CA FINAL

TEST SERIES
NOV 24 EXAM
Mock test paper – 2
Suggested answer

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 CA FINAL TEST SERIES NOVEMBER’ 24 EXAM
MOCK TEST PAPER – 2 SUGGESTED ANSWER

Section – A: MCQ’S

CASE SCENARIO 1:

1. Answer (A)
Particulars Amount Taxability
(i) 7,500 tickets sold to audience in India ` 30,00,000 Exempted, as ticket price ≤
w.r.to event in Telangana (7,500 x ` 400) ` 500 per person
(ii) 2,500 tickets sold to audience in India ` 10,00,000 Exempted as ticket price ≤
w.r.to event to Dubai (2,500 x ` 400) ` 500 per person
(iii) 2,000 tickets sold to audience outside ` 24,00,000 Not exempted as ticket
India w.r.to event in Telangana (2,000 x ` 1200) price > ` 500 per person
LOS = M.H; LOR = Outside
India
POS u/s 13= LOE =
Telangana

Deemed interstate
chargeable to IGST
(iv) 8,000 tickets sold to audience outside ` 1,92,00,000 Not exempted as ticket
India w.r.to event in Dubai (8,000 x 2,400) price > ` 500 per person
LOS = M.H; LOR = Outside
Indian
POS u/s 13= LOE = Outside
India
consideration = Forex
Export of services & zero
rated
(v) Sponsorship services to Fangs `16,00,000 Taxable under RCM as
Technologies P. Ltd. recipient is body corporate
(Treated as exempted
supply for ITC purpose)
(vi) Sponsorship services to Loot Academy `12,00,000 Taxable under FCM in the
hands of supplier
LOS = M.H & LOR not
available, therefore, POS is
LOS i.e., M.H and it is an
intra state supply
` 2,84,00,000
[2 MARKS]
2. Answer (D)
Computation of ITC
Event in Telangana Event in Dubai
(i) Event LOS= K.A LOS= K.A
management LOR = M.H LOR = M.H
services from POS u/s 12 (B2B) =LOR = M.H POS u/s 12 (B2B) =LOR = M.H
Shreya arts

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 Interstate supply, Chargeable to Interstate supply, Chargeable to
IGST IGST
IGST credit = ` 14,00,000 x 18% IGST credit = ` 25,00,000 x 18%
= ` 2,52,000 = ` 5,04,000
(ii) Event LOS= Dubai LOS= Dubai
Management LOR = M.H LOR = M.H
services from POS u/s 13 =LOE = Telangana POS u/s 13 =LOE = Dubai
A2Z events
Import of Services → IGST No Levy
payable under RCM

 IGST Credit = ` 4,00,000 x 18%

= ` 72,000
(iii) Classical Dance Exempted as the consideration Not exempted as the consideration
performance per performance ≤ ` 1,50,000 per performance > ` 1,50,000

LOS = M.H; LOR = M.H
POS u/s 12 = M.H & it is intra state
supply

CGST paid = 4,00,000 x 9% =

36,000

SGST paid = 4,00,000 x 9% =

36,000
(iv) Other input & 6,00,000 x 18% = 1,08,000 → 12,00,000 x 18% = 2,16,000 →
input services IGST Credit IGST Credit

CGST SGST IGST

Gross ITC 36,000 36,000 11,52,000
(-) ITC w.r.to exempt 36,000 x 56/284 36,000 x 56/284 11,52,000x 56/284
supply = 7,099 = 7,099 = 2,27,155
Net ITC Available 28,901 28,901 9,24,845
[2 MARKS]

3. Answer D
Net ITC computation without considering sponsorship services
CGST SGST IGST
Gross ITC 36,000 36,000 11,52,000
(-) ITC w.r.to exempt 36,000 x 40/256 36,000 x 40/256 11,52,000x 40/256
supply = 5625 = 5625 = 1,80,000
Net ITC Available 30,375 30,375 9,72,000
Zero rated turnover
Maximum refund = Net ITC ×
Adjusted total turnover
1,92,00,000
=10,32,750 × = 8,12,656
2,44,00,000
Total turnover  Revenue from sale of tickets 2,56,00,000
(-) Exempted supplies (40,00,000)
2,16,00,000
Without considering sponsorship services:
1,92,00,000
Refund = 10,32,750 × 2,16,00,000 = 9,18,000
[2 MARKS]

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4. Answer B
Sponsorship services from Fangs Technologies → Taxable under RCM as recipient is body
corporate. Therefore, Filmfare corporation is not liable to pay GST on the same.
Sponsorship services from Loot academy → Taxable under FCM as recipient is individual.
Therefore, Filmfare corporation is liable to pay GST or the same
= ` 12,00,000 x 18% = ` 2,16,000
[2 MARKS]

5. Answer D
Gross Liability = 24,00,00 x 18% = 4,32,000 (Sale of tickets)
= 12,00,000 x 18% = 2,16,000 (Sponsorship)
6,48,000
(-) ITC Available =12,24,000 (6,48,000)
0
(+) GST Payable under 72,000 (Import of services)
RCM
Net GST Payable 72000
[2 MARKS]

CASE SCENARIO 2:
6. Answer A
(i) Supply of steel sheets in territorial waters – Either intra or inter state supply based on
nearest coastal state or UT
(ii) Computer given free of cost – Not covered under Sec. 7(1)(c) and consequently it is
not a supply
(iii) Supply of paper rolls for printing – It is supply under Sec. 7(1)(a)
(iv) Recovery of bond amount from outgoing MD – As per CBIC circular such amount
falls under liquidated damages arising out of contract but in the nature of penalizing a
person to discourage such activity and consequently not treated as consideration and
not a supply.
[2 MARKS]

7. Answer D
(i) Director services – RCM
(ii) Accommodation services – FCM
(iii) Arbitral tribunal – RCM
(iv) Machinery – FCM
(v) Salary – Not a supply
[2 MARKS]

8. Answer B
Particulars CGST SGST IGST
Sale of paper rolls - - `15,00,000
POS u/s 10(1)(b) of IGST Act = Billing X 18% =
address i.e., Karnataka (Inter state supply) `2,70,000
Bond amount recovered – Not a supply - - -
Supply of steel sheets `6,00,000 X `6,00,000 X -
POS u/s 9 of IGST Act = Nearest coastal 9% = `54,000 9% = `54,000
state is Kerala (Intra state)
Advance for future supply of goods – TOS - - -
is Due date of invoice or actual date of

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 invoice as per Sec. 12(2) of CGST Act, read
with notification No. 66/2017
Advance for future supply of services – `4,90,000 X `4,90,000 X -
TOS is DOI or date of payment whichever 9% = `44,100 9% = `44,100
is earlier as per Sec. 13(2) of CGST Act.
(Intra state)
Disposal of computer to unrelated person - - -
on which ITC not availed
Gross GST payable under FCM `98,100 `98,100 `2,70,000
[2 MARKS]

9. Answer B
Particulars CGST SGST IGST
Sitting fees to director - ITC `6,00,000 X 9% `6,00,000 X 9% -
available = `54,000 = `54,000
LOS = Kerala
LOR = Kerala
POS u/s 12 as per general
provisions = Kerala (Intra state
supply)
Room charges to Hill woods - - -
hotel - ITC not available w.r.to
CGST & SGST paid in another
state
LOS = M.H
LOR = Kerala
POS u/s 12 = Location of
property i.e., M.H (Intra state
supply)
Arbitral tribunal services – ITC `7,00,000 X 9% `7,00,000 X 9% -
available = `63,000 = `63,000
LOS = Kerala
LOR = Kerala
POS u/s 12 as per general
provisions = Kerala (Intra state
supply)
Salary paid to employees on - - -
payroll – Not a supply
Machinery purchased – ITC - - -
not available as depreciation
claimed on tax component
Total ITC available `1,17,000 `1,17,000 -
[2 MARKS]

10. Answer B
GST is applicable and the place of supply is Kerala.
Service = Organizing an event
LOS = K.A
LOR = Kerala
POS u/s 12 (B2B) = LOR i.e., Kerala
[2 MARKS]

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11. Answer A
No GST is applicable on the transaction since training was imparted in San Francisco, i.e.
place outside India.
LOS = USA
LOR = India (Kerala)
POS u/s 13 = Location of performance in case of performance-based services, where physical
location of recipient is required i.e., USA
[2 MARKS]

12. Answer A
Value of supply as per Rule 32 of CGST Rules, 2017 = 10% of base fare in case of
international bookings (Taxes should be excluded from total fare to arrive at base fare) =
`40,00,000 X 10% = `4,00,000
GST payable = `4,00,000 X 18% = `72,000
[2 MARKS]

13. Answer A
As per Sec. 16 of Customs Act, 1962 the relevant date for determination of rate of duty in
case of export is the date of let export order i.e., 8.1.20XX and the rate of duty relevant is
18%.
Therefore, customs duty payable = `10,00,000 X 18% = `1,80,000
[1 MARK]

14. Answer A
Import manifest should be submitted at any time before arrival of vessel
[1 MARK]

15. Answer B
As per Notification No. 60/2018, exemption in respect of specified goods manufactured in
India and reimported into India for repairs or reconditioning subject to conditions; Said
goods shall include printers, fax machines, automatic data processing machines, radar
apparatus, projectors, colour TVs, Hearing aids, etc; Prescribes that, exemption shall be
available subject to reimportation taking place within 7 years (10 years in case of Nepal and
Bhutan) from date of exportation and re-exportation within one year; Further, requires that
AC/DC should be satisfied as regards identity of goods and importers shall execute a requisite
bond
[2 MARKS]

16. Answer B
Neither dumping margin nor injury margin can be determined and anti-dumping duty under
Sec. 9A of customs tariff Act is 40% of `1,50,000 i.e., `60,000
[1 MARK]

17. Answer B
Customs duty payable on account of abatement under sec. 22 of customs Act, 1962 is
`1,00,000 X `11,000/`5,00,000 = `2,200
[1 MARK]

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 Section B: Descriptive
(Question No. 1 is compulsory and answer any 4 out of 5 given below)

ANSWER FOR QUESTION 1:

I. Statement showing computation of Gross GST payable under FCM by J Ltd. for the month
of February 2022:
Particulars Value CGST SGST IGST
Export of goods to Spain under LUT 7,00,000 - - -
[Treated as Zero rated supplies, without
payment of GST. Such goods are
procured by paying concessional tax
@0.1% and it can be availed as ITC. Also,
such goods can be exported only under
LUT/Bond and cannot be exported on
payment of IGST]
High Seas Sales to an Indian party Not included in - - -
[As per Sec. 7(2) read with Schedule III aggregate
of CGST Act, supply of goods after the turnover
goods have been dispatched from the
port of Origin located outside India but
before clearance for home consumption,
is neither supply of goods not supply of
services]
Sale of goods to a party in Turkey [As per Not included in - - -
Sec. 7(2) read with Schedule III to CGST aggregate
Act, supply of goods from non-taxable turnover
territory to non-taxable territory without
goods entering into India is neither
supply of goods nor supply of services]
Technical Services to Mr. K Advance received 1,00,000 1,00,000 X -
[Technical Services provided to K Ltd. of not part of X 9% = 9% =
Ahmedabad, is a taxable supply within the aggregate 9,000 9,000
state, and as per Sec. 13(2), GST payable turnover
on advances]
Supply of goods to V Ltd, SEZ [It is Zero 10,00,000 - - 10,00,000 X
rated supply an in the absence of 18% =
information about LUT/Bond, it is treated 1,80,000
as supply upon payment of IGST]1
Supply of goods to V Ltd, (other than SEZ 40,00,000 40,00,000 40,00,000 -
and intra state supply) X 9% = X 9% =
3,60,000 3,60,000
Total Gross GST liability under FCM 57,00,000 3,69,000 3,69,000 1,80,000

1
Alternatively, it can be assumed that it is supplied to SEZ without payment of IGST under bond/LUT

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II. Statement showing computation of Gross GST payable under RCM by J Ltd. for the month
of February 2022:
Particulars CGST SGST IGST
Ocean Freight - - -
[Services provided by a person located in non-
taxable territory by way of transportation of
goods by a vessel from a place outside India
up to the customs station of clearance in India
shall not be taxable in lieu of SC decision in
Mohit minerals P. Ltd. case w.e.f 1.10.23]
Import of goods from China - - `6,00,000
[As per section 12 of customs Act, 1962 read X 18% =
with section 3 of Customs Tariff Act, 1975 1,08,000
Customs duty shall be levied on `6,00,000]
RCM ITC shall be available on payment of tax.

III. Statement showing computation of input tax credit available for utilization of J Ltd. for the
month of February 2022:
Particulars CGST SGST IGST
Opening balance 20,000 20,000
Purchase of goods from Manufacturing supplier - - `7,00,000 X
@ 0.1% IGST 0.1% = 700
(Note: It is assumed that the price at which J
Ltd. has purchased such goods is `7,00,000)
Imported goods from China - CIF Value ` - - -
5,00,000 [As the said goods are sold on high
seas basis by the original importer (J Ltd.), the
buyer (Indian party) who takes delivery of such
goods shall pay customs duty incl. IGST and can
avail ITC w.r.to the same but not by J Ltd.]
Commission paid to Mrs. T, an agent of J ltd. for - - -
purchase of goods from Taiwan and sales to
Turkey
[As per Notification No. 9/2017-IT services
provided by an intermediary when location of
supplier and recipient of goods is outside India
is exempted]
Import of goods from China - - `6,00,000 X
[As per section 12 of customs Act, 1962 read with 18% =
section 3 of Customs Tariff Act, 1975 Customs 1,08,000
duty shall be levied on `6,00,000]
ITC on raw material purchased and destroyed - - -
[As per section 17(5)(h) of CGST Act, ITC shall
not be availed in respect of goods lost, stolen,
destroyed, written off or disposed of by way of
gift or free samples. Even though insurance
compensation is received on the same, ITC not

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 available and it is not a supply, as ITC not
availed]
Three Wheeler, with an engine capacity of 20cc `2,50,000 X `2,50,000 X -
[It is not a motor vehicle, as per the definition of 9% = 22,500 9% = 22,500
motor vehicle as per Motor Vehicles Act, 1988.
Therefore, it is not a blocked ITC as per Sec.
17(5) and ITC available on the same. Also, it is
assumed to be intrastate supply. “motor vehicle”
or “vehicle” means any mechanically propelled
vehicle adapted for use upon roads whether the
power of propulsion is transmitted thereto from
an external or internal source and includes a
chassis to which a body has not been attached
and a trailer; but does not include a vehicle
running upon fixed rails or a vehicle of a special
type adapted for use only in a factory or in any
other enclosed premises or a vehicle having less
than four wheels fitted with engine capacity of
not exceeding 25 cubic centimetres.]
Transportation services received - - -
[Service by way of transportation of goods, other
than GTA or Courier agency is exempted as per
Sec. 11 read with Notification No. 12/2017. As the
supplier not issued consignment note, it is not a
GTA service]
Purchase of goods from X Impex, Gujrat 30,00,000 X 30,00,000 X -
9% = 2,70,000 9% = 2,70,000
Availment of Manpower security services from Y 1,00,000 X 9% 1,00,000 X 9% -
Ltd. = 9,000 = 9,000
[As the supplier is body corporate, the same is
not covered under RCM in terms of Sec. 9(3) of
CGST Act read with Notification No. 13/2017]
Total 3,21,500 3,21,500 1,08,700

IV. Statement showing computation of net GST payable by J Ltd. for the month of February
2022:
Particulars Statement CGST SGST IGST
Reference
Gross GST payable under FCM I 3,69,000 3,69,000 1,80,000
(-) Input Tax Credit III
IGST Credit utilized 1,08,700
CGST Credit utilized 3,21,500
SGST Credit utilized 3,21,500
Liability to be discharged under FCM 47,500 47,500 71,300
Reverse Charge Mechanism liability (To be II - - 1,08,000
discharged only through Electronic Cash Ledger)
Net GST payable 47,500 47,500 1,79,300

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Alternative Answer: If export is without payment of IGST under bond/LUT
Particulars Statement CGST SGST IGST
Reference
Gross GST payable under FCM I 3,69,000 3,69,000 -
(-) Input Tax Credit III
IGST Credit utilized 54,350 54,350
CGST Credit utilized 3,21,500
SGST Credit utilized 3,21,500
Liability to be discharged under FCM 0 0 -
Reverse Charge Mechanism liability (To II - - 1,08,000
be discharged only through Electronic
Cash Ledger)
Net GST payable 0 0 1,08,000
[14 MARKS]

ANSWER FOR QUESTION 2(A):

(1) Services provided to a Governmental Authority by way of slum improvement and upgradation
is specifically exempt from GST vide exemption notification under GST law.
(2) 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 recognised by any law for the time being in force. Since Banarsidas
College provides education as part of a curriculum for obtaining a qualification recognised
by Indian law, the services provided by it to its staff by way of conducting personality
development course would be exempt from GST, it being an educational institution.
(3) Since RPSD College provides education as a part of a curriculum for obtaining a qualification
recognised by Indian law, the transport services provided by RPSD College to its students
are exempt from GST.
(4) Services provided to an educational institution, by way of, inter alia, house-keeping services
performed are exempt from GST vide exemption notification provided such services are
performed in such educational institution. However, such exemption is available only when
the said services are provided to an educational institution providing services by way of pre-
school education and education up to higher secondary school or equivalent. In view of the
above discussion, house-keeping services provided to Bloom Montessori Play School are
exempt from GST since housekeeping services have been performed in such play school
itself.
(5) 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
not available to an educational institution providing services by way of pre-school education
and education up to higher secondary school or equivalent. Therefore, supply of online
journal to students of UKG class of Seeds Montessori School is not exempt from GST.
[5 MARKS]

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ANSWER FOR QUESTION NO. 2(B):
No, the view of Upasana Export House that the activity of sending the goods out of India for
exhibition is a zero-rated supply, is not correct.
As per section 7 read with Schedule I of the CGST Act, 2017, any activity/transaction is considered
as supply only when it is made in the course or furtherance of business and made for a
consideration, except for activities enumerated in Schedule I of the CGST Act, 2017.
Section 16 of the IGST Act, 2017 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, CBIC vide a circular 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.
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.
In view of the said provisions, Upasana Export House 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 Upasana Export House 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.
(II) In case, the entire quantity of goods (100 units) sent to USA is not sold and brought back
by Upasana Export House 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 applicable provisions within the specified time period.
[5 MARKS]

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ANSWER FOR QUESTION NO. 2(C):
Computation of assessable value of the imported goods
Cost of the machine at the factory of Peter Inc. $10,000.00
Transport charges up to port $500
Handling charges at the port $50
FOB Price $10,550
Freight charges up to India $1,000
Insurance charges @ 1.125% of FOB [Note 1] $118.69
CIF Price $11,668.69
CIF in Indian rupees @ ` 70/ per $ `8,16,808.30
Assessable Value `8.16.808
Notes:
(1) Insurance charges have been included @ 1.125% of FOB value of goods.
(2) Buying commission is not included in the assessable value.
[4 MARKS]
ANSWER FOR QUESTION NO. 3(A):
Computation of Value of taxable supply of Goods:
Note: In the absence of information, the given price is assumed to be after considering subsidy
Particulars `
Value of machine (including GST @ 12%) 15,00,000
(1) Taxes other than CGST/SGST/IGST charged separately by the supplier -
[As per section 15(2)(a) of CGST Act. 2017, any duty, cesses, fees and other
charges, charged separately by supplier are to be included in value of taxable
supply. Since they are already includible. Since they are already included, no
adjustment called for]
(2), (3), (4) and (5) Weighment and loading charges, Consultancy Charges in -
relation to pre-installation planning. Testing Charges and Inspection Charges
charged before supply
[As per section 15(2). any amount charged for anything done by 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. Since they are already included, no
adjustment called for.]
i. Subsidy received from Central government for setting up factory in -
backward region
[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, not includable.] in the given price its already
excluded.
ii. Subsidy received from third party for timely supply of machine to recipient 50,000
[As per Section 15(2) (e), the value of supply shall include subsidies directly
linked to the price; hence, Includable] In the given price its already
excluded.
iii. Trade discount actually allowed shown separately in invoice
[As per Section 15(3)(a), the value of the supply shall not include any (24,000)
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.

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 Hence, same is deductible in computing value. It is given as ‘other
information, hence, it is not already adjusted.]
Cum tax value (i.e., value including GST) 15,26,000
Less: GST@12% [15,26,000  12  112] (1,63,500)
[As per Section 15(2)(a) of the CGST Act, 2017, value of supply shall not include
GST and GST Cess.
Even as per Rule 35, if price is inclusive of GST, GST shall be computed using
back-computations.]
Value of taxable supply 13,62,500
[5 MARKS]

ANSWER FOR QUESTION NO. 3(B):

Where any applicant has received the refund of integrated tax paid on export of goods but could
not realise 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. 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 (9 Lakhs x 25 lakhs / 50 lakhs) (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.
[5 MARKS]

ANSWER FOR QUESTION NO. 3(C):

This issue has been addressed by the Supreme Court in the case of Commissioner of Customs v.
Tullow India Operations Ltd. (2005) 189 ELT 401 (SC). The Apex Court has observed that if a
condition is not within the power and control of the importer and depends upon the acts of public
functionaries, non-compliance of such a condition, subject to just exceptions cannot be held to
be a condition precedent which would disable it from obtaining the benefit for all times to come.
In the given case also the certificate has not been granted within a reasonable time. Therefore,
in view of the above-mentioned judgement, the importer M/s Clear Energy Ltd. cannot be blamed
for the lapse by the authorities. The Directorate General of Hydrocarbons is under the Ministry
of Petroleum and Natural Gas and such a public functionary is supposed to grant the essentiality
certificate within a reasonable time so as to enable the importer to avail of the benefits under
the notification.
[4 MARKS]

ANSWER FOR QUESTION NO. 4(A):

Computation of Taxable value of supply (amount in Rs.):
Purchase Raw material 'A' from local dealer (Rs. 86,100 × 100 ÷ 105] [WN] 82,000
Purchase Raw material 'B' from local dealer [Rs. 1,12,000x100 ÷ 112] [WN] 1,00,000
Depreciation expense [(Rs. 1,96,000 – Rs. 1,96,000 x12 ÷112) x15%] 26,250
Other direct and indirect expense 55,460
Total Cost of goods manufactured 2,63,710
Cost of goods sold (70% of goods produced were sold) 1,84,597
Add: Profit margin 5% of cost 9,230
Taxable value of supply 1,93,827

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Working Note:
Credit will be available for CGST and SGST charged by local suppliers. Hence, the same is not to
be included in the cost.

Computation of CGST and SGST payable after utilising the available input tax credit.
CGST SGST
Particulars
(Rs.) (Rs.)
Output tax liability @ 12% (being CGST 6% and SGST 11,630 11,630
6%] [Rs. 1,93, 827 × 12%)
Less: Eligible input tax credit in respect of purchases of-
Raw material "A" [82,000x5%] 2,050 2,050
Raw material “B” [1,00,000 × 12%] 6,000 6,000
Capital Goods [1,75,000 × 12%) 10,500 10,500
Net GST payable 0 0
CGST/SGST credit to be carried forward 6,920 6,920
[5 MARKS]

ANSWER FOR QUESTION NO. 4(B):

As per section 129 of the CGST Act, 2017, when owner of goods does not come forward for the
payment of penalty, detained/seized goods and conveyance (used as a means of transport for
carrying said goods) and related documents are released on payment of penalty equal to higher
of the following:
(i) 50% of value of goods or
(ii) 200% of the tax payable on such goods.

In view of the same, the amount of penalty payable (each under CGST and SGST) if Robecco
Limited does not come forward for the payment of penalty is as follows:
(i) 50% of value of goods [` 3,40,000 (50% of ` 6,80,000)] or
(ii) 200% of the tax payable on such goods [` 1,22,400 (200% of ₹ 6,80,000 × 9%)]
whichever is higher, i.e. ` 3,40,000 (each under CGST and SGST).

Conveyance shall be released on payment by the transporter the penalty as mentioned in the
order or ` 1 lakh, whichever is less.
In the given case, since the owner - Robecco Limited has failed to come forward to make
payment of penalty, penalty of ₹ 3,40,000 (each under CGST and SGST) shall be levied.

Further, the transporter of goods can get its truck released upon payment of the lower of the
following under the CGST Act, 2017:
(i) penalty as mentioned in the order [` 3,40,000] or
(ii) ` 1,00,000
Hence, Sambhav Transporters can get its truck released upon payment of ` 1,00,000 (each
under CGST and SGST).
[5 MARKS]

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ANSWER FOR QUESTION NO. 4(C):
Computation of baggage duty payable
Eligible for
Particulars Not Eligible for GFA
GFA
(Rate = (Rate =
(Rate = 38.5%)
38.5%) 110%)
Travel souvenirs Exempted - -
Other articles 1,50,000 - -
Cigarettes 10,000 - 2,000
Firearm - - 50,000
Cartridges of firearm 25,000 - 25,000
Dutiable Value 1,85,000 - 77,000
(-) General Free Allowance (15,000) - (0)
Value on which Baggage duty payable 1,70,000 - 77,000
Baggage duty payable 65,450 - 84,700
[4 MARKS]

ANSWER FOR QUESTION NO. 5(A):

As per section 122(1) of CGST Act, if a taxable person-
a) issues any invoice without supply of goods, or
b) takes or utilises ITC without actual receipt of goods, fully or partially, in contravention of the
provisions of GST law or rules made thereunder, then such person shall be liable to pay a
penalty which shall be higher of the following:
➢ Rs. 10,000 or
➢ an amount equivalent to the ITC availed of or passed on.
Further, as per section 122(1A), any person at whose instance above transactions are conducted
shall be liable to a penalty of an amount equivalent to ITC availed of or passed on.

Discussion & Conclusion: -

➢ In the given case, M/s Fly-by-Night Traders issued invoice without supply of goods and M/s
Runaway Traders utilized the ITC on the same.
➢ Thus, both are liable to pay a penalty of ` 25 lakhs each.
➢ Also, the tax consultant will be liable to pay a penalty of ` 25 lakhs since the transaction
was conducted at his instance.
[5 MARKS]

ANSWER FOR QUESTION NO. 5(B):

Non-reporting of material discrepancies noticed during the audit procedure and reliance upon
incorrect certificates and information
ABC audit team did not exercise due diligence to ascertain that the input tax credit availed by X
Ltd. is not in compliance with the GST provisions. Instead, ABC relied on the certificate issued by
its own associate firm which justified the incorrect input tax credit claim by X Ltd. In such a
scenario both ABC and the associate firm, which issued the certificate to justify the input tax
credit claim, were aiding and abetting X Ltd. in wrongful availment of credit, which is an offence
punishable with penalty under 122(3). This offence may also be punishable with imprisonment
and fine under section 132(1) depending on the amount of default involved and subject to
specified conditions. Further, ABC as well as its associate firm may be held guilty of professional
misconduct.
[5 MARKS]

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ANSWER FOR QUESTION NO. 5(C):
Section 26 of the Customs Act, 1962 provides for the refund of export duty in certain cases
where goods that have been exported are returned to India.
Conditions for refund under Section 26 of the Customs Act, 1962:
1. The goods are returned otherwise than by way of resale (Section 26(a)):
o In this case, the scarves were returned due to a defect in quality and were not
resold or altered in any way. Thus, this condition is satisfied.
2. The goods are re-imported within one year from the date of exportation (Section 26(b)):
o The scarves were exported on January 10, 2023, and re-imported on June 5,
2023, which is well within the one-year time limit. Hence, this condition is also
satisfied.
3. An application for refund is made within six months from the date of clearance (Section
26(c)):
o The customs officer issued the clearance order on June 7, 2023. Global Textiles
Pvt. Ltd. needs to apply for a refund within six months from this date, which would
be before December 7, 2023. If the company applies within this period, this
condition will also be satisfied.
Since all the conditions under Section 26 of the Customs Act, 1962 are met, Global Textiles Pvt.
Ltd. is eligible for a refund of the export duty of ₹3,00,000 paid at the time of exportation,
provided that they file the refund application before December 7, 2023.
[4 MARKS]

ANSWER FOR QUESTION NO. 6(A):

Appeal to Appellate Authority [Section 100]: The relevant provisions are discussed as under-
(1) Appeal by aggrieved person [Section 100(1)]: If the applicant is aggrieved with finding of
the AAR, he can also file an appeal with AAAR.
Similarly, if the concerned or jurisdictional officer of CGST/SGST/UTGST does not agree with
finding of AAR, he can also file an appeal with AAAR.
The word concerned officer of CGST/SGST means an officer who has been designated by the
CGST/SGST administration in regard to an application for advance ruling. In normal
circumstances, the concerned officer will be the officer in whose jurisdiction the applicant is
located. In such cases the concerned officer will be the jurisdictional CGST/SGST officer.

(2) Time Limit- 30 days [Section 100(2)]: Every appeal shall be filled within a period of 30 days
from the date on which the ruling sought to be appealed against is communicated to the
concerned officer, the jurisdictional officer and the applicant.
Condonation of delay upto 30 days: The AAAR may, if it is satisfied that the appellant was
prevented by a sufficient cause from presenting the appeal within the said period of 30
days, allow it to be presented within a further period not exceeding 30 days.

(3) Prescribed form and fees [Section 100(3)]: Every appeal under this section shall be filed in
prescribed form and accompanied by fees of Rs. 10,000 if appeal is filed by the applicant.

(or)
As per section 69 of CGST Act, following safeguards are provided 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 in writing and be produced before a magistrate within 24 hours of his arrest.

Page 15
b) If a person is arrested for a non-cognizable and bailable offence, he shall be admitted
to bail or in default of bail, forwarded to the custody of the Magistrate.
c) (c) All arrest must be in accordance with the provisions of the Code of Criminal
Procedure relating to arrest as per section 69(3) of CGST Act.
[5 MARKS]

ANSWER FOR QUESTION NO. 6(B):

Based on the recent clarification from Circular No. 203/15/2023-GST, the determination of the
place of supply for co-location services depends on the nature of the services provided. Co-
location services generally involve renting space in a data center for servers and IT hardware,
along with supplementary services such as infrastructure management, security, and connectivity.
If the co-location services provided by TechHub Data Centers Pvt. Ltd. include hosting, server
management, network connectivity, and similar IT infrastructure services (bundled offerings), the
place of supply will follow the default rule under Section 12(2) of the IGST Act. This means that
the place of supply is the location of the recipient, which in this case is Mumbai, Maharashtra
(since Innovate Solutions Ltd. is registered in Mumbai).
[5 MARKS]

ANSWER FOR QUESTION NO. 6(C):

Under the Customs Act, 1962, goods are considered to have been improperly removed from a
warehouse under the following circumstances:
1. Removal Without Proper Documentation (Section 71): Goods are taken out of the warehouse
without filing a bill of entry for home consumption or export, or without clearance from the
proper customs officer.
2. Non-Payment of Duty (Section 72): Goods are cleared from the warehouse without the
payment of applicable customs duty, even if other documentation is in place.
3. Expired Warehousing Period (Section 61): Goods are kept in the warehouse beyond the
allowed warehousing period (including extensions) and are removed without proper
authorization.
4. Unauthorized Movement or Tampering: Goods are transferred or tampered with in a manner
unauthorized by the customs authorities, including altering the goods' quantity or quality.
In any of these cases, improper removal can result in the seizure of the goods, penalties, or
criminal action under the Customs Act.
[4 MARKS]

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