITC on travel benefits extended to employees on home travel concession and
membership of health and fitness center 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.

(2) 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. Hence, ITC on works contract services for construction of plant and machinery is allowed. Further,
plant and machinery includes foundation and structural supports used to fix the machinery to earth.

(3) 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.

QUS.21 M/s Shivay, a registered supplier, supplies the following goods and services for construction of buildings and

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GST 722

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 Shivay receives the following services:

- Maintenance services for excavators;
- 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 Shivay are as follows:
- Hire charges for excavators - Rs. 18,00,000
- Service charges for supply of manpower for operation of the excavator - Rs. 20,000
- Service charges for soil testing and seismic evaluation at three sites -Rs. 2,50,000
The GST paid during the said month on services received by M/s Shivay is as follows:
- Maintenance for excavators - Rs. 1,00,000
- Health insurance for excavator operators - Rs. 11,000
- Scientific and technical consultancy for soil testing and seismic evaluation - Rs. 1,00,000 Compute the net

GST payable by M/s Shivay from Electronic Cash Ledger 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% (Ignore CGST, SGST or
IGST for the sake of simplicity).

Note: - Opening balance of ITC of GST is nil.

ANS- Computation of net GST payable by M/s Shivay

Particulars GST payable (Rs.)

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Gross GST liability [Refer Working Note 1 below] 2,63,400

Less: ITC [Refer Working Note 2 below] 2,00,000
Net GST payable from Electronic Cash Ledger 63,400

Working Notes
(1) Computation of gross GST liability

Particulars Value Rate of GST GST

Received (Rs.) Payable (Rs.)
Hiring charges for excavators 18,00,000 12% 2,16,000
Service charges for supply of manpower for operation of 20,000 12% 2,400
excavators [Refer Note 1]
Service charges for soil testing and seismic evaluation 2,50,000 18% 45,000
[Refer Note 2]
Gross GST liability 2,63,400

Notes:
(i) Since the excavators are invariably 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.

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 is12%.

(ii) 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 18%.

(2) Computation of ITC available for set off

Particulars GST paid (Rs.) ITC available (Rs.)
Maintenance services for excavators [Refer Note 1] 1,00,000 1,00,000

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Health insurance for excavator operators [Refer Note 2] 11,000 -

Scientific and technical consultancy [Refer Note 1] 1,00,000 1,00,000
Total ITC available 2,00,000

Notes:
(i) Section 17(5)(d) of the CGST Act, 2017 blocks credit on goods/ or services received by a taxable person for
construction of an immovable property on his own account. Here, though the excavators are used for
building projects, the same are not used by M/s. Shivay on its own account for construction of immovable
property instead they are used for outward taxable supply of hiring out of machinery. Further, excavators are
special purpose vehicles whose credit is not restricted under section 17(5)(a) of the CGST Act, 2017,
therefore, ITC on maintenance service for excavators shall be allowed.

Therefore, the maintenance service for the excavators does not get covered by the bar under section 17 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.

(ii) Section 17(5)(b)(i) of the CGST Act, 2017 allows input tax credit on health insurance only where an inward
supply of such services 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 or where it is
obligatory for an employer to provide the same to its employees under any law for the time being in force.

In the given case, it is assumed that it is not obligatory for employer to provide health insurance to its
employees under any law for the time being in force, therefore the credit thereon will not be allowed.

QUS.22 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.

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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 Techno art
- 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 `
Supply of electronic home appliances to wholesale dealers of such appliances in 84,00,000
Delhi Electronic home appliances supplied to Anchor Electricals Inc., USA under LUT 1,26,00,000
[Consideration received in convertible foreign exchange]
Repair and maintenance services provided to Unitech Ltd., an electronic appliance 8,40,000
manufacturer, located in Delhi
Advance received towards repair and maintenance services to be provided to 7,00,000
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 Novick 8,40,000
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]

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GST 726

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:

Goods/services supplied CGST SGST IGST

Electronic home appliances 2.5% 2.5% 5%
Repair and maintenance services 9% 9% 18%

ANS- Computation of gross GST Liability of Kaushal Manufacturers Ltd. for the month of January

Particulars CGST (`) SGST (`) IGST (`)

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

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GST 727

manufacturer, located in Delhi [Note - 6] ×9%] × 9%]

Advance received for electronic home appliances to be Nil
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%.

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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 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 when the invoice ought to have been
issued under section 31.

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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.

QUS.23 MS Ltd. is a GST registered company. During the month of October, 2020, the company has undertaken the
following transactions and wants you to work out the GST output liability, admissible input tax credit and the
amount that will have to be paid in cash by the company to the Government before taking you as a Manager
in the company. There is no carry forward amount in respect of any of the items to be considered for the
purpose of calculations other than what is mentioned specifically below.

Rate of IGST can be taken as 18%, CGST 9% and SGST 9% on all goods and services except GTA service/
transportation service and restaurant service for which CGST and SGST rate would be 2.50% each and IGST
rate would be 5%. The amounts indicated for all the items are without including the CGST and SGST or IGST
element. Whether a supply attracts IGST or CGST/SGST has to be determined on the basis of details given.

The company has indicated to you that the GST liability for October, 2020 for their main product alone is ` 54
lakh of CGST and SGST each and ` 72 lakh IGST and the eligible credit on the inputs and input services for
October, 2020 is ` 1.45 crore IGST and ` 20 lakh each towards CGST and SGST which can be straightaway
taken for calculations.

Company has provided you the other details which is not part of the above as under:

S.No. Details of the transaction

i. During the month of October 2020, the company offered a special discount of 25% on a product,
the sale of which it intended to discontinue from 1st December 2020 onwards and issued credit
notes to the dealers. This product was lying in stock with the dealers and the discount offered
to the customers was borne by the company by issuing the credit note. The amount reimbursed
to the dealers for the discounts given to the customers in the month of October 2020 was
` 36,00,000 in the course of inter-State.
ii. The company sold a van used for personal transport by auction. The van had been purchased
at ` 3,20,000. The depreciated value at the time of sale was ` 1,40,000. No GST credit was taken.

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The van was sold for an amount of ` 1,50,000 during the month of October 2020 in the
course of intra-State.
iii. The company has a policy of raising invoices separately towards transportation cost of their
products on their dealers at the time of invoicing for the products sold to them. The company
is collecting GST at 5% on all transactions and the amount is collected as a percentage of the
value of the goods supplied irrespective of the distance involved. The amount collected during
the month of October 2020 towards transportation in intra- State transaction is ` 6 lakh and
inter-State transactions is ` 4 lakh.
iv. The security establishment of the company caught an employee who had stolen bearings of
value ` 2.50 lakh during the month of October 2020. Bearings could not be recovered.
company successfully recovered the cost from the employee. IGST credit of ` 45,000 had been
taken by the company on these bearings.
v. The company supplies food and beverages to the employees and all the items are priced at 10%
of the actual cost to the company. During the month of October, 2020, the company had
charged ` 50,000 to the employees. Assume that it is intra-State transaction.
vi. During the month of October, 2020, the company purchased 10 mobile phones in its name and
distributed to the employees to enable them to perform their duties more efficiently for the
company. Total price of the phones was ` 1,20,000. At the end of the month, company sold
these mobiles to employees and company recovered only ` 20,000 from the employees.
Assume that it is intra-State transaction.
vii. The company's registered office is located in a building which belongs to the local Municipality.
The monthly rent is ` 1.50 lakh.
viii The whole-time director of the company was paid a salary of ` 5 lakh during the month. He was
also paid ` 20,000 towards sitting fees for his participation in the meeting.

Give a brief note to support your treatment for the items wherever required.
Note: Company wants to pay minimum amount of SGST as far as possible. (14 Marks)

Particulars CGST SGST IGST

(` in lakh) (` in lakh) (` in lakh)
GST liability for main product 54 54 72

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After-sales discount on a product Nil Nil

[In the given case, discount given after effecting the supply is
not in terms of an agreement that existed at the time of supply.
Therefore, discount is not allowed as deduction from value of
supply.]
Sale of van used for personal transport by auction1 0.135 0.135
[1.5 × 9%] [1.5 × 9%]
Transportation cost charged on the product 0.54 0.54 0.72
[Supply of goods and transport service is a composite supply as [6 × 9%] [6 × 9%] [4 × 18%]
the transportation cost is charged at a flat rate from all
customers irrespective of the distance involved.
Therefore, rate of principal supply (product) viz. 9% CGST and
SGST each is charged on intra-State supply and 18% IGST is
charged on inter-State supply.]
Food and beverages supplied to the employees 0.45 0.45
[Goods being provided to the related person (employees), open [5.0×9%] [5.0×9%]
market value of the same [actual cost (50,000×100/10)] has
been considered as value. CGST & SGST @ 9% each is payable
on food items.]
Supply of mobile phones to employees2 0.108 0.108
[Supply being made to the related person (employees), open [1.20×9%] [1.20×9%]
market value3 of the same has been considered as value.]
Total output tax liability 55.233 55.233 72.72
Less: ITC set off [Refer working note (1) below] (16.597) (55.233) (72.72)
[IGST credit is first utilized for payment of IGST liability and then
for payment SGST liability followed by CGST liability since the
SGST liability is to be kept at minimum.]
After exhausting IGST credit, CGST and SGST credit is to be (20.261)
utilized. ITC of CGST cannot be utilized for payment of SGST and
vice versa.
GST payable in cash [A] 18.375 Nil Nil

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1. The value of supply as well as applicable rate of tax to be paid in case of old and used motor
vehicles can also be determined in terms of Notification No 8/2018 CT (R) dated 25.01.2018.

2. It has been assumed that selling of mobile phones to employees at reduced rates does not form
part of the employment contract. Further, mobile phones have been considered as inputs.
However, it is also possible to consider mobile phones as capital goods. Since in the given case
mobile phones (capital goods) are being removed after being used, a specified ‘amount’
determined in terms of section 18(6) of the CGST Act, 2017 shall be payable.

3. Since mobile phones have been considered as inputs, purchase price of ` 1,20,000 for the mobile
phones has been considered as its open market value.

GST under reverse charge payable in cash [Refer working note 0.153 0.153
(2) below] [B]
[Tax payable under reverse charge, being not an output tax,
cannot be set off against ITC and thus, will have to be paid in
cash.]
Total GST payable in cash = [A]+ [B] 18.528 0.153

Working notes:
(1) Computation of ITC available with MS Ltd. for October 2020

Particulars CGST SGST IGST

(` in lakh) (` in lakh) (` in lakh)
Eligible credit on inputs and input services for the month 20 20 145
Ball bearings stolen (0.45)
[ITC on stolen goods is blocked. Hence, ITC taken on stolen ball
bearings needs to be reversed.]
Mobile phones purchased for employees 0.108 0.108
[ITC of goods used in course or furtherance of business is [1.2 × 9%] [1.2 × 9%]

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allowed.]
Rent paid to Municipality 0.135 0.135
[1.5 × 9%] [1.5 × 9%]
Sitting fee paid to whole time director 0.018 0.018
[0.20 × 9%] [0.20 × 9%]
Total 20.261 20.261 144.55

(2) Tax payable under reverse charge

Particulars CGST SGST IGST

(` in lakh) (` in lakh) (` in lakh)
Rent paid to Municipality 0.135 0.135
[Tax on renting of immovable property services supplied by [1.5 × 9%] [1.5 × 9%]
local authority to a registered person is payable under reverse
charge.]
Sitting fee paid to whole time director 0.018 0.018
[Services provided by employee to employer in the course of [0.20 × 9%] [0.20 × 9%]
his employment are not a supply. Hence, salary paid to director
is not taxable. However, sitting fee is a consideration for the
services provided beyond course of employment and hence,
is taxable. Further, tax on sitting fee paid to director is payable
under reverse charge.]
Total tax payable under reverse charge 0.153 0.153

Note: In the above question, “ GST at 5% on all transactions and the amount is collected as a percentage
of the value……………” may be read as “… ....... GST at 5% on all transactions. The transportation cost is
collected as a percentage of the value… ”.

QUS.24 When lock down was announced due to corona virus, BCD Ltd. decided that it would sell its own branded
groceries at 20% of the cost to any organisation who is providing free food and groceries to the poor and
needy as its contribution to the nation. The details of the transaction from April, 2020 to September,2020
during which it had done this are given below:

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S.No. Particulars Amount in rupees

I. Total turnover (excluding GST) of branded groceries and food 6 crore
grains during the period as per the invoices issued and accounted
for GST purposes (Actual value of the goods is ` 30 crores)
Ii. Tax paid on the security and maintenance services during the CGST-1.35 lakh
period SGST - 1.35 lakh
iii. Tax paid on the rent paid on the warehouse for storage of goods CGST - 4.50 lakh
and for undertaking packing etc. SGST - 4.50 lakh
Iv. Tax paid on packing materials and printing charges on packing CGST-11.15 lakh
What is the value to be adopted for the purpose of payment of GST?

Compute the admissible input tax credit and output tax liability and indicate whether any tax has to be paid in
cash.Assume the rate of CGST and SGST as 2.50% each on the branded groceries and food grains and all sales
are intra-State only. (4 Marks)

ANS- Particulars Amount (`)

Value of supply adopted for payment of GST 6,00,00,000
[Transaction value, which is the price actually paid or payable for the supply, is
adopted for purpose of payment of GST.]
Output tax liability CGST @ 2.5% (`) SGST@ 2.5% (`)
Output tax liability on ` 6 crores [A] 15,00,000 15,00,000
Input tax credit CGST (`) SGST (`)
Security and maintenance 1,35,000 1,35,000
Warehousing rent 4,50,000 4,50,000
Packing and printing 11,15,000 11,15,000
Total input tax credit available [B] 17,00,000 17,00,000
Net tax payable in cash [A] - [B] Nil Nil

QUS.25 Adityanath Private Limited is registered under GST in the State of Uttar Pradesh. It is engaged in supplying
three products – Product Alpha, Product Beta and Product Gamma, from its factory located in Rampur, Uttar

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Pradesh. Product Alpha and Product Beta are taxable whereas Product Gamma is exempt from GST. Besides,
it also supplies cigarettes from its factory located in Kanpur and owns a petrol pump in Lucknow. It is also
engaged in supply of certain services.
It has furnished the following information with regard to the supplies made by it in the month of August:

Particulars (`)*
Supply of Product Alpha 50,00,000
Supply of Product Gamma 1,00,00,000
Supply of management consultancy services 50,00,000
Renting of commercial complex to local traders of electronic goods 50,00,000
Export of Product Beta 1,00,00,000
Export of consultancy services
[including exports made to a Nepal based company of ` 5 lakh (payment is 20,00,000
received in Indian currency in said case)]
Sale of building (excluding stamp duty of ` 2.50 lakh being 2% of value 2,50,00,000
adopted for paying stamp duty)
[Entire consideration is received post issuance of completion
certificate; building was occupied thereafter]
Interest received on investment in fixed deposits with Manimani bank 10,50,000
Sale of shares of a public company (Purchase price of such shares 2,50,00,000
is ` 2,40,00,000)
Supply of cigarettes [GST being levied @ 28%.] (including excise duty 1,00,00,000
of ` 12,50,000)
Supply of petrol and diesel (including VAT of ` 5,00,000 and excise duty 80,00,000
of ` 12,50,000)
Amount received from Durga Das Private Limited of Lucknow, Uttar 6,00,000
Pradesh. It has sponsored the business exhibition organized in Delhi by
Adityanath Private Limited.

*excluding GST

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With the help of the above-mentioned information, compute the gross GST liability of Adityanath Private
Limited for the month of August on the outward supplies made by it during said period.

Note: Assume that rates of GST on outward supply of goods and services are 12% and 18% respectively unless
otherwise specified (Ignore CGST, SGST or IGST for the sake of simplicity). Exports made by Adityanath Private
Limited, if any, have been made to persons other than distinct/related persons and are made by furnishing
LUT without payment of IGST.

ANS- Computation of gross GST liability on outward supply of Adityanath Private Limited for the month of
August :

Particulars Value (`) GST (`)

Supply of Product Alpha [Liable to GST @ 12%] 50,00,000 6,00,000
Supply of Product Gamma [Exempt from GST] 1,00,00,000 Nil
Supply of management consultancy services 50,00,000 9,00,000
[Liable to GST @ 18%]
Renting of commercial complex to local traders of 50,00,000 9,00,000
electronic goods
[Services by way of renting of residential dwelling for use as
residence are exempt from GST. Thus, renting of commercial
complex is taxable and GST is payable on the same @ 18%.]
Export of Product Beta 1,00,00,000 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 made
without payment of tax under a LUT in terms of section 16(3)(a)
of that Act.]
Export of consultancy services 20,00,000 Nil
[As per section 2(6) of the IGST Act, 2017, an activity is treated
as export of service if, inter alia, payment for the service is
received in convertible foreign exchange or in Indian rupees
wherever permitted by the RBI. Since in case of exports to

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Nepal, RBI regulations allow receipt of payment in Indian

rupees, exports of services to Nepal are treated as ‘normal
exports’.
Export of services is a zero-rated supply in terms ofsection
16(1)(a) of the IGST Act, 2017. A zero-rated supply can be
made without payment of tax under a LUT in terms of section
16(3)(a) of that Act.]
Sale of building 2,50,00,000 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,
provided the entire consideration has been received after issue
of completion certificate by the competent authority or after its
occupation, whichever is earlier. Hence, the same is not liable
to GST.]
Interest received on investment in fixed deposits with 10,50,000 Nil
Manimani Bank
[Services by way of extending deposits, loans or advances in
so far as the consideration is represented by way of interest
are 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 GST.]
Supply of cigarettes [Liable to GST @ 28%] 1,00,00,000 28,00,000
[Excise duty is included in the value since as per section 15(2)(a)
of the CGST Act, 2017, value of supply includes all taxes, duties,
cesses other than GST.]
Supply of petrol and diesel 80,00,000 Nil
[Supply of petrol and diesel is not leviable to GST as per

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section 9 of the CGST Act, 2017.]

Amount received from Durga Das Private Limited for 6,00,000 Nil
sponsorship of the business exhibition
[Tax on services provided by any person by way of sponsorship
to any body-corporate located in taxable territory is payable
by the recipient (Durga Das Private Limited) under reverse
charge.Thus, tax on such services is not payable by Adityanath
Private Limited.]
Total GST liability on outward supply 52,00,000

QUS.26 In the above question, all other things remaining the same, compute the net GST payable from Electronic
Cash Ledger if Adityanath Private Limited furnishes the following additional information:

Particulars (`)*
Consideration paid for repair of machinery used for manufacturing 5,20,000
Product Alpha by George Inc. of USA
[Said machinery was sent to George Inc. in August for carrying out repair work on the
same.]
Life insurance premium paid by the company for the life insurance of employees 48,50,000
as per the policy of the company. There is no legal obligation for such insurance for
employees.
Audit fees paid 6,50,000
Raw material purchased 10,00,000
[including raw material of ` 1,50,000 imported from China. Basic customs duty of `
15,000, social welfare surcharge of ` 1,500 and integrated tax of ` 29,970 are
separately paid on the imported raw material]
Transportation charges paid for transporting the goods 5,00,000
[` 4,00,000 is paid to Goods Transport Agency (GTA) registered in Uttar Pradesh and `
1,00,000 is paid for transport of goods by horse pulled carts. GST applicable on the
services of GTA is 5%.]
Telephone expenses paid 4,25,000

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[Such expenses pertain to bills for landline phone installed at the factory and mobile
phones given to employees for official use.]
Bank charges paid towards company’s current account maintained with Manimani 2,00,000
Bank
Legal services received from an advocate during the period only in relation to 3,50,000
Product Beta

*excluding GST

Note: Assume that rates of GST on all inward supply of goods and services are 12% and 18% respectively
unless otherwise specified (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. Turnover of
Adityanath Private Limited was ` 40 crores in the preceding financial year. The inputs and input services
received during August are commonly used for making all the outward supplies unless otherwise specified.
The opening balance of Electronic Credit Ledger for the relevant tax period is Nil.

ANS- Computation of net GST payable by Adityanath Private Limited for the month of August :

Particulars (`)*
Gross GST liability on outward supply [as computed in Answer 9 above] 52,00,000
Less: Input tax credit (ITC) [Refer Working Note 2] 2,74,417
[Since the value of taxable supply other than exempt supply and zero-rated supply of
Adityanath Private Limited in August exceeds ₹ 50 lakh, amount available in electronic
credit ledger which it can use to discharge its output tax liability of said month cannot
exceed 99% of such tax liability in terms of rule 86B of the CGST Rules, 2017.]
GST payable from Electronic Cash Ledger [A] 49,25,583
Add: GST payable on inward supplies under reverse charge
Legal services [` 3,50,000 × 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.]

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Services received from GTA [` 4,00,000 × 5%] 20,000

[Tax on services provided by a GTA (who has not paid GST @ 12%) to a body corporate,
is payable under reverse charge by the body corporate in terms of Notification No.
13/2017 CT (R) dated 28.06.2017.]
Tax payable under reverse charge [B] 83,000
Total GST paid from Electronic Cash Ledger [A] + [B] 50,08,583
[As per section 49(4) 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). Therefore, input tax credit cannot be
used to pay tax payable under reverse charge and thus, tax payable under reverse
charge will have to be paid in cash.]

Working Note - 1
Computation of common credit attributable to exempt supplies during August
Particulars Amount (`) ITC (`)
Repair of machinery by George Inc. of USA 5,20,000 Nil
[In case where either supplier or recipient is located outside India, the
place of supply of services supplied in respect of goods required to be
made physically available by recipient to supplier is the location where
the services are actually performed in terms of section 13(3)(a) of the IGST
Act, 2017. Hence, place of supply of repair services received in the given
case is outside India.
Since the location of supplier and place of supply are outside India, said
repair services are not liable to GST.]
Life insurance premium paid by the company for the life insurance of 48,50,000 Nil
Employees
[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.
Since it is not obligatory for the employer in the instant case and thus,
the ITC thereon is blocked in terms of second proviso to section 17(5)(b).]

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Audit fees [6,50,000 × 18%] 6,50,000 1,17,000

[Credit of tax paid on input services used in the course or furtherance of
business is available in terms of section 16(1) of the CGST Act, 2017]
Raw material [`(10,00,000 - 1,50,000) × 12% + ` 29,970] 10,00,000 1,31,970
[Credit of tax paid on inputs used in the course or furtherance of business is
available in terms of section 16(1) of the CGST Act, 2017. Further, IGST
charged on raw material imported from China is also available because
input tax, inter alia, includes IGST charged on import of goods (Section
2(62) of the CGST Act).]
Transportation charges for transporting the goods [` 4,00,000 × 5%] 4,00,000 20,000
[Services by way of transportation of goods by road are exempt from GST
except the services of a GTA. Hence, GST is not payable on transportation
charges paid for horse pulled carts.]
Telephone expenses [` 4,25,000 × 18%] 4,25,000 76,500
[Credit of tax paid on input services used in the course orfurtherance of
business is available in terms of section 16(1) of the CGST Act, 2017.]
Bank charges paid towards company’s current account maintained 2,00,000 36,000
with bank [` 2,00,000 × 18%]
[Credit of tax paid on input services used in the course or furtherance of
business is available in terms of section 16(1) of the CGST Act, 2017.]
Common credit on inputs and input services 3,81,470
Common credit attributable to exempt supplies (rounded off) 1,70,053
= Common credit on inputs and input services x (Exempt turnover during
the period / Total turnover in State during the period)
= ` 3,81,470 x ` 29,60,00,000/ ` 66,40,00,000
Exempt turnover = ` 29,60,00,000 and total turnover inState = `
66,40,00,000 [Refer note below]
Legal services received from advocate [`3,50,000 × 18%] 3,50,000 63,000
[Legal services are not eligible for exemption providedunder
Notification No. 12/2017 CT (R) dated 28.06.2017 as the turnover of the
business entity (Adityanath Private Limited) in the preceding financial

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year exceeds ` 20 lakh. Further, credit of tax paid on input services used
in the course or furtherance of business is available in terms of section
16(1) of the CGST Act, 2017. Full credit is available as these services are
exclusively used for effecting taxable supply.]

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 (Input Tax Credit) 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. Aggregate value of exempt supplies and total turnover
excludes the central excise duty, State excise duty, central sales tax and VAT.

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 (` 6,00,000), value of sale of building (` 2,50,000 / 2 x 100 = ` 1,25,00,000),
value of sale of shares (1% of ` 2,50,00,000 = ` 2,50,000), supply of Product Gamma (`1,00,00,000) and
supply of petrol and diesel (` 80,00,000 -` 5,00,000 -` 12,50,000 = ` 62,50,000), which comes out to be `
29,60,00,000.
Total turnover in State = ` 66,40,00,000 [` 50,00,000 + ` 1,00,00,000 + ` 50,00,000+ ` 50,00,000 + ` 1,00,00,000
+ ` 20,00,000 + (` 2,50,000 / 2 x 100 = ` 1,25,00,000) + ` 10,50,000 + (1% of ` 2,50,00,000 = ` 2,50,000)
+ (` 1,00,00,000 – 12,50,000 = ` 87,50,000) + (` 80,00,000 -` 5,00,000 -` 12,50,000= ` 62,50,000) + ` 6,00,000]

Working Note 2

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Computation of ITC available in the Electronic Credit Ledger of Adityanath Private Limited for the month of
August
Particulars (`)
Common credit on inputs and input services [Refer working note-1] 3,81,470
Legal services used in the manufacture of taxable Product ‘Beta’
[Refer Working Note-1]
ITC available in the Electronic Credit Ledger 4,44,470
Less: Common credit attributable to exempt supplies during August
[Refer Working Note 1]
Net ITC available 2,74,417

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ADVANCE RULING

QUS.1 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- (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.

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(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.

Note: The above answer is based on the view taken by the CBIC in its e-flier issued on the subject of advance
ruling. The e-flier is available on the CBIC’s website. However, it can be also be argued that the question
relating to determination of the liability to pay tax on goods and/or services as provided under section
96(2)(e) of the CGST Act, 2017 encompasses within its ambit the question relating to place of supply. This is
so because place of supply is one of the factor to determine as to whether the supply is leviable to CGST &
SGST or IGST.

(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

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(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 date on which the ruling sought to be appealed against is
communicated. 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.

QUS.2 Briefly explain the procedure to be followed by the Authority for Advance Ruling on receipt of the
application for Advance Ruling under section 98 of CGST Act, 2017.

ANS- The procedure to be followed by the Authority for Advance Ruling (AAR) on receipt of the application for
advance ruling under section 98 of the CGST Act, 2017 is as under:-
1. Upon receipt of an application, the AAR shall send a copy of application to the officer in whose jurisdiction
the applicant falls and call for all relevant records.

2. The AAR may then examine the application along with the records and may also hear the applicant.
Thereafter he will pass an order either admitting or rejecting the application.

3. Application for advance ruling will not be admitted in cases where the question raised in the application is
already pending or decided in any proceedings in the case of an applicant under any of the provisions of this
Act.

4. If the application is rejected, it should be by way of a speaking order giving the reasons for rejection and

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only after giving an opportunity of being heard to the applicant.

5. If the application is admitted, the AAR shall pronounce its ruling on the question specified in the
application. Before giving its ruling, it shall examine the application and any further material furnished by the
applicant or by the concerned departmental officer.

6. Before giving the ruling, AAR must hear the applicant or his authorized representative as well as the
jurisdictional officers of CGST/ SGST.

7. If there is a difference of opinion between the two members of AAR, they shall refer the point or points on
which they differ to the Appellate Authority for hearing the issue

8. The Authority shall pronounce its advance ruling in writing within 90 days from the date of receipt of
application.

9. A copy of the advance ruling duly signed by members and certified in prescribed manner shall be sent to
the applicant, the concerned officer and the jurisdictional officer.

QUS.3 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.

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QUS.4 Discuss briefly provisions of CGST Act, 2017 regarding questions for which advance ruling can be sought.

ANS- As per section 97(2) of CGST Act, 2017, advance ruling can be sought for the following questions:-
(a) classification of any goods or services or both
(b) applicability of a notification issued under the CGST Act
(c) determination of time and value of supply of goods or services or both
(d) admissibility of input tax credit of tax paid or deemed to have been paid
(e) determination of the liability to pay tax on any goods or services or both
(f) whether applicant is required to be registered
(g) whether any particular activity with respect to any goods and/or services, amounts to/results in a supply
of goods and/or services, within the meaning of that term.

QUS.5 Chandra is engaged in supplying certain goods in the State of Punjab from his factory located in Jalandhar,
Punjab. He is not yet registered under GST. As his turnover is moving towards the applicable threshold limit
for registration under GST, he approaches his tax advisor to ascertain the applicability of GST on the supply
made by him.

His tax advisor is unable to determine whether supply of goods by Chandra amounts to supply of goods under
GST law and also, the classification of said goods. He advises Chandra to apply for the advance ruling in
respect of said issues. He told Chandra that the advance ruling would bring him certainty and transparency in
respect of the said issues and would avoid litigation later. Chandra agrees with his view, but has some
apprehensions.

In view of the information given above, you are required to advise Chandra with respect to following:
(i) The tax advisor asks Chandra to get registered under GST law before applying for the advance ruling as
only a registered person can apply for the same. Whether Chandra needs to get registered before applying
for advance ruling?

(ii) Can Chandra seek advance ruling to determine whether supply of goods by Chandra amounts to supply of
goods under GST law and if yes, to determine the classification of said goods?

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(iii) Chandra is doubtful whether he can seek advance ruling in relation to an activity/transaction already
being undertaken. Whether Chandra’s doubt is correct?

(iv) Chandra is apprehensive that Authority for Advance Ruling may take years to pronounce its ruling.
Whether his apprehension is correct?

ANS- (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 whether any particular thing
done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods
or services or both, within the meaning of that term as well as the classification of any goods or services or
both. Therefore, Chandra can seek the advance ruling for determining whether supply of goods by him
amounts to supply of goods under GST law as well as for determining the classification of said goods.

(iii) As per the definition of advance ruling under section 95(a) of the CGST Act, 2017,
advance ruling decision can be provided by the Authority to an applicant on matters/questions specified in
section 97(2) of the said Act, in relation to the supply of goods or services or both being undertaken or
proposed to be undertaken by the applicant. Thus, advance ruling can be sought not only for
activities/transactions proposed to be undertaken but also for activities/transactions already undertaken by
the applicant.

Hence, in the given case, Chandra can seek the advance ruling in relation to the supply of goods being already
undertaken by him.

(iv) No, Chandra’s view is not correct. As per section 98(6) of CGST Act, 2017, the Authority for Advance Ruling
shall pronounce its ruling in writing within 90 days from the date of receipt of application.

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QUS. What is the objective of having a mechanism of Advance Ruling?

ANS- The broad objective for setting up such an authority is to:

(i) provide certainty in tax liability in advance in relation to an activity being undertaken or proposed to be
undertaken by the applicant;
(ii) helps taxpayer in financial planning and making new investments
(iii) attract Foreign Direct Investment (FDI);
(iv) reduce litigation;
(v) pronounce ruling expeditiously in transparent and inexpensive manner

QUS. To whom will the Advance Ruling be applicable?

ANS- The advance rulings are given in personem and not in rem, that is, not to the whole world and therefore,
rulings cannot apply to other similar cases. Section 103 provides that an advance ruling pronounced by AAR or
AAAR shall be binding only on the applicant who sought it in respect of any matter referred to in section 97(2)
and on the jurisdictional tax authority of the applicant. This clearly means that an advance ruling is not
applicable to similarly placed taxable persons in the State. It is only limited to the person who has applied for
an advance ruling.

QUS. Can an advance ruling given be nullified?

ANS- Section 104(1) provides that an advance ruling shall be held to be ab initio void if the AAR or AAAR finds that
the advance ruling was obtained by the applicant by fraud or suppression of material facts or
misrepresentation of facts. In such a situation, all the provisions of the GST Act(s) shall apply to the applicant
as if such advance ruling had never been made (but excluding the period when advance ruling was given and
up to the period when the order declaring it to be void is issued). An order declaring advance ruling to be void
can be passed only after hearing the applicant.

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