M.K.

G
CA EDUCATION
9811429230 / 9212011367
WEBSITE: WWW.MKGEDUCATION.COM
EMAIL: MKCAEDUCATION@GMAIL.COM

GST
 Central Goods and Services Tax Act, 2017.
 State Goods and Services Tax Act, 2017.
 Integrated Goods and Services Tax Act,
2017.
 Union Territory Goods and Services Tax
Act, 2017.
 Goods and Services Tax (Compensation to
States) Act, 2017
After the book has been published, some error/mistake etc may be detected/or there may be some
amendments etc, all such corrections/amendments shall be uploaded on our website
11th Edition
Author
This Book is the result of combined efforts of
Chartered Accountants/ company executives /
other professionals / feedback of our thousands of students
MAY – 2024
NOV – 2024
₹750
 2

CONNECT WITH US ON SOCIAL MEDIA

FOR LATEST UPDATES
IN ORDER TO GET LATEST UPDATES FROM MKG, YOU
MUST GET CONNECTED WITH US ON FACEBOOK PAGE/
YOUTUBE OTHERWISE YOU WILL LOSE ALL
INFORMATION’S. LINK IS AS GIVEN BELOW:
Facebook page
https://www.facebook.com/mkgcaeducation/

Youtube channel
https://www.youtube.com/c/mkguptacaeducationk

Instagram
Instagram: https://www.instagram.com/mkcaeducation/

Our website
www.mkgeducation.com

FOR ONLINE PURCHASE OF OUR BOOK

PLEASE SEE DETAILS GIVEN ON OUR
WEBSITE :WWW.MKGEDUCATION.COM
 3
PAPER – 3 : TAXATION
(One paper ─ Three hours – 100 Marks)

SECTION A: INCOME TAX LAW (50 MARKS)

Objective:
(a) To develop an understanding of the provisions of income-tax law
(b) To acquire the ability to apply such provisions to solve problems and address application-oriented issues.
Contents:
1. Basic Concepts
(i) Income-tax law: An introduction
(ii) Significant concepts in income-tax law, including person, assessee, previous year, assessment year,
income, agricultural income
(iii) Basis of Charge
(iv) Procedure for computation of total income and tax payable in case of individuals

2. Residential status and scope of total income

(i) Residential status
(ii) Scope of total income

3. Heads of income and the provisions governing computation of income under different heads
(i) Salaries
(ii) Income from house property
(iii) Profits and gains of business or profession
(iv) Capital gains
(v) Income from other sources

4. Provisions relating to clubbing of income, set-off or carry forward and setoff of losses, deductions from
gross total income

5. Advance Tax, Tax deduction at source and tax collection at source

6. Provisions for filing return of income and self-assessment

7. Computation of total income and income-tax payable by an individual under the alternative tax regimes
under the Income-tax Act, 1961 to optimise tax liability

Note: If any new legislation(s) are enacted in place of an existing legislation(s), the syllabus will
accordingly include the corresponding provisions of such new legislation(s) in the place of the existing
legislation(s) with effect from the date to be notified by the Institute. Similarly, if any existing legislation(s)
on income tax law ceases to be in force, the syllabus will accordingly exclude such legislation(s) with effect
from the date to be notified by the Institute.

Further, the specific inclusions/exclusions in any topic covered in the syllabus will be effected by way of
Study Guidelines every year, if required. Specific inclusions/exclusions in a topic may also arise due to
additions/deletions made every year by the Annual Finance Act.
 4
SECTION B: GOODS AND SERVICES TAX (50 MARKS)
Objective:
(a) To develop an understanding of the provisions of goods and services tax law.
(b) To acquire the ability to apply such provisions to address/solve issues in moderately complex scenarios.

Contents:
1. GST Laws: An introduction including Constitutional aspects

2. Levy and collection of CGST and IGST

(i) Application of CGST/IGST law
(ii) Concept of supply including composite and mixed supplies
(iii) Charge of tax including reverse charge
(iv) Exemption from tax
(v) Composition levy

3. Basic concepts of:

(i) Classification
(ii) Place of supply
(iii) Time of supply
(iv) Value of supply
(v) Input tax credit

4. Computation of GST liability

5. Registration

6. Tax invoice; Credit and Debit Notes; Electronic way bill

7. Accounts and Records

8. Returns

9. Payment of tax

Note – If any new legislation(s) is enacted in place of an existing legislation(s), the syllabus will accordingly
include the corresponding provisions of such new legislation(s) in place of the existing legislation(s) with
effect from the date to be notified by the Institute. Similarly, if any existing legislation ceases to have effect,
the syllabus will accordingly exclude such legislation with effect from the date to be notified by the Institute.
Students shall not be examined with reference to any particular State GST Law.

Consequential/corresponding amendments made in the provisions of the Goods and Services Tax laws
covered in the syllabus of this paper which arise out of the amendments made in the provisions not covered
in the syllabus will not form part of the syllabus. Further, the specific inclusions/exclusions in the various
topics covered in the syllabus will be effected every year by way of Study Guidelines. The specific
inclusions/exclusions may also arise due to additions/ deletions every year by the annual Finance Act.
 5

GOODS AND SERVICES TAX

01. COMPUTATION OF GST 18-54

02. TIME OF SUPPLY 55-67

03. VALUE OF SUPPLY 68-83

04. RETURN 84-98

05. PAYMENT OF GST 99-113

06. COMPOSITION SCHEME 114-147

07. REGISTRATION 148-179

08. MEANING OF SUPPLY 180-210

09. INPUT TAX CREDIT 211-249

10. TAX INVOICE, DEBIT & CREDIT NOTE 250-268

11. E-WAY BILL 269-283

12. REVERSE CHARGE 284-306

13. EXEMPTION FROM GST 307-347

14. ACCOUNTS AND RECORDS 348-348

15. TDS / TCS 349-349

16. PLACE OF SUPPLY 350-353

17. MISCELLANEOUS 354-366

18. EXAMINATION QUESTIONS 367-393

19. CASE STUDIES 394-421

PART B (NOT COVERED IN SYLLABUS)

20. TOPICS NOT COVERED IN SYLLABUS 422-422

21. CLASSIFICATION / CONSTITUTIONAL 423-432

PROVISIONS / CIRCULAR
 6

LIST OF IMPORTANT SECTIONS

Section – 1 :Short title, extent and commencement
Section – 2: Definitions
Section – 3: Officers under this Act (not covered in syllabus)
Section – 4: Appointment of officers (not covered in syllabus)
Section – 5: Powers of officers (not covered in syllabus)
Section – 6: Authorisation of officers of State tax or Union territory tax as proper officer in certain
Circumstances (not covered in syllabus)
Section – 7: Scope of supply
Section – 8: Tax liability on composite and mixed supplies
Section – 9: Levy and Collection
Section – 10:Composition levy
Section – 11:Power to grant exemption from tax
Section – 12:Time of supply of goods
Section – 13:Time of supply of services
Section – 14: Change in rate of tax in respect of supply of goods or services (not covered in syllabus)
Section – 15:Value of taxable supply
Section – 16:Eligibility and condition for taking input tax credit
Section – 17:Apportionment of credit in case of mix use and blocked credits
Section – 18:Availability of credit in case of new registration or opting out of composition scheme etc.
Section – 19: Taking input tax credit in respect of inputs and capital goods sent for job work (not covered in
syllabus)
Section – 20: Manner of distribution of credit by Input Service Distributor (not covered in syllabus)
Section – 21: Manner of recovery of credit distributed in excess (not covered in syllabus)
Section – 22:Persons liable for registration
Section – 23:Persons not liable for registration
Section – 24:Compulsory registration
Section – 25:Procedure for registration
Section – 26: Deemed Registration
Section – 27: Casual Taxable Person / Non Resident Taxable Person
Section – 28:Amendment of registration
Section – 29:Cancellation of registration
Section – 30:Revocation of cancellation of registration
Section – 31:Tax invoice
Section – 31A: Facility of digital payment to recipient
Section – 32:Prohibition of collection of tax by unregistered dealers
Section – 33:Amount of tax to be indicated in tax invoice and other documents
Section – 34:Credit and debit notes
Section – 35: Accounts and other records
Section – 36: Period of retention of accounts
Section – 37:Furnishing details of outward supplies (GSTR-1)
Section – 38: Communication of details of inward supplies and input tax credit (GSTR -2A/2B)
Section – 39: Furnishing of returns (GSTR-3B)
Section – 40:First return
Section – 41: Availment of input tax credit
Section – 42: Matching, reversal and reclaim of input tax credit (not covered in syllabus)
Section – 43: Matching, reversal and reclaim of reduction in output tax liability (not covered in syllabus)
Section – 43A: Procedure for furnishing return and availing input tax credit
Section – 44:Annual return (GSTR-9)
Section – 45:Final return (GSTR-10)
Section – 46:Notice to return defaulters (GSTR - 3A)
 7
Section – 47:Levy of late fee
Section – 48:Goods and services tax practitioners
Section – 49:Payment of tax, interest, penalty and other amounts/utilization of ITC
Section – 50:Interest on delayed payment of tax
Section – 51: Tax deduction at source (not covered in syllabus)
Section – 52: Collection of tax at source (not covered in syllabus)
Section – 53: Transfer of input tax credit (not covered in syllabus)
Section – 54: Refund of tax (not covered in syllabus)
Section – 55: Refund in certain cases (not covered in syllabus)
Section – 56: Interest on delayed refunds (not covered in syllabus)
Section – 57: Consumer Welfare Fund (not covered in syllabus)
Section – 58: Utilisation of Fund (not covered in syllabus)
Section – 68: Inspection of goods in movement.
 8

LIST OF IMPORTANT RULES

Rule – 1:Short title 1 and commencement
Rule – 2:Definitions
Composition scheme
Rule – 3 to 7:Intimation for composition levy/Conditions / restrictions/Rate of tax
Registration
Rule – 8:Application for registration
Rule – 9:Verification of the application and approval
Rule – 10:Issue of registration certificate
Rule – 16:Suo motu registration
Rule – 19:Amendment of registration
Rule – 20:Application for cancellation of registration
Rule – 21:Registration to be cancelled in certain cases
Rule – 22:Cancellation of registration
Rule – 23:Revocation of cancellation of registration
Rule – 24: Migration of persons registered under the existing law
Rule – 25: Physical verification of business premises in certain cases
Rule – 26:Method of authentication
Rule – 27 to 35: Not cover in the syllabus
Input Tax Credit
Rule – 36:Documentary requirements and conditions for claiming input tax credit
Rule – 37:Reversal of input tax credit in the case of non-payment of consideration within 180 days
Rule – 40:Availment of ITC on registration or shifting to normal scheme etc.
Rule – 42: Reversal of ITC on Inputs/Input Services in case of mix use
Rule – 43: Reversal of ITC on Capital Goods in case of mix use
Rule – 44: Reversal of ITC on cancellation of registration/ shifting to composition scheme etc.
Invoice/Credit/Debit Notes
Rule – 46:Tax invoice
Rule – 46A: Invoice-cum-bill of supply
Rule – 47:Time limit for issuing tax invoice
Rule – 48:Manner of issuing invoice
Rule – 49:Bill of supply
Rule – 50:Receipt voucher
Rule – 51:Refund voucher
Rule – 52:Payment voucher
Rule – 53:Revised tax invoice and credit or debit notes
Rule – 54: Tax invoice in special cases
Rule – 55:Transportation of goods without issue of invoice
Rule – 55A: Tax Invoice or bill of supply to accompany transport of goods
Returns
Rule – 59:Form and manner of furnishing details of outward supplies (GSTR -1)
Rule – 60: Form and manner of ascertaining details of inward supplies. (GSTR -2A/2B)
Rule – 61: Form and manner of submission of monthly return (GSTR -3B)
Rule – 62:Form and manner of submission of quarterly return by the composition supplier
Rule – 68:Notice to non-filers of returns
Rule – 80:Annual return
Rule – 81:Final return
Payment of GST
Rule – 85 to 88:Electronic Liability Register/Electronic Credit Ledger/Electronic Cash Ledger
 9

E-Way Bill
Rule – 138: Information to be furnished prior to commencement of movement of goods and generation of
e-way bill.
Rule – 138A: Documents and devices to be carried by a person-in-charge of a conveyance.
Rule – 138B: Verification of documents and conveyances.
Rule – 138C: Inspection and verification of goods.
Rule – 138D: Facility for uploading information regarding detention of vehicle.
Rule – 138E: Restriction on furnishing of information in PART A of FORM GST EWB-01.
 10

ETI AGARWAL
ALL INDIA TOPPER OF CA-IPC (NOV-13)
ROLL NO. - 366539

MARKS IN TAXATION:89%
(HIGHEST MARKS IN TAXATION ALL OVER INDIA)
(AGGREGATE MARKS 79.71%)

(FEEDBACK)
A man for whom teaching is neither a business nor a profession, rather a passion for doing good,
great and unique in the field of teaching is none other than MK Gupta Sir.

Sir"s unmatchable style of teaching coupled with his patience and calmness in dealing with students
is simply excellent.

The structure of learning pattern, regular mock tests, motivational cash prizes and student friendly
study material covering practical illustrations, past year questions and bare act.. all contributed to
making this journey easy and building up the confidence needed for IPCC.

Moreover, the vast knowledge and experience of the faculty assisted in making the concepts crystal
clear and handling each n every doubt of students.

The administration and management stands second to none.

MK GUPTA classes is a place which can change the word impossible 2 I M POSSIBLE. It made
me a better person both personally n professionally.

I think 4 success 4 elements are necessary-desire, dedication, direction and discipline...and all the 4 i
got from Sir..

THANK YOU so much Sir..

In the end i would just like to say MK GUPTA SIR NOT ONLY MAKES CA. HE MAKES
HUMANS!!

ETI AGARWAL
 11

AKSHAY JAIN
ALL INDIA TOPPER OF CA-IPC (NOV-13)
ROLL NO.- 368162

MARKS IN TAXATION : 87%

(SECOND HIGHEST MARKS IN TAXATION ALL OVER INDIA)
(AGGREGATE MARKS 79.71%)

(FEEDBACK)
Experience of those four months with M.K. GUPTA SIR was out of the world.

As a teacher, M.K. GUPTA SIR is just like a sea of knowledge & you get each and everything from
very beginning to end from him.

Sir is really a nice person. He is very motivational and his words of motivation can influence
anybody to work hard & make their parents proud.

M.K. GUPTA CA EDUCATION is the only place where the provisions of tax laws are combined
with the practical knowledge. Study material provided is excellent and it contains numerous
problems covering all aspects and such type of problems are not available anywhere. Sir is not
giving any home work rather home work is done in the class itself and students are invited to solve
the problem before the entire class.

Be honest towards your studies & Sir will show you the way of success. The way, Sir is making
students ready for the professional world is praiseworthy. Exposure given by sir to face interview of
Big four CA Firms is excellent.

The test Series conducted by the Sir in all the subjects of IPC is very nice Scheme to score such
good marks and exam are conducted in the similar manner as it is conducted by ICAI.

I would like to express my gratitude to Sir because it was only his efforts that helped me reach this
position.

Sir its your Success.

A Message to all : -

“COME & HAVE A TIME THAT YOU WILL CHERISH THROUGHOUT YOUR LIFE”.

AKSHAY JAIN
 12

VIJENDER AGGARWAL
ALL INDIA TOPPER OF CA-IPCC (NOV-10)
ROLL NO. - 174639

MARKS IN TAXATION:92%
(HIGHEST MARKS IN TAXATION ALL OVER INDIA)
(AGGREGATE MARKS 83.71%)

(FEEDBACK)
A person who possesses such vast knowledge in the field of taxation, that we people can only dream
of, is none other than M. K. Gupta Sir.

He possesses the rare ability to teach this procedural subject with utmost ease, enabling his students
to grasp all the provisions without any confusion.

The quality of study material provided is such that a good study of it helped me score 92 marks. The
variety and complexity of practical problems covered in the books are not available anywhere else.

One can find many places where taxation is being taught but it is hardly possible to find a better
place where tax laws are combined with their practical applicability to ensure that all concepts are
crystal clear.

Sir is extremely generous. Money-making doesn’t appear to be his priority and it is clearly reflected
in his classes, where the infrastructure and administration stands second to none and students are
awarded handsome cash-prizes not only in classes but also in tests, which are regularly conducted.

Thanking Sir for all what he has done would be an insult since it was only his efforts that helped me
reach this position. Sir, its your success. The relationship between us started in CPT only and
continued in IPCC and I hope it will continue forever.

VIJENDER AGGARWAL
 13

PRACHI JAIN
ALL INDIA TOPPER OF CA-PCC (MAY-10)
ROLL NO. - 66312

MARKS IN TAXATION:88%
(HIGHEST MARKS IN TAXATION ALL OVER INDIA)
(AGGREGATE MARKS 77.67%)

(FEEDBACK)

M. K. Gupta Sir is an outstanding teacher. He is not only a good teacher but a good person by heart.
His way of teaching is excellent. There are many provisions in tax but Sir repeats every provision
atleast two times. This helps in understanding those provisions easily.

His books are very good. Everything from theory to PRACTICAL ILLUSTRATION,
EXAMINATION QUESTIONS and BARE ACT is covered in his books.

Sir’s staff and management is also very good. Everything is handled in a systematic manner and on
time. Overall it was a good experience.

Thanks Sir !! :-

PRACHI JAIN
 14
FEEDBACK
(CA-Intermediate)
NO OTHER TEACHER OF TAXATION IN INDIA HAS BETTER RESULT THAN OURS

OPINION OF OUR STUDENTS

1. AKSHAY (Roll No. 685445) (Total Marks- 607) AIR-6 (Taxation-80)

Firstly, I want to thanks M.K. Gupta Sir for teaching me the tax in the easiest manner many student can
think. Tax is very hard subject but the way Sir teach the Tax is excellent. I also want to say one more thing
that the staff of MKG is very supporting. They listen to the students problem very patiently and help them to
solve their problem. At last, I want to say that no one in this CA field can teach so nicely that MK Gupta Sir
teaches.
Thank You

2. DEEPANSHU GOYAL (Roll No. 625914) (Total Marks- 570) AIR-17 (Taxation-75)
MK Gupta sir is powerhouse of knowledge. I can’t thank him enough for providing me with vast exposure
about taxation. His mock tests are so good that I was eager to attempt them. He is proactive in solving
doubts. This subject became so light & interesting that I started gaining knowledge in it. It was my best
experience with MKG with rank in both foundation & intermediate. Recorded classes was very helpful for
me, I used to reach at 6:30 am and continued till 11 am and studied taxation. It was a beautiful journey
altogether, and with 10 views, you can view the lectures many times. It helped me revise many concepts. It
became my interest rather than burden. I was so excited to give mock test so that I can build my confidence.

3. SHIVAM MISHRA (Roll No. 624937) (Total Marks- 560) AIR-20 (Taxation-83)
MK Gupta sir has very unique style of teaching. He teaches every concept very clearly and correlates every
provision with practical life. Taxation is very vast subject you cannot learn every provision rather you can
understand them. Talking about study material, it covers all types of Question. You do not need to refer
study material as it is incorporated in sir’s books. I would recommend every one to join MK Gupta CA
Education.

4. PRASHANT YADAV (Roll No.354233) 92 Marks

M.K. Gupta Sir is an outstanding teacher. He possesses very vast knowledge of taxation. Sir repeats every
concept atleast three times which makes all concepts crystal clear. Study material provided is very good, it
covers everything from illustration to examination problem and from theory to Bare Act. Staff and
infrastructure facilities of MKG Classes is incomparable. Thank you Sir for your love and support.

5. MOHIT SHARMA (Roll No.353392) 89 Marks

A brilliant personality in my life who has motivated the student to a good path. He is very different from
others. Sir concentrates not only on the Marks but also on the overall development of the student.
I am truly glad that I studied from Sir. He taught me how to compete in life. Every student get very good
marks with a little effort, if he is a student of M.K. Gupta CA Education.

6. MANISHA BHAMBRI (Roll No.456626) 89 Marks

M.K. Gupta Sir is the best teacher I have ever met. His study material being the best helped me a lot in my
exams. He is the most sincere teacher who never waste a single moment and gives his best towards his
profession. He teaches not only the theoretical portion but the practical approach too. He teaches us how to
be a good human being and how to live life happily. Thank you Sir for your support every time I needed.
 15
7. ANISH SHRESTHA (Roll No.344028) 88 Marks
M.K. Gupta Sir is a very excellent teacher. The way he is dedicated towards teaching make us to be
dedicated towards our study. Every concept and every doubt of taxation whichever do I had, he has make
clear. The best thing about Sir is, he use to revise the concept more than 3 times which makes student very
easy for preparing their exam.
You will have all the sufficient material for study and lots of questions with answers for practice a
systematically designed materials.
Thank a lot to Sir for being so much helpful and lot of love.

8. KAPIL KHANNA (Roll No.341539) 85 Marks

Sir ‘M.K. Gupta’ is the best teacher for Taxation. I feel fortunate to be his student, the amount of knowledge
he imparts is fantastic and uncomparable. He is a person who burns himself up like a candle to light the path
of his dearest students to the road of success. I wish Sir teaches all the subjects of IPCC, since he is simply
the best. Thank you for everything Sir. It you and only you who can guide students like us to reach the
zenith.

9. JITENDRA (Roll No.337780) 85 Marks

Before joining CA, I was so much scary about the “Taxation” but after joining M.K. Gupta CA Education
for taking taxation class my scary converted into my strength now. This is just because of Sir’s knowledge
& teaching style with practicality. Study material provided by Sir is also awesome for study.

10. PUNEET WASAN (Roll No.368537) 84 Marks

M.K. Gupta Sir has a vast knowledge in the subject. The topics taken in the class are very well planned.
I found the book really very good. Infact, I practiced all the previous attempts questions of each chapter and
every small question was covered in the chapter. I recommend the students to be thorough with book and
one will score undoubtedly high marks in tax. All the best!! Thank you so much Sir.

11. ISHA MALIK (Roll No.339842) 84 Marks

I do not have words to express my greatfulness for M.K. Gupta Sir. He really possesses vast knowledge and
rich experience in taxation. Study material provided by Sir is also very good which covers everything for
getting through the exam. There is no doubt that due to excellent coaching given by Sir, I have been able to
secure good marks. I pray to God for his long, happy and prospective life. I wish him to continue give
coaching to the prospective students for a longer period. I appeal to all the students who qualify CPT to take
coaching from Gupta Sir for getting sure success. Thank you Sir.

12. RUPAL GARG(Roll No.393844) 84 Marks

M.K. Gupta Sir is, as I believe, the best teacher for Taxation. He is so knowledgeable that I was totally awe
inspired by him. Every day in the class was exciting as he explains everything with real examples and full
depth. The books are superb with lots of practical questions. Thank you Sir.

13. AKANSHA GOEL (Roll No.336693) 84 Marks

It was a great experience studying from M.K. Gupta Sir. He has a vast pool of the knowledge of the subject.
The book is a comprehensive one too.

14. PRASIT SHARMA (Roll No.344702) 84 Marks

Taking about the coaching, the teaching style of M.K. Gupta Sir is too much excellent. He has good dealing
with student in every situation. If anyone asked about the taxes coaching, I prefer M.K. Gupta Sir because he
is the one & only best teacher in Taxation.

15. MANSI BAJAJ (Roll No.354329) 83 Marks

Sir teaches so well and clarifies all our queries. He makes us understand the whole concept very clearly. He
is an amazing teacher and the best teacher in the field of Taxation.
 16
16. RASHI GUPTA (Roll No.337864) 83 Marks
M.K. Gupta Sir is a very friendly and helping teacher. He always answered my queries well. His coaching
classes are very knowledgeable and books are also very good.

17. HARSH AGARWAL (Roll No.491097) 83 Marks

M.K. Gupta Sir is a good teacher. He teaches all aspects of Taxation whether it is practical knowledge or
theoretical knowledge. He teaches every point for 2-3 times and it gets learn in class only. His practical
knowledge about the subject is very good.

18. RAHUL ARORA (Roll No.337403) 83 Marks

M.K. Gupta Sir is a great mentor. Sir has excellent knowledge about the subject. He makes every concept
crystal clear. Every concept is explained atleast twice in the class. He connect every topic with practical life.
Study material is excellent. Bare Act is covered in the study material. Three months experience with M.K.
Gupta Sir is memorable moments of my life. Thank you Sir, for your guidance and encouragement.

19. SEJAL MEHTA (Roll No.353096) 83 Marks

Coaching for Taxation was an enriching experience in terms of the conceptual clarity which I gained on
each and every topic. Learning tax became so easy with the simplified notes provided.
Also, the kind of knowledge that Sir shares with the students is very commendable and useful in
understanding the practical aspects of Taxation. Attending the coaching is worth the time spent.

20. ANU SETHI (Roll No.353491) 83 Marks

I have never seen teacher like M.K. Gupta Sir. His way to teaching, knowledge and experience is awesome
i.e. brilliant. Overall regards for such marks is only M.K. Gupta Sir.

21. ASHISH GUPTA (Roll No.353575) 82 Marks

M.K. Gupta Sir is a very good teacher and he has a very vast knowledge of taxation. He gives his best to
every student in a class. The atmosphere of the class when he was teaching in a class is very awesome. I am
giving all my credit to M.K. Gupta Sir for securing marks in Taxation.

22. RAGHAV GUPTA (Roll No.491122) 82 Marks

M.K. Gupta Sir is an outstanding teacher. He possesses a very vast knowledge about the subject. His way of
teaching is fabulous. Every concept is explained with help of an example. Study material is all exhaustive
that he provides. Also, queries are taken up promptly. Thank you Sir for your guidance.

23. SHREYA MALIK (Roll No.340228) 82 Marks

M.K. Gupta Sir is the best teacher I have ever come across. His level of knowledge is tremendous. The way
he teaches, with so much patience and willingness, keeps every student motivated. The marks I have scored
in tax is all because of him. Thank you so much Sir. I am a student of video class and I have never met Sir in
person. I would be grateful if I would be given a chance to meet him in person.

24. PRABHAW KUMAR AGARWALLA (Roll No.369428) 82 Marks

Teaching was excellent and queries handled were excellent. Teaching methodology was really excellent and
helped a lot to me.

25. PRABHAT RANJAN (Roll No.347926) 81 Marks

M.K. Gupta Sir has a very deep knowledge about the subject and his practical approach towards the subject.
Sir repeats every provision atleast twice. This helps in understanding those provision easily.
The books notes and all the management is done very properly and in a smooth manner. All in all the best
way to study tax.
 17
26. ANKIT KHEMKA (Roll No.338055) 81 Marks
M.K. Gupta Sir is excellent teacher of Tax. He repeats the provision two to three times and doubts are also
taken by the faculty. His books are also very good. Bare Act is covered in his books for more understanding
about the Act. Sir also provide regular test and prize also given by him motivates the student to work hard.
Environment provided by M.K. Gupta Classes is also very good to study.

27. ARTI SRIVASTAVA (Roll No.347859) 80 Marks

Sir’s unmatchable style of teaching. Regular mock test, also help in to achieve good marks in Taxation. Sir’s
books contain illustration. Past year question also help to achiever to good marks. Sir’s build confidence in
every student to achieve success in life. Thank you, so much Sir.

28. SHIVANGI GUPTA (Roll No.337956) 80 Marks

M.K. Gupta Sir is an amazing teacher. The tax subject is all about provisions so many sections but Sir makes
it simpler for us out of all the subjects, I found Taxation to be the most interesting one.
Sir’s study material and notes are sufficient. Study material covers all the past year exam questions, practice
questions with solutions. His practical experiences help our understanding level to reach new heights. Thank
you Sir for everything.
 Computation of GST 18

GOODS AND SERVICES TAX

COMPUTATION OF GST LIABILITY

ITC/OUTPUT TAX/ NET TAX
Concept of GST was introduced first of all in France in 1954.
Goods and Services Tax infact includes the following taxes:
1. Central Goods and Services Tax (Regulated through Central Goods and Services Tax Act, 2017).
2. State Goods and Services Tax (Regulated through State Goods and Services Tax Act, 2017).
3. Integrated Goods and Services Tax (Regulated through Integrated Goods and Services Tax Act, 2017).
4. Union Territory Goods and Services Tax (Regulated through Union Territory Goods and Services Tax
Act, 2017).
5. Goods and Services Tax, Compensation to States (Regulated through Goods and Services Tax
(Compensation to States) Act, 2017)

Syllabus of CA-INTER covers only Central GST and Integrated GST.

Prior to the concept of GST, there was multiple taxation in indirect taxes and also there was cascading effect
i.e. tax on tax but after GST there is no multiple taxation and also no cascading effect and it can be
explained with the help of the illustration given below:

Illustration 1: ABC Ltd. has purchased raw material for ₹10,00,000 plus excise duty 10% plus VAT @
10%. The company has incurred ₹5,00,000 being processing charge and sold the final product at a profit of
₹2,00,000 and charged output excise duty @ 10% plus VAT @ 10%.
Discuss tax treatment.
Solution: ₹
BEFORE GST
Raw Material 10,00,000
Add: Excise Duty @ 10% 1,00,000
Total 11,00,000
Add: VAT @ 10% 1,10,000
12,10,000
Add: Processing charges 5,00,000
Cost 17,10,000
Add: Profit 2,00,000
Transaction Value 19,10,000
Add: Output Excise Duty 10% 1,91,000
Total 21,01,000
Add: VAT @ 10% 2,10,100
Amount payable by the buyer 23,11,100
The raw material has been taxed twice and also there is cascading effect i.e. tax on tax.

MODIFIED TAX STRUCTURE BEFORE GST

Raw Material 10,00,000
Add: Excise Duty @ 10% 1,00,000
Total 11,00,000
Add: VAT @ 10% 1,10,000
Cost 12,10,000
 Computation of GST 19

Assessee shall be allowed input Tax credit as given below:

Excise Duty 1,00,000
VAT 1,10,000

Since tax credit has been allowed, cost of final product shall be as given below:
Cost of Raw Material 10,00,000
Add: Processing charges 5,00,000
Add: Profit 2,00,000
Transaction Value 17,00,000
Add: Excise Duty 10% 1,70,000
Total 18,70,000
Add: VAT @ 10% 1,87,000
Amount payable by the buyer 20,57,000
Payment of taxes by ABC Ltd. to Government
(i) Excise Duty
On output 1,70,000
Less: Input Tax Credit (1,00,000)
Net Excise Duty 70,000
(ii) Output VAT 1,87,000
Less: Input Tax Credit (1,10,000)
Net Payable 77,000

Excise duty/VAT paid by ABC Ltd. on raw material shall be called input tax and its tax credit is allowed.
Excise duty/VAT on final product shall be called output tax. Input tax credit shall be deducted from output
tax and balance shall be called net tax.

Still it has defects because there is VAT on Excise duty i.e. it has cascading effect.

AFTER GST
There is no multiple taxation and also there is no cascading effect and now under GST it will work in the
manner given below:
ABC Ltd. has purchased raw material for ₹10,00,000 plus CGST @ 10% and SGST 10% The company has
incurred ₹5,00,000 being processing charge and sold the final product at a profit of ₹2,00,000 and charged
output CGST @ 10% plus SGST @ 10%.
Discuss tax treatment.
Solution: ₹
Raw Material 10,00,000
Add: CGST @ 10% 1,00,000
Add: SGST @ 10% 1,00,000
Total 12,00,000
Input tax credit
CGST 1,00,000
SGST 1,00,000
Cost of Raw Material 10,00,000
Add: Processing charges 5,00,000
Cost 15,00,000
Add: Profit 2,00,000
Transaction Value 17,00,000
Add: Output CGST @ 10% 1,70,000
Add: Output SGST @ 10% 1,70,000
Total 20,40,000
 Computation of GST 20

Computation of Net Tax

CGST ₹
Output tax 1,70,000
Less: ITC Raw material - CGST (1,00,000)
Net Tax Payable 70,000
SGST ₹
Output tax 1,70,000
Less: ITC Raw Material - SGST (1,00,000)
Net Tax Payable 70,000

There is no multiple taxation and no cascading effect (Tax on Tax).

Before the concept of GST, Excise duty was charged on manufacture and Value added tax also called sales
tax was charged on sale of goods. Excise duty was payable on cost plus profit and sales tax was payable on
cost plus profit plus excise duty and accordingly sales tax was charged on excise duty also i.e. there is tax on
tax and it is called cascading effect (as shown above) but after GST there is no cascading effect and the
manufacturer shall charge CGST plus SGST instead of excise and VAT. Also CGST/SGST shall be charged
on cost plus profit.

Payment of GST
A supplier shall be required to pay GST upto 20th of next month and has to file challan no. PMT-06 and
payment is to be made online. However over the Counter payment can be made through authorised banks for
deposits up to ten thousand rupees per challan per tax period, by cash, cheque or demand draft:

As per section 170, GST shall be rounded off in the multiple of rupee 1 and if there is 50 paisa or more, it
will be rounded off to the higher multiple otherwise it will be ignored.

In case of delay in payment of tax, as per section 50 interest shall be charged @ 18% per annum for the
period of delay.

In case of excess payment, refund shall be granted within 60 days from the date of application otherwise
interest shall be allowed u/s 56 @ 6% per annum for the period after 60 days.

Illustration 2: ABC Ltd is a manufacturer and is registered in GST in Delhi and has purchased raw
material/spare parts etc. for ₹6,00,000 plus CGST @ 9% plus SGST @ 9% and incurred ₹ 4,00,000 on
processing. Profit @ 40% on cost and entire product was sold to a wholesaler and charged CGST @ 12%
and SGST @ 12%. Compute input tax credit/ output tax and net tax.
The wholesaler has further sold it to retailer at a profit of 30% on cost and charged CGST @ 12% and SGST
@ 12%. Compute input tax credit/ output tax and net tax of the wholesaler.
The retailer has further sold it to a consumer Mr. X at a profit of 30% on cost and charged CGST @ 12%
and SGST @ 12%. Compute input tax credit/ output tax and net tax of the retailer.
Solution:
Computation of Net Tax Liability of ABC Ltd. ₹
Raw Material 6,00,000
Add: CGST @ 9% 54,000
Add: SGST @ 9% 54,000
Total 7,08,000
Input tax credit
CGST 54,000
SGST 54,000
Cost of Raw Material 6,00,000
Add: Processing charges 4,00,000
Cost 10,00,000
Add: Profit @ 40% of ₹10,00,000 4,00,000
 Computation of GST 21

Transaction Value 14,00,000

Add: Output CGST @ 12% 1,68,000
Add: Output SGST @ 12% 1,68,000
Total 17,36,000

Computation of Net Tax

CGST ₹
Output tax 1,68,000
Less: ITC Raw material - CGST (54,000)
Net Tax 1,14,000

SGST ₹
Output tax 1,68,000
Less: ITC Raw material - SGST (54,000)
Net Tax 1,14,000

Computation of Net Tax Liability of wholesaler ₹

Purchase price of wholesaler 17,36,000
Less: ITC Goods – CGST (1,68,000)
Less: ITC Goods – SGST (1,68,000)
Cost to Wholesaler 14,00,000
Add: Profit @ 30% of ₹14,00,000 4,20,000
Transaction Value 18,20,000
Add: CGST @ 12% 2,18,400
Add: SGST @ 12% 2,18,400
Total 22,56,800

Computation of Net Tax

CGST ₹
Output tax 2,18,400
Less: ITC Goods - CGST (1,68,000)
Net Tax payable 50,400

Computation of Net Tax

SGST ₹
Output tax 2,18,400
Less: ITC Goods - SGST (1,68,000)
Net Tax payable 50,400

Computation of Net Tax of Retailer ₹

Purchase price of Retailer 22,56,800
Less: ITC Goods – CGST (2,18,400)
Less: ITC Goods – SGST (2,18,400)
Cost to Retailer 18,20,000
Add: Profit @ 30% of ₹18,20,000 5,46,000
Transaction Value 23,66,000
Add: CGST @ 12% 2,83,920
Add: SGST @ 12% 2,83,920
Total 29,33,840

Computation of Net Tax

CGST ₹
Output tax 2,83,920
Less: ITC Goods – CGST (2,18,400)
 Computation of GST 22

Net Tax Payable 65,520

SGST ₹
Output tax 2,83,920
Less: ITC Goods – SGST (2,18,400)
Net Tax Payable 65,520

Illustration 3:Mr. X is a dealer in Delhi purchased goods for ₹ 10,00,000 plus CGST 10% and SGST 10%
and sold the goods at a profit of ₹ 2,00,000 and he is not a registered dealer, in this case tax treatment shall
be as given below:
Solution: ₹
Purchase price 10,00,000
Add: CGST @ 10% 1,00,000
Add: SGST @ 10% 1,00,000
Total 12,00,000

Input tax credit of CGST & SGST is not allowed because Mr. X is not registered.

Cost 12,00,000
Add: profit 2,00,000
Sale Value 14,00,000

(b) presume he is registered.

Solution: ₹
Purchase price 10,00,000
Add: CGST @ 10% 1,00,000
Add: SGST @ 10% 1,00,000
Total 12,00,000

Input tax credit of CGST & SGST is allowed.

Cost 10,00,000
Add: profit 2,00,000
Sale Value 12,00,000
Add: CGST @ 10% 1,20,000
Add: SGST @ 10% 1,20,000
Total 14,40,000

Computation of Net Tax

CGST
Output 1,20,000
Less: ITC (1,00,000)
Net Tax 20,000

SGST
Output 1,20,000
Less: ITC (1,00,000)
Net Tax 20,000

Illustration 4:
ABC Ltd. purchased raw material ₹7,00,000 + CGST @ 10% + SGST @ 10% . Processing charge
₹3,00,000 profit 40% on cost entire product was sold and output CGST @ 10%/ SGST @ 10%.
Compute ITC/ Output tax/ Net Tax . Also amount for which product is sold.
(a) Registered in GST
 Computation of GST 23

(b) Unregistered in GST.

Solution (a):
Computation of Net Tax Liability of ABC limited ₹
Raw Material 7,00,000
Add: CGST @ 10% 70,000
Add: SGST @ 10% 70,000
Total 8,40,000
Input tax credit
CGST 70,000
SGST 70,000
Cost of Raw Material 7,00,000
Add: Processing cost 3,00,000
COST 10,00,000
Add: Profit @ 40% on cost 4,00,000
Transaction Value 14,00,000
Add: CGST @ 10% 1,40,000
Add: SGST @ 10% 1,40,000
Total 16,80,000
Computation of Net Tax
CGST
Output 1,40,000
Less: ITC (70,000)
Net Tax 70,000

SGST
Output 1,40,000
Less: ITC (70,000)
Net Tax 70,000

(b) Computation of Net Tax Liability of ABC limited ₹

Raw Material 7,00,000
Add: CGST @ 10% 70,000
Add: SGST @ 10% 70,000
Total 8,40,000
Input tax credit
CGST Nil
SGST Nil
Cost of Raw Material 8,40,000
Add: Processing cost 3,00,000
COST 11,40,000
Add: Profit @ 40% on cost 4,56,000
Transaction Value 15,96,000

Illustration 5: ABC Ltd is a manufacturer and is registered in GST in Delhi and has purchased raw
material/spare parts etc. for ₹5,00,000 plus CGST @ 12% plus SGST @ 12% and incurred ₹2,00,000 on
processing. Profit @ 40% on cost and entire product was sold to a wholesaler and charged CGST @ 12%
and SGST @ 12%. Compute input tax credit/ output tax and net tax.
The wholesaler has further sold it to retailer at a profit of 30% on cost and charged CGST @ 12% and SGST
@ 12%. Compute input tax credit/ output tax and net tax of the wholesaler.
The retailer has further sold it to a consumer Mr. X at a profit of 30% on cost and charged CGST @ 12%
and SGST @ 12%. Compute input tax credit/ output tax and net tax of the retailer.
 Computation of GST 24

Solution:
Computation of Net Tax Liability of ABC Ltd. ₹
Raw Material 5,00,000
Add: CGST @ 12% 60,000
Add: SGST @ 12% 60,000
Total 6,20,000
Input tax credit
CGST 60,000
SGST 60,000
Cost of Raw Material 5,00,000
Add: Processing charges 2,00,000
Cost 7,00,000
Add: Profit @ 40% of ₹7,00,000 2,80,000
Transaction Value 9,80,000
Add: Output CGST @ 12% 1,17,600
Add: Output SGST @ 12% 1,17,600
Total 12,15,200
Computation of Net Tax
CGST ₹
Output tax 1,17,600
Less: ITC Raw material - CGST (60,000)
Net Tax 57,600

SGST ₹
Output tax 1,17,600
Less: ITC Raw material - SGST (60,000)
Net Tax 57,600
Computation of Net Tax Liability of wholesaler ₹
Purchase price of wholesaler 12,15,200
Less: ITC Goods – CGST (1,17,600)
Less: ITC Goods – SGST (1,17,600)
Cost to Wholesaler 9,80,000
Add: Profit @ 30% of ₹9,80,000 2,94,000
Transaction Value 12,74,000
Add: CGST @ 12% 1,52,880
Add: SGST @ 12% 1,52,880
Total 15,79,760

Computation of Net Tax

CGST ₹
Output tax 1,52,880
Less: ITC Goods - CGST (1,17,600)
Net Tax payable 35,280

Computation of Net Tax

SGST ₹
Output tax 1,52,880
Less: ITC Goods - SGST (1,17,600)
Net Tax payable 35,280

Computation of Net Tax of Retailer ₹

Purchase price of Retailer 15,79,760
Less: ITC Goods – CGST (1,52,880)
 Computation of GST 25

Less: ITC Goods – SGST (1,52,880)

Cost to Retailer 12,74,000
Add: Profit @ 30% of ₹12,74,000 3,82,200
Transaction Value 16,56,200
Add: CGST @ 12% 1,98,744
Add: SGST @ 12% 1,98,744
Total 20,53,688
Computation of Net Tax
CGST ₹
Output tax 1,98,744
Less: ITC Goods – CGST (1,52,880)
Net Tax Payable 45,864

SGST ₹
Output tax 1,98,744
Less: ITC Goods – SGST (1,52,880)
Net Tax Payable 45,864

Illustration 6: ABC Ltd. purchased raw material ₹ 800,000 and paid CGST 14% + SGST 14% and incurred
₹600,000 for processing and had profit of 30% on cost and charged CGST 14% + SGST 14%. It was
purchased by wholesaler XYZ ltd. and the product was sold further at a profit of 20% on cost and charged
CGST 14% + SGST 14%. C
Solution:
Computation of Net Tax Liability of ABC ltd. ₹
Raw Material 8,00,000
Add: CGST @ 14% 1,12,000
Add: SGST @ 14% 1,12,000
Total 10,24,000
Input tax credit
CGST 1,12,000
SGST 1,12,000

Cost of Raw Material 8,00,000

Add: Processing charges 6,00,000
Cost 14,00,000
Add: Profit @ 30% of ₹14,00,000 4,20,000
Transaction Value 18,20,000
Add: Output CGST @ 14% 2,54,800
Add: Output SGST @ 14% 2,54,800
Total 23,29,600
Computation of Net Tax
CGST ₹
Output tax 2,54,800
Less: ITC Raw material - CGST (1,12,000)
Net Tax 1,42,800

SGST ₹
Output tax 2,54,800
Less: ITC Raw material - SGST (1,12,000)
Net Tax 1,42,800

Computation of Net Tax Liability of XYZ Limited ₹

Purchase price of wholesaler 23,29,600
 Computation of GST 26

Less: ITC Goods – CGST (2,54,800)

Less: ITC Goods – SGST (2,54,800)
Cost to Wholesaler 18,20,000
Add: Profit @ 20% of ₹18,20,000 3,64,000
Transaction Value 21,84,000
Add: CGST @ 14% 3,05,760
Add: SGST @ 14% 3,05,760
Total 27,95,520

Computation of Net Tax

CGST ₹
Output tax 3,05,760
Less: ITC Goods - CGST (2,54,800)
Net Tax payable 50,960

Computation of Net Tax

SGST ₹
Output tax 3,05,760
Less: ITC Goods - SGST (2,54,800)
Net Tax payable 50,960

Illustration 7: Mr. A is a manufacturer in Delhi. He purchased raw material ₹6,00,000 + CGST @ 10% +
SGST @ 10% and incurred ₹4,00,000 on processing and charged profit 40% on cost and sold entire product
and output CGST @ 10% and SGST @ 10%. The product was purchased by a wholesaler Mr. B and he
further sold it at a profit of 20% on cost and charged output CGST @ 10% and SGST @ 10%. Compute
Input Tax Credit allowed to Mr. A and Mr. B and also net tax payable by each of them.
Solution:
Computation of Net Tax Liability of Mr. A ₹
Raw Material 6,00,000
Add: CGST @ 10% 60,000
Add: SGST @ 10% 60,000
Total 7,20,000
Input tax credit
CGST 60,000
SGST 60,000

Cost of Raw Material 6,00,000

Add: Processing charges 4,00,000
Cost 10,00,000
Add: Profit @ 40% of ₹10,00,000 4,00,000
Transaction Value 14,00,000
Add: Output CGST @ 10% 1,40,000
Add: Output SGST @ 10% 1,40,000
Total 16,80,000

Computation of Net Tax

CGST ₹
Output tax 1,40,000
Less: ITC Raw material - CGST (60,000)
Net Tax 80,000

SGST ₹
Output tax 1,40,000
 Computation of GST 27

Less: ITC Raw material - SGST (60,000)

Net Tax 80,000
Computation of Net Tax Liability Mr. B ₹
Purchase price of wholesaler 16,80,000
Less: ITC Goods – CGST (1,40,000)
Less: ITC Goods – SGST (1,40,000)
Cost to Wholesaler 14,00,000
Add: Profit @ 20% of ₹14,00,000 2,80,000
Transaction Value 16,80,000
Add: CGST @ 10% 1,68,000
Add: SGST @ 10% 1,68,000
Total 20,16,000

Computation of Net Tax

CGST ₹
Output tax 1,68,000
Less: ITC Goods - CGST (1,40,000)
Net Tax payable 28,000

Computation of Net Tax

SGST ₹
Output tax 1,68,000
Less: ITC Goods - SGST (1,40,000)
Net Tax payable 28,000

Illustration 8: Mr. X is a dealer registered in GST and has purchased goods for ₹7,60,000 and paid CGST
@ 9% and SGST @ 9% and sold goods at a profit of 40% on cost and charged output CGST @ 9% and
SGST@ 9%. Compute tax payable, Output Tax and Input Tax.

b) Presume he is unregistered dealer.

Solution:
₹
Purchase price 7,60,000
Add: CGST @ 9% 68,400
Add: SGST @ 9% 68,400
Total 8,96,800

Input tax credit of CGST & SGST is allowed.

Cost 7,60,000
Add: profit @ 40% 3,04,000
Sale Value 10,64,000
Add: CGST @ 9% 95,760
Add: SGST @ 9% 95,760
Total 12,55,520
Computation of Net Tax
CGST ₹
Output tax 95,760
Less: ITC Goods – CGST (68,400)
Net Tax Payable 27,360
SGST ₹
Output tax 95760
Less: ITC Goods – SGST (68,400)
Net Tax Payable 27,360
 Computation of GST 28

b) If he is an unregistered dealer.
₹
Cost 8,96,800
Add: profit @ 40% 3,58,720
Total 12,55,520

Illustration 9: Mr. X is dealer registered in GST and has submitted information as given below:
Goods A purchased for ₹ 3,00,000 + CGST @ 9% and SGST @ 9% and sold the goods at a profit of 40% on
cost and charged CGST @ 9% and SGST @ 9%.
Goods B purchased ₹ 5,00,000 + CGST @ 14% + SGST @ 14% and sold goods at a profit of ₹ 3,00,000
charged CGST @ 14% + SGST @ 14%.
Goods C purchased ₹7,00,000 + CGST @ 6% + SGST @ 6% and sold goods at a profit of 40% on sale and
charged CGST @ 6% + SGST @ 6%.
Compute Input Tax Credit /Output Tax / Net Tax.
Solution:
Computation of Net Tax Liability of Mr. X ₹
Goods A 3,00,000
Add: CGST @ 9% 27,000
Add: SGST @ 9% 27,000
Total 3,54,000
Input tax credit
CGST 27,000
SGST 27,000

Cost of Goods A 3,00,000

Add: Profit @ 40% 1,20,000
Transaction Value 4,20,000
Add: Output CGST @ 9% 37,800
Add: Output SGST @ 9% 37,800
Total Sale 4,95,600

Goods B 5,00,000
Add: CGST @ 14% 70,000
Add: SGST @ 14% 70,000
Total 6,40,000
Input tax credit
CGST @ 14% 70,000
SGST @ 14% 70,000

Cost of Goods B 5,00,000

Add: Profit 3,00,000
Transaction Value 8,00,000
Add: Output CGST @ 14% 1,12,000
Add: Output SGST @ 14% 1,12,000
Total Sale 10,24,000

Goods C 7,00,000
Add: CGST @ 6% 42,000
Add: SGST @ 6% 42,000
Total 7,84,000
Input tax credit
CGST @ 6% 42,000
SGST @ 6% 42,000
 Computation of GST 29

Cost of Goods C 7,00,000.00

Add: Profit @ 40% on sale (7,00,000/60 x 40) 4,66,666.67

Transaction Value 11,66,666.67

Add: Output CGST @ 6% 70,000.00
Add: Output SGST @ 6% 70,000.00
Total Sale 13,06,666.67

Computation of Net Tax

CGST ₹
Output Tax
Goods A 37,800
Goods B 1,12,000
Goods C 70,000
2,19,800
Less: ITC – GOODS A – CGST (27,000)
Less: ITC – GOODS B – CGST (70,000)
Less: ITC – GOODS C – CGST (42,000)
Net Tax 80,800
SGST ₹
Output Tax
Goods A 37,800
Goods B 1,12,000
Goods C 70,000
2,19,800
Less: ITC – GOODS A – SGST (27,000)
Less: ITC – GOODS B – SGST (70,000)
Less: ITC – GOODS C – SGST (42,000)
Net Tax 80,800
 Computation of GST 30

INTER STATE SUPPLY

( IGST Act)
Illustration 10
Mr. X is a dealer registered in GST and he has purchased goods from Haryana for ₹10,00,000 plus IGST @
12% and goods were sold in Delhi at a profit of ₹1,00,000 and charged CGST @ 6% and SGST @ 6%. In
this case sale value and tax charged shall be as given below:
Solution: ₹
Purchase price 10,00,000
Add: IGST @ 12% 1,20,000
Total 11,20,000
Input tax credit of IGST is allowed of ₹ 1,20,000.

Cost 10,00,000
Add: profit 1,00,000
Sale Value 11,00,000
Add: CGST @ 6% 66,000
Add: SGST @ 6% 66,000
Sale value inclusive of tax 12,32,000
Computation of Net Tax
CGST ₹
Output tax 66,000
Less: ITC Raw Material-IGST (66,000)
Net Tax Payable Nil

SGST ₹
Output tax 66,000
Less: ITC Raw Material-IGST (54,000)
Net Tax Payable 12,000

There is no multiple taxation and no cascading effect (Tax on Tax).

Illustration 11: Mr. X is a registered dealer in GST Act in Delhi and has submitted information as given
below:
- Purchased goods A’ from Haryana ₹6,00,000 IGST @ 20% and sold the goods in Delhi at a profit of 20%
on purchase price plus CGST @ 10% plus SGST @ 10%.

- Purchased goods ‘B’ from Delhi ₹5,00,000 and CGST @ 10% plus SGST @ 10% and sold goods at a
profit of 30% of cost price + CGST @ 10% plus SGST @ 10%.

- Purchased goods ‘C’ from Delhi ₹7,00,000 plus CGST @ 10% plus SGST @ 10% and the goods were sold
in inter-state sale in UP and charged IGST @ 20% and the dealer has taken profit of 40% on cost.
Discuss tax treatment and Compute Net Tax Payable.
Solution:
Goods ‘A’
6,00,000
Add: IGST @ 20% 1,20,000
7,20,000
Input Tax Credit - IGST 1,20,000
6,00,000
Add: Profit @ 20% 1,20,000
7,20,000
 Computation of GST 31

Add: CGST @ 10% 72,000

Add: SGST @ 10% 72,000

Goods ‘B’
5,00,000
Add: CGST @ 10% 50,000
Add: SGST @ 10% 50,000
Input Tax Credit
CGST 50,000
SGST 50,000
5,00,000
Add: Profit @ 30% 1,50,000
6,50,000
Add: CGST @ 10% 65,000
Add: SGST @ 10% 65,000

Goods ‘C’
7,00,000
Add: CGST @ 10% 70,000
Add: SGST @ 10% 70,000
Input Tax Credit
CGST 70,000
SGST 70,000
7,00,000
Add: Profit @ 40% 2,80,000
9,80,000
Add: IGST @ 20% 1,96,000

Computation of Net Tax

Particulars IGST ₹
Output Tax
Goods C 1,96,000
Less: ITC Raw Material A – IGST (1,20,000)
Net Tax Payable 76,000
Computation of Net Tax
Particulars CGST ₹
Output Tax
Goods A 72,000
Goods B 65,000
Total 1,37,000
Less: ITC Raw Material B – CGST (50,000)
Less: ITC Raw Material C – CGST (70,000)
Net Tax Payable 17,000

Computation of Net Tax

Particulars SGST ₹
Output Tax
Goods A 72,000
Goods B 65,000
Total 1,37,000
Less: ITC Raw Material B - SGST (50,000)
Less: ITC Raw Material C – SGST (70,000)
Net Tax Payable 17,000
 Computation of GST 32

Illustration 12: ABC Ltd is engaged in manufacturing and registered under GST Act and the company has
submitted information as given below:
Purchased raw material ‘A’ from some other state ₹1,00,000 + IGST @ 15%.
Purchased raw material ‘B’ from Delhi ₹3,00,000 + CGST @ 10% + SGST @ 10%
Processing charges 4,00,000. Taken services of production engineer and paid ₹3,00,000 + CGST @ 7.5% +
SGST @ 7.5%. Profit ₹5,00,000 and entire product was sold and charged output tax CGST @ 10% + SGST
@ 10% . Compute Net Tax Payable.
Solution: Raw Material ‘A’ ₹
Transaction Value 1,00,000.00
Add: IGST @ 15% 15,000.00
1,15,000.00
Raw Material ‘B’
Transaction Value 3,00,000.00
Add: CGST @ 10% 30,000.00
Add: SGST @ 10% 30,000.00
3,60,000.00
Services 3,00,000.00
Add: CGST @ 7.5% 22,500.00
Add: SGST @ 7.5% 22,500.00
3,45,000.00
Cost of finished product
Raw Material A 1,00,000.00
Raw Material B 3,00,000.00
Services 3,00,000.00
Processing 4,00,000.00
Cost 11,00,000.00
Add: Profit 5,00,000.00
Transaction value 16,00,000.00
Add: CGST @ 10% 1,60,000.00
Add: SGST @ 10% 1,60,000.00
19,20,000.00
Computation of Net Tax
Particulars CGST ₹
Output Tax 1,60,000
Less : ITC Raw Material A - IGST (15,000)
Less: ITC Raw Material B – CGST (30,000)
Less: ITC Services – CGST (22,500)
Tax Payable 92,500

Computation of Net Tax

Particulars SGST ₹
Output Tax 1,60,000
Less: ITC Raw Material B – SGST (30,000)
Less: ITC Services – SGST (22,500)
Tax Payable 1,07,500

Illustration 13: ABC Ltd. is registered under GST Act and has submitted information as given below.

- Purchased raw material ‘A’ ₹2,00,000 + CGST @ 10% + SGST @ 10%

- Purchased raw material ‘B’ ₹3,10,000 + IGST @ 20%

 Computation of GST 33

- Services of a production engineer were taken and paid ₹2,00,000 + CGST @ 10% + SGST @ 10%

- Processing charges 4,00,000

- Profit 20% of cost.
- Sold entire product in UP under interstate sale and output IGST @ 20%
Show the tax treatment and compute ITC / Output tax/ Net tax
Solution: ₹
Raw Material ‘A’
2,00,000
Add: CGST @ 10% 20,000
Add: SGST @ 10% 20,000
2,40,000
Input Tax Credit
CGST 20,000
SGST 20,000
Cost of Raw Material 2,00,000
Raw Material ‘B’
3,10,000
Add: IGST @ 20% 62,000
3,72,000
Input Tax Credit
IGST 62,000
Cost of Raw Material 3,10,000

Services
2,00,000
Add: CGST @ 10% 20,000
Add: SGST @ 10% 20,000
2,40,000
Input Tax Credit
CGST 20,000
SGST 20,000
Cost of Service 2,00,000
Cost of Finished Product
Raw Material ‘A’ 2,00,000
Raw Material ‘B’ 3,10,000
Services 2,00,000
Processing Cost 4,00,000
11,10,000
Profit (11,10,000 x 20%) 2,22,000
13,32,000
Add: IGST @ 20% 2,66,400
15,98,400
Computation of Net Tax Payable
Particulars IGST
Output Tax 2,66,400
Less: ITC Raw Material B – IGST (62,000)
Less: ITC Raw Material A - CGST (20,000)
Less: ITC Services - CGST (20,000)
Less: ITC Raw Material A – SGST (20,000)
Less: ITC Services - SGST (20,000)
Net Tax Payable 1,24,400
 Computation of GST 34

Illustration 14: Mr. X is registered in GST and he is a manufacturer and he has purchased raw material R1
for ₹2,50,000 and has paid CGST @ 10% plus SGST @ 10%.

He purchased raw material R2 for ₹3,20,000 and paid IGST @ 20% and raw material was purchased from
other state.

He has purchased raw material R3 for ₹5,50,000 and has paid CGST @ 10% plus SGST @ 10%.
Processing charges ₹4,00,000 plus profit ₹70,000.

The manufacturer has taken input services in connection with manufacturing of the product and has paid
₹5,00,000 plus CGST @ 10% plus SGST @ 10%.

Final product was sold and charged CGST @ 10% plus SGST @ 10%.

Show the working for GST and also show the working for payment of tax at the time of sale of final product.

Solution: ₹
Raw material – R1
Transaction value 2,50,000
Add: CGST @ 10% 25,000
Add: SGST @ 10% 25,000
Total 3,00,000
Input Tax Credit
CGST 25,000
SGST 25,000
2,50,000
Raw material – R2
Transaction value 3,20,000
Add: IGST @ 20% 64,000
Total 3,84,000
Input Tax Credit
IGST 64,000
3,20,000
Raw material – R3
Transaction value 5,50,000
Add: CGST @ 10% 55,000
Add: SGST @ 10% 55,000
Total 6,60,000
Input Tax Credit
CGST 55,000
SGST 55,000
5,50,000
Service
5,00,000
Add: CGST @ 10% 50,000
Add: SGST @ 10% 50,000
Total 6,00,000
Input Tax Credit
CGST 50,000
SGST 50,000

Cost of Final Product

Raw material - R1 2,50,000.00
 Computation of GST 35

Raw material - R2 3,20,000.00

Raw material - R3 5,50,000.00
Processing charges 4,00,000.00
Payment for services 5,00,000.00
Profit 70,000.00
Transaction value 20,90,000.00
Add: CGST @ 10% 2,09,000.00
Add: SGST @ 10% 2,09,000.00
Total 25,08,000.00

Computation of Net Tax

CGST
₹
Output tax 2,09,000.00
Less:
ITC Raw material – R2 – IGST (64,000.00)
ITC Raw material – R1 – CGST (25,000.00)
ITC Raw material – R3 – CGST (55,000.00)
ITC Services – CGST (50,000.00)
Net tax payable 15,000.00

Computation of Net Tax

SGST
₹
Output tax 2,09,000.00
Less:
ITC Raw material – R1 – SGST (25,000.00)
ITC Raw material – R3 – SGST (55,000.00)
ITC Services – SGST (50,000.00)
Net tax payable 79,000.00

Illustration 15: ABC Limited is a manufacturing concern and the company has submitted the particulars as
given below:-
Purchased raw material, R1: ₹2,00,000 (+) CGST @10% (+) SGST @10%
Purchased raw material, R2: ₹3,00,000 (+) IGST @ 20%
The company purchased plant and machinery for ₹10 Lakhs and paid CGST @10% plus SGST @ 10%.
Life of the plant and machinery is 5 years and depreciation is allowed @ 20% on SLM.
The company has taken certain services in connection with manufacturing of goods and has paid ₹3,00,000
plus CGST @10% plus SGST @ 10%. Other processing expenditure incurred by the company is ₹5,00,000
and profit is ₹8,00,000. Final product was sold by the company and output CGST @10% plus SGST @
10%. Company is registered under GST ACT. Compute Net Tax Payable.

Solution: ₹
Raw material –R1
Purchase price 2,00,000.00
Add: CGST @ 10% 20,000.00
Add: SGST @ 10% 20,000.00
2,40,000.00
Raw material –R2
Purchase price 3,00,000.00
Add: IGST @ 20% 60,000.00
3,60,000.00
 Computation of GST 36

Capital goods
Purchase price 10,00,000.00
Add: CGST @10% 1,00,000.00
Add: SGST @10% 1,00,000.00
12,00,000.00

Services 3,00,000.00
Add: CGST @10% 30,000.00
Add: SGST @10% 30,000.00
3,60,000.00

Cost of final product

Raw material –R1 2,00,000.00
Raw material –R2 3,00,000.00
Depreciation on Capital goods (10,00,000 @ 20%) 2,00,000.00
Services 3,00,000.00
Other processing charges 5,00,000.00
Profit 8,00,000.00
Transaction Value 23,00,000.00
Add: CGST @10% 2,30,000.00
Add: SGST @10% 2,30,000.00
27,60,000.00
Computation of Net Tax Payable
CGST ₹
Output Tax 2,30,000
Less:
ITC Raw Material 2 - IGST (60,000)
ITC Raw material – R1 – CGST (20,000)
ITC Plant and machinery – CGST (1,00,000)
ITC Tax on Input Services – CGST (30,000)
Net tax payable 20,000
Computation of Net Tax Payable
SGST ₹
Output Tax 2,30,000
Less:
ITC Raw material – R1 – SGST (20,000)
ITC Plant and machinery – SGST (1,00,000)
ITC Services – SGST (30,000)
Net tax payable 80,000
Assessee has the option to adjust ITC of IGST either from output CGST or from output SGST

Illustration 16: ABC Ltd. is registered under GST Act and has submitted information as given below:
Purchased raw material for ₹4,00,000 plus CGST @10% and SGST @10% and company purchased plant
and machinery for ₹10,00,000 plus CGST @10% and SGST @10%. Life of plant and machinery is 5 years
and depreciation is allowed @ 20% on SLM basis. Processing charges ₹2,00,000 and profit ₹5,00,000. All
the goods were sold and charged CGST @10% and SGST @10%.
Show the tax treatment and Compute Net Tax Payable.
Solution: ₹
Raw Material
Cost of Raw Material 4,00,000
Add: CGST @10% 40,000
Add: SGST @10% 40,000
4,80,000
 Computation of GST 37

Input Tax Credit

CGST 40,000
SGST 40,000
Cost of Raw Material 4,00,000

Plant and Machinery

Plant and Machinery 10,00,000
Add: CGST @10% 1,00,000
Add: SGST @10% 1,00,000
Total 12,00,000
Input Tax Credit
CGST 1,00,000
SGST 1,00,000
Cost of finished product
Raw Material 4,00,000
Depreciation on capital goods (20% of 10,00,000) 2,00,000
Processing 2,00,000
Profit 5,00,000
Transaction value 13,00,000
Add: CGST @ 10% 1,30,000
Add: SGST @ 10% 1,30,000
15,60,000
Computation of Net Tax Payable
CGST ₹
Output Tax 1,30,000.00
Less:
ITC Raw Material – CGST (40,000.00)
ITC Plant & Machinery – CGST (90,000.00)
Net Tax Payable Nil

SGST ₹
Output Tax 1,30,000.00
Less:
ITC Raw Material – SGST (40,000.00)
ITC Plant & Machinery – SGST (90,000.00)
Net Tax Payable Nil
Excess tax credit - CGST ₹ 10,000
Excess tax credit - SGST ₹ 10,000
Excess tax credit shall be carried forward or refund can be claimed as per section 54.
As per section 54, Refund shall be allowed if credit has been accumulated on account of rate of tax on inputs
is higher than the rate on output supplies. Refund shall be granted within 60 days from the date of
application otherwise interest shall be allowed u/s 56 @ 6% per annum for the period after 60 days.

Illustration 17: ABC Ltd. is registered under GST Act and has submitted particulars as given below:-

- Purchased Raw Material ‘A’ ₹1,00,000 + CGST @10% and SGST @10%
- Purchased Raw Material ‘B’ ₹2,00,000 + IGST @ 20%.
- Purchased plant and machinery ₹20,00,000 + CGST @10% and SGST @10%.
- Life of plant and machinery is 5 years. Depreciation is allowed on SLM basis.
- Service taken ₹3,00,000 + CGST @10% and SGST @10%.
- Processing charges 4,00,000
- Profit 5,00,000
 Computation of GST 38

All the goods were sold CGST @10% and SGST @10%

Show tax treatment and compute net tax payable.

Solution:
Raw Material ‘A’
Cost of Raw Material ‘A’ 1,00,000
Add: CGST @10% 10,000
Add: SGST @10% 10,000
1,20,000
Input Tax Credit
CGST 10,000
SGST 10,000
Cost of Raw Material 1,00,000
Raw Material “B’
Cost of Raw Material ‘B’ 2,00,000
Add: IGST @ 20% 40,000
2,40,000
Input Tax Credit
IGST 40,000
Cost of Raw Material 2,00,000

Plant and Machinery

Plant and Machinery 20,00,000
Add: CGST @10% 2,00,000
Add: SGST @10% 2,00,000
24,00,000
Input Tax Credit
CGST 2,00,000
SGST 2,00,000
Cost of Assets 20,00,000
Services
Services 3,00,000
Add: CGST @10% 30,000
Add: SGST @10% 30,000
3,60,000
Input Tax Credit
CGST 30,000
SGST 30,000
Cost of service 3,00,000

Cost of finished product

Raw Material A 1,00,000
Raw Material B 2,00,000
Depreciation on capital goods (20% of 20,00,000) 4,00,000
Services 3,00,000
Processing 4,00,000
Profit 5,00,000
Transaction value 19,00,000
Add: CGST @10% 1,90,000
Add: SGST @10% 1,90,000
 Computation of GST 39

Computation of Net Tax Payable

CGST ₹
Output Tax 1,90,000
Less:
ITC Raw Material ‘B’ – IGST (40,000)
ITC Raw Material ‘A’ – CGST (10,000)
ITC Plant & Machinery – CGST (1,40,000)
Net Tax Payable Nil

SGST ₹
Output Tax 1,90,000
Less:
ITC Raw Material ‘A’ – SGST (10,000)
ITC Plant & Machinery - SGST (1,80,000)
Net Tax Payable Nil
Excess tax credit - CGST ₹ 90,000
Excess tax credit - SGST ₹ 50,000
Excess tax credit shall be carried forward or refund can be claimed as per section 54.

Illustration 18: ABC Limited is a manufacturing concern and the company has submitted the particulars as
given below:-
Purchased raw material, R1: ₹2,00,000 plus CGST @10% and SGST @10%
Purchased raw material, R2: ₹3,00,000 plus IGST @ 20%
The company purchased plant and machinery for ₹10 Lakhs and paid IGST @10%.
Life of the plant and machinery is 5 years and depreciation is allowed @ 20% on SLM.
The company has taken certain services in connection with manufacturing of goods and has paid ₹3,00,000
plus CGST @ 9% and SGST @ 9%
Other processing expenditure incurred by the company is ₹5,00,000 and profit is ₹3,00,000.
Final product was sold by the company and output CGST @10% and SGST @10% .
Company is registered under GST and Compute Output tax / Net tax .
Solution:
Raw material –R1
Purchase price 2,00,000.00
Add: CGST @10% 20,000.00
Add: SGST @10% 20,000.00
2,40,000.00
Input Tax Credit
CGST 20,000.00
SGST 20,000.00
Cost of Raw Material 2,00,000.00
Raw material –R2
Purchase price 3,00,000.00
Add: IGST @ 20% 60,000.00
3,60,000.00
Input Tax Credit
IGST 60,000.00
Cost of Raw Material 3,00,000.00
Plant & Machinery
Purchase price 10,00,000.00
 Computation of GST 40

Add: IGST @ 10% 1,00,000.00

11,00,000.00
Input Tax Credit
IGST 1,00,000.00
Cost of Asset 10,00,000.00

Services 3,00,000.00
Add: CGST @ 9% 27,000.00
Add: SGST @ 9% 27,000.00
3,54,000.00
Input Tax Credit
CGST 27,000.00
SGST 27,000.00
Cost of service 3,00,000.00
Cost of final product
Raw material –R1 2,00,000.00
Raw material –R2 3,00,000.00
Depreciation on Capital goods (10,00,000 @ 20%) 2,00,000.00
Services 3,00,000.00
Other processing charges 5,00,000.00
Profit 3,00,000.00
Transaction Value 18,00,000.00
Add: CGST @ 10% 1,80,000.00
Add: SGST @ 10% 1,80,000.00
21,60,000.00
Computation of Net Tax Payable
CGST ₹
Output Tax 1,80,000.00
Less:
ITC Raw material – R2 –IGST (60,000.00)
ITC Plant and machinery – IGST (73,000.00)
ITC Raw material – R1 – CGST (20,000.00)
ITC – Services – CGST (27,000.00)
Net tax payable Nil

SGST ₹
Output Tax 1,80,000.00
Less:
ITC Plant and machinery – IGST (27,000.00)
ITC Raw material – R1 –SGST (20,000.00)
ITC Services – SGST (27,000.00)
Net tax payable 1,06,000.00
Assessee has the option to adjust ITC of IGST either from output CGST or from output SGST

Illustration 19:
Mr. X is a dealer registered under GST. He has submitted the information given below:
1. Purchased goods A for ₹10,00,000 + IGST @ 20% and sold these goods for ₹12,00,000 + CGST @
10% + SGST @ 10%.
2. Purchased goods B for ₹8,00,000 + CGST @ 10% + SGST @ 10% and sold these goods for
₹6,00,000 + IGST @ 20%.
3. Purchased goods C for ₹8,00,000 + CGST @ 10% + SGST @ 10% and sold these goods for
₹9,00,000 + CGST @10% + SGST @10%.
Compute Net Tax payable by Mr. X.
 Computation of GST 41

Solution:
₹
Goods A
Cost 10,00,000
Add: IGST @20% 2,00,000

Input Tax Credit

IGST 2,00,000

Sale 12,00,000
Add: CGST @10% 1,20,000
Add: SGST @10% 1,20,000
Total 14,40,000

Goods B
Cost 8,00,000
Add: CGST @10% 80,000
Add: SGST @10% 80,000
Total 9,60,000
Input Tax Credit
CGST 80,000
SGST 80,000

Sale 6,00,000
Add: IGST @20% 1,20,000
Total 7,20,000

Goods C
Cost 8,00,000
Add: CGST @10% 80,000
Add: SGST @10% 80,000
Total 9,60,000

Input Tax Credit

CGST 80,000
SGST 80,000
Sale 9,00,000
Add: CGST @10% 90,000
Add: SGST @10% 90,000
Total 10,80,000
Computation of Net Tax Payable
IGST ₹
Output Tax 1,20,000
Less:
ITC Goods A – IGST (1,20,000)

Net Tax Payable Nil

Excess credit of IGST of ₹80,000 can be adjusted either from CGST/SGST. We are adjusting ₹50,000 from
CGST and remaining ₹30,000 from SGST. (Even reverse is possible.)
CGST ₹
Output Tax (1,20,000+90,000) 2,10,000
Less:
 Computation of GST 42

ITC Goods A – IGST (50,000)

ITC Goods B – CGST (80,000)
ITC Goods C – CGST (80,000)
Net Tax Payable Nil

SGST ₹
Output Tax (1,20,000+90,000) 2,10,000
Less:
ITC Goods A – IGST (30,000)
ITC Goods B – SGST (80,000)
ITC Goods C – SGST (80,000)
Net Tax Payable 20,000

Illustration 20:
Mr. X is a dealer registered under GST. He has submitted the information given below:
1. Purchased goods A for ₹10,00,000 + IGST @ 20% and sold these goods for ₹8,00,000 + CGST @
10% + SGST @ 10%.
2. Purchased goods B for ₹8,00,000 + CGST @ 10% + SGST @ 10% and sold these goods for
₹18,00,000 + IGST @ 20%.
3. Purchased goods C for ₹8,00,000 + CGST @ 10% + SGST @ 10% and sold these goods for
₹6,00,000 + CGST @ 10% + SGST @ 10%.
Compute Net Tax payable by Mr. X.
Solution:
₹
Goods A
Cost 10,00,000
Add: IGST @20% 2,00,000

Input Tax Credit

IGST 2,00,000

Sale 8,00,000
Add: CGST @10% 80,000
Add: SGST @10% 80,000
Total 9,60,000

Goods B
Cost 8,00,000
Add: CGST @10% 80,000
Add: SGST @10% 80,000
Total 9,60,000

Input Tax Credit

CGST 80,000
SGST 80,000

Sale 18,00,000
Add: IGST @20% 3,60,000
Total 21,60,000

Goods C
Cost 8,00,000
Add: CGST @10% 80,000
 Computation of GST 43

Add: SGST @10% 80,000

Total 9,60,000

Input Tax Credit

CGST 80,000
SGST 80,000

Sale 6,00,000
Add: CGST @10% 60,000
Add: SGST @10% 60,000
Total 7,20,000

Computation of Net Tax Payable

IGST ₹
Output Tax 3,60,000
Less:
ITC Goods A – IGST (2,00,000)
ITC Goods C – CGST (20,000)
ITC Goods C – SGST (20,000)
Net Tax Payable 1,20,000

CGST ₹
Output Tax 1,40,000
Less:
ITC Goods B – CGST (80,000)
ITC Goods C – CGST (60,000)
Net Tax Payable Nil
Excess credit of CGST of ₹20,000 can be adjusted from IGST.
SGST ₹
Output Tax 1,40,000
Less:
ITC Goods B – SGST (80,000)
ITC Goods C – SGST (60,000)
Net Tax Payable Nil
Excess credit of SGST of ₹20,000 can be adjusted from IGST.

Illustration 21:
Mr. X is a dealer registered under GST. He has purchased goods A for ₹10,00,000 + CGST@ 10% + SGST
@10% and sold 50% of these goods for ₹6,00,000 + IGST @20%. Compute Net Tax payable by Mr. X.
Solution:
₹
Goods A
Cost 10,00,000
Add: CGST @10% 1,00,000
Add: SGST @10% 1,00,000

Input Tax Credit

CGST 1,00,000
SGST 1,00,000

Sale 6,00,000
Add: IGST @20% 1,20,000
 Computation of GST 44

Total 7,20,000

Computation of Net Tax Payable

IGST ₹
Output Tax 1,20,000
Less:
ITC Goods A – IGST Nil
ITC Goods C – CGST (1,00,000)
ITC Goods C – SGST (20,000)
Net Tax Payable Nil
Excess credit of SGST ₹80,000 shall be carried forward.

Illustration 22: Mr. X, a supplier of goods, pays GST under regular scheme. Mr. X is not eligible for any
threshold exemption. He has made the following outward taxable supplies in a tax period:
Particulars (₹)
Intra-State supply of goods 8,00,000
Inter-State supply of goods 3,00,000
He has also furnished the following information in respect of purchases made by him in that tax period:
Particulars (₹)
Intra-State Purchase of goods 3,00,000
Inter-State Purchase of goods 50,000

Mr. X has following ITCs with him at the beginning of the tax period:
Particulars (₹)
CGST 30,000
SGST 30,000
IGST 70,000
Note:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled. Compute the net GST payable by
Mr. X during the tax period. Make suitable assumptions as required.
Solution:
Computation of GST payable by Mr. X on outward supplies
S.No. Particulars (₹ ) GST (₹)
(i) Intra-State supply of goods
CGST @ 9% on ₹8,00,000 72,000
SGST @ 9% on ₹8,00,000 72,000 1,44,000
(ii) Inter-State supply of goods IGST @ 18% on ₹3,00,000 54,000
Total GST payable 1,98,000
Computation of total ITC
Particulars CGST @ 9% (₹) SGST @ 9% (₹) IGST @ 18%(₹)
Opening ITC 30,000 30,000 70,000
Add: ITC on Intra-State purchases of goods 27,000 27,000 Nil
valuing ₹3,00,000
Add: ITC on Inter-State purchases of goods Nil Nil 9,000
valuing ₹50,000
Total ITC 57,000 57,000 79,000

Computation of Tax payable from cash ledger

Particulars IGST (₹)
IGST payable 54,000
Less: ITC of IGST (54,000)
 Computation of GST 45

Net IGST payable Nil

Balance credit of IGST can be adjusted either from CGST/SGST. In the given case, we have adjusted 15,000
from CGST and balance from SGST
Particulars CGST (₹)
CGST payable 72,000
Less: ITC of IGST (15,000)
Less: ITC of CGST (57,000)
Net CGST payable Nil

Particulars SGST (₹)

SGST payable 72,000
Less: ITC of IGST (10,000)
Less: ITC of SGST (57,000)
Net SGST payable 5,000
 Computation of GST 46

MULTIPLE CHOICE QUESTIONS

1. GST is
(a) Direct Tax (b) Indirect Tax (c) both (a) & (b) (d) None of the above
2. GST is
(a) Progressive in nature (b) Regressive in nature (c) both (a) & (b) (d) None of the above
3. GST shall be rounded off in the multiple of
(a) ₹100 (b) ₹10 (c) ₹1 (d) ₹1000
4. In case of Inter-State Supply of service/Goods
(a) only IGST shall be charged (b) only CGST shall be charged
(c) only SGST shall be charged (d) Both CGST and SGST shall be charged.
5. In case of Intra-State Supply of service/Goods
(a) only IGST shall be charged (b) only CGST shall be charged
(c) only SGST shall be charged (d) Both CGST and SGST shall be charged.
6. Mr. X is a dealer registered in GST and has purchased goods for ₹7,60,000 and paid CGST @ 9%
& SGST @ 9% and sold the goods at a profit of 40% on cost and charged output CGST @ 9% and
Output SGST @ 9%. Tax Payable shall be
(a) CGST – ₹27,360 & SGST - ₹27,360
(b) CGST – ₹27,360 & SGST - Nil
(c) CGST – Nil & SGST - ₹27,360
(d) CGST – Nil & SGST - Nil
(e) CGST – ₹95,760 & SGST - ₹95,760
7. Mr. X is not registered in GST and has purchased goods for ₹7,60,000 + CGST @ 9% and SGST @
9% and sold the goods at a profit of 40% on cost. Tax Payable shall be
(a) CGST – ₹27,360 & SGST - ₹27,360
(b) CGST – ₹27,360 & SGST - Nil
(c) CGST – Nil & SGST - ₹27,360
(d) CGST – Nil & SGST - Nil
(e) CGST – ₹95,760 & SGST - ₹95,760
8. Mr. X is a dealer registered in GST and has purchased goods from other State ₹10,00,000 and paid
IGST @ 12% and sold the goods at a profit of ₹1,00,000 and charged output CGST @ 6% and
Output SGST @ 6%. Tax Payable shall be
(a) CGST – ₹66,000 & SGST - ₹66,000
(b) CGST – ₹12,000 & SGST - ₹12,000
(c) CGST – Nil & SGST - ₹12,000
(d) CGST – Nil & SGST - Nil
(e) IGST – ₹1,20,000
9. Mr. X is a dealer registered in GST and has purchased goods from other State ₹5,00,000 and paid
IGST @ 10% and sold the goods at a profit of ₹2,00,000 and charged output CGST @ 5% and
Output SGST @ 5%. Tax Payable shall be
(a) CGST – ₹35,000 & SGST - ₹35,000
(b) CGST – ₹20,000 & SGST - ₹20,000
(c) CGST – Nil & SGST - ₹20,000
(d) CGST – Nil & SGST - Nil
(e) IGST – ₹50,000
10. Mr. X is a dealer registered in GST and has purchased goods of ₹5,00,000 and paid CGST @ 5%
and SGST @ 5% and sold the goods at a profit of ₹2,00,000 and charged output CGST @ 5% and
Output SGST @ 5%. Tax Payable shall be
(a) CGST – ₹35,000 & SGST - ₹35,000
(b) CGST – ₹10,000 & SGST - ₹10,000
(c) CGST – Nil & SGST - ₹20,000
(d) CGST – Nil & SGST - Nil
(e) CGST – ₹20,000 & SGST - Nil
 Computation of GST 47

11. Which of the following statement is correct

(a) ITC of CGST can be adjusted from output SGST
(b) ITC of SGST can be adjusted from output CGST
(c) ITC of IGST can be adjusted from output CGST
(d) ITC of CGST can be adjusted from output IGST
(e) (c) & (d)
(f) (a) & (d)
(g) none of these
12. Which of the following statement is correct
(a) In case of purchase of capital goods, ITC is not allowed
(b) In case of purchase of capital goods, ITC is allowed
(c) In case of purchase of capital goods, ITC is allowed but depreciation on GST portion is not allowed
(d) In case of purchase of capital goods, ITC is allowed and also depreciation on GST portion is allowed
(e) (a) & (b)
13. Which of the following statement is correct
(a) In case of purchase of goods from other states, IGST is payable but ITC not allowed
(b) In case of purchase of goods from other states, IGST is payable and also ITC is allowed
(c) In case of purchase of goods from other states, CGST is payable and also ITC is allowed
(d) In case of purchase of goods from other states, CGST is payable and ITC is not allowed
(e) none of these
14. Which of the following statement is correct
(a) GST is payable on supply of goods but not on supply of services
(b) GST is payable on supply of services but not on supply of goods
(c) GST is not payable on supply of goods or services
(d) GST is payable on supply of both goods as well as services
(e) none of these
15. Which of the following statement is not correct
(a) GST is a single stage tax
(b) GST is a multi stage tax
(c) GST has cascading effect
(d) (a) & (b)
(e) (b) & (c)
(f) (a) & (c)

Answer:
1. (b); 2. (b); 3. (c); 4 (a); 5. (d); 6. (a); 7. (d); 8. (c) ; 9. (c) ; 10. (b); 11. (e); 12. (c); 13. (b); 14. (d); 15. (f)

Hint Answer MCQ 6:

Purchase of Goods ₹
Purchase Value 7,60,000
Add: CGST@ 9% 68,400
Add: SGST@ 9% 68,400

Input Tax Credit

CGST 68,400
SGST 68,400

Sale of Goods
Cost of goods 7,60,000
Add: Profit (7,60,000 x 40%) 3,04,000
Transaction Value 10,64,000
Add: CGST @ 9% 95,760
 Computation of GST 48

Add: SGST @ 9% 95,760

Total Sale Value 12,55,520

Computation of Net Tax Payable

CGST ₹
Output Tax 95,760
Less:
ITC – CGST (68,400)
Net Tax Payable 27,360

SGST ₹
Output Tax 95,760
Less:
ITC – SGST (68,400)
Net Tax Payable 27,360

Hint Answer to MCQ 7

Purchase of Goods ₹
Purchase Value 7,60,000
Add: CGST@ 9% 68,400
Add: SGST@ 9% 68,400

Input Tax Credit

CGST Nil
SGST Nil

Sale of Goods
Cost of goods 8,96,800
Add: Profit (8,96,800 x 40%) 3,58,720
Total Sale Value 12,55,520
Since Dealer is not Register in GST, he will not be entitle to get GST Credit and would form part of Cost
Further, no GST would be charged during sale

Hint Answer to MCQ 8

Purchase of Goods ₹
Purchase Value 10,00,000
Add: IGST @ 12% 1,20,000

Input Tax Credit

IGST 1,20,000
Sale of Goods
Cost of goods 10,00,000
Add: Profit 1,00,000
Transaction Value 11,00,000
Add: CGST @ 6% 66,000
Add: SGST @ 6% 66,000
Total Sale Value 13,05,920
Computation of Net Tax Payable
CGST ₹
Output Tax 66,000
Less:
ITC – IGST (66,000)
 Computation of GST 49

Net Tax Payable Nil

SGST ₹
Output Tax 66,000
Less:
ITC – IGST (54,000)
Net Tax Payable 12000

Hint Answer to MCQ 9

Purchase of Goods ₹
Purchase Value 5,00,000
Add: IGST @ 10% 50,000
Input Tax Credit
IGST 50,000
Sale of Goods
Cost of goods 5,00,000
Add: Profit 2,00,000
Transaction Value 7,00,000
Add: CGST @ 5% 35,000
Add: SGST @ 5% 35,000
Total Sale Value 7,70,000
CGST ₹
Output Tax 35,000
Less:
ITC – IGST (35,000)
Net Tax Payable Nil

SGST ₹
Output Tax 35,000
Less:
ITC – IGST (15,000)
Net Tax Payable 20,000

Hint Answer MCQ 10:

Purchase of Goods ₹
Purchase Value 5,00,000
Add: CGST@ 5% 25,000
Add: SGST@ 5% 25,000

Input Tax Credit

CGST 25,000
SGST 25,000

Sale of Goods
Cost of goods 5,00,000
Add: Profit 2,00,000
Transaction Value 7,00,000
Add: CGST @ 5% 35,000
Add: SGST @ 5% 35,000
Total Sale Value 7,70,000
CGST ₹
Output Tax 35,000
 Computation of GST 50

Less:
ITC – CGST (25,000)
Net Tax Payable 10,000

SGST ₹
Output Tax 35,000
Less:
ITC – SGST (25,000)
Net Tax Payable 10,000
 Computation of GST 51

EXAMINATION QUESTION
NOV 2018
Question 10 (a) (4 Marks)
From the following information, compute the Net GST payable for the month of March 2023:
Amount in (₹)
Output GST Opening ITC as per credit ledger
CGST 2,000 Nil
SGST 15,000 1,000
IGST 24,000 37,000

Solution: Computation of Net GST payable for the month of March 2023
₹IGST
Output tax 24,000
Less: ITC-IGST (24,000)
Net Tax Liability Nil

₹ CGST
Output tax 2,000
Less: ITC-IGST (2,000)
Net Tax Liability Nil

₹SGST
Output tax 15,000
Less: ITC-IGST (11,000)
Less: ITC-SGST (1,000)
Net Tax Liability 3,000

NOV 2018
Question 11(a) (4 Marks)
Insight Ltd. is operating in West Bengal. The Tax liability for the month of August, 2022 is as follows:
SL. No. Tax Liability West Bengal (₹)
(1) Output CGST Payable 24,000

(2) Output SGST Payable 9,000

(3) Output IGST Payable 3,000

(4) Input CGST 7,000

(5) Input SGST 14,000

(6) Input IGST 12,000

Calculate Tax payable and carry forward for the month of August, 2022.
Solution:
Computation of Net Tax
IGST ₹
Output tax 3,000
 Computation of GST 52

Less: ITC - IGST (3,000)

Net Tax Payable Nil
CGST ₹
Output tax 24,000
Less: ITC - IGST (9,000)
Less: ITC - CGST (7,000)
Net Tax Payable 8,000
SGST ₹
Output tax 9,000
Less: ITC - SGST (9,000)
Net Tax Payable Nil

SGST to be carried forward 5,000

IGST to be carried forward Nil
CGST to be carried forward Nil

MAY 2018
Question 8 (a) (6 Marks)
Mr. Ajay, a registered supplier of goods, pays GST under regular scheme and provides the following
information for the month of August 2022:
Particulars (₹)
(i) Inter-state taxable supply of goods 10,00,000
(ii) Intra state taxable supply of goods 2,00,000
(iii)Intra state purchase of taxable goods 5,00,000

He has the following Input tax credit at the beginning of August 2022:
Nature ITC Amount in (₹)
CGST 20,000
SGST 30,000
IGST 25,000
Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively.
Both inward and outward supplies are exclusive of taxes wherever applicable.
All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. Ajay for the month of August 2022.
Solution: Computation of net GST payable by Mr. Ajay for the month of August 2022
₹
Purchase price 5,00,000
Add: CGST @ 9% 45,000
Add: SGST @ 9% 45,000
Total 5,90,000

Input tax credit of CGST & SGST is allowed.

Output Tax
Inter-state taxable supply of goods
Sale Value 10,00,000
Add: IGST @ 18% 1,80,000
Total 11,80,000

Intra-state taxable supply of goods

Sale Value 2,00,000
Add: CGST @ 9% 18,000
 Computation of GST 53

Add: SGST @ 9% 18,000

Total 2,36,000

Computation of Net Tax

IGST ₹
Output tax 1,80,000
Less: ITC b/f – IGST (25,000)
Less: ITC – CGST (47,000)
Less: ITC – SGST (57,000)
Net Tax Payable 51,000

CGST ₹
Output tax 18,000
Less: ITC Goods – CGST (18,000)
Net Tax Payable Nil
SGST ₹
Output tax 18,000
Less: ITC Goods – SGST (18,000)
Net Tax Payable Nil

MAY 2018
Question 7 (a) (6 Marks)
Mr. Nimit, a supplier of goods, pays GST under regular scheme. He is not eligible for any threshold
exemption. He has made the following outward taxable supplies in the month of August, 2022:-
Intra state supplies of goods ₹6,00,000
Inter state supplies of goods ₹2,00,000
He has also furnished following information in respect of purchases made by him from registered dealers
during August, 2022:-
Intra state purchase of goods ₹4,00,000
Inter state purchase of goods ₹50,000
Balance of ITC available at the beginning of the August 2022:-
CGST ₹15,000
SGST ₹35,000
IGST ₹20,000
Note:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies.
(ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.

Compute the net GST payable by Mr. Nimit for the month of August, 2022.

Solution : Computation of net GST payable by Mr. Nimit for the month of August 2022
₹
Purchase price 4,00,000
Add: CGST @ 9% 36,000
Add: SGST @ 9% 36,000
Total 4,72,000

Input tax credit of CGST & SGST is allowed.

Purchase price 50,000

 Computation of GST 54

Add: IGST @ 18% 9,000

Total 59,000
Input tax credit of IGST is allowed.

Output Tax
Inter-state taxable supply of goods
Sale Value 2,00,000
Add: IGST @ 18% 36,000
Total 2,36,000
Intra-state taxable supply of goods
Sale Value 6,00,000
Add: CGST @ 9% 54,000
Add: SGST @ 9% 54,000
Total 7,08,000

Computation of Net Tax

IGST ₹
Output tax 36,000
Less: ITC b/f – IGST (20,000)
Less: ITC – IGST (9,000)
Less: ITC – SGST (7,000)
Net Tax Payable Nil

CGST ₹
Output tax 54,000
Less: ITC Goods – CGST (36,000)
Less: ITC b/f – CGST (15,000)
Net Tax Payable 3,000

SGST ₹
Output tax 54,000
Less: ITC Goods – SGST (36,000)
Less: ITC b/f – SGST (18,000)
Net Tax Payable Nil

Excess credit of SGST shall be carried forward (36,000+35,000-54,000-7000) = 10,000. Credit of SGST
shall not be allowed to be adjusted from CGST.
 Time of Supply 55

TIME OF SUPPLY
(SECTION 12 & 13, CGST ACT)
Question 1: Explain Time of Supply of goods under direct charge/normal charge/forward charge.
Answer: Time of supply of goods Section 12 (1) & 12 (2).
Time of supply means the particular date when a registered person shall have the liability to pay GST but
GST has to be paid in the subsequent month on the date applicable to such registered person.
The time of supply of goods shall be the earlier of the following dates, namely:—
(a) the date of issue of invoice by the supplier or the last date on which he is required, to issue the
invoice with respect to the supply.
e.g. If invoice is issued on 28th July 2022 and goods are delivered on 31st July 2022 and payment is received
on 10th August 2022, TOS is 28th July 2022 but if invoice is issued on 01st August 2022, TOS is 31st July
2022.

Illustration 1: ABC Ltd has submitted information as given below:

Delivered goods on 31/07/2022 to Mr. A ₹ 7,00,000 + CGST @ 9% + SGST @ 9% and issued invoice on
03/08/2022 and received payment on 01/09/2022.

Delivered goods to Mr. B on 10/09/2022 and issued invoice on 31/08/2022 ₹ 6,00,000 + CGST @ 9% +
SGST @ 9% and received payment on 01/09/2022.

Delivered goods to Mr. C on 10/08/2022 and issued invoice on 01/09/2022 ₹7,00,000 + CGST @ 9% +
SGST @ 9% and payment has not been received so far.

Delivered goods to Mr. D on 30/09/2022 and issued invoice on 31/08/2022 ₹12,00,000 + CGST @ 14% +
SGST @ 14% and received payment on 16/08/2022.

Determine TOS and tax liability for each month and last date of payment of GST and if each payment was
delayed by 10 days compute Interest also.
Solution:
As per section 12, Liability to pay GST shall arise at the time of supply of goods which will be the date of
issue of invoice or delivery of goods whichever is earlier.
As per the above,
1. For Goods to Mr. A TOS shall be 31/07/2022
2. For Goods to Mr. B TOS shall be 31/08/2022
3. For Goods to Mr. C TOS shall be 10/08/2022
4. For Goods to Mr. D TOS shall be 31/08/2022

Tax Liability for the Month of July ₹

Goods to Mr. A 7,00,000.00
Add: CGST @ 9% 63,000.00
Add: SGST @ 9% 63,000.00
8,26,000.00
Tax shall be payable upto 20th August 2022

Tax Payable – CGST 63,000.00

Tax Payable 63,000.00

Interest @ 18% (₹63,000 x 18% x 10 /365) 310.68

Rounded off u/s 170 311.00

Tax Payable – SGST 63,000.00

 Time of Supply 56

Tax Payable 63,000.00

Interest @ 18% (₹63,000 x 18% x 10 /365) 310.68

Rounded off u/s 170 311.00

Tax Liability for the Month of August ₹

Goods to Mr. B 6,00,000.00
Goods to Mr. C 7,00,000.00
Total 13,00,000.00
Add: CGST @ 9% 1,17,000.00
Add: SGST @ 9% 1,17,000.00
15,34,000.00

Goods to Mr. D 12,00,000.00

Add: CGST @ 14% 1,68,000.00
Add: SGST @ 14% 1,68,000.00
15,36,000.00

Tax shall be payable upto 20th September 2022

Tax Payable – CGST 2,85,000.00

Tax Payable 2,85,000.00

Interest @ 18% (₹2,85,000 x 18% x 10 /365) 1,405.48

Rounded off u/s 170 1,405.00

Tax Payable – SGST 2,85,000.00

Tax Payable 2,85,000.00

Interest @ 18% (₹2,85,000 x 18% x 10 /365) 1,405.48

Rounded off u/s 170 1,405.00

Illustration 2: 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:

17.09.2022 Purchase order with advance of ₹50,000 is received for goods worth ₹12 lakh and
entry duly made in the seller’s books of account
20.10.2022 The machine is assembled, tested at site, and accepted by buyer
23.10.2022 Invoice raised
04.11.2022 Balance payment of ₹11,50,000 received
Determine the time of supply in the above scenario.
Answer: As per section 12, Liability to pay GST shall arise at the time of supply of goods which will be the
date of issue of invoice or delivery of goods whichever is earlier.
In the given case, time of supply of goods is 20.10.2022 which is the date on which the goods were made
available to the recipient because invoice issued after the date of delivery of goods.

Question 2: Explain TOS in case of additional consideration.

Answer: TOS in case of Additional consideration Section 12 (6).
The time of supply to the extent it relates to an addition in the value of supply by 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, e.g. Mr. X sold certain goods on credit and because of delay beyond the permitted time,
interest of ₹ 10,000 was charged, such additional consideration shall also be considered to be value of
supply and TOS shall be the time when such payment is received.
 Time of Supply 57

Question 3: Explain TOS in case of supply of voucher of goods.

Answer: Supply of Voucher of Goods Section 12 (4).
In case of supply of vouchers by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.

As per section 2 (118),"voucher" means an instrument where there is an obligation to accept it as

consideration for a supply of goods. Further the identities of their potential suppliers including the terms
and conditions of use of such instrument may be indicated either on the voucher or some other documents.

Example 1: ABC Limited sells food coupons to a company, which gives these to its employees as part of
the agreed perquisites. The coupons can be redeemed for purchase of any item of food /other goods in the
outlets. As the supply against which the coupon will be redeemed is not known on the date of the sale of the
coupon, the time of supply of the coupon will be the date on which the employee redeems it against food
/other goods of his choice.

Example 2: With each purchase of a large pizza during the Christmas week from DOMINOS Pizza, one can
buy a voucher for ₹20 which will be redeemable till 5 Jan for a small pizza. As the supply against which the
voucher will be redeemed is known on the date of the sale, the time of supply is the date of issue of the
voucher.

Question 4: Explain Time of Supply of services under direct charge/normal charge/forward charge.
Answer: Time of supply of services Section 13 (1) & (2).
The liability to pay tax on services shall arise at the time of supply. Time of supply of services shall be the
date of invoice or the date of receiving payment whichever is earlier but if invoice is not issued within 30
days of supply of service, TOS shall be the date of supply of service or the date of payment whichever is
earlier, e.g. If services are rendered on 23rd July,2022 and invoice issued 10th August,2022 and payment
received 20th September, 2022, TOS shall be 10th August 2022 but if invoice is issued on 27th August 2022,
TOS shall be 23rd July,2022.

Illustration 3: Mr. X is a supplier of services. Determine TOS in the following cases.

Case Date of Date of invoice Date on which Time of Supply
completion payment received
of service
I September 5, 2022 September 28, 2022 October 10, 2022 September 28, 2022
II September 5, 2022 October 03, 2022 September 20, 2022 September 20, 2022
III September 5, 2022 October 8, 2022 September 25, 2022 September 5, 2022
IV September 5, 2022 October 8, 2022 Amount received partly on September 3, 2022
September 3, 2022 and and September 5, 2022
remaining on September for respective amounts
20, 2022

Illustration 4: Mr. X is a supplier of services. Determine TOS in the following cases.

S. Date of Date of Date on which payment is Time of Supply
No. completion Invoice Received
of service
1. 16.07.2022 11.08.2022 26.08.2022 11.08.2022
2. 16.07.2022 11.08.2022 01.08.2022 01.08.2022
3. 16.07.2022 11.08.2022 Part payment on 01.08.2022 01.08.2022 for the part payment and
and remaining on 26.08.2022 11.08.2022 for the remaining amount
4. 16.07.2022 11.08.2022 Part payment on 12.07.2022 12.07.2022 for the part payment and
 Time of Supply 58

and remaining on 15.07.2022 15.07.2022 for the remaining amount

Illustration 5: Mr. X is a supplier of services. Determine TOS in the following cases.

Determine the Time of Supply.
Date of completion Date of Invoice Date of Payment
01.08.2022 20.08.2022 18.08.2022
01.07.2022 20.08.2022 18.08.2022
01.07.2022 20.07.2022 01.05.2022
03.08.2022 31.08.2022 01.09.2022
Solution:
Date of completion Date of Invoice Date of Payment TOS
01.08.2022 20.08.2022 18.08.2022 18.08.2022
01.07.2022 20.08.2022 18.08.2022 01.07.2022
01.07.2022 20.07.2022 01.05.2022 01.05.2022
03.08.2022 31.08.2022 01.09.2022 31.08.2022

Illustration 6: Mr. X is a supplier of services registered in GST and has submitted the information as given
below:
1. Rendered services on 01.05.2022 and issued bill on 10.06.2022 for ₹ 6 lakhs and payment was received
on 10.12.2022
2. Rendered services on 07.06.2022 and issued bill on 30.06.2022 for ₹ 15 lakhs and payment was received
on 07.03.2023.
3. Rendered services on 12.07.2022 and issued bill on 31.08.2022 for ₹ 30 lakhs and payment was received
on 07.01.2023.
4. Rendered services on 22.11.2022 and issued bill on 28.12.2022 for ₹ 60 lakhs and payment was received
on 18.11.2022.

All the above amounts are exclusive of GST and Rate of CGST is 9% and SGST is 9%.
Determine TOS in each case and also compute the GST Payable for each month and also last date upto
which GST should be paid.
Solution:
1. First bill issued after 30 days of rendering of service hence TOS is 01/05/2022 and GST should be paid
upto 20th June 2022.

2. Second bill issued within 30 days of rendering of service hence TOS is 30/06/2022 and GST should be
paid upto 20th July 2022.

3. Third bill issued after 30 days of rendering of service hence TOS is 12/07/2022 and GST should be paid
upto 20th August 2022.

4. Fourth bill issued after 30 days of rendering of service but payment has been received prior to rendering
of service hence TOS is 18/11/2022 and GST should be paid upto 20th December 2022.

Tax Liability for the Month of May ₹

First Bill (TOS 01/05/2022) 6,00,000.00
Add: CGST @ 9% 54,000.00
Add: SGST @ 9% 54,000.00
7,08,000.00
GST should be paid upto 20th June 2022

Tax Liability for the Month of June ₹

Second Bill (TOS 30/06/2022) 15,00,000.00
Add: CGST @ 9% 1,35,000.00
 Time of Supply 59

Add: SGST @ 9% 1,35,000.00

17,70,000.00

GST should be paid upto 20th July 2022.

Tax Liability for the Month of July ₹

Third Bill (TOS 12/07/2022) 30,00,000.00
Add: CGST @ 9% 2,70,000.00
Add: SGST @ 9% 2,70,000.00
35,40,000.00
GST should be paid upto 20th August 2022
Tax Liability for the Month of November ₹
Fourth Bill (TOS 18/11/2022) 60,00,000.00
Add: CGST @ 9% 5,40,000.00
Add: SGST @ 9% 5,40,000.00
70,80,000.00
GST should be paid upto 20th December 2022

Illustration 7: Determine the time of supply from the following particulars:

6th May: Booking of convention hall, sum agreed ₹15000, advance of ₹3000 received
15th September: Function held in convention hall
27th October: Invoice issued for ₹15000, indicating balance of ₹12000 payable
3rd November: Balance payment of ₹ 12000 received

Answer: As per section 31 read with rule 47 of CGST Rules, the 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, in a case where the invoice is not issued within the prescribed time, the time of supply of service
is the date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of ₹3,000 is 6th May as the date of payment of ₹3000
is earlier than the date of provision of service.
The time of supply of service to the extent of the balance ₹12,000 is 15th September which is the date of
provision of service.

Question 5: Explain Payments in excess of amount of invoice.

Answer: Payments in excess of amount of invoice
Wherever the supplier of service receives a payment up to ₹1,000 in excess of the amount indicated in the
invoice, the time of supply to the extent of such excess amount, at the option of the provider of taxable
service, shall be determined on the basis of invoice or completion of service, as the case may be, rather than
payment.
Example: 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

Question 6: Explain meaning of receiving of payment.

Answer: Meaning of receiving payment
Date of receiving payment shall be date on which the payment is entered in the books of accounts or date on
which payment is credited to the bank account of the person liable to pay tax, whichever is earlier. e.g. If
payment is entered in the books on 10.07.2022 and it is credited in the bank account on 16.07.2022, date of
receiving payment shall be 10.07.2022 but if it was entered in the books of accounts on 20.07.2022, date of
receiving payment shall be 16.07.2022.
 Time of Supply 60

Question 7: Explain TOS in case of additional consideration.

Answer: TOS in case of Additional consideration Section 13 (6).
The time of supply to the extent it relates to an addition in the value of supply by 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, eg. Mr. X has given certain services on credit and because of delay beyond the permitted
time, interest of ₹ 10,000 was charged, such additional consideration shall also be considered to be value of
supply and TOS shall be the time when such payment is received.

Question 8: Explain TOS in case of supply of voucher of services.

Answer: Supply of Voucher Section 13 (4).
In case of supply of vouchers by a supplier, the time of supply shall be—
(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.
As per section 2 (118),"voucher" means an instrument where there is an obligation to accept it as
consideration for a supply of services. Further the identities of their potential suppliers including the terms
and conditions of use of such instrument may be indicated either on the voucher or some other documents.

Example: Best Hospitality Services enters into agreement with Drive Marketing Ltd by which Drive
Marketing Ltd. markets Best Hospitality Services’ hotel rooms and sells coupons / vouchers redeemable for
a discount against stay in the hotel. As the supply against which the voucher will be redeemed is
identifiable, the time of supply of the voucher will be its date of issue.

Illustration 8: Mr. X has started rendering taxable services w.e.f. 01-07-2022 and has submitted
information as given below:
Rendered Services on 10-07-2022 and issued bill ₹18,00,000 and received payment on 01-09-2022. He has
taken registration on 18-07-2022 u/s 25(3) on voluntary basis. At the time of registration he has inputs on
which input tax paid in CGST ₹10,000 SGST ₹10,000 and also had capital goods on which input tax paid is
IGST ₹ 30,000.
He rendered service on 27-08-2022 and issued bill on 03-09-2022 ₹11,00,000 + CGST @ 9% +SGST @ 9%
and received payment on 10-10-2022.
He rendered services on 01-01-2023 and issued invoice on 01-03-2023 ₹ 20,00,000 + CGST @ 10% +SGST
@ 10% but payment was recovered in advance on 01-12-2022.
Compute his GST Liability for each month and the last date upto which GST should be paid.
Solution:
In the present case the supplier has taken voluntary registration therefore as per section 18(1)(b)/ Rule 40 the
supplier will allowed to take tax credit of inputs and not of capital goods.
In the first case of supply of services rendered he will not be allowed to issue tax invoice because at the time
of supply he is not a registered dealer and he cannot collect tax.

In the second case of services rendered, the TOS shall be 03-09-2022 when he issued invoice within 30 days
of rendering of service, So he will show this supply in GSTR-1 for the month of September and tax shall be
paid upto 20th October 2022.

Tax Liability ₹
Transaction Value 11,00,000
CGST @ 9% 99,000
SGST @ 9% 99,000
Total 12,98,000
Net Tax Payable
CGST Payable 99,000
Less: ITC on CGST (10,000)
Net Tax Payable 89,000
Net Tax Payable
 Time of Supply 61

SGST Payable 99,000

Less: ITC on SGST (10,000)
Net Tax Payable 89,000
In the third case of services rendered, The TOS shall be 01-12-2022 because he issued invoice after 30 days
of rendering of service and payment received before rendering of service, So he will show this supply in
GSTR-1 for the month of December and tax shall be paid upto 20th January 2023.
Tax Liability ₹
Transaction Value 20,00,000
CGST @ 10% 2,00,000
SGST @ 10% 2,00,000
Total 24,00,000
CGST Payable 2,00,000
SGST Payable 2,00,000

Illustration 9: Mr. X is a dealer registered in GST in Delhi and he has submitted information as given
below:
- Purchased goods A on 10/07/2022 ₹4,00,000 plus CGST @ 10% and SGST @ 10% and goods were
sold on 31/08/2022 ₹ 6,00,000 + CGST @ 10% and SGST @ 10% but invoice was issued on
01/09/2022 and payment was received on 01/10/2022.
- Purchased goods B on 10/09/2022 ₹5,00,000 plus CGST @ 10% and SGST @ 10% and goods were
exported on 12/12/2022 and profit taken is 30% on cost.
- Purchased goods C on 10/09/2022 ₹7,00,000 plus CGST @ 10% and SGST @ 10% and goods were
sold to our own branch in some other State on 31/12/2022 for ₹7,00,000 + IGST @ 20%. No Invoice
has been issued and no payment has been received.

Determine TOS in each case and ITC and Net tax Payable for each month and ITC to be carried forward.
Solution:
Net Tax Payable for the Month of August
ITC ₹
Goods A
Transaction Value 4,00,000.00
Add: CGST @ 10% 40,000.00
Add: SGST @ 10% 40,000.00
4,80,000.00
Tax Liability
First Bill (TOS 31/08/2022) 6,00,000.00
Add: CGST @ 10% 60,000.00
Add: SGST @ 10% 60,000.00
7,20,000.00
Net Tax Payable
Output
CGST 60,000.00
Less: ITC CGST (40,000.00)
Tax Payable 20,000.00

Output
SGST 60,000.00
Less: ITC SGST (40,000.00)
Tax Payable 20,000.00
Net Tax Payable for the Month of September
 Time of Supply 62

ITC ₹
Goods B
Transaction Value 5,00,000.00
Add: CGST @ 10% 50,000.00
Add: SGST @ 10% 50,000.00
6,00,000.00
Goods C
Transaction Value 7,00,000.00
Add: CGST @ 10% 70,000.00
Add: SGST @ 10% 70,000.00
8,40,000.00

Net Tax Payable for the Month of December

Output Tax
Goods B Nil

Goods C (TOS 31-12-2022)

Transaction Value 7,00,000
IGST@ 20% 1,40,000
Less: ITC CGST Goods B (50,000)
Less: ITC CGST Goods C (70,000)
Less: ITC SGST Goods B (20,000)
Net Tax Payable Nil
ITC to be carried forward
SGST 1,00,000
 Time of Supply 63

PRACTICE PROBLEMS
Q1. 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?
Answer: 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:
• 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.

Q2. Investigation shows that 150 cartons of ceramic capacitors were dispatched on 2nd August but no
invoice was made and the cartons were not entered in the accounts. There was no evidence of receipt of
payment.
What is the time of supply of the 150 cartons?
Answer: Time of supply of goods is the earlier of the following two dates in terms of section 12:
• Date of issue of invoice
• Date of delivery of goods
In this case since the invoice has not been issued, the time of supply will be the delivery of goods.
The invoice for supply of goods must be issued on or before the dispatch of goods i.e., on 2nd August, time
of supply of the goods will be 2nd August.

Q3. An order is placed on Ram & Co. on 18th August for supply of a consignment of customised 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 hands over
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?
Answer: Time of supply of goods is the earlier of the following two dates in terms of section 12:
• Date of issue of invoice
• Date of delivery of goods
In this case,
Date of invoice: 2nd December
Date of delivery of goods 7th December
Therefore, the date of invoice will be the time of supply i.e. 2nd December.

Q4. Sodexo 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?
Answer: 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.

Q5. 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?
Answer: 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].
 Time of Supply 64

In this case, the service is provided on 5th September but not invoiced within the prescribed time limit.
Therefore, the date of provision of service, i.e., 5th September, will be the time of supply.

Q6. Explain the significance of time of supply under GST law.

Answer: GST is payable on supply of goods or services. Time of supply indicates the point in time when the
liability to pay tax arises. However, it is important to note that though the liability to pay tax arises at the
time of supply, the same can be paid to the Government by the due date prescribed with reference to the said
‘time of supply’. The CGST Act provides separate provisions for time of supply for goods and services vide
sections 12 and 13.

Q7. GST is payable on advance received for supply of goods and services taxable under forward charge.
Do you agree with the statement? Support your answer with legal provisions.
Answer: The statement is not correct. While GST is payable on advance received for supply of services
taxable under forward charge, the same is not payable in case of advance received for supply of goods
taxable under forward charge.
As per section 13, the time of supply of services taxable under forward charge is –
 Date of issue of invoice or date of receipt of payment, whichever is earlier, if the same is issued within
30 days from the date of supply of service;
OR
 Date of provision of service or date of receipt of payment, whichever is earlier, if the invoice is not
issued within 30 days from the date of supply of service.
Thus, in case of services, if the supplier receives any payment before the provision of service or before the
issuance of invoice for such service, the time of supply gets fixed at that point in time and the liability to pay
tax on such payment arises. However, the tax can be paid by the due date prescribed with reference to such
time of supply.
As regards time of supply of goods taxable under forward charge is concerned, a registered person
(excluding composition supplier) should 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. Therefore, in case of goods, tax is not payable on receipt of advance payment.

Q8. Mr. X supplied goods for ₹ 50,000 to its customer Miss Diyana on 1st January on the condition that
payment for the same will be made within a week. However, Miss Diyana made payment for the said goods
on 2nd February and thus, paid interest amounting to ₹ 2,000.
What is the time of supply with regard to addition in the value by way of interest in lieu of delayed payment
of consideration?
Answer: As per section 12(6), the time of supply with regard to an addition in value on account of interest,
late fee or penalty or delayed payment of consideration is the date on which the supplier received such
additional consideration.
Thus, time of supply in respect of interest would be the date on which the supplier has received such
additional consideration, i.e. 2nd February.
 Time of Supply 65

MULTIPLE CHOICE QUESTIONS

1. Date on which the supplier receives the payment as per section 12 of CGST Act is
(a) Date entered in books of accounts
(b) Date of credit in bank account
(c) Date entered in books of accounts or date of credit in bank account, whichever is earlier
(d) Date on which receipt voucher is issued by supplier
2. What is the time of supply of vouchers when the supply with respect to the voucher is identifiable?
(a) Date of issue of voucher (b) Date of redemption of voucher
(c) Date of entry in books of accounts (d) Earlier of (a) or (b) or (c)
3. What is the time of supply of vouchers when the supply with respect to the voucher is not
identifiable?
(a) Date of issue of voucher (b) Date of redemption of voucher
(c) Date of entry in books of accounts (d) Earlier of (a) or (b) or (c)
4.What is the time of supply of service if the invoice is issued within 30 days from the date of provision
of service?
(a) Date of issue of invoice (b) Date on which the supplier receives payment
(c) Date of provision of service (d) Earlier of (a) & (b)
5.What is the time of supply of service if the invoice is not issued within 30 days from the date of
provision of service?
(a) Date of issue of invoice (b) Date on which the supplier receives payment
(c) Date of provision of service (d) Earlier of (b) & (c)
6. Mr. X supplied goods on 10.08.2022 and issued invoice on 13.08.2022 and received payment on
01.08.2022, in this case time of supply shall be
(a) 10.08.2022 (b) 13.08.2022
(c) 01.08.2022 (d) none of these
7. Mr. X supplied goods on 10.08.2022 and issued invoice on 08.08.2022 and received payment on
01.08.2022, in this case time of supply shall be
(a) 10.08.2022 (b) 08.08.2022
(c) 01.08.2022 (d) none of these
8. Mr. X supplied goods on 10.08.2022 and issued invoice on 08.08.2022 but payment was received
after 6 months and Mr. X has received interest of ₹ 10,000 on 10.03.2023, in this case TOS for the
interest received shall be
(a) 10.08.2022 (b) 08.08.2022
(c) 10.03.2023 (d) none of these
9. Mr. X has rendered services on 10.09.2022 issued invoice 28.12.2022 received payment on
03.10.2022, in this case TOS shall be
(a) 10.09.2022 (b) 28.12.2022
(c) 03.10.2022 (d) none of these
10. Mr. X has rendered services on 10.09.2022 issued invoice 07.10.2022 received payment on
03.10.2022, in this case TOS shall be
(a) 10.09.2022 (b) 07.10.2022
(c) 03.10.2022 (d) none of these
11. Mr. X has rendered services on 10.09.2022 issued invoice 07.10.2022 received payment on
13.10.2022, in this case TOS shall be
(a) 10.09.2022 (b) 07.10.2022
(c) 13.10.2022 (d) none of these
12. Mr. X has rendered services on 10.09.2022 issued invoice 07.10.2022 received payment by cheque
on 06.10.2022 and entered in the books of accounts on the same date and amount was credited in the
bank account on 11.10.2022, in this case TOS shall be
(a) 10.09.2022 (b) 07.10.2022
(c) 06.10.2022 (d) 11.10.2022
 Time of Supply 66

(e) none of these

13. Mr. X rendered services on 01.09.2022 and issued invoice on 20.09.2022 for ₹3,67,300 but he
received payment of ₹ 3,67,500, in this case TOS for ₹ 200 which has been received in excess shall be
(a) 20.09.2022 (b) 01.09.2022
(c) It will be decided on the basis of services rendered and invoice issued for such amount
(d) GST is not payable on excess amount (e) none of these
14.Mr. X has taken advance of ₹ 30,000 on 01.01.2023 for rendering services and services were
rendered on 10.01.2023 and issued invoice on 12.01.2023 and balance amount of ₹ 70,000 was received
on 31.01.2023, in this case TOS shall be
(a) For ₹ 30,000, 01.01.2023 and for ₹ 70,000, 31.01.2023
(b) For ₹ 30,000, 10.01.2023 and for ₹ 70,000, 12.01.2023
(c) For ₹ 30,000, 01.01.2023 and for ₹ 70,000, 12.01.2023
(d) For ₹ 30,000, 31.01.2023 and for ₹ 70,000, 12.01.2023
(e) none of these
15.Mr. X has taken advance of ₹ 30,000 on 01.01.2023 for rendering services and services were
rendered on 10.01.2023 and issued invoice on 09.01.2023 and balance amount of ₹ 70,000 was received
on 31.01.2023, in this case TOS shall be
(a) For ₹ 30,000, 01.01.2023 and for ₹ 70,000, 31.01.2023
(b) For ₹ 30,000, 10.01.2023 and for ₹ 70,000, 09.01.2023
(c) For ₹ 30,000, 01.01.2023 and for ₹ 70,000, 09.01.2023
(d) For ₹ 30,000, 31.01.2023 and for ₹ 70,000, 09.01.2023
(e) none of these
16. 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:
10.09.2022 Purchase order with advance of ₹ 50,000 is received for goods worth ₹ 12 lakh and
entry duly made in the seller’s books of account
20.09.2022 The machine is assembled, tested at site, and accepted by buyer
30.09.2022 Invoice raised
10.10.2022 Balance payment of ₹ 11,50,000 received
Time of supply shall be
(a) 10.09.2022
(b) 20.09.2022
(c) 30.09.2022
(d) 10.10.2022
17. Determine the Time of Supply.
Date of completion Date of Invoice Date of Payment
(i) 01.08.2022 20.08.2022 18.08.2022
(ii) 01.07.2022 20.08.2022 18.08.2022
(iii) 01.07.2022 20.07.2022 01.05.2022
(iv) 03.08.2022 31.08.2022 01.09.2022
Time of supply shall be
(a) (i) 18.08.2022, (ii) 01.07.2022, (iii) 01.05.2022, (iv) 03.08.2022
(b) (i) 18.08.2022, (ii) 01.07.2022, (iii) 20.07.2022, (iv) 31.08.2022
(c) (i) 20.08.2022, (ii) 01.07.2022, (iii) 01.05.2022, (iv) 31.08.2022
(d) (i) 18.08.2022, (ii) 01.07.2022, (iii) 01.05.2022, (iv) 31.08.2022

Answer:
1.(c); 2.(a); 3.(b); 4.(d); 5.(d); 6. (a); 7. (b); 8. (c); 9. (a); 10. (c); 11. (b); 12. (c); 13. (c); 14. (c); 15. (c); 16.
(b); 17. (d)
 Time of Supply 67

EXAMINATION QUESTION
NOV 2018
Question 8 (b) (5 Marks)
M/s XYZ & Co., a firm of Chartered Accountants, issued invoice for services rendered to Mr. A on 7th
September, 2022. Determine the Time of Supply in the following independent cases:
(1) The provision of service was completed on 1st August, 2022.
(2) The provisions of service was completed on 14th August, 2022.
(3) Mr. A made the payment on 3rd August, 2022 where provisions of service was remaining to be
completed.
(4) Mr. A made the payment on 15th September, 2022 where provision of service was remaining to be
completed.
Answer:
As per section 13 (1) & (2), The liability to pay tax on services shall arise at the time of supply. Time of
supply of services shall be the date of invoice or the date of receiving payment whichever is earlier but if
invoice is not issued within 30 days of supply of service, TOS shall be the date of supply of service or the
date of payment whichever is earlier.
As per the above provision Time of supply shall be:
(1) Invoice is issued after 30 days, Date of completion shall be the time of supply i.e. 01st August.
(2) Invoice is issued within 30 days, Date of invoice shall be the time of supply i.e. 7th September.
(3) Payment received before the date of invoice hence time of supply shall be the date of receiving
payment i.e. 3rd August.
(4) Payment received after the date of invoice hence time of supply shall be the date of invoice i.e. 7th
September.

IPC NOV 2017 (MODIFIED)

Question 4 (2 Marks)
You are required to determine the Time of supply for the following service:
ABC & Co., a firm of Chartered Accountants, renders service to M/s. ST & Sons in the month of
December, 2022, which gets completed on 31st December, 2022. It is billed on 5th January, 2023, while
the payment for the same is received on 2nd January, 2023.
Answer:
As per section 13, Time of supply of services shall be the date of invoice or payment whichever is earlier
but if the invoice is not issued within 30 days of supply of service, TOS shall be the date of supply of service
or payment whichever is earlier. In the given case, Invoice is issued within 30 days but payment is received
before the date of invoice hence TOS shall be the date of receiving payment i.e. 2nd January 2023.
 Value of Supply 68

VALUE OF SUPPLY
(SECTION 15, CGST ACT)
Question 1: Explain Value of Supply under GST.
Answer: Value of taxable supply Section 15
As per section 15(1), The value of a supply of goods or services or both shall be the transaction value,
which is the price actually paid or payable for the said supply of goods or services or both where the supplier
and the recipient of the supply are not related and the price is the sole consideration for the supply.
As per section 15 (2), The value of supply shall include—
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other
than GST, if charged separately by the supplier; e.g. Mr. X imported certain goods and has paid basic
custom duty and IGST, in this case IGST shall be charged on the total of value of goods plus custom duty
i.e. IGST shall be charged even on the amount of custom duty.
Example: Mr. X imported certain goods of the value of ₹ 1,00,000 and paid basic custom duty 10% and
IGST 20%, in this case tax treatment shall be as given below:
Value of goods 1,00,000
Add: Basic Custom Duty 10% 10,000
Transaction Value 1,10,000
IGST 20% 22,000
(b) 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.
Example: Samriddhi Advertisers conceptualised and designed the advertising campaign for a new product
launched by New Moon Pvt Ltd. for a consideration of ₹ 5,00,000. Samriddhi Advertisers owed ₹ 20,000 to
one of its vendors in relation to the advertising service provided by it to New Moon Pvt Ltd. Such liability of
Samriddhi Advertisers was discharged by New Moon Pvt Ltd. New Moon Pvt Ltd. delayed the payment of
consideration and thus, paid ₹ 15,000 as interest. Assume the rate of GST to be 18%.
Determine the value of taxable supply made by Samriddhi Advertisers.
Answer:
Computation of value of taxable supply
Particulars ₹
Service charges 5,00,000
Payment made by New Moon Pvt. Ltd to vendor of Samriddhi Advertisers [Liability of the 20,000
supplier being 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 15(2)(d) 12,712
– 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 15,000 / 118 X 100 = 12,712. It is also possible to assume the interest to be exclusive of GST.
In that case, the value of supply will work out to be ₹ 5,00,000 + 20,000 + 15,000 = 5,35,000.
(c) incidental expenses, including commission, packing or weightment charges, 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.
Example: 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
 Value of Supply 69

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?
Answer: Section 15 mandates the addition of certain elements to transaction value to arrive at taxable value.
Section 15 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 therefor 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.
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and
Example: ABC limited sold certain goods for ₹ 10,00,000 plus GST 2,00,000 on credit and payment was
received by the company after 6 months and the company has received interest ₹ 15,000, in this case ₹
15,000 shall be considered to be additional consideration and GST is payable.
(e) Any subsidy except subsidies given by the Government.
Example: A philanthropic association 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 ₹3 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?
Answer: As per section 15, 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 a philanthropic association. Therefore, the subsidy is to be added back to the price to arrive at
the taxable value, which comes to ₹5 lakh a year.

Question 2: Explain Treatment of Discount while computing Transaction Value.

Answer: Discount while computing Transaction Value Section 15(3)
If the supplier has given any discount before or at the time of supply, it will be allowed to be deducted, if
such discount has been duly recorded in the invoice issued in respect of such supply; and
Discount allowed after supply shall also be allowed to be deducted provided 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 further the supplier shall issue credit note for such discount and shall be allowed to reduce his
tax liability but the recipient should also reverse/ reduce tax credit taken by him.

Example: 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
offers 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?
Answer: The discounts were not known or agreed at the time of supply of goods to the dealers. Therefore,
such discounts cannot be reduced from the price on which tax had been paid in terms of section 15(3).
(4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1),
the same shall be determined in such manner as may be prescribed (such rules are not covered in syllabus
Rule No. 27 to 35).
(5) The value of such supplies as may be notified by the Government on the recommendations of the
Council shall be determined in such manner as may be prescribed.

TCS under Income-Tax Act, 1961 not includible in the taxable value for the purpose of GST:
The 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.
 Value of Supply 70

Clarification Regarding Applicability Of GST On Additional / Penal Interest

Generally, following two transaction options involving EMI are prevalent in the trade:-

Case - 1: X sells a mobile phone to Y. The cost of mobile phone is ₹40,000/-. However, X gives Y an option
to pay in installments, ₹11,000/- every month before 10th day of the following month, over next four months
(₹11,000/- *4 = ₹44,000/-). Further, as per the contract, if there is any delay in payment by Y beyond the
scheduled date, Y would be liable to pay additional/penal interest amounting to ₹ 500/- per month for the
delay.

In some instances, X is charging Y ₹ 40,000/- for the mobile and is separately issuing another invoice for
providing the services of extending loans to Y, the consideration for which is the interest of 2.5% per month
and an additional/penal interest amounting to ₹500/- per month for each delay in payment.
Solution:
As per the provisions of section 15(2)(d) of the CGST Act, the amount of penal interest is to be included in
the value of supply. The transaction between X and Y is for supply of taxable goods i.e. mobile phone.
Accordingly, the interest/ penal interest would be taxable as it would be included in the value of the mobile,
irrespective of the manner of invoicing.

Case - 2: X sells a mobile phone to Y. The cost of mobile phone is ₹ 40,000/-. Y has the option to avail a
loan at interest of 2.5% per month for purchasing the mobile from M/s ABC Ltd. The terms of the loan from
M/s ABC Ltd. allows Y a period of four months to repay the loan and an additional/penal interest @ 1.25%
per month for any delay in payment.
Solution:
The interest / additional/ penal interest is charged for a transaction between Y and M/s ABC Ltd., and the
same is getting covered under exemption notification No. 12/2017 dated 28.06.2017. Accordingly, in this
case the interest/ 'penal interest' charged thereon on a transaction between Y and M/s ABC Ltd. would not be
subject to GST. The value of supply of mobile by X to Y would be ₹ 40,000/- for the purpose of levy of
GST.]

Illustration 1: Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it
to Colourful Pvt. Ltd.
Particulars ₹
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 ₹2000 as a subsidy from a NGO on sale of such goods. The price of
₹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. and also amount of GST payable
if Rate of CGST @ 10% and SGST @ 10%.
Answer: Computation of value of taxable supply
Particulars ₹
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
[Includible in the value as per section 15]
Packing charges [Includible in the value as per section 15] 1,000
Subsidy received from a non-Government body 2,000
[Since subsidy is received from a non-Government body, the same is
included in the value in terms of section 15]
Total 58,000
Less: Discount @ 2% on ₹50,000 [Since discount is known at the time of supply, (1,000)
it is deductible from the value in terms of section 15]
Value of taxable supply 57,000
 Value of Supply 71

CGST @ 10% 5,700

SGST @ 10% 5,700

Illustration 2: 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?
Answer: 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.

Meaning of "Recipient" of supply of goods or services or both section 2 (93)

"Recipient" of supply of goods or services or both, means—
(a) where a consideration is payable for the supply of goods or services or both, the person who is
liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are
delivered or made available, or to whom possession or use of the goods is given or made available;
and
(c) where no consideration is payable for the supply of a service, the person to whom the service is
rendered,
and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of
the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or
services or both supplied;

Section 2(105)
"supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or
services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods
or services or both supplied;

CLARIFICATIONS
Buy one get one free offer
Sometimes, companies announce offers like ‘Buy One, Get One free‟ For example, „buy one soap and get
one soap free‟ or „Get one tooth brush free along with the purchase of tooth paste‟. 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.
 Value of Supply 72

PRACTICE PROBLEMS
Q1. Wholesale price for 1 MT of cement sold by X Ltd. in the ordinary course of business : ₹ 7,000. Price of
1 MT of cement sold by X Ltd. to unrelated customer Y: ₹ 6,700.
Value of supply made by X Ltd. to Y is ₹ 6,700 which is the price actually paid or payable and not the
wholesale price.

Q2. Grand Biz contracts with ABC Co. to conduct a dealers’ meet. In furtherance of this, Grand Biz
contracts with vendors to deliver goods / services, like water, soft drinks, audio system, projector, catering,
flowers etc. at the venue on the stipulated dates at the stipulated prices. Grand Biz is liable to make these
payments as contracted.
The soft drinks supplier wants payment upon delivery; ABC Co. agrees to pay the bill raised by the soft
drinks vendor on Grand Biz, on receiving the crates of soft drinks. This amount is not billed by Grand Biz to
ABC Co. However, it would be added to the value of supply provided by Grand Biz to ABC Co. for
payment of GST.

Q3. Commission: This may be paid to an agent and recovered from the buyer of the goods / services; this is
part of the value of the supply.

Q4. Packing, if charged by the supplier to the recipient, is similarly part of the value of the supply.

Q5. Inspection or certification charges is another element that will be added to the value, if incurred
before/at the time of supply and billed to the recipient of supply.

Q6. Installation and testing charges at the recipient’s site will also be added, being an amount charged for
something done by the supplier in respect of the supply, at the time of making the supply.

Q7. Weighment charges, loading charges, designing charges etc. incurred before/at the time of supply
will be added to the value, if billed to the recipient of supply.

Q8. A supply priced at ₹ 2,000 is made, with a credit period of 1 month for payment. Thereafter, interest @
12% p.a. is chargeable. The payment is received after the lapse of two months from the date of supply. The
amount of interest @ 12% p.a. (i.e. 1% per month) on ₹ 2,000 for one month after the free credit period of
one month, is ₹ 20. Such interest will be added to the value and thus, the value of supply will work out to be
₹ 2,020, assuming the interest to be exclusive of GST.

Q9. The selling price of a notebook is ₹ 50. For notebooks sold to students in Government schools, a
company uses its CSR funds to pay the seller ₹ 30, so that the students pay only ₹ 20 per notebook. The
value of the notebook will be ₹ 50, as this is a nongovernment subsidy. If the same subsidy is paid by the
Central Government or State Government, the value of the notebook would be ₹ 20.

Q10. Royal Biscuit Co. gives a discount of 30% on the list price to its distributors. Thus, for a carton of
Spice bisk, in the invoice the list price is mentioned as ₹ 200, on which a discount of 30% is given to arrive
at the final price of ₹ 140. The value is ₹ 140, as the discount is allowed at the time of supply and shown in
the invoice.

Post supply discounts

Q11. The agreement of Raju Electrical Appliances with its dealers is that purchase of rice cookers over 1000
pieces in the Diwali month will entitle them to discount of 5% per cooker. Therefore, the quantum of
discount can be determined only at the end of Diwali month. However, since the agreement relating to
discount was in existence at the time of supply, and the discount can be worked out for each invoice, such
post supply discount will be allowed as a deduction from the value of supply of rice cookers. Raju Electrical
Appliances can issue credit note for 5% of the value of goods along with GST and claim adjustment of
 Value of Supply 73

excess tax paid. The dealer must reverse the proportionate input tax credit on the relevant stock to bring it in
line with the reduced tax.

Q12. Pink and Blue Pvt. Ltd. (PBPL) sold goods to Orange Pvt. Ltd. (OPL) on 15th January at ₹ 50,000
(exclusive of taxes and discounts) and charged ₹ 9,000 as IGST @ 18%. The terms of supply stipulated that
discount @ 2% will be given to OPL if it makes the payment within one month of the supply. OPL avails
the input tax credit of ₹ 9,000 in the month of January and makes the payment for the goods on 10th
February. PBPL issues credit note for ₹ 1180 [₹ 1,000 for value of discount and ₹ 180 for proportionate
IGST leviable thereon] to OPL on 11th February. After receiving credit note, OPL reverses the input tax
credit of ₹ 180 attributable to the discount given by the PBPL. PBPL can reduce its GST liability of the
month of February by ₹ 180. OPL would have paid ₹ 57,820 (₹ 50,000 + ₹ 9,000 - ₹ 1,000 - ₹ 180) to PBPL
on 10th February.

Q13. In the above example, if the terms of supply did not provide for discount @ 2% for payment within
one month but PBPL offers such discount to OPL at the time of payment after negotiation, the discount will
not be allowed as a deduction from the value. PBPL will issue a commercial credit note for only the value of
discount, i.e. for ₹ 1,000. OPL will not reverse any input tax credit and PBPL will also not be able to reduce
its GST liability for the month of February. In this case, OPL would pay ₹ 58,000 (₹ 50,000 + ₹ 9,000 - ₹
1,000) to PBPL on 10th February.

Q14. A company announces turnover discounts after reviewing dealer performance during the year. The
discounts are based on performance slabs and are given as cash-back. As these discounts were not known at
the time of supply of the goods, they will not be deducted from value of those goods. Hence, the company
will not be able to adjust excess tax paid from its tax liability.

Q15. Are post-supply discounts eligible for deduction from the value of supplies in all situations? Explain.
Answer: No, the post-supply discounts are not eligible for deduction from the value of supplies in all
situations. Such discounts are allowed as a deduction from the value of supply only in the situations where
the following two conditions are satisfied:
(i) The discount is in terms of an agreement that existed at the time of supply and can be worked out
invoice-wise; and
(ii) Proportionate input tax credit (ITC) is reversed by the recipient – The buyer would have availed ITC of
GST payable on the gross value specified in the invoice. Thus, when a credit note is issued to him by the
supplier for the discount, the buyer will reverse the proportionate credit; consequent to which, the supplier’s
output tax liability will be reduced by the same amount.
If any of the above conditions are not satisfied, post-supply discount is not allowed as a deduction from the
value of supply and consequently, GST liability of the supplier does not get reduced.

Q16. ‘Consideration under GST law includes both monetary and non-monetary considerations.’
Discuss the correctness or otherwise of the statement with reference to the definition of term ‘consideration’
provided under the CGST Act.
Answer: The statement is correct. As per the definition of the term ‘consideration’ provided under the
CGST Act, consideration under the GST law includes both payment in money or otherwise made by the
recipient or any other person and also takes within its sweep the monetary value of any act or forbearance
for the supply by the recipient or any other person. Further, it includes within its ambit any deposit which is
applied as a consideration for the supply but excludes the subsidies provided by the State or Central
Government.
The term money has also been defined under the CGST Act and it not only includes cash (Indian as well as
foreign currency) but also cheque, promissory note, bill of exchange, letter of credit, draft, pay order,
traveler’s cheque, money order, postal/electronic remittance or any such similar instrument recognized by
RBI. Non-monetary consideration essentially means consideration in kind.
 Value of Supply 74

Q17. Sharp Minds Institute provides coaching for engineering entrance examinations. Monthly fee charged
by the Institute from a student is ₹ 10,000. The Institute is known for its commitment to provide education to
underprivileged children. It trains 10 students every year for entrance examinations free of cost.
The Institute has received ₹ 3,00,000 as coaching fees during a month. Nav Jeevan, an NGO working in the
area of education for underprivileged children, has given a subsidy of ₹ 10,000 (in lumpsum) during the
month to the Institute as it is serving the cause of underprivileged children.
Determine the value of supply of education services made by Sharp Minds Institute during the month.
Answer: As per section 15(2)(e), the value of a supply includes subsidies directly linked to the price,
excluding subsidies provided by the State Governments and the Central Government.
In the given case, though the subsidy is given by a non-Government body, the same is not includible in the
value as it is given in lumpsum and not directly linked to the price of the supply being valued. Therefore, the
value of supply made by Sharp Minds during the month is ₹ 3,00,000.

Q18. Furniture Wala is a chain of retail showrooms selling both modern and classic furniture. In order to
build strong customer association, the showroom provides free delivery of the furniture at the premises of
the customers if the distance between the showroom and the customer’s premises is upto 20 kms. Where the
distance is more than 20 kms, the showroom charges a concessional freight of ₹ 10 for every additional km.
Ms. Leena Kapoor purchases a double bed, a dressing table and a centre table for ₹ 2,00,000 from Furniture
Wala. Ms. Leena gets free delivery of the furniture as her residence is located at a distance of 18 km from
the showroom. The showroom incurs an expenditure of ₹ 1000 for delivering the furniture at Ms. Leena’s
residence.
Determine the value of taxable supply made by Furniture Wala. Will your answer change if residence of Ms.
Leena is 50 km away from the showroom?
Answer: In the given case, the showroom is not charging any amount towards freight from Ms. Leena but
incurring the same out of its own pocket. Therefore, the same should not be added to the value. Hence, the
value of supply will be ₹ 2,00,000.
However, the answer will change in the second case when the showroom will charge ₹ 300 for freight
[(50km – 20 km) x ₹ 10] from Ms. Leena. In this case, the supply will be a composite supply (principle
supply being the supply of furniture) and value thereof will be ₹ 2,00,300.

Q19. Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the following
details of taxable inter-State supply made by it during the month of March.
S. Particulars Amount
No. (₹)
(i) List price of taxable goods supplied inter-state (exclusive of taxes) 15,00,000
(ii) Subsidy received from the Central Government for supply of taxable goods to 2,10,000
Government School (exclusively related to supply of goods included at S. No. 1)
(iii) Subsidy received from an NGO for supply of taxable goods to an old age home 50,000
(exclusively related to supply of goods included at S. No. 1)
(iv) Tax levied by Municipal Authority 20,000
(v) Packing charges 15,000
(vi) Late fee paid by the recipient of supply for delayed payment of consideration (Recipient 6,000
has agreed to pay ₹ 6,000 in lump sum and no additional amount is payable by him)
The list price of the goods is net of the two subsidies received. However, the other charges/taxes/fee are
charged to the customers over and above the list price.
Calculate the total value of taxable supplies made by Red Pepper Ltd. during the month of March. Rate of
IGST is 18%.
Answer: Computation of total value of taxable supplies made by Red Pepper Ltd. during the month of
March
Particulars Amount (₹)
List price of the goods 15,00,000
 Value of Supply 75

Subsidy amounting to ₹ 2,10,000 received from the Central Government NIL

[Since the subsidy is received from the Government, the same is not includible in the value
in terms of section 15(2)(e)]
Subsidy received from NGO 50,000
[Since the subsidy is received from a non-Government body and directly linked to the supply,
the same is includible in the value in terms of section 15(2)(e)]
Tax levied by the Municipal Authority 20,000
[Includible in the value as per section 15(2)(a)]
Packing charges 15,000
[Being incidental expenses, the same are includible in the value as per section 15(2)(c)]
Late fees paid by recipient of supply for delayed payment 5,085
[Includible in the value as per section 15(2)(d) - As the amount of interest received is a lump sum
amount, the same has to be taken as inclusive of GST] [₹ 6,000 x 100/118] rounded off
Total value of taxable supplies 15,90,085

Q20. M/s. Flow Pro, a registered supplier, sold a machine to BP Ltd. It provides the following information
in this regard: -
S. Particulars Amount
No. (₹)
(i) Price of the machine [excluding taxes and other charges mentioned at S. Nos. (ii) and (iii)] 25,000
(ii) Third party inspection charges 5,000
[Such charges were payable by M/s Flow Pro but the same have been directly paid by BP
Ltd. to the inspection agency. These charges were not recorded in the invoice issued by M/s Flo Pro.]
(iii) Freight charges for delivery of the machine 2,000
[M/s Flow Pro has agreed to deliver the goods at BP Ltd.’s premises]
(iv) Subsidy received from the State Government on sale of machine under Skill 5,000
Development Programme [Subsidy is directly linked to the price]
(v) Discount of 2% is offered to BP Ltd. on the price mentioned at S. No. (i) above and recorded
in the invoice
Note: Price of the machine is net of the subsidy received.
Determine the value of taxable supply made by M/s Flow Pro to BP Ltd.
Answer: Computation of value of taxable supply made by M/s. Flo Pro to BP Ltd.
Particulars Amount (₹)
Price of the machine 25,000
[Since the subsidy is received from the State Government, the same is not includible in the value
of supply in terms of section 15(2)(e)]
Third party inspection charges 5,000
[Any amount that the supplier is liable to pay in relation to the supply but has been incurred by the
recipient and not included in the price actually paid or payable for the goods, is includible in the
value of supply in terms of section 15(2)(b)]
Freight charges for delivery of the machine value 2,000
[Since arranging freight is the liability of supplier, it is a case of composite supply and thus, freight
charges are added in the value of principal supply.]
Total 32,000
Less: Discount @ 2% on ₹ 25,000 being price charged to BP Ltd. (500)
[Discount given before or at the time of supply if duly recorded in the invoice is deductible from the
value of supply in terms of section 15(3)(a)]
Value of taxable supply 31,500
 Value of Supply 76

MULTIPLE CHOICE QUESTIONS

1. Value of supply under section 15(1) is :
(a) Wholesale price (b) Market value (c) Maximum retail price (d) Transaction
value
2. The value of supply should include:
(a) Any non-GST taxes, duties, cesses, fees charged separately by supplier
(b) Interest, late fee or penalty for delayed payment of any consideration for any supply
(c) Subsidies directly linked to the price except subsidies provided by the Central and State Governments
(d) All of the above
3. Which of the following shall not be included in value of supply?
(a) GST (b) Interest (c) Late fee (d) Commission
4. When can the transaction value be rejected for computation of value of supply?
(a) When the buyer and seller are related and price is not the sole consideration
(b) When the buyer and seller are related or price is the sole consideration
(c) It can never be rejected
(d) When the goods are sold at very low margins
5. Which of the following statement(s) is/are correct?
(a) Section 15 of CGST Act prescribes different provisions for valuation of goods and services
(b) CGST Act and IGST Act have different provisions for valuation of supply
(c) Section 15 of CGST Act prescribes same set of provisions for valuation of goods and services
(d) (a) and (b)
6. Discount given after the supply is deducted from the value of supply, if –
(a) such discount is given as per the agreement entered into at/or before the supply
(b) such discount is linked to the relevant invoices
(c) proportionate input tax credit is reversed by the recipient of supply
(d) all of the above
7. ABC Ltd. has imported certain goods for ₹ 2,00,000 and paid custom duty ₹ 20,000, in this case
IGST shall be charges on
(a) 2,00,000 (b) 20,000 (c) 2,20,000 (d) none of these
8. ABC Ltd. sold certain goods for ₹ 2,00,000 and charged ₹ 5,000 for packing and ₹ 3,000 for
transportation and ₹ 10,000 for installation, in this case value of supply shall be
(a) 2,00,000 (b) 2,05,000 (c) 2,03,000 (d) 2,08,000
(e) 2,10,000 (f) none of these
9. ABC Ltd. sold certain goods for ₹ 2,00,000 and charged ₹ 3,000 for packing and ₹ 5,000 for
weighment, in this case value of supply shall be
(a) 2,00,000 (b) 2,03,000 (c) 2,05,000 (d) 2,08,000 (e) none of these
10. ABC Ltd. sold certain goods for ₹ 2,00,000 and charged ₹ 3,000 for packing and ₹ 5,000 for
weighment and the buyer has also paid ₹ 1,00,000 to XYZ Ltd. on behalf of ABC Ltd., in this case
value of supply shall be
(a) 2,08,000 (b) 3,08,000 (c) 2,05,000 (d) 3,00,000 (e) none of these
11. ABC Ltd. sold certain goods for ₹ 2,00,000 and charged ₹ 3,000 for packing and ₹ 5,000 for
weighment and the buyer has also paid ₹ 1,00,000 to XYZ Ltd. on behalf of ABC Ltd. ABC Ltd. has
given 10% discount on ₹ 2,00,000 at the time of sale, in this case value of supply shall be
(a) 3,00,000 (b) 3,86,000 (c) 2,89,000 (d) 2,86,000
(e) 2,91,000 (f) 2,88,000 (g) none of these
12. ABC Ltd. sold certain goods for ₹ 3,00,000 and received subsidy from the Govt. ₹ 1,00,000 hence
charged from customer ₹ 2,00,000, in this case value of supply shall be
(a) 3,00,000 (b) 2,00,000 (c) 4,00,000 (d) 5,00,000
(e) none of these
13. ABC Ltd. sold certain goods for ₹ 3,00,000 and received subsidy from a private organisation
₹1,00,000 hence charged from customer ₹ 2,00,000, in this case value of supply shall be
 Value of Supply 77

(a) 3,00,000 (b) 2,00,000 (c) 4,00,000 (d) 5,00,000 (e) none of
these
14. While computing transaction value, discount allowed shall be deducted provided such discount
was given
(a) at or before the time of supply
(b) after making the supply
(c) after making supply but it has been established in term of agreement entered into at or before the time of
supply
(d) option (a) or (c)
(e) none of these
15. As per section 15 value of supply means
(a) The value of a supply of goods or services or both shall be the transaction value, which is the price
actually paid or payable for the said supply of goods or services or both where the supplier and the
recipient of the supply are related and the price is the sole consideration for the supply.
(b) The value of a supply of goods or services or both shall be the transaction value, which is the price
actually paid or payable for the said supply of goods or services or both where the supplier and the
recipient of the supply are not related and the price is not the sole consideration for the supply.
(c) The value of a supply of goods or services or both shall be the transaction value, which is the price
actually paid or payable for the said supply of goods or services or both where the supplier and the
recipient of the supply are not related and the price is the sole consideration for the supply.
(d) The value of a supply of goods or services or both shall be the market value, which is the price actually
paid or payable for the said supply of goods or services or both where the supplier and the recipient of the
supply are not related and the price is the sole consideration for the supply.

Answer:
1.(d); 2. (d); 3. (a); 4. (a); 5. (c); 6. (d); 7. (c); 8.(f); 9. (d); 10. (b); 11. (f); 12. (b); 13. (a); 14. (d); 15. (c)

Hint to Question 7:

Basic Price of Goods: 2,00,000

Add: Custom Duty: 20,000
Taxable Value 2,20,000

Hint to Question 8:
Basic Price of Goods: 2,00,000
Add: Packing 3,000
Add: Transportation 5,000
Add: Installation 10,000
Taxable Value 2,28,000

Hint to Question 9:
Basic Price of Goods 2,00,000
Add: Packing 3,000
Add: Weighment 5,000
Taxable Value 2,08,000

Hint to Question 10:

Basic Price of Goods 2,00,000
Add: Packing 3,000
Add: Weighment 5,000
Add: Payment to other on Suppler Behalf 1,00,000
Taxable Value 3,08,000
 Value of Supply 78

Hint to Question 11:

Basic Price of Goods 2,00,000
Add: Packing 3,000
Add: Weighment 5,000
Add: Payment to other on Suppler Behalf 1,00,000
Less: Discount (200000X10%) (20,000)
Taxable Value 2,88,000

Hint to Question 12:

Basic Price of Goods 3,00,000
Less: Subsidy (1,00,000)
Taxable Value 2,00,000

Hint to Question 13:

Basic Price of Goods 3,00,000
Taxable Value 3,00,000
 Value of Supply 79

EXAMINATION QUESTION
JAN 2021
Question 5 (8 Marks)
Star Ltd., a registered supplier in Karnataka has provided the following details for supply of one machine:

Particulars Amount in
(₹)
(1) List price of machine supplied [exclusive of items given below from 80,000
(2) to (4)]
(2) Tax levied by Local Authority on sale of such machine 6,000
(3) Discount of 2% on the list price of machine was provided (recorded in the
invoice of machine)
(4) Packing expenses for safe transportation charged separately in the invoice 4,000

Star Ltd. received ₹ 5,000 as subsidy from a NGO on sale of each such machine, The Price of
₹80,000 of the machine is after considering such subsidy.
During the month of February, 2023, Star Ltd. supplied three machines to Intra-State customers and one
machine to Inter-State customer.
Star Ltd. purchased inputs (intra-State) for ₹ 1,20,000 exclusive of GST for supplying the above four
machines during the month.
The Balance of ITC at the beginning of February, 2023 was:

CGST SGST IGST

₹ 18,000 ₹ 4,000 ₹ 26,000
Note:
(i) Rate of CGST, SGST and IGST to be 9%,9% and 18% respectively for both inward and outward
supplies.
(ii) All the amounts given above are exclusive of GST.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the minimum net GST payable in cash by Star Ltd. for the month of February, 2023.
Answer
Computation of value of taxable supply
Particulars Amount
(₹)
List price of the machine 80,000
Add: Tax levied by Local Authority on the sale of machine 6,000
[Tax other than GST, if charged separately, are includible in the value in terms of
section 15 of the CGST Act, 2017.]
Add: Packing expenses for safe transportation 4,000
[Includible in the value as per section 15 of the CGST Act, 2017.]
Add: Subsidy received from a NGO on sale of each machine 5,000
[Subsidy received from a non-Government body and which is directly linked to the
price, the same is included in the value in terms of section 15 of the CGST Act, 2017.]
 Value of Supply 80

Total 95,000
Less: Discount @ 2% on ₹ 80,000 (1,600)
[Since discount is known at the time of supply and recorded in invoice, it is
deductible from the value in terms of section 15 of the CGST Act, 2017 .]
Value of taxable supply 93,400

Computation of minimum net GST payable in cash by Star Ltd.

Particulars CGST (₹) SGST (₹) IGST (₹)
Sale of machine 25,218 25,218 16,812
[Intra-State sales = ₹ 93,400 × 3 machines = ₹ 2,80,200
[2,80,200 [2,80,200 [93,400×
Inter-State sales = ₹ 93,400 × 1 machine = ₹ 93,400]
×9%] ×9%] 18%]
Total output tax 25,218 25,218 16,812
Less: Set off of IGST against IGST and SGST (9,188) (16,812)
[IGST credit first be utilized towards payment of IGST,
remaining amount can be utilized towards CGST and SGST in any
order and in any proportion]

Less: Set off of CGST against CGST and SGST against SGST (25,218) (14,800)
[CGST credit cannot be utilized towards payment of SGST and
vice versa.]

Minimum net GST payable in cash Nil 1,230

Working Note:
Computation of total ITC available
Particulars CGST (₹) SGST (₹) IGST (₹)
Opening balance of ITC 18,000 4,000 26,000
Add: Inputs purchased during the month 10,800 10,800
[₹ 1,20,000 ×9%] [₹ 1,20,000 ×9%]
Total ITC available 28,800 14,800 26,000

NOV 2020
Question 6 (a). (6 Marks)
Following are the particulars, relating to one of the machine sold by M/s SQM Ltd. to M/s. ACD Ltd. in the
month of February 2023 at List price of ₹9,50,000 (Exclusive of taxes and discount) Further, following
additional amounts have been charged from M/s ACD Ltd:
S. No Particulars Amount
(i) Municipal taxes chargeable on the machine 45,000
(ii) Outward freight charges (Contract was to deliver machine at ACD Ltd.’s factory 65,000
i.e. F.O.R. contract)
Additional information:
(i) M/s SQM Ltd. normally gives an interest-free credit period of 30 days for payment, after that it charges
interest @ 1% P.M. or part thereof on list price.
ACD Ltd. paid for the supply after 45 days but, M/S SQM Ltd. waived the interest payable.
(ii) M/s SQM Ltd. received ₹50,000 as subsidy, from one non-government organisation (NGO) on sale of
such machine. This subsidy was not linked to the price of machine and also not considered in list price of
₹9,50,000.
 Value of Supply 81

(iii) M/s ACD Ltd. deducted discount of ₹15,000 at the time of final payment, which was not as per
agreement.
(iv) M/s SQM Ltd. collected ₹9,500 as TCS (Tax collected at Source) under the provisions of the Income
Tax Act,1961.
Compute the Taxable Value of supply as per provision of GST laws, considering that the price is the sole
consideration for the supply and both parties are unrelated to each other.
Note: Correct legal provision should form part of your answer.
Solution: Computation of value of taxable supply
Particulars ₹
List price of the goods (exclusive of taxes and discounts) 9,50,000
Tax levied by Municipal Authority on the sale of such goods 45,000
[Includible in the value as per section 15]
Freight charges [Includible in the value as per section 15] 65,000
Subsidy received from a non-Government body Nil
[Since subsidy is received from a non-Government body but same is not linked
to the price of machine and also not considered in list price]
Total 10,60,000
Less: Discount [Since discount is known at the time of supply, Nil
it is deductible from the value in terms of section 15]
Value of taxable supply 10,60,000
Note:
1. GST shall not be levied on TCS.
2. Interest free credit has been waived by the supplier hence not included in the value of taxable supply.

NOV 2018
Question 9 (a) (5 Marks)
Mr. X a registered supplier in Kochi (Kerala State) has provided the following detail in respect of her
supplies made within Intra-State for the month of March 2023:
Particulars Amount in (₹)
(i) List price of goods supplied intra-state 3,30,000
(Exclusive of item given below from ii to v)
(ii) Swachh Bharat cess levied on sale of goods 12,500
(iii) Packing expense charged separately in the invoice 10,800
(iv) Discount of 1% on the list price of the goods was provided (recorded in the invoice of goods)
(v) Subsidy received from State Government for encouraging women entrepreneurs. 5,000
Compute the value of taxable supply and the gross GST liability of Mr. X for the month of March 2022
assuming rate of CGST to be 9% and SGST to be 9%. All the amounts given above are exclusive GST.
Solution: Computation of Value of taxable supply
Particulars Amount in (₹)
(i) List price of goods supplied intra-state 3,30,000
(ii) Swachh Bharat cess levied on sale of goods (other tax paid shall be included as per section 15) 12,500
(iii) Packing expense charged separately in the invoice (includible as per section 15) 10,800
(iv) Discount of 1% on the list price of the goods was provided (recorded in the invoice of goods) (3,300)
(since discount is known at the time of supply, it is deductible from the value in terms of section 15)
(v) Subsidy received from State Government for encouraging women entrepreneurs. Nil
(Subsidy received from Govt. shall not be includible in the value as per section 15)
Value of Supply 3,50,000
CGST @ 9% 31,500
SGST @ 9% 31,500
 Value of Supply 82

Alternative solution: In the above solution it is assumed that subsidy received from State Government
is already adjusted in list price hence no treatment has been done. Alternatively, it is assumed that
subsidy is not excluded from list price then subsidy amount shall be deducted hence computation will
be
Solution: Computation of Value of taxable supply
Particulars Amount in (₹)
(i) List price of goods supplied intra-state 3,30,000
(ii) Swachh Bharat cess levied on sale of goods (other tax paid shall be included as per section 15) 12,500
(iii) Packing expense charged separately in the invoice (includible as per section 15) 10,800
(iv) Discount of 1% on the list price of the goods was provided (recorded in the invoice of goods) (3,300)
(since discount is known at the time of supply, it is deductible from the value in terms of section 15)
(v) Subsidy received from State Government for encouraging women entrepreneurs. (5,000)
(Subsidy received from Govt. shall not be includible in the value as per section 15)
Value of Supply 3,45,000
CGST @ 9% 31,050
SGST @ 9% 31,050

MAY 2018
Question 9 (a) (5 Marks)
Candy Blue Ltd., Mumbai, a registered supplier, is manufacturing Chocolates and Biscuits. It provides the
following details of taxable inter-state supply made by it for the month of October 2022:
Particulars GST paid (₹)
(i) List price of goods supplied inter-state 12,40,000
Item already adjusted in the price given in (i) above:
(1) Subsidy from Central Government for supply of Biscuits to Government School. 1,20,000
(2) Subsidy from Trade Association for supply of quality Biscuits. 30,000
Items not adjusted in the price given in (i) above:
(3) Tax levied by Municipal Authority 24,000
(4) Packing Charges 12,000
(5) Late fee paid by the recipient of supply for delayed Payment of invoice 5,000
Calculate the Value of taxable supply made by M/s Candy Blue Ltd. for the month of October 2022.
Solution: Computation of value of taxable supply
Particulars ₹
List price of the goods 12,40,000
Tax levied by Municipal Authority 24,000
[Includible in the value as per section 15]
Packing charges [Includible in the value as per section 15] 12,000
Subsidy received from a non-Government body 30,000
[Since subsidy is received from a non-Government body, the same is
included in the value in terms of section 15]
Late fee paid by the recipient of supply for delayed Payment of invoice 5,000
[Includible in the value as per section 15]
Total 13,11,000
Note: Subsidy received from Government is not includible in value of supply as per section 15.

MAY 2018
Question 9 (b) (5 Marks)
Explain the meaning of the term "Recipient of supply of goods and/or services" under the CGST Act, 2017.
Answer: Refer answer in the book
 Value of Supply 83

MAY 2018
Question 7 (b) (4 Marks)
Shri Krishna Pvt. Ltd., a registered dealer, furnishes the following information relating to goods sold by it to
Shri Balram Pvt. Ltd. in the course of Intra State.
S. No Particulars Amount
(₹)
(i) Price of the goods 1,00,000
(ii) Municipal Tax 2,000
(iii) Inspection charges 15,000
(iv) Subsidies received from Shri Ram Trust 50,000
(As the products is going to be used by blind association)
(v) Late fees for delayed payment. (Though Shri Balram Pvt. Ltd, made late payment 1,000
but these charges are waived by Shri Krishna Pvt. Ltd.)
(vi) Shri Balram Pvt. Ltd. paid to Radhe Pvt. Ltd. (on behalf of Shri Krishna Pvt. Ltd.) 2,000
weighment charges.
According to GST Law, determine the value of taxable supply made by Shri Krishna Pvt. Ltd .. Items given
in Point (ii) to (vi) are not considered while arriving at the price of the goods given in point no. (i).
Solution: Computation of value of taxable supply
Particulars ₹
List price of the goods 1,00,000
Tax levied by Municipal Authority 2,000
[Includible in the value as per section 15]
Inspection charges [Includible in the value as per section 15] 15,000
Subsidy received from a non-Government body (already not considered) Nil
Late fee for delayed Payment but waived by the seller. Nil
Weighment charges [Includible in the value as per section 15] 2,000
[Includible in the value as per section 15]
Total 1,19,000
 Returns 84

RETURNS
SECTION 37,38,39,40,44,45,46,47
RULE 59,60, 61, 61A, 62,68,80,81
Question 1: Explain Furnishing of statement of outward supplies under section 37 / Rule 59 (GSTR-1)
Answer: Furnishing of statement of outward supplies under section 37 / Rule 59
1. Every registered person shall be required to file a statement of outward supply in GSTR-1 on monthly
basis upto 11th of the month succeeding the relevant month
2. If turnover in the preceding year is upto 5 crores, such person has the option to file such statement
on quarterly basis upto 13th on the month succeeding the relevant quarter. If turnover has crossed
5 Crores, such person shall be required to file the return on monthly basis from the first month of next
quarter. (NN 83/2020 CT 10/11/2020)
3. If statement is filed on quarterly basis, in that case, the details of outward supply for first and second
month of a quarter may be furnished using invoice furnishing facility till 13th of subsequent month but
only upto ₹50 lakh for each month. It will include debit note and credit note also.
4. A registered person shall not be allowed to furnish GSTR-1, if he has not furnished GSTR-1 or
GSTR-3B for the earlier tax period.
5. A taxpayer cannot file GSTR-1 before the end of the current tax period. However, following are the
exceptions to this rule:
a. Casual taxpayers, after the closure of their business
b. Cancellation of GSTIN of a normal taxpayer. A taxpayer who has applied for cancellation of
registration will be allowed to file GSTR-1 after confirming receipt of the application.

The return shall contain the following particulars:

1. GSTIN
2. Legal name / Trade name.
3. Aggregate Turnover in the preceding financial year
4. Taxable outward supplies (invoice wise) made to registered persons.
5. Taxable outward Inter-State supplies (invoice wise) to unregistered persons where the invoice
value is more than ₹2.5 lakh.
6. Zero rated supplies
7. Consolidated details of Taxable Supplies to unregistered persons except table 5 (Rate wise
and State wise)
8. Nil rated, exempted and non GST outward supplies
9. Amendments to table 4,5,6 including debit note, credit note etc.
10. Amendments to table no. 7
11(I). Advances received/advance adjusted in the current tax period.
11 (II). Amendments of 11(I).
12. HSN-wise summary of outward supplies
13. Serial number of Documents issued during the tax period.
GSTR-1 can be filed maximum upto 3 years for a particular tax period from the due date of filing GSTR-1
for the said tax period.
If any person has received a notice under Rule 88C or Rule 88D, such person shall not be allowed to furnish
GSTR-1 / IFF for a subsequent tax period unless he has either deposited the amount or has furnished a reply.
If any person has not complied with Rule 10A, he will not be allowed to furnish GSTR-1 / IFF
Question 2: Whether Nil GSTR-1 is to be filed
Answer: Filing of GSTR-1 is mandatory for all normal and casual taxpayers, even if there is no business
activity in any particular tax period. For such tax period, a Nil GSTR-1 is required to be filed.
 Returns 85

A Nil GSTR-1 can be filed through an SMS using the registered mobile number of the taxpayer.
GSTR-1 submitted through SMS is verified by registered mobile number-based OTP facility.
Taxpayer opting for voluntary cancellation of GSTIN has to file GSTR-1 for active period.
In cases where a taxpayer has been converted from a normal taxpayer to composition taxpayer, GSTR-1 will
be available for filing only for the period during which the taxpayer was registered as normal taxpayer.

Question 3: How are the details of outward supply furnished in prior periods amended? [Section
37(3)]
Answer:
(a) Amendment/ Correction
Tables 9, 10 and 11(II) of GSTR-1 provide for amendments in details of taxable outward supplies furnished
in earlier periods. The details of original debit notes / credit notes / refund vouchers issued by the tax-payer
in the current tax period as also the revision in the debit notes/ credit notes / refund vouchers issued in the
earlier tax periods are required to be shown in Table 9 of the GSTR-1.
Ordinarily, in Amendment Table, the supplier is required to give details of original invoice (No and Date),
the particulars of which have been wrongly entered in GSTR-1 of the earlier months and are now sought to
be amended. However, it may happen that, a supplier altogether forgets to include the entire original invoice
while furnishing the GSTR-1 for a particular month. In such cases also, he would be required to show the
details of the said missing invoice which was issued in earlier month in the Amendment Table only.
(b) Rectification of errors
If the supplier discovers any error or omission, he shall rectify the same in the tax period during which such
error or omission is noticed, and pay the tax and interest, if any, in case there is short payment, in the return
to be furnished for such tax period.

The maximum time limit within which such amendments are permissible is earlier of the following dates:
• 30th November following the end of the financial year to which such details pertain or
• Date of filing of the relevant annual return
Example: An entity has discovered an error in GSTR 1 of November 2022, in this case it can be rectified till
30th November 2023 but if annual return has been filed on 10th August 2023, error can not be rectified after
10th August 2023.

Question 4: Explain classification of Goods/Services under GST.

Answer: The exercise of placing the various goods/services under the various groups or sub- groups is
known as 'Classification' of a product/services and such classification is given in GST Tariff and it is called
Harmonised system of Nomenclature. All the goods are divided into 98 categories which are called
chapters. Each product given in the GST Tariff has a specific 8 digit code number first 2 digit refer to
Chapter next 2 heading next 2 sub-heading and last 2 are specific for the product e.g. Code No. for
Tobacco is 2401 20 50 and for mobile phone is 8517 12 10 and for Chocolate is 1806 90 10 (Nomenclature
means a system of naming things)
All services are covered in chapter 99 and each service has a code of 6 digit which is called services
accounting code.
HSN or HS (Harmonized Commodity Description and Coding System) is a standardized system of
nomenclature of different goods developed by World Customs Organization, which is accepted globally.
HSN uses 6-digits uniform codes to classify different goods. India uses eight-digits codes for more specific
and precise classification.

Position from 01.04.2021

As per notification no. 12/2017, w.e.f 01.04.2021, if annual turnover in preceding year is upto 5 crore, the
supplier shall be required to mention four digits of HSN in case of B2B supply but it will be optional for
B2C supply. If turnover is more than 5 crores, supplier shall be required to mention six digit of HSN.
Example: The turnovers of Yellow Lemon Pvt. Ltd., Red Pepper Pvt. Ltd. And Blue Berry Pvt. Ltd. in the
previous financial year are ₹ 1.5 crore, ₹ 4.8 crore and ₹ 6 crore respectively. While Yellow Lemon Pvt. Ltd.
And Red Pepper Pvt. Ltd. will be required to upload 4 digits of HSN code of the goods sold to registered
 Returns 86

persons, uploading of 4 digits HSN code will be optional for the two companies when the goods are sold to
unregistered persons. Blue Berry Pvt. Ltd. will have to upload 6 digits of HSN code of goods sold by it. This
will be the position from 01.04.2021.
Question 5: Explain Furnishing of returns u/s Section 39 / Rule 61 GSTR 3B
Answer:
1. Every registered person, shall submit a return in GSTR 3B every month or part thereof upto 20th of
subsequent month
2. If turnover is not exceeding 5 crore, return can be filed on quarterly basis and such return should be
submitted upto 22nd of subsequent month or 24th of subsequent month depending upon the place where
he is registered (NN 84/2020 CT 10/11/2020)
(Registered persons whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh,
Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union
territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or
Lakshadweep shall submit return upto 22nd of the month succeeding the quarter.)

(Registered persons whose principal place of business is in the States of Himachal Pradesh, Punjab,
Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur,
Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu
and Kashmir, Ladakh, Chandigarh or Delhi shall submit return upto 24th of the month succeeding the
quarter.)
3. Every registered person who is required to furnish a return shall furnish a return for every tax period
whether or not any supplies have been made during such tax period.
4. If any registered person after furnishing a return in GSTR 3B discovers any omission or incorrect
particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax
authorities, he shall rectify such omission or incorrect particulars in such form and manner as may be
prescribed, subject to payment of interest under this Act:
5. No such rectification of any omission or incorrect particulars shall be allowed after 30th November of
the subsequent financial year, or the actual date of furnishing of relevant annual return, whichever is
earlier.
6. A registered person shall not be allowed to furnish GSTR-3B if he has not furnish GSTR-3B or GSTR-1
for the earlier tax period.
7. A registered person shall be allowed to file GSTR-3B for a maximum period of 3 year from the due date
of furnishing the said GSTR-3B.

Question 6: Explain QRMP Scheme.

Answer:
QRMP Scheme
If any registered person has turnover upto 5 crores, he shall have the option to file GSTR – 3B on quarterly
basis but tax has to be paid every month in the manner given below:
1. Fixed Sum Method
(i) thirty five per cent. of the tax liability paid by debiting the electronic cash ledger in the return for the
preceding quarter where the return is furnished quarterly; or
(ii) the tax liability paid by debiting the electronic cash ledger in the return for the last month of the
immediately preceding quarter where the return is furnished monthly:
Provided that no such amount may be required to be deposited-
(a) for the first month of the quarter, where the balance in the electronic cash ledger or electronic
credit ledger is adequate for the tax liability for the said month or where there is nil tax liability ;
(b) for the second month of the quarter, where the balance in the electronic cash ledger or electronic
credit ledger is adequate for the cumulative tax liability for the first and the second month of the
quarter or where there is nil tax liability:
Provided further that registered person shall not be eligible for the fixed sum method unless he has furnished
the return for a complete tax period preceding such month.
 Returns 87

“A complete tax period” means a tax period in which the person is registered from the first day of the tax
period till the last day of the tax period.
2. Self Assessment Method
Such registered person has the option to pay tax on estimated basis as per his own assessment but in that
case interest shall be charged on any short fall.
Example 1: A registered person, who has opted for QRMP Scheme, has paid a total amount of ₹100/- in
cash as tax liability in the previous quarter of October to December. He opts to pay tax under fixed sum
method. He therefore pays ₹35/- each on 25th February and 25th March for discharging tax liability for the
first 2 months of quarter viz. January and February.
In his return for the quarter, it is found that liability based on the outward and inward supplies, for January
was ₹40/- and for February it was ₹42/-. However, no interest would be payable for the lesser amount of tax
i.e. ₹5 and ₹7 respectively. But if he has paid tax on estimated basis, in that case interest shall be charged on
₹ 5 and ₹7.
Question 7: Explain Manner of opting for furnishing quarterly return.
Answer: Rule 61A
(1) Every registered person intending to furnish return (GSTR 3B) on a quarterly basis shall indicate his
preference for furnishing of return on a quarterly basis, electronically, on the common portal, from the 1st
day of the second month of the preceding quarter till the last day of the first month of the quarter for which
the option is being exercised: e.g. Mr. X is filing return on monthly basis in April 2022 but now he decides
to file return on quarterly basis, in this case he can exercise the option from 1st May 2022 upto 31st July 2022
for filing return on quarterly basis for the quarter starting from July to Aug 2022.
Provided that where such option has been exercised once, the said registered person shall continue to
furnish the return on a quarterly basis for future tax periods, unless the said registered person,-
(a) becomes ineligible for furnishing the return on a quarterly basis as per the conditions and
restrictions notified in this regard; or
(b) opts for furnishing of return on a monthly basis, electronically, on the common portal:
Provided further that a registered person shall not be eligible to opt for furnishing quarterly return
in case the last return due on the date of exercising such option has not been furnished.
(2) A registered person, whose aggregate turnover exceeds 5 crore rupees during the current financial year,
shall 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 his aggregate turnover exceeds 5 crore rupees.
Examination MAY – 2023 (3 Marks)
Question 7(b)
(i) Mr. Sumit is a registered dealer in the state of Punjab. In the month of May he decides to apply for
QRMP scheme. As he wants to switch to QRMP scheme he had not filed his returns for the months of May
and June.
Please guide to Mr. Sumit regarding the following:
(A) Conditions and restrictions of QRMP scheme.
(B) Manner of exercising option of QRMP scheme.
Answer:
(i) (A) Conditions and restrictions of QRMP scheme
Mr. Sumit has to fulfil the following conditions and restrictions for opting for QRMP scheme:
• His aggregate annual turnover (PAN based) is up to ₹ 5 crore in the preceding financial year.
• He has furnished the return for the preceding month, as due on the date of exercising such option.
• He is not required to exercise the option every quarter.
(B) Manner of exercising option of QRMP scheme
Registered person – Mr. Sumit - intending to opt for QRMP scheme for any quarter should indicate his
preference for furnishing of return on a quarterly basis from 1st day of the 2nd month of the preceding
quarter till the last day of the 1st month of the quarter for which the option is being exercised.
 Returns 88

Question 8: Discuss the provisions of Section 39(9) of the CGST Act, 2017, relating to rectification of
errors/ omissions in GST returns already filed and also state its exceptions. State the time limit for
making such rectification.
Answer: As per Section 39(9) Subject to the provisions of sections 37 and 38, if any registered person after
furnishing a return GSTR 3B discovers any omission or incorrect particulars therein, other than as a result of
scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or
incorrect particulars in such form and manner as may be prescribed, subject to payment of interest under this
Act (earlier in GSTR 3, there were tables for rectification of the error in the earlier return just like GSTR 1
but now there is no such table in GSTR 3B hence rules will be framed for rectification of error)
Rectification of any omission or incorrect particulars shall be allowed upto 30th day of November following
the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.

Question 9: Explain Statement and return by composition dealer.

Answer: Section 39/Rule 62
Every registered person paying tax under section 10 shall-
(i) furnish a statement, every quarter or, as the case may be, part thereof, containing the details of payment
of self-assessed tax in FORM GST CMP-08, till the 18th day of the month succeeding such quarter; and
(ii) furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4, till the
30th day of April following the end of such financial year,
electronically through the common portal.
Every such registered person shall discharge his liability towards tax or interest by debiting the electronic
cash ledger.
A registered person opting to withdraw from the composition scheme at his own motion or where option is
withdrawn at the instance of the proper officer shall, where required, furnish a statement in FORM GST
CMP-08 for the period for which he has paid tax under the composition scheme till the 18th day of the
month succeeding the quarter in which the date of withdrawal falls and furnish a return in FORM GSTR-
4 for the said period till the 30th day of April following the end of the financial year during which such
withdrawal falls.

Particulars of GSTR-4 (Annually) shall be as given below:

Table No. 1. GSTIN
Table No. 2. Legal name / Trade name.
Table No. 3. Aggregate Turnover during the preceding financial year.
Table No. 4. Inward supplies including supplies on which tax is to be paid reverse charge.
Table No. 5. Tax on outward supplies made.
Table No. 6. Consolidated statement of advances paid/advance adjustment on account of receipt of supply.
Table No. 7. TDS Credit received (Not covered in syllabus)
Table No. 8. Tax Payable and paid
Table No. 9. Interest, Late fee payable and paid
Table No. 10. Refund claimed from electronic cash ledger
Table No. 11. Debit entries in cash ledger for tax/interest payment.

Question 10: Explain Form and manner of ascertaining details of inward supplies.
Answer: As per Section 38/ Rule 60.
Communication of details of inward supplies and input tax credit Section 38
1. An auto generated statement in GSTR-2B shall be available on the GST portal every month and the
recipient shall be allowed to take ITC on the basis of such statement. It may be available a day after the
due date of furnishing of GSTR-1or furnishing of invoice using IFF, whichever is later i.e. 11th or 13th,
whichever is later i.e. 13th of subsequent month or quarter. If will contain details of inward suppliers
received during the preceding month and also supplies of earlier month if the same has not being
reported in the relevant month.
2. It will also contain details of the input tax for which ITC can not be availed.
 Returns 89

Question 11: Explain Filing of First Return.

Answer: Filing of First Return Section 40
Every registered person who has made outward supplies in the period between the date on which he became
liable to registration till the date on which registration has been granted shall declare the same in the first
return furnished by him after grant of registration.
When a person becomes liable to registration after his turnover crossing the threshold limit, he may apply
for registration within 30 days of so becoming liable. Thus, there might be a time lag between a person
becoming liable to registration and grant of registration certificate.
During the intervening period, such person might have made the outward supplies, i.e. after becoming liable
to registration but before grant of the certificate of registration. Now, in order to enable such registered
person to declare the taxable supplies made by him for the period between the date on which he became
liable to registration till the date on which registration has been granted so that ITC can be availed by the
recipient on such supplies. Firstly, the registered person may issue Revised Tax Invoices against the invoices
already issued during said period within 1 month from the date of issuance of certificate of registration.
The registered person shall declare his outward supplies made during said period in the first return furnished
by him after grant of registration.

Question 12: Explain filing of Annual return

Answer: Filing of Annual return. Section 44/Rule 80
Every registered person shall furnish an annual return for every financial year electronically in form no.
GSTR-9 upto 31st December of the subsequent year, e.g. for financial year 22-23, Return to be submitted
upto 31st December 2023.
Particulars of GSTR-9 shall be as given below:
Table No. 1. GSTIN
Table No. 2. Name of Taxable Person
Table No. 3. Date of Statutory Audit.
Table No. 4. Auditors
Table No. 5. Details of Expenditure.
Table No. 6. Details of Income.
Table No. 7. Return reconciliation Statement.
Table No. 8. Other Amounts.
Table No. 9. Profit as per the Profit and Loss Statement
A registered person shall be allowed to file annual return for a maximum period of 3 years from the due date
of filing of such annual return.
Persons required to file Annual Return
Sl. No Persons Form
01. Every Registered Person GSTR-9
02. Every electronic commerce operator required to GSTR-9B
collect tax at source under section 52
03. (i) NRTP (ii) Persons providing OIDAR services Exempt from filing Annual Return
(iii) Input Service Distributor, (iv) A person
paying tax under section 51, (v) A casual taxable
person,
Every person whose turnover has exceeded ₹5 crore shall be required to submit GSTR-9C which will be a
self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for
the financial year, with the audited annual financial statement.
Question 13: Explain filing of Final Return
Answer: Filing of Final return Section 45 / Rule 81.
Every registered person whose registration has been cancelled shall furnish a final return in form no. GSTR-
10 within three months of the date of cancellation or date of order of cancellation, whichever is later, eg. if
cancellation order has been issued on 20th October 2022 but registration has been cancelled w.e.f.1st October
2022, 3 months shall be determined from 20th October 2022.
 Returns 90

Particulars of GSTR-10 shall be as given below:

1. GSTIN
2. Legal Name
3. Business Name
4. Address
5. Application Reference Number (ARN) of surrender application.
6. Effective Date of Surrender/Cancellation.
7. Whether cancellation order has been passed.
8. If yes , Unique ID of cancellation order.
9. Date of Cancellation order
10. Particulars of closing Stock held on date of surrender / cancellation.
11. Amount of Tax Payable on closing stock.

Question 14: Explain Notice to Return defaulters

Answer: Notice to Return Defaulters Section 46 / Rule 68
Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall
be issued requiring him to furnish such return within fifteen days in GSTR-3A.

Question 15: Explain Penalty for late filing of Return.

Answer: Levy of late fee Section 47
If any person has not filed any return, notice shall be given u/s 46/ Rule 68 in form no. GSTR-3A.
Penalty for delay in filing GSTR-1 shall be as given below (Notification No.20/2021 dated: 01-06-
2021):
(i) If output supply is nil, penalty shall be ₹10 per day but maximum ₹250.
(ii) In other cases, penalty shall be charged @ ₹25 per day for every day but maximum ₹1,000 provided
aggregate turnover in the preceding financial year is upto ₹1.5 crores. If turnover is more than 1.5 crores but
upto 5 crores, maximum penalty shall be ₹2,500. In all other cases maximum penalty shall be ₹5,000.

Penalty for delay in filing GSTR-3B shall be as given below (Notification No.19/2021 dated: 01-06-
2021):
(i) If tax payable in GSTR-3B is nil, penalty shall be ₹10 per day but maximum ₹250.
(ii) In other cases, penalty shall be charged @ ₹25 per day for every day but maximum ₹1,000 provided
aggregate turnover in the preceding financial year is upto ₹1.5 crores. If turnover is more than 1.5 crores but
upto 5 crores, maximum penalty shall be ₹2,500. In all other cases maximum penalty shall be ₹5,000.

Penalty for delay in filing GSTR-4 shall be as given below (Notification No.21/2021 dated: 01-06-
2021):
(i) If tax payable in GSTR-4 is nil, penalty shall be ₹10 per day but maximum ₹250
(ii) In all other cases, penalty shall be ₹25 per day but maximum ₹1,000
The above Late Fee is under CGST Act, and\an equal amount shall be payable under SGST/UTGST Act i.e.
infact the late fee shall be double of the amount as mentioned above.

Penalty for delay in filing Annual Return Section 44

Any registered person who fails to furnish the annual return u/s 44 by the due date shall be liable to pay a
late fee of one hundred rupees for every day during which such failure continues subject to a maximum of
an amount calculated at a quarter per cent of his turnover.
Example 1:
(i) Delay is 20 days and turnover is ₹ 60,00,000, penalty shall be ₹ 2,000 or ₹ 15,000 i.e. ₹ 2,000
(ii) Delay is 20 days and turnover is ₹ 10,00,000, penalty shall be ₹ 2,000 or ₹ 2,500 i.e. ₹ 2,000
(iii) Delay is 40 days and turnover is ₹ 10,00,000, penalty shall be ₹ 4,000 or ₹ 2,500 i.e. ₹ 2,500
(iv) Delay is 100 days and turnover is ₹ 50,00,000, penalty shall be ₹ 10,000 or ₹ 12,500 i.e. ₹ 10,000
 Returns 91

Further equal amount shall be payable under SGST/UTGST Act.

Penalty for delay in filing Final Return Section 45
Every registered person who is required to furnish a return and whose registration has been surrendered or
cancelled is required to file a final return.
The final return has to be filed within 3 months of the:
(i) date of cancellation
or
(ii) date of order of cancellation whichever is later.
Quantum of late fee for not filing the final return is as follows:
(i) ₹ 100 for every day during which such failure continues
or
(ii) ₹ 5,000
whichever is lower.
An equal amount of late fee is payable under the respective SGST/UTGST Act as well.

Question 16: Difference in GST liability reported in GSTR-1 and GSTR-3B Rule 88C.
Answer: Difference in GST liability reported in GSTR-1 and GSTR-3B Rule 88C
If output tax liability reported in GSTR-1 / IFF is exceeding the amount shown in GSTR-3B, the person
shall be given a notice in DRC-01B, directing such person to explain the difference and to pay the balance
amount alongwith interest under section 50. The registered person shall explain the reason or pay the
amount within the period of 7 days, otherwise amount shall be recovered with penalty as per GST
provisions. Also such person shall not be allowed to file GSTR-1.

Examination – NOV-2023 (5 Marks)

Question 8 (b)
Mr. Sameer a registered person under GST, is unable to file GSTR-1, reason being showed that tax payable
under GSTR-1 which has been filed in respect of last tax period exceeds the tax payable under GSTR-3B
which has been filed for the corresponding tax period. Explain the procedure to be followed by the
department and Mr. Sameer for the same as per the provisions of Rule 88C of the CGST Rules 2017.
Solution:
Refer answer to Question No. 16.

Question 17: Explain tax credit availed in excess of GSTR-2B Rule 88D.
Answer: Tax credit availed in excess of GSTR-2B Rule 88D
If any person has availed ITC in excess of the amount shown in GSTR-2B. Such person shall be given
intimation in DRC-01C and shall be required to pay the excess amount along with interest under section 50
within 7 days. Also he should explain the reasons for availing excess credit. If no explanation is given and
also excess amount is not paid, in that case amount shall be recovered along with penalty as per GST
provisions. Also such person shall not be allowed to file GSTR-1.

Question 18: Explain Purpose of Filing of Returns

Answer: In any tax law, “filing of returns” constitutes the most important compliance procedure which
enables the Government/ tax administrator to estimate the tax collection for a particular period and
determine the correctness of the tax compliance of the taxpayers.
The returns serve the following purposes:
a) Mode for transfer of information to tax administration;
b) Compliance verification program of tax administration;
c) Finalization of the tax liabilities of the taxpayer within stipulated period of limitation;
d) Providing necessary inputs for taking policy decision;
e) Management of audit and anti-evasion programs of tax administration
The taxpayer is generally required to furnish the return in a specific statutory format. These formats are,
therefore, designed to take care of all the provisions of the law that have a bearing on computation of tax
liability of a taxpayer.
 Returns 92

Question 19: Explain filing of return by the non resident taxable person
Answer: Every non resident taxable person shall be required to file monthly return in GSTR 5 within 13
days after expiry of relevant month. But it should be filed within 7 days after the last day of period of
registration specified u/s 27. (NRTP is not required to file GSTR 1 or GSTR 3B or Annual return)
Section 39(5)/Rule 63

Question 20: Explain filing of return by persons providing online information and database access or
retrieval services (not covered in syllabus)
Answer: Form and manner of submission of return by persons providing online information and
database access or retrieval services
Every registered person providing online information and database access or retrieval services from a place
outside India to an unregistered person in India shall file return in FORM GSTR-5A on or before the 20
days of the month succeeding the calendar month or part thereof. Section 39 / Rule 64 (such person are not
required to file GSTR 1 or GSTR 3B or Annual return)

Question 21: Explain filing of return by the input service distributor (Not covered in syllabus)
Answer: Every input service distributor shall submit a monthly return in form no. GSTR 6 within 13 days
after the end of relevant month (they are not required to file GSTR 1 or GSTR 3B or Annual return)
Section 39(4) / Rule 65

Question 22: Explain filing of return by the person required to deduct tax at source u/s 51 (Not
covered in syllabus)
Answer:
Such person shall file monthly return in GSTR 7 within 10 days from the end of relevant month. (they are
not required to file GSTR 1 or GSTR 3B or Annual return)
Section 39(3)/Rule 66

Question 23: Explain filing of return by the Electronic Commerce operator required to collect tax u/s
52 (Not covered in syllabus)
Answer:
Every electronic commerce operator required to collect tax at source u/s 52 shall furnish a monthly
statement in GSTR 8 within 10 days of the succeeding month (They are not required to file GSTR 1 or
GSTR 3B but Annual return has to be filed in form no. GSTR 9B)
 Returns 93

PRACTICE PROBLEMS
Question 1: Mr. X, a regular taxpayer, did not make any taxable supply during the month of July.
Is he required to file a GSTR-3B?
Answer: A regular taxpayer 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 GSTR-3B is also mandatory.
Therefore, Mr. X is required to file GSTR-3B even if he did not make any taxable supply during the month
of July.
Question 2: Mr. Kalpesh is a registered dealer in Kerala paying tax under composition levy from 1st April.
However, he opts to pay tax under regular scheme from 1st December.
Is he liable to file GSTR-4 upto the month of November? Discuss.
Answer: Where a taxpayer opts to withdraw from the composition scheme, he has to file GSTR-4 for the
period prior to his opting for payment of tax under regular scheme. Therefore, in the given case, Mr.
Kalpesh is liable to file GSTR-4 upto the month of October since he was paying tax under composition
scheme during the month of October.
Question 3: Mrs. Zarina, a registered dealer in Rajasthan, did not file GSTR-3B for the month of June but
she wants to file GSTR-3B for the month of July.
Is it possible? Answer with reference to section 39 of the CGST Act.
Answer: As per section 39(10), a registered person is not allowed to furnish a return for a tax period if the
return for any of the previous tax periods has not been furnished by him
Therefore, in the given case, Mrs. Zarina cannot file GSTR-3B for July if she has not filed GSTR-3B for the
preceding month, i.e., June.
Question 4: X has not made any outward supply during the month of September. However, X has procured
certain input services during the month. X is of the opinion that he can file Nil GSTR-3B for the month of
September through SMS.
Whether the understanding of X is correct? Explain.
Answer: Nil GSTR-3B means that the return has nil or no entry in all its Tables. Since in the present case
X has received certain input services, he cannot file Nil GSTR- 3B through SMS as the said input services
will need to be disclosed in the Table for Eligible ITC in GSTR-3B.
Question 5: Quicktax, a GST return filing service provider, has asked its clients to provide the scanned
copies of the tax invoices issued to B2B customers for uploading on the GST portal and filing the return.
Whether the process followed by Quicktax is correct?
Answer: No, the process followed by Quicktax is not correct.
The registered persons supplying goods or services to B2B customers are required to upload the invoice
wise details of supplies made during the tax period. However, there is no requirement to upload the scanned
copies of the invoices issued to the customers on the GST portal at the time of filing returns. Only
information required as per GST returns is to be captured in the return filing utility and the same is to be
uploaded on the GST portal and not the scanned copies of the actual invoices.
Question 6: X Ltd. is winding up its business in Rajasthan. The Tax Consultant of X Ltd. Has suggested
that X Ltd. will have to file either the annual return or the final return at the time of voluntary cancellation
of registration in the state of Rajasthan. Do you agree with the stand taken by Tax Consultant of X Ltd.?
Offer your comments.
Answer: No, the stand taken by Tax Consultant of X Ltd. is not correct.
Annual return is required to be filed by every registered person paying tax as a normal taxpayer. Final return
is filed by the registered persons who have applied for cancellation of registration within three months of the
date of cancellation or the date of cancellation order.
In the given case, X Ltd., a registered person, is winding up its business and has thus, applied for
cancellation of registration. Therefore, it is required to file both annual return and final return.
 Returns 94

MULTIPLE CHOICE QUESTIONS

1. Who is required to furnish details of outward supplies in Form GSTR-1?
(a) Person paying tax under composition scheme
(b) Non-resident taxable person
(c) Both (a) & (b)
(d) None of the above
2. What does N stand for in HSN?
(a) Network
(b) Nationalization
(c) Nomenclature
(d) Nomination
3. Which form is furnished for submission of details of outward supplies u/s 37?
(a) GSTR-1
(b) GSTR-2
(c) GSTR-3
(d) GSTR-5
4. Composition tax payer is required to file annual return in Form no. ______.
(a) GSTR-2
(b) GSTR-3
(c) GSTR-4
(d) GSTR-5
5. Which of the following are not required to file the Annual Return?
(a) Input Service Distributor
(b) Casual Taxable Person
(c) Non-resident Taxpayer
(d) All of the above
6. The maximum amount of late fee payable by any registered person on failure to furnish return
under section 39 by the due date is ₹ ____.
(a) 1,000
(b) 5,000
(c) 10,000
(d) 25,000
7. The due date of filing Final Return is ______.?
(a) 20th of the next month
(b) 18th of the month succeeding the quarter
(c) Within three months of the date of cancellation or date of order of cancellation, whichever is later
(d) 31st December of next financial year
8. What is the due date for submission of monthly GSTR-3B for the persons who are required to file
the return on monthly basis?
(a) on or before 10th day of the immediately succeeding month
(b) on or before 15th day of the immediately succeeding month
(c) on or before 17th day of the immediately succeeding month
(d) on or before 20th day of the immediately succeeding month
9. What is the due date for submission of Quarterly CMP-08?
(a) on or before 10th day of the immediately succeeding quarter
(b) on or before 15th day of the immediately succeeding quarter
(c) on or before 18th day of the immediately succeeding quarter
(d) on or before 20th day of the immediately succeeding quarter
10. Which of the following person are not required to file the GSTR-1?
(a) Input Service Distributor
(b) Person paying tax under composition scheme
(c) Non-resident Taxpayer
 Returns 95

(d) All of the above

11. Contents of GSTR-1 are
(a) GSTIN
(b) Legal Name and Trade Name
(c) Aggregate turnover in previous year
(d) All of the above
(e) None of the above
12. If turnover of person in preceding year is upto ₹5 crore then GSTR-1 shall be filed
(a) Monthly
(b) Quarterly
(c) Half-yearly
(d) Yearly
13. If turnover of person in preceding year is more than ₹5 crore then GSTR-1 shall be filed
(a) Monthly
(b) Quarterly
(c) Half-yearly
(d) Yearly
14. Annual return is required to file in Form no. ______.
(a) GSTR-4
(b) GSTR-1
(c) GSTR-6
(d) GSTR-9

Answer:
1. (d); 2. (c); 3. (a); 4. (c); 5. (d); 6. (b); 7. (c); 8. (d); 9. (c); 10. (d ); 11. (d); 12. (b); 13. (a); 14. (d)
 Returns 96

EXAMINATION QUESTION
JULY 2021
Question.8.(a) (5 Marks)
Explain who is required to furnish final return, time limit for filling of final return and late fee for delay in
filing final return.
Answer:
Every registered person who is required to furnish a return and whose registration has been surrendered or
cancelled is required to file a final return.
The final return has to be filed within 3 months of the:
(i) date of cancellation
or
(ii) date of order of cancellation whichever is later.
Quantum of late fee for not filing the final return is as follows:
(iii)₹ 100 for every day during which such failure continues
or
(iv) ₹ 5,000
whichever is lower.
An equal amount of late fee is payable under the respective SGST/UTGST Act as well.

NOV 2020
Question 7 (c). (3 Marks)
“In form GSTR-l, submission of Invoice-wise details of outward supplies is mandatory for all kind of
invoices issued during the tax period." Comment on the validity of the above statement with reference to
GST laws.
Answer: The above statement is wrong with reference to Rule 59 of the CGST Rules 2017
Rule 59 of the CGST Rules, 2017, inter alia, stipulates that the details of outward supplies of goods and/or
services furnished in form GSTR-1 shall include the–
(a) invoice wise details of all –
(i) inter-State and intra-State supplies made to the registered persons; and
(ii) inter-State supplies with invoice value more than two and a half lakh rupees made to the
unregistered persons;
(b) consolidated details of all –
(i) intra-State supplies made to unregistered persons for each rate of tax; and
(ii) State wise inter-State supplies with invoice value upto two and a half lakh rupees made to
unregistered persons for each rate of tax;
As per above assessee have to furnish both the details i.e. invoice wise and consolidated details in the
GSTR-1.

NOV 2019
Question.8. (b) (5 Marks)
Discuss the provisions of Section 39(9) of the CGST Act, 2017, relating to rectification of errors/ omissions
in GST returns already field and also state its exceptions. State the time limit for making such rectification.
Answer: Refer answer given in the book
 Returns 97

NOV 2019
Question.8. (c) (i) (2 Marks)
Explain the consequence, if the taxable person under GST law files the GST return under Section 39(1) of
the CGST Act, 2017, but does not make payment of self-assessment tax.
Answer: As per Rule 61 Every registered person required to furnish return, shall, subject to the provisions
of section 49, discharge his liability towards tax, interest, penalty, fees or any other amount payable under
the Act or the provisions of this Chapter by debiting the electronic cash ledger or electronic credit ledger and
include the details in the return in FORM GSTR-3B, i.e. all payments must be done before filing GSTR 3B.
Further 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; i.e. the return shall be considered to be invalid if tax has not
been paid.
NOV 2019
Question.9. (b) (5 Marks)
Discuss about the late fee levied for delay in filing:
(i) Final Return
(ii) Annual Return
Answer: Refer answer given in the book

MAY 2019
Question 9 (b) (1+2+1 Marks)
Please answer with reference to Section 37 of the CGST Act, 2017 and rule-59 of CGST Rules, 2017:
Mr. Kolly is registered supplier in the State of Gujarat. He is filing GSTR 1 every month. During the
month of February, 2023 he was out of India and so did not do any transaction during the month. He
believes that as there is no transaction there is no need to file GSTR 1 for the month of February, 2023. Is
he correct?
Answer:
Not Correct: GSTR-1 needs to be filed even if there is no business transaction (Nil Return) in the tax
period hence intention of Mr. Kolly is not correct and he is liable to file GSTR-1.

NOV 2018
Question 11 (c) (2 Marks)
A taxpayer can file GSTR-1 under CGST Act, 2017, only after the end of the current tax period. State
exceptions to this.
Answer: A taxpayer can file GSTR-1 only after the end of the current tax period however, following are the
exceptions to this rule:
(i) Casual taxpayers, after the closure of business.
(ii) Cancellation of GSTIN of a normal taxpayer.
A taxpayer who has applied for cancellation of registration will be allowed to file GSTR-1 after confirming
receipt of the application.

NOV 2018
Question 12 (5 Marks)
(a) What kinds of invoice details of outward supplies are required to be furnished in GSTR-1 for outward
supplies?
Answer: Refer answer given in the book
 Returns 98

MAY 2018
Question 12 (5 Marks)
(c) Who is required to furnish Final Return under CGST Act, 2017 and what is the time limit for the same?
Discuss.
Answer: Refer answer given in the book

MAY 2018
Question 12 (c) Marks 5
Explain the provision relating to filing of Annual Return under section 44 of CGST Act, 2017 and Rules
there under.
Answer: Refer answer given in the book

IPC NOV 2017 (MODIFIED)

Question 6 (Marks 3)
Bring out the salient points in respect of fee leviable on late filing of GST returns and also determine the late
fee payable by PQR Ltd., where the filing of GST return has been delayed by 45 days.
Answer: Refer answer given in the book
 Payment of GST 99

PAYMENT OF GST
SECTION 49, 49A, 49B, 50
RULE 85, 86, 86A, 86B, 87, 88A, 88B
Question 1: Explain rules for utilization of Input Tax Credit Section 49(5).
Answer:
Utilisation of Input Tax Credit Section 49(5)
ITC shall be adjusted against output tax in the manner given below:
(i) First of all ITC of IGST shall be adjusted against output IGST and after that against output CGST or
output SGST/UTGST as per the option of the assessee.
(ii) After ITC of IGST is exhausted, only after that ITC of CGST or SGST/ UTGST shall be used.
(iii) Adjust ITC of CGST against output CGST and surplus if any against output IGST ( it can never be
adjusted against output SGST)
(iv) Adjust ITC of SGST against output SGST and surplus if any against output IGST ( it can never be
adjusted against output CGST)
(v) If there is output IGST and also ITC of CGST and SGST/UTGST, ITC of CGST shall be used first and
only after that ITC of SGST/UTGST shall be used.

Question 2: Explain the order of adjustment of tax dues and other dues Section 49(8).
Answer:
As per section 49(8), every taxable person shall discharge his tax and other dues in the following order-
(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;

(i) "tax dues" means the tax payable and does not include interest, fee and penalty; and
(ii) "other dues" means interest, penalty, fee or any other amount payable.

Examination May – 2023 (5 Marks)

Question 7(a)
Mr. Manik provides the following information regarding his tax & other liabilities under GST Act as per
Electronic Liability Register:
1. Tax due for the month of May 25,000
2. Interest due for the month of May 2,000
3. Penalty due for the month of May 3,000
4. Tax due for the month of June 35,000
5. Liability arising out of demand notice U/s 73 48,000
Mr. Manik wants to clear his liability of demand notice U/s 73 first.
Discuss the provisions of order of discharge of GST liability U/s 49(8) of CGST Act & advice to Mr. Manik.
Answer:
The order of discharge of GST liability under section 49(8) of the CGST Act is as under:
(i) self-assessed tax, interest, penalty, fee or any other amount related to returns of the previous tax periods.
(ii) self-assessed tax, interest, penalty, fee or any other amount related to returns of the current tax period.
(iii) any other amount payable including demand determined under section 73 or section 74,
In view of the above provisions, Mr. Manik cannot clear his liability of demand notice u/s 73 first.
 Payment of GST 100

The order of discharge of liability of Mr. Manik will be as under:

1. Tax, interest and penalty for the month of May, ₹ 30,000
2. Tax due for the month of June, ₹ 35,000
3. Liability arising out of demand notice u/s 73, ₹ 48,000
Question 3: Explain transfer of tax or other dues from one account to the other Section 49(10).
Answer:
As per section 49(10), 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 this Act, to the electronic cash
ledger for,-
(a) integrated tax, central tax, State tax, Union territory tax or cess; or
(b) integrated tax or central tax of a deemed distinct person under section 25(4) / 25(5).
Provided that no such transfer under clause (b) shall be allowed if the said registered person has any unpaid
liability in his electronic liability register.
In order to transfer the amount, the registered person shall be required to fill Form GST PMT-09.

Question 4: Explain Payment of Interest on delayed payment of tax

Answer: Interest on delayed payment of tax Section 50/ Rule 88B
(1) Every person who is liable to pay tax but fails to pay the tax within the period prescribed, shall for the
period for which the tax remains unpaid, pay, on his own, interest at rate of 18%.
Provided 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, shall
be levied on that portion of the tax that is paid by debiting the electronic cash ledger.
(2) The interest shall be calculated, from the day succeeding the day on which such tax was due to be paid.
(3) Where the input tax credit has been wrongly availed and utilised, the registered person shall pay interest
on such input tax credit wrongly availed and utilised, at 18% pa (as per notification no. Central Tax
13/2017 dated 28.06.2017)
The interest shall be calculated on the amount of input tax credit wrongly availed and utilised, for the period
starting from the date of utilisation of such wrongly availed input tax credit till the date of reversal of such
credit or payment of tax in respect of such amount.
(i) input tax credit wrongly availed shall be construed to have been utilised, when the balance in the
electronic credit ledger falls below the amount of input tax credit wrongly availed, and the extent of such
utilisation of input tax credit shall be the amount by which the balance in the electronic credit ledger falls
below the amount of input tax credit wrongly availed.
(ii) the date of utilisation of such input tax credit shall be taken to be, —
(a) the date, on which the return is due to be furnished under section 39 or the actual date of filing of
the said return, whichever is earlier.
(b) the date of debit in the electronic credit ledger when the balance in the electronic credit ledger
falls below the amount of input tax credit wrongly availed, in all other cases.

Question 5: Explain Electronic Liability Ledger

Answer: Electronic Liability Ledger Rule 85
For every registered person electronic liability register shall be maintained on the common portal and
liability to pay GST shall be debited to this ledger on the basis of GSTR-1 filed by him. Such liability can be
paid either through electronic credit ledger or through electronic cash ledger.
The amount payable on reverse charge basis, or the amount payable under section 10, any amount payable
towards interest, penalty, fee or any other amount under the Act shall be paid by debiting the electronic cash
ledger.
Example: ABC limited has balance of ₹ 10,00,000 in credit ledger and company has to pay interest/penalty
₹50,000, in this case it cannot be adjusted from credit ledger rather it has to be paid in cash.
Example: ABC Limited has taken services from XYZ limited ₹ 10,00,000 + GST ₹ 1,00,000 but tax is
payable under reverse charge and ABC limited has balance in credit ledger ₹10,00,000 in this case, ABC
limited has to pay ₹1,00,000 in cash (and it cannot be adjusted from balance in credit ledger because it is
 Payment of GST 101

input tax) and ABC limited shall be allowed ITC of ₹1,00,000 and balance in credit ledger shall be
₹11,00,000. ITC can be adjusted in payment of Output tax not Input Tax.

Question 6: Explain Electronic credit ledger.

Answer: Electronic Credit Ledger Rule 86.
Electronic credit ledger shall be maintained for every registered person on the common portal. Input tax
credit available to him on the basis of GSTR-2B shall be credited to this ledger. The registered person can
utilised such credit as per provisions of section 49(5) but it can not be used for payment of other dues or for
payment of any tax under reverse charge. The balance available in this ledger can be carried forward for
unlimited period but its refund is not allowed except in two cases:
(i) Zero rated supply
(ii) Inverted Rate structure i.e. Tax on inputs is higher than the tax on outputs

Question 7: Who can impose restrictions on utilization of input tax credit (ITC) available in the
electronic credit ledger and under what circumstances, can restrictions be imposed under the CGST
Rules 2017?
Answer: Conditions of use of amount available in electronic credit ledger Rule 86A
The Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant
Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has
been fraudulently availed or is ineligible can impose restrictions on utilization of ITC in the following
cases—
(i) The person availing ITC do not possess tax invoice / debit note or other similar document.
(ii) The person availing ITC has availed ITC without receipt of goods or services.
(iii) The supplier has not paid tax to the Govt.
(iv) Tax invoice has been issued by a person who is non-existent or is not conducting business from the
registered place to business.
(v) The registered person who has availed ITC is non-existent or is not conducting business from the
registered place.
The Commissioner or the Officer authorized by him may withdraw the orders passed by him in case he finds
it to be bonafide.
If no decision is taken within 1 year, the restriction shall cease to have effect.

Examination MAY-2023 (5 Marks)

Question 8(b)
“Rule 86A of the CGST Rules, 2017 provides that in certain specified circumstances, Commissioner on the
basis of reasonable belief may not allow debit of an amount equivalent to such credit in electronic credit
ledger.”
State the grounds (as guided by CBIC) on which the reasons for such belief must be based on.
Answer:
The reasons for such belief must be based on one or more of the following grounds:
(1) The credit is availed by the registered person on the invoices/debit notes issued by a supplier, who is
found to be non-existent or is found not to be conducting any business from the place declared in
registration.
(2) The credit is availed by the registered person on invoices/debit notes, without actually receiving any
goods and/or services.
(3) The credit is availed by the registered person on invoices/debit notes, the tax in respect of which has not
been paid to the Government.
(4) The registered person claiming the credit is found to be non-existent or is found not to be conducting
any business from the place declared in registration.
(5) The credit is availed by the registered person without having any invoice/debit note or any other valid
document for it.
 Payment of GST 102

Question 8: Restrictions on use of amount available in electronic credit ledger.

Answer: Rule 86B A registered supplier can use maximum upto 99% of ITC towards output tax but this
condition is applicable only for those suppliers whose monthly taxable turnover (other than exempt supply
and zero-rated supply) is exceeding ₹50 lakh.
The rule shall not be applicable in the following cases:
(i) Where the said person/proprietor/karta/managing director, partners, whole-time directors etc., have
paid more than ₹ 1 lakh as income tax in each of the last 2 financial years.
(ii) If such person has received a refund of more than ₹ 1 lakh in the preceding FY on account of
unutilised ITC in case of
(i) zero rated supplies made without payment of tax or
(ii) inverted duty structure.
(iii) Where the registered person has discharged his liability towards output tax through the electronic cash
ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively,
upto the said month in the current FY.
(iv) Where the registered person is Government Department, Public Sector Undertaking, Local authority or
Statutory body. Said restriction may be removed by Commissioner/ authorised officer after required
verifications and safeguards.

Question 9: Explain Electronic cash ledger.

Answer: Electronic Cash Ledger Rule 87.
(1) The electronic cash ledger shall be maintained in FORM GST PMT-05.
(2) Any person, shall generate a challan in FORM GST PMT-06 on the common portal and enter the details
of the amount to be deposited by him towards tax, interest, penalty, fees or any other amount. The challan in
FORM GST PMT-06 generated at the common portal shall be valid for a period of fifteen days:
(3) The deposit shall be made through any of the following modes, namely:—
(i) Internet Banking through authorised banks;
(ia) Unified Payment Interface (UPI) from any bank
(ib) Immediate Payment Services (IMPS) from any bank
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
(iv) Over the Counter payment through authorised banks for deposits up to ten thousand rupees per
challan per tax period, by cash, cheque or demand draft:
The term relevant for the challan
(a) 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.
(b) CIN or Challan Identification Number is generated by the banks, once payment in lieu of a generated
Challan is successful. It is a 17-digit number that is 14-digit CPIN plus 3-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.
On receipt of the Challan Identification Number from the collecting bank, the said amount shall be credited
to the electronic cash ledger of the person on whose behalf the deposit has been made and the common
portal shall make available a receipt to this effect.
Where the bank account of the person concerned, or the person making the deposit on his behalf, is debited
but no Challan Identification Number is generated or generated but not communicated to the common portal,
the said person may represent electronically in FORM GST PMT-07 through the common portal to the bank
or electronic gateway through which the deposit was initiated.
 Payment of GST 103

Provided that where the bank fails to communicate details of Challan Identification Number to the Common
Portal, the Electronic Cash Ledger may be updated on the basis of e-Scroll of the Reserve Bank of India in
cases where the details of the said e-Scroll are in conformity with the details in challan generated in FORM
GST PMT-06 on the Common Portal.
(c) Bank Reference Number is the transaction number given by the bank for a payment against a Challan
(d) 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.
Discrepancy in Liability/credit/cash ledger
The registered person should report any discrepancy through the common portal in GST PMT-04.

Question 10: Are principles of unjust enrichment applicable for payment made under GST?
Answer: Yes, as per Section 49 of the CGST Act, 2017 every person who has paid the tax on goods or
services or both under this Act shall, unless the contrary is proved by him, be deemed to have passed on the
full incidence of such tax to the recipient of such goods or services or both. In fact a supplier shall charge
GST from the recipient and if GST charged is in excess, its incidence is on the recipient hence refund shall
be granted to the recipient because otherwise it will be unjust enrichment.
 Payment of GST 104

Form GST PMT –06

[See rule 87(2)]
Challan for deposit of goods and services tax

CPIN <<Auto Generated after submission Date <<Current date>> Challan Expiry Date --
of information>>

GSTIN <<Filled in/Auto Email address <<Auto Populated>>

populated>>
Name <<Auto Populated>> Mobile No. <<Auto Populated>>
(Legal)
Address <<Auto Populated>>

Details of Deposit (All Amount in Rs.)

Government Major Head Minor Head
Tax Interest Penalty Fee Others Total

Central Tax
(----)
Government of
Integrated
India
Tax
(----)
CESS (----)

Sub-Total
State (Name) State Tax (--
--)
UT (Name) UT Tax
(----)
Total Challan Amount
Total Amount in words

Mode of Payment (relevant part will become active when the particular mode is selected)

 E-Payment  Over the Counter (OTC)

(This will include all modes of e-payment such as
CC/DC and net banking. Tax Payer will choose one of Bank (Where cash or instrument is
this) proposed to be deposited)
Details of Instrument
 Cash  Cheque  Demand Draft
 NEFT/RTGS
Remitting bank
Beneficiary name GST
Beneficiary Account Number (CPIN) <CPIN>
Name of beneficiary bank Reserve Bank f India
Beneficiary Bank’s Indian Financial System Code (IFSC) IFSC of RBI
Amount
 Payment of GST 105

Note: Charges to be separately paid by the person making payment.

Particulars of depositor
Name
Designation/ Status (Manager, partner etc.)
Signature
Date
Paid Challan Information
GSTIN
Taxpayer Name
Name of Bank
Amount
Bank Reference No. (BRN)/UTR
CIN
Payment Date
Bank Ack. No. (For Cheque / DD
deposited at Bank’s counter)

Note - UTR stands for Unique Transaction Number for NEFT / RTGS payment
 Payment of GST 106

FORM GST PMT –09

[See rule 87(13)]
Transfer of amount from one account head to another in electronic cash ledger
1. GSTIN
2. (a) Legal <Auto>
name
(b) Trade <Auto>
name, if any
3. ARN
4. Date of ARN

5. Details of the amount to be transferred from one account head to another

(Amount in Rs.)

Amount to be transferred from Amount to be transferred to

Major head Minor Amount Major Minor Amount
head available Head head transferred
1 2 3 4 5 6
<Central tax, Tax <Central Tax
State/ UT Interest tax, Interest
tax, Penalty State / Penalty
Integrated Fee UT tax Fee
tax, Cess> Others Integrated Others
Total tax, Cess> Total

6. Verification
I hereby solemnly affirm and declare that the information given herein above is true and correct to the best
of my knowledge and belief and nothing has been concealed
therefrom.

Place Signature
Name of Authorised Signatory

Date Designation /Status

Instructions -
1. Major head refers to - Integrated tax, Central tax, State/UT tax and Cess.
2. Minor head refers to – tax, interest, penalty, fee and others.
3. The form may be filled up if amount from one major / minor head is intended to be transferred to
another major/minor head. Minor head for transfer of amount may be same or different.
4. The amount from one minor head can also be transferred to another minor head under the same
major head.
5. Amount can be transferred from the head only if balance under that head is available at the time of
transfer.
 Payment of GST 107

PRACTICE PROBLEM
Q1. Can one use input tax credit for payment of interest, penalty, and payment under reverse charge?
Answer: No, as per Section 49 of the CGST Act, 2017 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" in relation to a taxable person, means the tax chargeable under this Act on taxable supply of
goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge
basis;
Therefore, input tax credit cannot be used for payment of interest, penalty, and payment under reverse
charge.
Q2. State the name of output tax under GST, where any of the input tax credit under GST can be adjusted?
Answer: IGST. IGST, CGST, SGST, UTGST i.e. all input tax credit can be adjusted against output tax
liability known as IGST.
Q3. ABC limited filed the return for GST under section 39 for the month of November on 20th, December
showing self assessed tax of ₹2,50,000 which was not paid. Explain what are the implications for ABC
limited as per relevant provisions?
Answer: As per section 2(117) of CGST Act, “valid return” means a return furnished under section 39 on
which self-assessed tax has been paid in full. Hence, in such a case, the return is not considered as a valid
return and also input tax credit will not be allowed to the recipient of supplies.
Q4. Examine the authority vested under CGST Act, 2017 for preventing a registered person from utilising
the input tax credit availed in a fraudulent manner?
Answer: Every registered person, shall avail the input tax credit through a return filed under Section 39 of
CGST Act, 2017. Input Tax credit availed shall be credited to electronic credit ledger under section 41 of the
CGST Act, 2017 on a provisional basis. As per provisions contained in Rule 86A, In case the Commissioner
or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, has reasons
to believe that ITC available in the electronic credit ledger has been fraudulently availed or is ineligible, he
may prohibit use of ITC for discharge of any liability under section 49 or for claim of any refund of any
unutilised amount.
Q5. Mr. A has deposited a sum of ₹ 30,000 under minor head of “Interest” column for the major head
“IGST”. At the time of filing GSTR-3B for a particular tax period, he noticed that there is no sufficient
amount under the minor head ‘Tax’ towards payment of ₹ 30,000. When approached with the Jurisdictional
Tax officer, Mr. A was guided to deposit the tax amount under proper head of account and claim a refund
for the remittance of amount deposited under head ”interest”. Examine the relevant provisions of CGST Act,
2017 towards payment of tax and compliance with the law.
Answer: Provisions of Section 49(10) of CGST Act, 2017 permit a registered person for transferring the
amount deposited under any of the minor head i.e. tax, interest, penalty, fees or others to any of the heads
under IGST/CGST/SGST/UTGST and make the payment of taxes there upon. Accordingly, Mr. A need not
deposit the tax amount under head “ tax” and claim a refund for the remittance of amount deposited under
head ”interest. Rather, using the Form GST PMT09, such amount can be transferred suomoto on the
common portal from “interest” to “tax” head and tax liability be paid
Q6. M/s PPC Ltd., has availed Input Tax credit for ₹ 54,000/- IGST during February 2023 on a particular
purchase. Accounting records for the above purchase, indicate that IGST paid to the supplier is ₹ 45,000/- as
per the bill received. GSTR1 uploaded by the supplier for the above supply indicates ₹ 45,000/- as tax paid.
Examine as per GST provisions, what value shall be updated in the ledgers maintained on behalf of M/s PPC
Ltd., on the common portal
Answer: M/s PPC Ltd., have accounted and paid ₹ 45,000/- as IGST to the supplier concerned. However,
availment of input tax credit has been made for ₹ 54,000/-.
As per Section 49(2) of CGST Act, 2017 ”The input tax credit as self-assessed in the return of a registered
person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in
such manner as may be prescribed.”
 Payment of GST 108

Accordingly, electronic credit ledger of M/s PPC Ltd., shall be updated with a value of ₹ 54,000/- as per
self- assessed return to be filed for February 2023, though the input tax credit shown by the supplier is only
for ₹ 45,000/-.
Q7. M/s ABC & Co., have defaulted in filing the return under Section 39 of CGST Act, 2017 i.e. GSTR-3B
for the month of March, 2023 within the specified due date . Reason for such delay is attributable to delay in
closure of Books for March 2023, which have been finalised during May 2023. The GST Common portal
prompted for payment of late fees payable under Section 47 of CGST Act, 2017 for a sum of ₹ 2,000 under
CGST and SGST each. Accountant, of M/s ABC & Co., sought your confirmation for payment of such late
fees through the balance available in Electronic Credit Ledger for the late fees. Give your guidance in this
regard
Answer: Section 49(3) of the CGST Act, 2017 provides that the amount available in the electronic cash
ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable
under the provisions of this Act or the rules made there under in prescribed manner.
Further, section 49(4) provides that the amount available in the electronic credit ledger may be used for
making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act
in prescribed manner.
Accordingly, as per the combined reading of the above provisions, late fees shall be paid only through
electronic cash ledger and not possible through electronic credit ledger. Thus, contention of the accountant
of M/s ABC & Co., is not correct and the above amount shown on the common portal has to be deposited in
Electronic Cash Ledger under appropriate minor head, through any of the specified modes.
Q8. How many types of electronic ledger/register are there?
Answer:
(a) Electronic cash ledger
(b) Electronic credit ledger
(c) Electronic liability register
Q9. What are the main features of GST payment process?
Answer: The main features of GST payment process are as follows:-
(a) Electronically generated challan from GSTN common portal in all modes of payment and no use of
manually prepared challan;
(b) Facilitation for the tax payer by providing hassle free, anytime, anywhere mode of payment of tax;
(c) Convenience of making payment online;
(d) Realtime data for tax collection in electronic format;
(e) Faster remittance of tax revenue to the Government Account;
(f) Paperless transactions;
(g) Speedy Accounting and reporting;
(h) Electronic reconciliation of all receipts;
(i) Simplified procedure for banks;
(j) Warehousing of Digital Challan.
 Payment of GST 109

MULTIPLE CHOICE QUESTIONS

1. Which of these electronic ledgers are maintained online?
(a) Electronic liability register (b) Electronic credit ledger
(c) Electronic cash ledger (d) All of the above
2. Deposits towards tax, penalty, interest, fee or any other amount are credited into the--------------------
-- of a taxable person.
(a) Electronic liability register (b) Electronic credit ledger
(c) Electronic cash ledger (d) All of the above
3. Input tax credit as self-assessed in the return of the registered person shall be credited to which of
the following ledger?
(a) Electronic liability register (b) Electronic credit ledger
(c) Electronic cash ledger (d) All of the above
4. Which of the following items are debited to electronic credit ledger?
(a) Output tax (b) Interest
(c) Penalty (d) All of the above
5. Balance in electronic credit ledger under SGST can be used against which liability?
(a) SGST Liability only (b) SGST and IGST liability
(c) SGST, IGST and CGST liability (d) None of the above
6. Which input tax credit cannot be claimed against which output tax liability?
(a) IGST, SGST (b) CGST, IGST
(c) SGST, IGST (d) CGST, SGST
7. Interest is payable on:-
(a) Belated payment of tax (b) Undue/excess claim of input tax credit
(c) Undue/ excess reduction in output tax liability (d) All of the above
8. Which of the following liability cannot be adjusted against input tax credit of CGST?
(a) IGST (b) SGST/UTGST
(c) All of the above (d) None of the above
9. Which of the following shall be discharged first, while discharging liability of a taxable person?
(a) All dues related to previous tax period (b) All dues related to current tax period
(c) Demand raised under section 73 and 74 (d) No such condition is mandatory
10. Interest is calculated:-
(a) From the day following the day on which tax becomes due to be paid
(b) From the last day such tax was due to be paid
(c) No period is specified
(d) None of the above
11. Which of the following statement is true:
Which date is considered as date of deposit of the tax dues
(a) Date of presentation of cheque or
(b) Date of payment or
(c) Date of credit of amount in the account of Government
12. Balance in electronic credit ledger can be utilized against which liability?
(a) Output tax payable (b) Interest
(c) Penalty (d) All of them
13. What is the due date for payment of tax in case of persons required to file GSTR 3B on monthly
basis?
(a) Last day of the month to which payment relates (b) Within 10 days of the subsequent month
(c) Within 20 days of the subsequent month (d) Within 15 days of the subsequent month
14. CPIN Stands for
(a) Common portal identification number (b) Common portal identity number
(c) Challan portal identification number (d) Challan passbook identification number
15. CIN Stands for
 Payment of GST 110

(a) Common identification number (b) Common identity number

(c) Challan identification number (d) Challan identity number
16. Validity of challan generated online is
(a) 1 day (b) 10 days (c) 15 days (d) 30 days
17. CPIN is a _________ digit unique number
(a) 10 (b) 14 (c) 17 (d) 30
18. CIN is a _________ digit unique number
(a) 10 (b) 14 (c) 17 (d) 30
19. Interest is payable @ _____ % in case of person liable to pay tax fails to pay tax.
(a) 12 (b) 18 (c) 24 (d) 30
20. Interest is payable @ _____ % in case of taxable person who makes an undue or excess claim of
input tax credit.
(a) 12 (b) 18 (c) 24 (d) 30
21. E-FPB Stands for
(a) Electronic Focal Point Branch (b) Electronic Focus Point Branch
(c) Electrical Focal Point Branch (d) Electronic Fund Point Branch

Answer:
1. (d); 2. (c); 3. (b); 4. (a); 5. (b); 6. (d); 7. (d); 8. (b); 9. (a); 10. (a); 11. (c); 12. (a); 13. (c) ; 14. (a); 15. (c);
16. (c); 17. (b); 18. (c); 19. (b); 20. (c); 21. (a)
 Payment of GST 111

EXAMINATION QUESTION
NOV 2020
Question 8 (a). (5 Marks)
Who can impose restrictions on utilization of input tax credit (ITC) available in the electronic credit ledger
and under what circumstances, can restrictions be imposed under the CGST Rules 2017?
Answer: Refer answer given in the chapter

NOV 2020
Question 8 (b). 5 Marks
Explain the order of discharge of tax and other dues as per provisions of Section 49 (8) of the CGST Act,
2017.
Answer: Every taxable person shall discharge his tax and other dues under this Act 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 including the demand determined under section 73 or
section 74.

NOV 2019
Question.8. (c) (ii) (3 Marks)
State the items which are to be debited to electronic liability register of the taxable person under the CGST
Act, 2017 and rules thereunder.
Answer: Refer answer given in the book

NOV 2019
Question.9. (b) (4 Marks)
Mr. Alok, a registered supplier of taxable goods, files GSTR 3B for the month of January 2023 on 15th
April, 2023. The prescribed due date to file the said GSTR 3B was 20th February, 2023. The amount of net
GST payable on supplies made by him for the said month worked out to ₹ 36,500 which was paid on the
same date of filing the return.
Briefly explain the related provision and compute the amount of interest payable under the CGST Act, 2017
by Mr. Alok.
Answer: Interest on delayed payment of tax Section 50.
Every person who is liable to pay tax fails to pay the tax or any part thereof to the Government within the
period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own,
interest @ 18% per annum for the period of delay.
In the given case, it is a case of delay in payment of GST hence 18% per annum shall be chargeable.
For January 2023 return filing due date is 20th February, 2023
Tax paid on 15th April 2023
Period of default - 20th February to 15th April 2023 = Feb-8, March-31, April-15 = 54 days
Interest = ₹36,500 x 54/365 x 18% = ₹972
 Payment of GST 112

MAY 2019
Question 7 (b) (2 Marks)
M/s. Daksha Enterprises has made a cash deposit of ₹ 10,000 under minor head ‘tax’ of major head ‘SGST’.
It has a liability of ₹ 2,000 for minor head “Interest” under the major head “SGST”.
State whether M/s. Daksha Enterprises can utilize the amount available for payment of interest.
Answer:
As per Section 49 (10)/Rule 87 (13) 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, to the electronic
cash ledger for any other major head or minor head by submitting form PMT-09.
As per the above provision M/s Daksha Enterprises can transfer fund from minor head tax to Interest by
filing PMT-09 and after transfer of such fund Daksha Enterprises can utilize the amount for payment of
Interest.
MAY 2019
Question 10 (b) (5 Marks)
What are the E-ledgers? State the entries to be debited to electronic liability register under the CGST Act,
2017 and the CGST Rules, 2017.
Answer: Refer answer given in the book

NOV 2018
Question 11 (a) (3 Marks)
(ii) Electronic cash ledger balance of ₹5,000 under the major head of IGST can be utilized for discharging
the liability of major head of CGST.
Answer:
True: As per Section 49 (10)/Rule 87 (13) 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, to the
electronic cash ledger for any major or minor head by submitting form PMT-09.
As per the above provision, a registered person can transfer fund from major head (IGST) to other Major
head (CGST) by submitting PMT-09 and after transfer of such fund a registered person can utilize the
amount for payment of CGST.

Question 12 (c) (ii) (3 Marks)

Mr. Jimmy wants to adjust input tax credit for payment of interest, penalty and payment of tax under
reverse charge. Explain whether he can do so.
Answer: Payment of tax, interest, penalty and other amounts. Section 49.
The amount available in the electronic credit ledger can be used only for making payment of tax i.e. IGST,
CGST or SGST/UTGST but it cannot be used for making payment of other dues like interest or penalty or
fine etc. but amount in the cash ledger can be used for tax or even for other dues like interest/penalty etc.
Example: ABC limited has balance of ₹ 10,00,000 in credit ledger and company has to pay interest/penalty
₹50,000, in this case it cannot be adjusted from credit ledger rather it has to be paid in cash.

If tax is payable under reverse charge or it is a payment under composition scheme, it can also be paid only
from cash ledger and not from credit ledger.

Example: ABC Limited has taken services from XYZ limited ₹ 10,00,000 + GST ₹ 1,00,000 but tax is
payable under reverse charge and ABC limited has balance in credit ledger ₹10,00,000 in this case, ABC
limited has to pay ₹1,00,000 in cash (and it cannot be adjusted from balance in credit ledger because it is
input tax) and ABC limited shall be allowed ITC of ₹1,00,000 and balance in credit ledger shall be
₹11,00,000. ITC can be adjusted in payment of Output tax not Input Tax.
 Payment of GST 113

MAY 2018
Question 12 (5 Marks)
(a) Discuss the following in terms of provisions of CGST Act, 2017:
When interest shall be payable by a registered person and what is the maximum rate of interest chargeable
for the same?
Answer: Refer answer given in the book
MAY 2018
Question 10 (b) (5 Marks)
Answer the following with reference to GST Laws:
(i) What is CIN?
Answer: Refer answer given in the book

MAY 2018
Question 10 (b) (5 Marks)
(ii) When interest is payable?
Answer: Refer answer given in the book
MAY 2018
Question 10 (b) (5 Marks)
(iii) How do the new payment system benefit the taxpayer & the Commercial Tax Department?
Answer: These are the benefits of the new system for the taxpayer and the Commercial Tax Department.
1. No more queues and waiting for making payments as payments can be made online 24 x 7.
2. Instant online receipts for payments made online.
3. Tax consultants can make payment on behalf of the clients.
4. Single challan form to be created online, replacing the three or four copy challan.
5. Revenue will come earlier into the Government Treasury as compared to the old system.
6. Greater Transparency.
7. Online Payments made after 8 pm will credited to the taxpayers account on the same day.
 Composition Scheme 114

COMPOSITION SCHEME
SECTION 10
RULE 3 to 7
Question: Explain in brief composition scheme.
Answer: GST requires too much accounting and complicated procedure for availing ITC and making
payment of output tax which may be very difficult for the small tax payers hence composition scheme has
been devised which is a simplified scheme and is an optional scheme and particulars are given under section
10/Rule 3 to 7. There will be two types of composition schemes and are as given below:

Composition scheme where mainly supply is of goods Section 10(1) and 10(2)
As per Section 10, A registered dealer whose aggregate turnover in the preceding year is upto ₹150,00,000
may opt for composition scheme and in that case he will not be allowed to charge any output tax and also no
ITC is allowed rather he himself has to pay tax.
The limit of ₹ 150,00,000 shall be ta
ken as ₹ 75,00,000 in case of following states
1. Manipur
2. Mizoram
3. Nagaland
4. Tripura
5. Arunachal Pradesh
6. Meghalaya
7. Sikkim
8. Uttarakhand
The rate shall be as given under Rule 7 and is as given below:
(i) 0.5% CGST + 0.5% SGST of Turnover (Taxable + Exempt) in the State/Turnover in the Union
Territory in case of manufacturer.
(ii) but in case of other suppliers, 0.5% CGST + 0.5% SGST but it will be computed on taxable supplies
(Goods and services) instead of total supplies. (now other supplier have been exempted to pay tax on
exempt supplies)
(iii) If person is engaged in restaurant services rates shall be 2.5% CGST & 2.5% SGST of Turnover in the
State/Turnover in the Union Territory.

However person opting under composition scheme may supply services other than restaurant services of
value not exceeding 10% of turnover in the state or union territory in the preceding financial year or
₹5,00,000 whichever is higher. In other words services upto a value of ₹ 5 lakh can be supplied in any case.

If any such person has provided exempt services of charging of interest on loan or advance, it will not be
included in the turnover computed above.

Example 1: Mr. X has turnover of selling goods ₹100 lakhs and turnover of restaurant services ₹11 lakh and
interest charged on loan given ₹6 lakhs. He has provided computer typing and courier services of 5 lakhs, in
this case his tax liability shall be as given below eligibility can be computed in the manner given below:
GST payable by him shall be
100 lakhs x 0.5% CGST + 0.5% SGST 1,00,000
11 lakhs x 2.5% CGST + 2.5% SGST 55,000
 Composition Scheme 115

5 lakhs x 0.5% CGST + 0.5% SGST 5,000

Turnover excluding exempt services of charging interest on loan or advance ₹116 lakhs
In the subsequent year Mr. X is allowed to supply services of the value of ₹ 11.6 lakh i.e. 10% of 116 lakh
or ₹ 5 lakh, whichever is higher
Example 2: Mr. X has turnover of selling goods ₹45 lakhs and turnover of restaurant services ₹4 lakh and
exempt services of giving loan or advance ₹6 lakhs, in this case he can provide services other than restaurant
services in the subsequent year
Total Turnover ₹49 lakhs
10% of ₹49 lakhs = ₹4.90 lakh or 5 lakh, higher is ₹5 lakhs

Composition scheme where mainly supply is of services Section 10 (2A)

A registered person, not eligible to opt to pay tax under section 10 (1) & 10(2), whose aggregate turnover in
the preceding financial year did not exceed fifty lakh rupees, may opt to pay, tax calculated at 6% (i.e.
3%+3%) of the taxable turnover in State or turnover in Union territory.

Common Conditions
1. He is not making any inter-state supply.
2. He is not engaged in making supply of services through electronic commerce operator who is required
to collect tax at source under section 52. He is allowed to make supply of goods through electronic
commerce operator.
3. He is not engaged in making any supply which are not leviable to tax under this Act i.e. non taxable
supply.
4. He is not a manufacturer of such goods which are notified for this purpose i.e. Ice cream and other edible
ice, fly ash bricks, fly ash aggregates, fly ash blocks, bricks of fossil meals or similar siliceous earths,
building bricks, earthen or roofing tiles or pan masala, aerated water, Tobacco and manufactured tobacco
substitutes (Notification No.14/2019 (CT)).
5. Where more than one registered person are having same permanent account, in that case all such
registered person have to opt /reject composition scheme i.e. individual choice is not available, eg. ABC
limited has three branches in three different states, all the three branches should be either under composition
scheme or in the normal scheme i.e. same scheme will be applicable for all registration with same PAN.
6. The person covered in composition scheme shall get shifted to the normal scheme if the limit of
₹1,50,00,000/₹ 75,00,000/₹ 50,00,000 exceeds at any time in a financial year and he will give an
intimation in CMP-04 within 7 days of exceeding the limit.
7. A person applying for registration may give option for composition scheme in part B of REG-01.
8. Option to pay tax under section 10 shall be effective from the beginning of the next financial year but
such person shall also furnish statement in ITC-03 for reversal of tax credit within a period of 60 days
from the date of commencement of composition scheme.
In case of new registration it will be applicable from the effective date of registration.
9. Such person should be neither casual taxable person nor non - resident taxable person.
10. Such supplier shall mention the words “composition taxable person not eligible to collect tax on
supplies” at the top of the bill of supply. (not allowed to issue tax invoice) and also mention “composition
taxable person” on every notice or signboard displayed at the prominent place at his principal place of
business and at every additional place or places of business.
11. Any person who is in the composition scheme may opt out of the scheme at any time and shall file an
application in CMP-04 and he will get shifted to normal scheme with immediate effect. He shall be required
to submit ITC-01 for availing ITC within 30 days from the date of withdrawal. Such withdrawal shall be
applicable to all the places in all the states/UTs.
 Composition Scheme 116

12. As per rule 62, such person has to file quarterly statement in CMP-08 instead of monthly return and
also taxes is to be paid on quarterly basis within 18 days from the end of the quarter. Further composition
dealer shall file an annual return upto 30th April following the end of the financial year in form GSTR-4.
13. such person can purchase either from same state or from some other state or from some other country but
cannot sell to other state or to other country.
14. such person has to pay tax out of his own even with regard to supplies which are exempt from GST but
in case of traders tax shall be payable only with regard to taxable supplies.
15. If person opting for composition scheme is taking supply of goods or services where reverse charge is
applicable, in that case, composition dealer has to pay tax under reverse charge.
16. For the purposes of computing aggregate turnover of a person for determining his eligibility to pay
tax under this section, the expression "aggregate turnover" shall include the value of supplies made by
such person from the 1st day of April of a financial year upto the date when he becomes liable for
registration under this Act, but shall not include the value of exempt supply of services provided by way
of extending deposits, loans or advances in so far as the consideration is represented by way of interest
or discount.
Example: Mr. X started trading in goods w.e.f. 01/04/2022 in Delhi and turnover of ₹ 40 lakh was
achieved upto 30/06/2022. Turnover from 01/07/2022 to 31/01/2023 was ₹ 110 lakh. He earned interest
on the loan given by him ₹ 5 lakh from 01/09/2022 to 31/12/2022, in this case he has to shift to normal
scheme w.e.f. 01/02/2023 and turnover shall be 40 lakh + 110 lakh i.e. 150 lakh but it will not include
interest of ₹ 5 lakh. His turnover in the state shall be considered to be 110 lakh for the purpose of
charging tax under composition scheme.
17. For the purposes of determining the tax payable by a person under this section, the expression
"turnover in State or turnover in Union territory" shall not include the value of following supplies,
namely:—
(i) supplies from the first day of April of a financial year upto the date when such person becomes
liable for registration under this Act; and
(ii) exempt supply of services provided by way of extending deposits, loans or advances in so far as
the consideration is represented by way of interest or discount.
Example: Mr. X started trading in goods w.e.f. 01/04/2022 in Delhi and turnover of ₹ 30 lakh was achieved
upto 30/06/2022 and he earned interest of ₹ 10 lakh upto 30/06/2022. Turnover from 01/07/2022 to
31/01/2023 was ₹ 110 lakh. His turnover from 01/02/2023 to 15/02/2023 was ₹ 10 lakh. In this case
registration is required on 30/06/2022 because interest will also be considered for the purpose of limit of
registration but he will be shifted to normal scheme after 15/02/2023 because interest shall not be taken into
consideration for the purpose of aggregate turnover for composition scheme. His turnover in the state shall
be considered to be 120 lakh for the purpose of charging tax under composition scheme.
As per section 2(6), "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 Permanent Account
Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess.
As per section 2(47) "exempt supply" means supply of any goods or services or both which
attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act, and includes non-taxable supply.
As per section 2(78) "non-taxable supply" means a supply of goods or services or both which is not
leviable to tax under this Act or under the Integrated Goods and Services Tax Act.
As per section 2(108)"taxable supply" means a supply of goods or services or both which is leviable to tax
under this Act;
As per 2 (112)"turnover in State" or "turnover in Union territory" means the aggregate value of all
taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse
 Composition Scheme 117

charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of
goods or services or both and inter-State supplies of goods or services or both made from the State or Union
territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and
cess.

Examination MAY – 2023 (3 Marks)

Question 8(a)
Who are not eligible to opt for composition scheme for goods under GST Laws?
Answer:
(i) The registered person who is not eligible for composition scheme for goods under GST law are as under:
(i) Supplier engaged in making any supply of goods or services which are not leviable to tax.
(ii) Supplier engaged in making any inter-State outward supplies of goods or services.
(iii) Person supplying any services through an electronic commerce operator who is required to collect tax at
source (under section 52).
(iv) Manufacturer of ice cream, panmasala, tobacco, aerated waters, fly ash bricks; fly ash aggregate, fly ash
blocks, bricks of fossil meals or similar siliceous earths, building bricks, earthen or roofing tiles.
(v) Supplier who is either a casual taxable person or a non-resident taxable person
(vi) Supplier of services exceeding an amount which is higher of 10% of the turnover in a State/U.T. in the
preceding financial year or ₹ 5 lakh.
Illustration 1:
Mr. X started trading in goods in Delhi w.e.f 01.04.2022 and has submitted particulars as given below:
- Sold goods upto 30.06.2022 and charged ₹40,00,000.
- His turnover crossed ₹40 lakhs on 01-07-2022 and he has taken registration and opted for
composition scheme and turnover from 01-07-2022 to 31-01-2023 was ₹1,10,00,000. His turnover
from 01-02-2023 to 31-03-2023 was ₹25,00,000. He has given loan and has earned interest of
₹3,00,000 from 01/10/2022 to 31/12/2022.
- GST rates on the goods is CGST @ 6% and SGST 6%.
Discuss tax treatment and compute his tax liability for the financial year 2022-23.
Solution:
In this case no GST is payable upto 30th June 2022 because he is unregistered. After 31st Jan, 2023 he has to
shift to the normal scheme because turnover has exceeded ₹150 lakhs (₹40,00,000 shall also be added to
determine aggregate turnover but no tax payable on ₹40 lakhs.) After 31st Jan 2023 he has to pay normal tax
(however ITC shall be allowed)

Under Composition scheme

110,00,000
CGST @ .5% 55,000
SGST @ .5% 55,000

Under Normal Scheme

He has to pay normal tax on turnover of ₹25,00,000
25,00,000
CGST @ 6% 1,50,000
SGST @ 6% 1,50,000

Illustration 2: Mr. X purchased goods for ₹ 25,00,000 and paid CGST @10% / SGST @10%. He is a
registered dealer and is covered in normal scheme and sold the product at a profit of ₹ 2,00,000 and charged
CGST @10% and SGST@10%. He has incurred ₹ 40,000 in connection with maintenance of books of
accounts. Show Tax treatment.
 Composition Scheme 118

Solution:
Purchase 25,00,000
Add: CGST@10% 2,50,000
Add: SGST@10% 2,50,000
Total 30,00,000

Input tax allowed

CGST 2,50,000
SGST 2,50,000

Cost 25,00,000
Add: profit 2,00,000
Transaction Value 27,00,000
Add: CGST@10% 2,70,000
Add: SGST@10% 2,70,000
Total 32,40,000

Computation of Net Tax

Output Tax
CGST 2,70,000
Less: ITC CGST (2,50,000)
Net Tax Payable 20,000

SGST 2,70,000
Less: ITC SGST (2,50,000)
Net Tax Payable 20,000
Computation of Net Profit (2,00,000 – 40,000) 1,60,000
(b) Presume he is covered in composition scheme and in that case expenses incurred on maintenance
of books shall not be incurred.
Solution:
Purchase 25,00,000
Add: CGST@10% 2,50,000
Add: SGST@10% 2,50,000
Total 30,00,000
Input tax credit is not allowed.
Cost 30,00,000
Add: profit 2,00,000
Sale Value 32,00,000

He will not be allowed to charge any output tax rather he himself has to pay composition tax in the manner
given below:
CGST@ 0.5% of ₹ 32,00,000 16,000
 Composition Scheme 119

SGST@ 0.5% of ₹ 32,00,000 16,000

Computation of Net Profit (2,00,000 -16,000-16,000) 1,68,000

If he has opted for composition scheme, his profit shall be higher and he will be saved from complicated
accounting and other procedure.

Illustration 3:
Mr. X started rendering services in Delhi w.e.f 01.04.2022 and has submitted particulars as given below:
- Rendered output services on 30.06.2022 and charged ₹ 20,00,000 and has taken input services on
30.06.2022 ₹3,00,000 + CGST @ 9% + SGST @ 9%.
- He rendered services of ₹ 15,00,000 on 30.09.2022 and purchased inputs on 30.09.2022 ₹ 7,00,000
+ CGST @ 6% + SGST @ 6%.
- He rendered services ₹ 15,00,000 on 31.12.2022 and purchased capital goods on 01.10.2022
₹10,00,000 + CGST @ 10% + SGST @ 10%.
- He opted for composition scheme under section 10(2A) from 01.07.2022.
- He is shifted to normal scheme w.e.f 01.01.2023 and by that time he has consumed 50% of inputs.
- He rendered services and issued invoice
10.01.2023 ₹ 4,00,000 + CGST @ 9% + SGST @ 9%
10.02.2023 ₹ 5,00,000 + CGST @ 9% + SGST @ 9%
10.03.2023 ₹ 6,00,000 + CGST @ 9% + SGST @ 9%
- He purchased inputs ₹ 8,00,000 + CGST @ 5% + SGST @ 5% on 01.01.2023.
Discuss Tax Treatment and compute net tax payable/refundable and also mention the due date on which
payment is to be made.
Solution:
No output tax and no ITC from 01.04.2022 to 30.06.2022 because the service provider is unregistered.
For the quarter July to September and October to December 2022, he is in composition scheme, hence no
output and no ITC but tax should be paid out of his own at 3% + 3%.
₹
July to September
15,00,000
CGST @ 3% 45,000
SGST @ 3% 45,000
Payment should be made upto 18.10.2022
October to December
15,00,000
CGST @ 3% 45,000
SGST @ 3% 45,000

Payment should be made upto 18.01.2022

January 2023
The service provider is in normal scheme from 01.01.2023. ITC of inputs/capital goods in stock is allowed.
Input Tax Credit
Inputs 3,50,000
CGST @ 6% 21,000
SGST @ 6% 21,000
Capital goods
Used for one quarter 01.10.2022 to 31.12.2022
 Composition Scheme 120

Capital goods 10,00,000

CGST @ 10% 1,00,000
ITC allowed (1,00,000 – 1,00,000 x 5%) 95,000
SGST @ 10% 1,00,000
ITC allowed (1,00,000 – 1,00,000 x 5%) 95,000
ITC inputs
8,00,000
CGST @ 5% 40,000
SGST @ 5% 40,000

Total Input tax credit

CGST (21,000 + 95,000 + 40,000) 1,56,000
SGST (21,000 + 95,000 + 40,000) 1,56,000

Output Tax
4,00,000
Output CGST @ 9% 36,000
Output SGST @ 9% 36,000

Net Tax
CGST 36,000
Less: ITC (36,000)
Nil
ITC CGST Carried forward 1,20,000

SGST 36,000
Less: ITC (36,000)
Nil
ITC SGST Carried forward 1,20,000

Payment should be made upto 20.02.2023

February 2023
Output Tax
5,00,000
Output CGST @ 9% 45,000
Output SGST @ 9% 45,000
Net Tax
CGST 45,000
Less: ITC (45,000)
Nil
ITC CGST Carried forward 75,000
SGST 45,000
Less: ITC (45,000)
Nil
ITC SGST Carried forward 75,000
Payment should be made upto 20.03.2023
March 2023
 Composition Scheme 121

Output Tax
6,00,000
Output CGST @ 9% 54,000
Output SGST @ 9% 54,000

Net Tax
CGST 54,000
Less: ITC (54,000)
Nil
ITC CGST Carried forward 21,000

SGST 54,000
Less: ITC (54,000)
Nil
ITC SGST Carried forward 21,000
Payment should be made upto 20.04.2023

(b) Presume he has not opted for composition scheme w.e.f 01.07.2022 rather he was in the normal
scheme and charged output CGST @ 9% and SGST @ 9%.
Solution:
No output tax and no ITC from 01.04.2022 to 30.06.2022 because the service provider is unregistered.
₹
July
Nil
August
Nil
September
15,00,000
Output CGST @ 9% 1,35,000
Output SGST @ 9% 1,35,000

Inputs 7,00,000
CGST @ 6% 42,000
SGST @ 6% 42,000

Net Tax
CGST 1,35,000
Less: ITC (42,000)
Tax Payable 93,000

SGST 1,35,000
Less: ITC (42,000)
Tax Payable 93,000

Payment should be made upto 20.10.2022

October
ITC – Capital goods
Capital goods 10,00,000
CGST @ 10% 1,00,000
SGST @ 10% 1,00,000
 Composition Scheme 122

ITC CGST Carried forward 1,00,000

ITC SGST Carried forward 1,00,000
November
ITC CGST Carried forward 1,00,000
ITC SGST Carried forward 1,00,000

December
15,00,000
Output CGST @ 9% 1,35,000
Output SGST @ 9% 1,35,000

Net Tax
CGST 1,35,000
Less: ITC b/f (1,00,000)
Tax Payable 35,000

SGST 1,35,000
Less: ITC b/f (1,00,000)
Tax Payable 35,000

Payment should be made upto 20.01.2023

January 2023
4,00,000
Output CGST @ 9% 36,000
Output SGST @ 9% 36,000

ITC inputs
8,00,000
CGST @ 5% 40,000
SGST @ 5% 40,000

Net Tax
CGST 36,000
Less: ITC (36,000)
Nil
ITC CGST Carried forward 4,000

SGST 36,000
Less: ITC (36,000)
Nil
ITC SGST Carried forward 4,000

February 2023
5,00,000
Output CGST @ 9% 45,000
Output SGST @ 9% 45,000

Net Tax
Output CGST 45,000
Less: ITC b/f (4,000)
Tax Payable 41,000
 Composition Scheme 123

Output SGST 45,000

Less: ITC (4,000)
Tax Payable 41,000

Payment should be made upto 20.03.2023

March 2023
6,00,000
Output CGST @ 9% 54,000
Output SGST @ 9% 54,000

Net Tax
Output CGST 54,000
Less: ITC Nil
Tax Payable 54,000

Output SGST 54,000

Less: ITC Nil
Tax Payable 54,000

Payment should be made upto 20.04.2023

(c) Presume he has taken registration right from the beginning i.e. w.e.f 01.04.2022 and charged
output CGST @ 9% and SGST @ 9%.
Solution:
₹
April
Nil
May
Nil
June
20,00,000
Output CGST @ 9% 1,80,000
Output SGST @ 9% 1,80,000

Input Service 3,00,000

CGST @ 9% 27,000
SGST @ 9% 27,000

Net Tax
CGST 1,80,000
Less: ITC (27,000)
Tax Payable 1,53,000
SGST 1,80,000
Less: ITC (27,000)
Tax Payable 1,53,000

Payment should be made upto 20.07.2022

July
Nil
August
 Composition Scheme 124

Nil
September
15,00,000
Output CGST @ 9% 1,35,000
Output SGST @ 9% 1,35,000

Inputs 7,00,000
CGST @ 6% 42,000
SGST @ 6% 42,000

Net Tax
CGST 1,35,000
Less: ITC (42,000)
Tax Payable 93,000

SGST 1,35,000
Less: ITC (42,000)
Tax Payable 93,000

Payment should be made upto 20.10.2022

October
ITC – Capital goods
Capital goods 10,00,000
CGST @ 10% 1,00,000
SGST @ 10% 1,00,000

ITC CGST Carried forward 1,00,000

ITC SGST Carried forward 1,00,000

November
ITC CGST Carried forward 1,00,000
ITC SGST Carried forward 1,00,000

December
15,00,000
Output CGST @ 9% 1,35,000
Output SGST @ 9% 1,35,000

Net Tax
CGST 1,35,000
Less: ITC b/f (1,00,000)
Tax Payable 35,000

SGST 1,35,000
Less: ITC b/f (1,00,000)
Tax Payable 35,000

Payment should be made upto 20.01.2023

January 2023
4,00,000
Output CGST @ 9% 36,000
Output SGST @ 9% 36,000
 Composition Scheme 125

ITC inputs
8,00,000
CGST @ 5% 40,000
SGST @ 5% 40,000
Net Tax
CGST 36,000
Less: ITC (36,000)
Nil
ITC CGST Carried forward 4,000

SGST 36,000
Less: ITC (36,000)
Nil
ITC SGST Carried forward 4,000

February 2023
5,00,000
Output CGST @ 9% 45,000
Output SGST @ 9% 45,000

Net Tax
Output CGST 45,000
Less: ITC b/f (4,000)
Tax Payable 41,000

Output SGST 45,000

Less: ITC (4,000)
Tax Payable 41,000

Payment should be made upto 20.03.2023

March 2023
6,00,000
Output CGST @ 9% 54,000
Output SGST @ 9% 54,000

Net Tax
Output CGST 54,000
Less: ITC Nil
Tax Payable 54,000

Output SGST 54,000

Less: ITC Nil
Tax Payable 54,000

Payment should be made upto 20.04.2023

Illustration 4: Mr. X is a registered person in GST in Delhi and he is in Composition scheme.

He Purchased goods A ₹20,00,000 + CGST @ 10% + SGST @ 10% on 01/08/2022 and also plant
machinery ₹30,00,000 + CGST @ 12% + SGST @ 12%.
He shifted to the normal scheme on 10/02/2023 and upto 10/02/2023, he has sold half of goods (not P & M).
 Composition Scheme 126

He purchased goods B ₹18,00,000 on 01/03/2023 + CGST@ 10 % + SGST @ 10% and sold goods
₹30,00,000 + CGST @ 10% + SGST @ 10%.
Compute ITC /Output tax and Net Tax.
Solution:
At the time of shifting to the normal scheme he shall be allowed to take ITC of the goods lying in the
stock hence tax credit allowed shall be as given below:
₹
Goods A in stock 10,00,000
Add: CGST @10% 1,00,000
Add: SGST @10% 1,00,000
Total 12,00,000
ITC allowed
CGST 1,00,000
SGST 1,00,000

Plant & Machinery 30,00,000

Add: CGST @12% 3,60,000
Add: SGST @12% 3,60,000
Total 37,20,000
ITC Allowed shall be as given below:
CGST 3,60,000
Asset already used 01/08/2022 to 10/02/2023 = 6 month and 10 days = 3 Quarters
Less: Tax Credit not allowed (3,60,000 x (3 x 5%)) (54,000)
Amount of Tax Credit allowed 3,06,000
SGST 3,60,000
Asset already used 01/08/2022 to 10/02/2023 = 6 month and 10 days = 3 Quarters
Less: Tax Credit not allowed (3,60,000 x (3 x 5%)) (54,000)
Amount of Tax Credit allowed 3,06,000

Purchased goods B 18,00,000

Add: CGST @10% 1,80,000
Add: SGST @10% 1,80,000
Total 21,60,000
Less: ITC allowed
CGST 1,80,000
SGST 1,80,000

Output Tax
Transaction Value 30,00,000
Add: CGST @10% 3,00,000
Add: SGST @10% 3,00,000
Total 36,00,000
Computation of Net Tax Payable
CGST
Output Tax 3,00,000
 Composition Scheme 127

Less: ITC Goods A (1,00,000)

Less: ITC Plant & Machinery (3,06,000)
Less: ITC Goods B (1,80,000)
Excess credit to be carried forward (2,86,000)
SGST
Output Tax 3,00,000
Less: ITC Goods A (1,00,000)
Less: ITC Plant & Machinery (3,06,000)
Less: ITC Goods B (1,80,000)
Excess credit to be carried forward (2,86,000)

Illustration 5: Mr. X is a registered in GST in Delhi and is in Normal scheme.

Purchased goods ₹30,00,000 + CGST @ 10% + SGST @ 10% on 01/10/2021.
Purchased Plant & Machinery ₹32,00,000 + CGST @ 12% + SGST @ 12% on 22/09/2021.
Sold half of the goods for ₹22,00,000 + CGST @ 10% + SGST @ 10% upto 01/04/2022.
He shifted to the composition scheme on 01/04/2022 and remaining goods were sold by him for ₹24,00,000
(no GST has been charged)
Purchased some more goods on 01/05/2022 ₹10,00,000 + CGST@ 10 % + SGST @ 10% and sold goods
up to 31/05/2022 ₹14,00,000.
Compute ITC to be reversed at the time of shifting to composition scheme and also tax payable when he was
in Normal scheme/Composition Scheme.
Solution:
₹
Purchase goods 30,00,000
Add: CGST @10% 3,00,000
Add: SGST @10% 3,00,000
Total 36,00,000
ITC
CGST 3,00,000
SGST 3,00,000
Plant and Machinery
Transaction Value 32,00,000
Add: CGST @12% 3,84,000
Add: SGST @12% 3,84,000
Total 39,68,000
ITC
CGST 3,84,000
SGST 3,84,000
Output Tax
Transaction Value 22,00,000
Add: CGST @10% 2,20,000
Add: SGST @10% 2,20,000
Total 26,40,000
Net tax Payable
 Composition Scheme 128

CGST
Output tax 2,20,000
Less: ITC on Goods (2,20,000)
Net Tax Nil
Excess Credit to be carried forward (3,00,000 + 3,84,000 - 2,20,000) 4,64,000
SGST
Output tax 2,20,000
Less: ITC on Goods (2,20,000)
Net Tax Nil
Excess Credit to be carried forward (3,00,000 + 3,84,000-2,20,000) 4,64,000
Computation of ITC to be reversed when opting for composition scheme
ITC of Goods (50%)
CGST (3,00,000 x 50%) 1,50,000
SGST (3,00,000 x 50%) 1,50,000
ITC on Plant and Machinery shifted on 01/04/2022
Asset used (22/09/2021 to 31/03/2022) = 6 month and 9 days
Remaining life = 60 months – 6 month and 9 days = 53 months and 21 days ignoring no. of days
53 months
CGST (3,84,000/60 x 53) 3,39,200
SGST (3,84,000/60 x 53) 3,39,200

Total ITC to be reversed

CGST (1,50,000 + 3,39,200) 4,89,200
Less: ITC (4,64,000)
Net Payable 25,200
SGST (1,50,000 + 3,39,200) 4,89,200
Less: ITC (4,64,000)
Net Payable 25,200
Output tax under composition scheme
Turnover 38,00,000
CGST @ 0.5% 19,000
SGST @ 0.5% 19,000
Illustration 6: Mr. X is a registered in GST in Delhi and is in Composition scheme.
Purchased goods A ₹30,00,000 + CGST @ 10% + SGST @ 10% on 01/04/2022.
Purchased Plant & Machinery ₹18,00,000 + CGST @ 10% + SGST @ 10% on 01/06/2022.
Sold half of the goods A for ₹22,00,000 on 01/10/2022.
He shifted to the normal scheme on 01/01/2023 and remaining goods were sold by him on 01/03/2023 for
₹22,00,000 + CGST @ 10% + SGST @ 10%
 Composition Scheme 129

Compute ITC/Output tax/ Net tax and also composition tax

Solution:
₹
Purchase goods A 30,00,000
Add: CGST @10% 3,00,000
Add: SGST @10% 3,00,000
Total 36,00,000
ITC allowed
CGST 1,50,000
SGST 1,50,000
Plant and Machinery
Transaction Value 18,00,000
Add: CGST @10% 1,80,000
Add: SGST @10% 1,80,000
Total 21,60,000
ITC allowed after shifting to normal scheme
CGST 1,80,000
Less: Tax credit not allowed for already used from 01/06/2022 to 01/01/2023 (27,000)
(1,80,000 x 3 x 5%)
ITC allowed 1,53,000

SGST 1,80,000
Less: Tax credit not allowed for already used from 01/06/2022 to 01/01/2023 (27,000)
(1,80,000 x 3 x 5%)
ITC allowed 1,53,000
Output Tax
Transaction Value 22,00,000
Add: CGST @10% 2,20,000
Add: SGST @10% 2,20,000
Total 26,40,000
Net tax Payable
CGST
Output tax 2,20,000
Less: ITC on Goods A (1,50,000)
Less: ITC Plant & Machinery (70,000)
Net Tax Nil
Excess Credit to be carried forward (1,50,000 + 1,53,000 - 2,20,000) 83,000
SGST
Output tax 2,20,000
Less: ITC on Goods A (1,50,000)
Less: ITC Plant & Machinery (70,000)
Net Tax Nil
Excess Credit to be carried forward (1,50,000 + 1,53,000 - 2,20,000) 83,000
Output tax under composition scheme
Turnover 22,00,000
 Composition Scheme 130

CGST @ 0.5% 11,000

SGST @ 0.5% 11,000

Illustration 7:
Mr. X started rendering services in Delhi w.e.f 01.04.2022 and has submitted particulars as given below:
- Rendered output services on 30.06.2022 and charged ₹ 20,00,000 and purchased input on 15.06.2022
₹ 3,00,000 + CGST @ 9% + SGST @ 9% and purchased capital goods on 01.06.2022 ₹ 1,00,000 +
CGST @ 10% + SGST @ 10%.
- He rendered services of ₹ 20,00,000 on 30.09.2022 and purchased inputs on 30.09.2022 ₹10,00,000
+ CGST @ 9% + SGST @ 9% and purchased capital goods on 01.09.2022 ₹ 2,00,000 + CGST @
10% + SGST @ 10%. He has taken input service during September 2022 of ₹ 1,00,000 + CGST @
9% + SGST @ 9%.
- He rendered services of ₹ 10,00,000 on 31.12.2022 and purchased inputs on 15.12.2022 ₹1,00,000 +
CGST @ 9% + SGST @ 9% and purchased capital goods on 01.09.2022 ₹ 10,00,000 + CGST @
10% + SGST @ 10%. He has taken input service during December 2022 of ₹ 1,00,000 + CGST @
9% + SGST @ 9%.
- He opted for composition scheme under section 10(2A) from 01.07.2022.
- He is shifted to normal scheme w.e.f 01.01.2023 and by that time he has consumed 50% of all inputs
purchased by Mr. X.
- He rendered services and issued invoice
10.01.2023 ₹ 8,00,000 + CGST @ 9% + SGST @ 9%
10.02.2023 ₹ 10,00,000 + CGST @ 9% + SGST @ 9%
10.03.2023 ₹ 12,00,000 + CGST @ 9% + SGST @ 9%
- He purchased inputs ₹ 16,00,000 + CGST @ 5% + SGST @ 5% on 01.01.2023.
Discuss Tax Treatment and compute net tax payable/refundable and also mention the due date on which
payment is to be made.
No output tax and no ITC from 01.04.2022 to 30.06.2022 because the service provider is unregistered.
For the quarter July to September and October to December 2022, he is in composition scheme, hence no
output and no ITC but tax should be paid out of his own at 3% + 3%.
₹
July to September
20,00,000
CGST @ 3% 60,000
SGST @ 3% 60,000

Payment should be made upto 18.10.2022

October to December
10,00,000
CGST @ 3% 30,000
SGST @ 3% 30,000

Payment should be made upto 18.01.2023

January 2023
The service provider is in normal scheme from 01.01.2023. ITC of inputs/capital goods in stock is allowed.

Input Tax Credit

Inputs (50% of 14,00,000) 7,00,000
CGST @ 9% 63,000
 Composition Scheme 131

SGST @ 9% 63,000

Capital goods
No Tax credit shall be allowed for capital asset purchased prior to registration in GST. Asset purchased after
the date of registration but before opting out to composition scheme shall be allowed on proportionate basis.

1. Used from 01.09.2022 to 31.12.2022

Asset already used for 4 Months = 2 Quarters
Capital goods 2,00,000
CGST @ 10% 20,000
ITC allowed (20,000 – 20,000 x 10% (i.e. 5% x 2)) 18,000

SGST @ 10% 20,000

ITC allowed (20,000 – 20,000 x 10% (i.e. 5% x 2)) 18,000

2. Used from 01.10.2022 to 31.12.2022

Asset already used for 3 Months = 1 Quarter
Capital goods 10,00,000
CGST @ 10% 1,00,000
ITC allowed (1,00,000 – 1,00,000 x 5% (i.e. 5% x 1)) 95,000

SGST @ 10% 1,00,000

ITC allowed (1,00,000 – 1,00,000 x 5% (i.e. 5% x 1)) 95,000

ITC inputs
16,00,000
CGST @ 5% 80,000
SGST @ 5% 80,000

Total Input tax credit

CGST (63,000 + 95,000 + 18,000+80,000) 2,56,000
SGST (63,000 + 95,000 + 18,000+80,000) 2,56,000

Output Tax
8,00,000
Output CGST @ 9% 72,000
Output SGST @ 9% 72,000

Net Tax
CGST 72,000
Less: ITC (72,000)
Nil
ITC CGST Carried forward 1,84,000

SGST 72,000
Less: ITC (72,000)
Nil
ITC SGST Carried forward 1,84,000

Payment should be made upto 20.02.2023

 Composition Scheme 132

February 2023
Output Tax
10,00,000
Output CGST @ 9% 90,000
Output SGST @ 9% 90,000

Net Tax
CGST 90,000
Less: ITC b/f (90,000)
Nil
ITC CGST Carried forward 94,000

SGST 90,000
Less: ITC b/f (90,000)
Nil
ITC SGST Carried forward 94,000

Payment should be made upto 20.03.2023

March 2023
Output Tax
12,00,000
Output CGST @ 9% 1,08,000
Output SGST @ 9% 1,08,000

Net Tax
CGST 1,08,000
Less: ITC b/f (94,000)
Tax Payable 14,000

SGST 1,08,000
Less: ITC b/f (94,000)
Tax Payable 14,000

Payment should be made upto 20.04.2023

(b) Presume he has not opted for composition scheme w.e.f 01.07.2022 rather he was in the normal
scheme and charged output CGST @ 9% and SGST @ 9%. Presume inputs consumed upto 30th June
2022 is 50%
Solution:
No output tax and no ITC from 01.04.2022 to 30.06.2022 because the service provider is unregistered. But
ITC allowed on Inputs in stock but no ITC allowed on capital Goods.
₹
July
Input Tax Credit
Input (50% of 3,00,000) 1,50,000
CGST @ 9% 13,500
SGST @ 9% 13,500
ITC Carried forward CGST 13,500
ITC Carried forward CGST 13,500
 Composition Scheme 133

August
ITC Carried forward CGST 13,500
ITC Carried forward CGST 13,500

September
20,00,000
Output CGST @ 9% 1,80,000
Output SGST @ 9% 1,80,000

Input Tax Credit

Inputs 10,00,000
CGST @ 9% 90,000
SGST @ 9% 90,000
ITC – Capital goods
Capital goods 2,00,000
CGST @ 10% 20,000
SGST @ 10% 20,000
ITC – Input Service
Input Service 1,00,000
CGST @ 9% 9,000
SGST @ 9% 9,000

Net Tax
CGST 1,80,000
Less: ITC – Inputs (90,000)
Less: ITC – Capital Goods (20,000)
Less: ITC- Input Service (9,000)
Less: ITC- b/f (13,500)
Tax Payable 47,500

SGST 1,80,000
Less: ITC – Inputs (90,000)
Less: ITC – Capital Goods (20,000)
Less: ITC- Input Service (9,000)
Less: ITC- b/f (13,500)
Tax Payable 47,500

Payment should be made upto 20.10.2022

October
ITC – Capital goods
Capital goods 10,00,000
CGST @ 10% 1,00,000
SGST @ 10% 1,00,000

ITC CGST Carried forward 1,00,000

ITC SGST Carried forward 1,00,000

November
ITC CGST Carried forward 1,00,000
ITC SGST Carried forward 1,00,000
 Composition Scheme 134

December
10,00,000
Output CGST @ 9% 90,000
Output SGST @ 9% 90,000

ITC – Inputs
Inputs 1,00,000
CGST @ 9% 9,000
SGST @ 9% 9,000

ITC – Input service

Input service 1,00,000
CGST @ 9% 9,000
SGST @ 9% 9,000

Net Tax
CGST 90,000
Less: ITC inputs (9,000)
Less: ITC input service (9,000)
Less: ITC – b/f (72,000)
Tax Payable Nil

ITC CGST Carried forward 28,000

SGST 90,000
Less: ITC inputs (9,000)
Less: ITC input service (9,000)
Less: ITC – b/f (72,000)
Tax Payable Nil

ITC SGST Carried forward 28,000

January 2023
8,00,000
Output CGST @ 9% 72,000
Output SGST @ 9% 72,000

ITC inputs
16,00,000
CGST @ 5% 80,000
SGST @ 5% 80,000

Net Tax
CGST 72,000
Less: ITC (72,000)
Nil
ITC CGST Carried forward (28,000 + 80,000 – 72,000) 36,000

SGST 72,000
Less: ITC (72,000)
Nil
ITC SGST Carried forward (28,000 + 80,000 – 72,000) 36,000
 Composition Scheme 135

February 2023
10,00,000
Output CGST @ 9% 90,000
Output SGST @ 9% 90,000

Net Tax
Output CGST 90,000
Less: ITC b/f (36,000)
Tax Payable 54,000

Output SGST 90,000

Less: ITC b/f (36,000)
Tax Payable 54,000

Payment should be made upto 20.03.2023

March 2023
12,00,000
Output CGST @ 9% 1,08,000
Output SGST @ 9% 1,08,000
Net Tax
Output CGST 1,08,000
Less: ITC Nil
Tax Payable 1,08,000

Output CGST 1,08,000

Less: ITC Nil
Tax Payable 1,08,000

Payment should be made upto 20.04.2023

(c) Presume he has taken registration right from the beginning i.e. w.e.f 01.04.2022 and charged
output CGST @ 9% and SGST @ 9%.
Solution:
₹
April
Nil
May
Nil
June
20,00,000
Output CGST @ 9% 1,80,000
Output SGST @ 9% 1,80,000

Input 3,00,000
CGST @ 9% 27,000
SGST @ 9% 27,000

Capital Goods 1,00,000

CGST @ 10% 10,000
SGST @ 10% 10,000
 Composition Scheme 136

Net Tax
CGST 1,80,000
Less: ITC-Input (27,000)
Less: ITC-capital goods (10,000)
Tax Payable 1,43,000

SGST 1,80,000
Less: ITC-Input (27,000)
Less: ITC-capital goods (10,000)
Tax Payable 1,43,000

Payment should be made upto 20.07.2022

July
Nil
August
Nil
September
20,00,000
Output CGST @ 9% 1,80,000
Output SGST @ 9% 1,80,000

Input Tax Credit

Inputs 10,00,000
CGST @ 9% 90,000
SGST @ 9% 90,000

ITC – Capital goods

Capital goods 2,00,000
CGST @ 10% 20,000
SGST @ 10% 20,000

ITC – Input Service

Input Service 1,00,000
CGST @ 9% 9,000
SGST @ 9% 9,000

Net Tax
CGST 1,80,000
Less: ITC – Inputs (90,000)
Less: ITC – Capital Goods (20,000)
Less: ITC- Input Service (9,000)
Tax Payable 61,000

SGST 1,80,000
Less: ITC – Inputs (90,000)
Less: ITC – Capital Goods (20,000)
Less: ITC- Input Service (9,000)
Tax Payable 61,000

Payment should be made upto 20.10.2022

 Composition Scheme 137

October
ITC – Capital goods
Capital goods 10,00,000
CGST @ 10% 1,00,000
SGST @ 10% 1,00,000

ITC CGST Carried forward 1,00,000

ITC SGST Carried forward 1,00,000

November
ITC CGST Carried forward 1,00,000
ITC SGST Carried forward 1,00,000

December
10,00,000
Output CGST @ 9% 90,000
Output SGST @ 9% 90,000

ITC – Inputs
Inputs 1,00,000
CGST @ 9% 9,000
SGST @ 9% 9,000

ITC – Input service

Input service 1,00,000
CGST @ 9% 9,000
SGST @ 9% 9,000

Net Tax
CGST 90,000
Less: ITC inputs (9,000)
Less: ITC input service (9,000)
Less: ITC – b/f (72,000)
Tax Payable Nil

ITC CGST Carried forward 28,000

SGST 90,000
Less: ITC inputs (9,000)
Less: ITC input service (9,000)
Less: ITC – b/f (72,000)
Tax Payable Nil

ITC SGST Carried forward 28,000

January 2023
8,00,000
Output CGST @ 9% 72,000
Output SGST @ 9% 72,000

ITC inputs
16,00,000
 Composition Scheme 138

CGST @ 5% 80,000
SGST @ 5% 80,000

Net Tax
CGST 72,000
Less: ITC (72,000)
Nil
ITC CGST Carried forward (28,000 + 80,000 – 72,000) 36,000

SGST 72,000
Less: ITC (72,000)
Nil
ITC SGST Carried forward (28,000 + 80,000 – 72,000) 36,000

February 2023
10,00,000
Output CGST @ 9% 90,000
Output SGST @ 9% 90,000

Net Tax
Output CGST 90,000
Less: ITC b/f (36,000)
Tax Payable 54,000

Output SGST 90,000

Less: ITC b/f (36,000)
Tax Payable 54,000
Payment should be made upto 20.03.2023

March 2023
12,00,000
Output CGST @ 9% 1,08,000
Output SGST @ 9% 1,08,000

Net Tax
Output CGST 1,08,000
Less: ITC Nil
Tax Payable 1,08,000

Output CGST 1,08,000

Less: ITC Nil
Tax Payable 1,08,000
Payment should be made upto 20.04.2023
 Composition Scheme 139

PRACTICE PROBLEMS
Q1. Determine whether the supplier in the following cases are eligible for composition levy provided their
turnover in preceding year does not exceed ₹150 lakh:
- Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in neighbouring
States.
Answer: Since supplier of inter-State outward supplies of goods is not eligible for composition levy, Sugam
Manufacturers is not eligible for composition levy.
Q2. Mohan Enterprises has two registered business in Delhi. Its aggregate turnover for the preceding year
for both the business was ₹70 lakh. It wishes to pay tax under composition levy for one of the business in the
current year while under normal levy for other business. You are required to advice Mohan Enterprises
whether he can do so?
Answer: All registered persons having the same Permanent Account Number (PAN) have to opt for
composition scheme. If one such registered person opts for normal scheme, others become ineligible for
composition scheme. Thus, Mohan Enterprises either have to opt for composition levy for both the business
or under normal levy for both the business.
Q3. Taxpayer ‘Tolaram’ is a manufacturer who has opted for composition levy for goods, having one unit –
A1 in UP and another unit – A2 in MP. Total turnover of two units in last FY was ₹ 115 lakh (₹ 85 lakh +
₹30 lakh). Turnover of units A1 and A2 in the first quarter of current financial year is ₹ 5 lakh and ₹ 10 lakh
respectively. Compute the amount payable under composition levy under section 10(1) & 10(2) of the CGST
Act, 2017 by ‘Tolaram’.
Answer:
Unit Location Turnover in Turnover in 1st Total tax (@1%)
Previous FY quarter of this FY
A1 U.P. ₹ 85 lakh ₹ 5 lakh ₹ 5,000
A2 M.P. ₹ 30 lakh ₹ 10 lakh ₹ 10,000
Total ₹ 115 lakh ₹ 15 lakh ₹ 15,000
Q4. Taxpayer ‘Bholaram’ is a trader, who has opted for composition levy for goods, of both taxable and
exempted goods. It has one retail showroom – A1 in Punjab and another retail showroom – A2 in Rajasthan,
both selling taxable as well as exempted goods. Total turnover (including taxable and exempted goods) of
the two showrooms in last FY was ₹ 115 lakh (₹ 85 lakh + ₹ 30 lakh). Turnover of showrooms A1 and A2 in
the first quarter of current financial year is ₹ 35 lakh [A1 – ₹ 15 lakh (₹ 5 lakh from sale of taxable goods
and ₹ 10 lakh from sale of exempted goods) and A2 – ₹ 20 lakh (₹ 10 lakh from sale of taxable goods and
₹10 lakh from sale of exempted goods)].
Compute the amount payable under composition levy under section 10(1) & 10(2) of the CGST Act, 2017
by ‘Bholaram’.
Answer:
Retail Location Turnover in Taxable Turnover in Total tax (@1%)
Showroom Previous FY 1st quarter of this FY
A1 Punjab ₹ 85 lakh ₹ 5 lakh ₹ 5,000
A2 Rajasthan ₹ 30 lakh ₹ 10 lakh ₹ 10,000
Total ₹ 115 lakh ₹ 15 lakh ₹ 15,000
Note: A supplier, other than manufacturer and restaurant service provider, eligible for composition levy
under section 10(1) & 10(2) has to pay tax @ 1% (CGST+ SGST) of the turnover of only taxable supplies of
goods and services in the State.
Q5. Taxpayer ‘Padmavati’ is a salon stylist, who has opted for composition levy for services, having one
branch–B1 in Vasant Kunj, Delhi and another branch – B2 in Gurgaon, Haryana. Total turnover of two
branches in last FY was ₹ 45 lakh (₹ 25 lakh + ₹ 20 lakh). Turnover of branches B1 and B2 in the first
quarter of current financial year is ₹ 5 lakh and ₹ 10 lakh respectively. Compute the amount payable under
composition levy under section 10(2A) of the CGST Act, 2017 by ‘Padmavati’.
 Composition Scheme 140

Answer:
Branch Location Turnover in Turnover in 1st Total tax (@6%)
Previous FY quarter of this FY
B1 Delhi ₹ 25 lakh ₹ 5 lakh ₹ 30,000
B2 Haryana ₹ 20 lakh ₹ 10 lakh ₹ 60,000
Total ₹ 45 lakh ₹ 15 lakh ₹ 90,000
Q6. A photographer ‘Champak’ has commenced providing photography services in Delhi from April this
year. His turnover for various quarters till December is as follows:
April-June ₹ 20 lakh
July-Sept ₹ 30 lakh
Oct-Dec ₹ 20 lakh
In the given case, since Champak has started the supply of services in the current financial year, his
aggregate turnover in the preceding FY is Nil. Consequently, in the current FY, he can supply services only
for ₹ 5 lakh hence he is eligible for composition scheme for services. He becomes eligible for the
registration when his aggregate turnover exceeds ₹ 20 lakh.
While registering under GST, he opts for composition scheme for services.
For determining his 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], he 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, his aggregate turnover reaches ₹ 50 lakh.
Consequently, his option to avail composition scheme for services shall lapse by the end of July-Sept quarter
and thereafter, he is required to pay tax at the normal rate of 18%. Thus, the tax payable for Oct-Dec quarter
is ₹ 20 lakh × 18%, i.e. ₹ 3,60,000.
Note: while computing aggregate turnover for determining Champak’s 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.
Q7. Ramsewak is engaged in supply of goods. His turnover in preceding FY is ₹ 60 lakh. Since his
aggregate turnover in the preceding FY does not exceed ₹ 1.5 crore, he is eligible for composition scheme
for goods in current FY. Further, in current FY, he can supply services [other than restaurant services] upto a
value of not exceeding:
(a) 10% of ₹ 60 lakh, i.e. ₹ 6 lakh or
(b) ₹ 5 lakh,
whichever is higher.
Thus, he can supply services upto a value of ₹ 6 lakh in current FY. If the value of services supplied exceeds
₹ 6 lakh, he becomes ineligible for the composition scheme for goods and has to opt out of the same.
Q8. A person availing composition scheme during a financial year crosses the turnover of ₹ 1.5 crore on 9th
of December. The option availed shall lapse from the day on which his aggregate turnover during the
financial year exceeds ₹ 1.5 crore, i.e. on 9th December, in this case.
Q9. Sultan & Sons, a partnership firm, in Nagpur, Maharashtra is a wholesaler of a taxable product ‘P’ and
product ‘Q’ exempt by way of a notification, in the State of Maharashtra. Its aggregate turnover in the
preceding financial year is ₹ 130 lakh. The firm wishes to opt for composition scheme under subsections (1)
& (2) of section 10 of the CGST Act. However, its accountant is of the view that a person engaged in
making supply of exempt goods is not eligible for the said scheme. Discuss.
Answer: The view taken by the accountant of Sultan & Sons is not valid in law. A registered person with an
aggregate turnover in a preceding financial year up to ₹ 1.5 crore is eligible for composition levy, under
section 10(1) & 10(2), in Delhi. Further, such person must not be engaged in making any supply of goods
 Composition Scheme 141

which are not leviable to tax under this Act and must not be engaged in making any inter-State outward
supplies of goods, for being eligible to pay tax under said scheme.
In the given case, the aggregate turnover of Sultan & Sons does not exceed ₹ 1.5 crore. Further, it is engaged
in making only intra-State supply of goods and Product P supplied by it is taxable and Product Q supplied
by it is leviable to tax though exempted by way of notification. Therefore, it is eligible for composition levy
under section 10(1) & 10(2) in the current year.
Q10. A person availing composition scheme, under sub-sections (1) & (2) of section 10 of the CGST Act, in
Haryana during a financial year crosses the turnover of ₹ 1.5 crore in the month of December. Will he be
allowed to pay tax under composition scheme for the remainder of the year, i.e. till 31st March? Please
advise.
Answer: No. The option to pay tax under composition scheme lapses from the day on which the aggregate
turnover of the person availing composition scheme for goods during the financial year exceeds the
specified limit (₹1.5 crore). Once he crosses the threshold, he is required to file an intimation for withdrawal
from the scheme in prescribed form within 7 days of the occurrence of such event.
Every person who has furnished such an intimation, may electronically furnish at the common portal, a
statement in prescribed form containing details of the stock of inputs and inputs contained in semi-finished
or finished goods held in stock by him on the date on which the option is withdrawn, within a period of 30
days from the date from which the option is withdrawn.
Q11. Determine whether the suppliers in the following cases are eligible for composition levy, under section
10(1) & 10(2) of the CGST Act, 2017, provided their turnover in preceding year does not exceed ₹ 1.5 crore:
(i) Mohan Enterprises is engaged in trading of pan masala in Rajasthan and is registered in the same State.
(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods in neighbouring
States.
Answer:
(i) A supplier engaged in the manufacture of goods as notified is not eligible for composition scheme under
section 10(1) and 10(2). Ice cream and other edible ice, whether or not containing cocoa, Pan masala,
Tobacco and manufactured tobacco substitutes and aerated waters are notified under this category. However,
in the given case, since Mohan Enterprises is engaged in trading of pan masala and not manufacture and his
turnover does not exceed ₹ 1.5 crore, he is eligible for composition scheme subject to fulfilment of specified
conditions.
(ii) Since supplier of inter-State outward supplies of goods is not eligible for composition levy, Sugam
Manufacturers is not eligible for composition levy.
Q12. Subramanian Enterprises has two registered places of business in Delhi. Its aggregate turnover for the
preceding year for both the places of business was ₹ 120 lakh. It wishes to pay tax under composition levy,
under section 10(1) & 10(2) of the CGST Act, 2017, for one of the places of business in the current year
while under normal levy for other. You are required to advice Subramanian Enterprises whether he can do
so?
Answer: A registered person with an aggregate turnover in a preceding financial year up to ₹ 1.5 crore is
eligible for composition levy, under section 10(1) & 10(2), in Delhi. Since the aggregate turnover of
Subramanian Enterprises does not exceed ₹ 1.5 crore, it is eligible for composition levy in the current year.
However, all registered persons having the same Permanent Account Number (PAN) have to opt for
composition scheme. If one such registered person opts for normal scheme, others become ineligible for
composition scheme. Thus, Subramanian Enterprises either have to opt for composition levy for both the
places of business or under normal levy for both the places of business.
Q13. Mr. Ajay has a registered repair centre where electronic goods are repaired/serviced. His repair centre
is located in State of Rajasthan and he is not engaged in making any inter-State supply of services. His
aggregate turnover in the preceding financial year (FY) is ₹ 45 lakh.
With reference to the provisions of the CGST Act, 2017, examine whether Mr. Ajay can opt for the
composition scheme under section 10(1) &10(2) of the CGST Act, 2017 in the current financial year? Or
whether he is eligible to avail benefit of composition scheme under section 10(2A)? Considering the option
 Composition Scheme 142

of payment of tax available to Mr. Ajay, compute the amount of tax payable by him assuming that his
aggregate turnover in the current financial year is ₹ 35 lakh.
Will your answer be different if Mr. Ajay procures few items required for providing repair services from
neighbouring State of Madhya Pradesh?
Answer: Section 10(1) provides that a registered person, whose aggregate turnover in the preceding
financial year did not exceed ₹ 1.5 crore, may opt to pay, in lieu of the tax payable by him, an amount
calculated at the specified rates. However, as per proviso to section 10(1), person who opts to pay tax under
composition scheme may supply services other than restaurant services, of value not exceeding 10% of the
turnover in a State or Union territory in the preceding financial year or ₹ 5 lakh, whichever is higher.
In the given case, since Mr. Ajay is an exclusive supplier of services other than restaurant services [viz.
repair services], he is not eligible for composition scheme under section 10(1) & 10(2).
However, section 10(2A) provides an option to a registered person (subject to certain conditions) whose
aggregate turnover in the preceding financial year is upto ₹ 50 lakh and who is not eligible to pay tax under
composition scheme under section 10(1) & 10(2), to pay tax @ 3% [Effective rate 6% (CGST+
SGST/UTGST)] of the turnover of supplies of goods and services in the State or Union territory.
Thus, in view of the above-mentioned provisions, Mr. Ajay is eligible to avail the composition scheme
under section 10(2A) as his aggregate turnover in the preceding FY does not exceed ₹ 50 lakh and he is not
eligible to opt for the composition scheme under section 10(1) & 10(2).
Thus, the amount of tax payable by him as per the composition scheme under section 10(2A) is ₹ 2,10,000
[6% of ₹ 35 lakh].
A registered person cannot opt for composition scheme under section 10(2A), if, inter alia, he is engaged in
making any inter-State outward supplies. However, there is no restriction on inter-State procurement of
goods. Hence, answer will remain the same even if Mr. Ajay procures few items from neighboring State of
Madhya Pradesh.
Q14. M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in the State
of Karnataka. Their aggregate turnover in the preceding financial year by way of supply of appliances was
₹120 Lakh.
The firm also expects to provide repair and maintenance service of such appliances from the current
financial year.
With reference to the provisions of the CGST Act, 2017, examine:
(i) Whether the firm can opt for the composition scheme, under section 10(1) and 10(2) of the CGST Act,
2017, for the current financial year, as the turnover may include supply of both goods and services?
(ii) If yes, up to what amount, the services can be supplied?
Answer:
(i) The registered persons, whose aggregate turnover in the preceding financial year did not exceed ₹ 1.5
crore, may opt to pay tax under composition levy, under section 10(1) and 10(2).
The scheme can be availed by an intra-State supplier of goods and supplier of restaurant service.
However, the composition scheme permits supply of marginal services (other than restaurant services) for a
specified value along with the supply of goods and restaurant service, as the case may be.
Thus, M/s United Electronics can opt for composition scheme for the current financial year as its aggregate
turnover is less than ₹ 1.5 crore in the preceding financial year and it is not engaged in inter-State outward
supplies.
(ii) The registered person opting for composition scheme, under section 10(1) and 10(2), 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.
Thus, M/s United Electronics can supply repair and maintenance services up to a value of ₹ 12 lakh [10% of
₹ 120 lakh or ₹ 5 lakh, whichever is higher] in the current financial year.
 Composition Scheme 143

MULTIPLE CHOICE QUESTIONS

1. What is the threshold limit of turnover in the preceding financial year to be eligible for composition
levy for supply of goods in Delhi?
(a) ₹50 lakh
(b) ₹75 lakh
(c) ₹100 lakh
(d) ₹150 lakh
2. Mr. X, a registered supplier of Meghalaya wants to opt for composition levy. The turnover limit for
supply of goods under composition levy is-
(a) ₹50 lakh
(b) ₹75 lakh
(c) ₹100 lakh
(d) ₹150 lakh
3. Mr. X, a registered supplier of Delhi opted for composition levy. He purchased goods A and paid
GST of ₹50 lakh on such purchase. ITC allowed shall be
(a) ₹50 lakh
(b) ₹25 lakh
(c) No tax credit is allowed
(d) none of the above
4. Can a registered person opting for composition scheme collect tax on his outward supplies?
(a) Yes
(b) No
(c) Yes, if the amount of tax is prominently indicated in the invoice issued by him
(d) Yes, only on such goods as may be notified by the Central Government
5. Mr. X, a trader in Delhi has opted for composition scheme of taxation under GST. Determine the
rate of total GST payable by him under composition scheme:
(a) 0.5% CGST & 0.5% SGST
(b) 2.5% CGST & 2.5% SGST
(c) 5% IGST
(d) 5% SGST
6. Mr. X providing restaurant service in Delhi has opted for composition scheme of taxation under
GST. Determine the rate of total GST payable by him under composition scheme:
(a) 0.5% CGST & 0.5% SGST
(b) 2.5% CGST & 2.5% SGST
(c) 5% IGST
(d) 5% SGST
7. Which of the following person can opt for composition scheme
(a) person engaged in inter state supply.
(b) A manufacturer manufacturing pan masala
(c) A manufacturer manufacturing ice cream
(d) None of the above
8. A person opting for composition scheme can file annual return in
(a) GSTR-1
(b) GSTR-2
(c) GSTR-3
(d) GSTR-4
9. A person opting for composition scheme can pay taxes within
(a) 18 days from the end of the quarter
(b) 20 days from the end of the quarter
(c) 30 days from the end of the quarter
 Composition Scheme 144

(d) 60 days from the end of the quarter

10. If a person is shifting from composition scheme to normal scheme and can give intimation in
(a) CMP-01
(b) CMP-02
(c) CMP-03
(d) CMP-04
11. If a person is opting for composition scheme in one State then it shall be applicable in ________
States for multiple registration.
(a) all the States
(b) Optional for other States
(c) not apply for other States
(d) None of the above
12. If a trader is opting for composition scheme then tax shall be payable on
(a) Turnover in a State
(b) Turnover of taxable supplies in a State
(c) Turnover of exempt supplies in a State
(d) None of the above
13. ABC Industries, a manufacturer in Mumbai, is engaged in supply of goods in Mumbai as well as
Chennai (i.e. inter-State supply of goods). Here, ABC Industries ________ enter into the composition
scheme.
(a) can
(b) cannot
(c) may
(d) None of the above
14. A dealer ‘X’ has two offices in Delhi. In order to determine whether ‘X’ is eligible to avail benefit
of the composition scheme, turnover of __________would be taken into account.
(a) any one of the offices
(b) both the offices
(c) higher of both the offices
(d) lower of both the offices
15. A registered service provider is allowed to opt composition scheme under section 10 (2A)
(a) whose aggregate turnover in the preceding financial year was sixty lakh rupees or below
(b) whose aggregate turnover in the preceding financial year was fifty lakh rupees or below
(c) whose aggregate turnover in the preceding financial year was forty lakh rupees or below
(d) none of these
16. Composition scheme under section 10(2A) is not allowed
(a) to a service provider
(b) to a service provider who is supplying goods also
(c) to a supplier of goods
(d) none of these
17. Manufacturer of following goods are not allowed for composition scheme.
(a) Pan masala
(b) Ice cream
(c) Tobacco product
(d) Electrical goods
(e) (a), (b) & (c)
(f) (b), (c) & (d)

Answer:
1. (d); 2. (b); 3. (c) ; 4. (b); 5. (a); 6. (b); 7. (d); 8. (d); 9. (a); 10. (d); 11. (a); 12. (b); 13. (b); 14. (b) ; 15.(b);
16. (c); 17. (e)
 Composition Scheme 145

EXAMINATION QUESTION
NOV 2019
Question.6. (a) (6 Marks)
Mr. Zafar of Assam, provides the following information for the preceding financial year 2021-22. You are
required to find out the aggregate turnover for the purpose of eligibility of composition levy scheme and
determine whether he is eligible for composition levy scheme or not, for the F.Y. 2022-23.

Particulars Amount
(₹ in lakhs)
Value of taxable outward supplies (out of this ₹10 lakhs was in course of inter-state 50.00
transactions).
Value of exempt supplies (which include ₹ 30 lakhs was received as a interest on loans & 70.00
advances).
Value of inward supplies on which he is liable to pay tax under reverse charge 5.00
Value of exports 5.00
All the amounts are exclusive of GST.
Solution:
As per section 2(6), "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 Permanent Account
Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess.
As per the above definition aggregate turnover shall be:
Particulars Amount
(₹ in lakhs)
Value of taxable outward supplies 50.00
Value of exempt supplies (70-30) 40.00
Value of inward supplies on which he is liable to pay tax under reverse charge Nil
Value of exports 5.00
Aggregate turnover 95.00
Since Assessee is staying in Assam hence limit of ₹1.5 crore shall be applicable and his aggregate turnover
is below ₹1.5 crore hence he is eligible for composition scheme but in the given case assessee is supplying
inter-state hence he is not eligible for composition scheme.
Question.8. (a) (5 Marks)
Explain in brief the conditions to be fulfilled by a registered person under GST law for availing the option to
pay concessional tax @ 3% (effective rate 6%) under GST, with effect from1st April, 2022.
Answer: Refer answer given in the book

NOV 2019
Question.9. (a) (5 Marks)
M/s United Electronics, a registered dealer, is supplying all types of Electronic Appliances in the state of
Karnataka. Their aggregate Turnover in the Financial Year 2021-22 by way of supply of appliances was
₹120 Lakhs.
The firm also expects to provide repair and maintenance service of such Appliances from the financial year
2022-23.
With reference to the latest amendments made in CGST Act, 2017, examine:
 Composition Scheme 146

(i) Whether the firm can opt for the composition scheme for the financial year 2022-23, as the turnover may
include supply of both goods and services?
(ii) If yes, up to what amount, the supply of service can be provided?
Answer:
As per section 10(1) & (2), a registered dealer whose aggregate turnover in the preceding year is upto ₹1.5
crore may opt for composition scheme provided he is not engaged in providing taxable supply of services
except restaurant services. However person opting for composition scheme may supply services other than
restaurant services of value not exceeding 10% of turnover in the state in the preceding year or ₹5,00,000
whichever is higher may opt for composition scheme.
(i) Yes, Firm can opt for the composition scheme for the financial year 2022-23 as the turnover is not
exceeding ₹1.5 crores even if the firm is supplying services along with goods.
(ii) Supply of services can be provided up to higher of the followings:
(a) 10% of ₹1.2 crore = ₹12,00,000
(b) ₹5,00,000
Higher = ₹12,00,000

MAY 2019
Question 8 (a) (5 Marks)
Enumerate the persons who are not eligible to opt for Composition Scheme under section 10 of the CGST
Act, 2017.
Answer: Refer answer given in the book

MAY 2019
Question 9 (a) (1+2+2 Marks)
Examine in relation to composition levy scheme under the CGST Act, 2017 and the rules made thereunder
in the following individual cases:
(1) Ketu is a manufacturer of Ice-cream and pan masala in State of Maharashtra. His turnover for the year
does not exceed ₹1.5 Crore. He wants to register for composition levy scheme. Is he eligible for it?
(2) Jadhu of Gujarat opts for composition scheme during a financial year 2022-23. But on 10-02-2023 his
turnover crosses ₹ 1.5 Crore, can he continue under composition levy scheme.
(3) X Ltd. has 2 branches K & L in Delhi, having same PAN. Branch K opts for normal scheme. X Ltd.
want to continue composition levy in case of its branch L. Can X Ltd. continue Composition levy only for
Branch L?
Answer:
(1) As per section 10, if a manufacturer is manufacturing Pan Masala and Ice-cream then he is not eligible
for composition scheme. In the given case, Ketu is manufacturer of Ice-cream and pan masala hence he is
not eligible for composition scheme
(2) As per rule 6, if a person crosses the threshold limit then he will be shifted to normal scheme with
immediate effect. Hence Jadhu cannot continue under composition scheme.
(3) If any person has opted for composition scheme for any place of business in any state or union territory,
shall be automatically covered in composition scheme for all other places of business in any other State /
UT i.e. same scheme will be applicable for all registration with same PAN. Hence X Ltd. cannot opt for
composition scheme for its one branch.

NOV 2018
Question 10 (b) (i) (2 Marks)
Mr. X is running a consulting firm and also a readymade garment showroom in Kolkata registered in same
PAN. Turnover of the showroom is ₹70 lakhs and receipt of consultancy firm is ₹15 lakhs in the preceding
financial year. You are required to answer the following:
 Composition Scheme 147

(1) Is Mr. X eligible for composition scheme?

(2) Is it possible for Mr. X to opt for composition scheme only for showroom?
Answer: As per section 10, In the given case, total turnover is ₹70 lakhs + ₹15 lakhs = ₹85 lakhs and 10%
is ₹8.5 lakhs, hence he is not eligible for composition scheme
No it is not possible for firm to opt for composition scheme only for showroom if firm is providing services
also.

MAY 2018
Question 10 (c) (3 Marks)
M/s Sai Trading Company, an eligible registered dealer in goods making intra-state supplies within the state
of Andhra Pradesh, has reported an aggregate turnover of ₹78 Lakhs in the preceding financial year.
(i) Determine whether Sai Trading Company will be eligible for composition levy, as on 31-10-2022.
Answer: A registered person, whose aggregate turnover in the preceding financial year did not exceed ₹1.5
crore is eligible to opt for composition scheme and in the given case turnover is less than ₹1.5 crore so M/s
Sai Trading Company is eligible for composition scheme.
(ii) Will your answer be different, if in the above scenario, M/s Sai Trading Company is making intra state
supply within the state of Jammu and Kashmir?
Answer: No answer will remain same as limit for Jammu & Kashmir is also ₹1.5 crore.

MAY 2018
Question 12 (a) (5 Marks)
M/s. Ginny and John Company is a partnership firm of interior decorators and also running a readymade
garment showroom. Turnover of the showroom was ₹80 lakh and Receipts of the interior decorators service
was ₹22 Lakh in the preceding financial year. With reference to the provisions of the CGST Act, 2017,
examine whether the firm can opt for the composition scheme?
Will your answer change, if the turnover of the showroom was ₹70 lakh and Receipts of the interior
decorators service was ₹22 Lakh in the preceding financial year?
Also discuss whether it is possible for M/s. Ginny and John Company to opt for composition scheme only
for Showroom?
Answer: As per section 10, a registered dealer whose aggregate turnover in the preceding year is upto ₹1.5
crore may opt for composition scheme.
However person opting under composition scheme may supply services other than restaurant services of
value not exceeding 10% of turnover in the state or union territory in the preceding financial year or
₹5,00,000 whichever is higher.
In the given case, total turnover is ₹80 lakhs + ₹22 lakhs = ₹102 lakhs and 10% is ₹10.2 lakhs, hence he is
not eligible for composition scheme
No Answer will remain same even if turnover of the showroom was ₹70 lakhs.
No it is not possible for firm to opt for composition scheme only for showroom if firm is providing services
also.
 Registration 148

REGISTRATION
Question 1: write a note on Registration on the basis of Threshold exemption.
Answer: As per section 22, every supplier of goods or services or services plus goods shall be liable to be
registered in the State / Union Territory, if his aggregate turnover in a financial year exceeds the threshold
limit which is given below:
Limit for person supplying within the State/UT.
SL.No Name of State/UT Limit for person supplying Limit for person supplying
only services or services plus only goods
goods
01 Manipur 10,00,000 10,00,000
02 Mizoram 10,00,000 10,00,000
03 Nagaland 10,00,000 10,00,000
04 Tripura 10,00,000 10,00,000
05 Arunachal Pradesh 20,00,000 20,00,000
06 Meghalaya 20,00,000 20,00,000
07 Puducherry 20,00,000 20,00,000
08 Sikkim 20,00,000 20,00,000
09 Telangana 20,00,000 20,00,000
10 Uttarakhand 20,00,000 20,00,000
11 Other remaining States / UT 20,00,000 40,00,000

SL. No Name of State/UT Limit for person supplying Specified goods i.e. Ice
cream and other edible ice, fly ash bricks, fly ash
aggregates, fly ash blocks, bricks of fossil meals or
similar siliceous earths, building bricks, earthen or
roofing tiles or pan masala, Tobacco and manufactured
tobacco substitutes (Notification No. 10/2019 (CT))
01 Manipur 10,00,000
02 Mizoram 10,00,000
03 Nagaland 10,00,000
04 Tripura 10,00,000
05 Other remaining States / UT 20,00,000

Examples:
Supplier Engaged Aggregate Applicable Whether liable to
turnover threshold limit for obtain registration?
(in lakhs) Registration
(in lakhs)
Mr. P exclusively in supply of 22 40 No
of Assam shoes
exclusively in supply of 22 20 Yes
pan masala
exclusively in supply of 22 20 Yes
taxable services
in supply of both taxable 22 20 Yes
goods and services
Mr. S of exclusively in supply of 22 20 Yes
Telangana toys
exclusively in supply of 22 20 Yes
 Registration 149

ice cream
exclusively in supply of 22 20 Yes
taxable services
in supply of both taxable 22 20 Yes
goods and services
Mr. A of exclusively in supply of 12 10 Yes
Manipur paper
exclusively in supply of 12 10 Yes
tobacco
exclusively in supply of 12 10 Yes
taxable services
in supply of both taxable 12 10 Yes
goods and services

As per section 2(6), "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 Permanent Account
Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess.

If any person is giving loan or deposit and is earning interest i.e. he is rendering service of lending money,
for the purpose of registration, it will be considered to be supply of goods and not supply of services and
limit for turnover shall be determined accordingly.

As per section 2(47) "exempt supply" means supply of any goods or services or both which
attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act, and includes non-taxable supply;

As per section 2(78) "non-taxable supply" means a supply of goods or services or both which is not
leviable to tax under this Act or under the Integrated Goods and Services Tax Act;

Example: Mr. X is supplying goods in Delhi has turnover of ₹32,00,000 and also he has earned interest of
₹2,00,000 on the loan or deposit given by him, in this case it will be considered that he is dealing only in
goods and threshold exemption limit of ₹40,00,000 shall be applicable and turnover in this case shall be
₹34,00,000 i.e. ₹2,00,000 shall be added to the turnover. If Turnover of goods is ₹39,00,000 and interest is
₹2,00,000, turnover is ₹41,00,000 and registration is required.

Question 2: Explain Persons not liable for registration.

Answer: Persons not liable for registration. Section 23
(1) The following persons shall not be liable to registration, namely:—
(a) any person engaged exclusively in the business of supplying goods or services or both that are not
liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services
Tax Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
As per section 2 (7), "agriculturist" means an individual or a Hindu Undivided Family who undertakes
cultivation of land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or
the personal supervision of any member of the family;
 Registration 150

(2) The Government may, on the recommendations of the Council, by notification, specify the category of
persons who may be exempted from obtaining registration under this Act.

As per notification number CT-5/2017 dated 19.06.2017, Government has exempted the persons from
registration who are only engaged in making supplies of taxable goods or services or both, total tax on
which is liable to be paid on reverse charge basis by the recipient of such goods or services under section
9(3). E.g. reverse charge is applicable on the services provided by an advocate hence even if turnover has
exceeded the threshold exemption limit, no registration is required.
Question 3: Explain Registration required irrespective of Turnover.
Answer: As per section 24, The following persons must take registration irrespective of their turnover.
(i) Persons making any inter-State taxable supply of goods (In case of Inter - State supply of services
normal limit of ₹10,00,000/₹20,00,000 shall be applicable.) In case of Inter State supply of goods,
registration is required irrespective of turnover but in case of Inter State supply of handicrafts goods,
limit of ₹10,00,000/₹20,00,000/₹40,00,000 shall be applicable. Handicraft goods: means the goods
made by the craftsmen predominantly by hand even though some machinery may also be used in the
process.
(ii) Casual taxable persons making taxable supply. E.g. Mr. X is a dealer in the state of U.P. and his
turnover is ₹ 18,00,000 and he will be selling goods in a trade fair in Delhi, in this case registration is
required in the state of Delhi as casual taxable person. If he is selling handicraft goods, registration
shall be required only if aggregate turnover of ₹ 40,00,000 has crossed.
(iii) Non-resident taxable persons making taxable supply.
(iv) Persons who are required to pay tax under reverse charge.
(v) Persons who are required to pay tax under section 9 (5), e.g. UBER, OLA CABS etc.
(vi) Every electronic commerce operator, e.g. Amazon, Flipkart etc.
(vii) Persons supplying goods through electronic commerce operator shall also be required to take
registration but in case of handicrafts goods normal limit shall be applicable.
Further in case of services normal limit of ₹10,00,000/₹20,00,000 shall be applicable.
Also limit of ₹10,00,000/₹20,00,000 shall be applicable in case of person suppling services
through ECO covered u/s 9(5).

Example: Prithiviraj of Assam is exclusively engaged in intra-State supply of shoes. His aggregate turnover
in the current financial year is ₹ 22 lakh. In view of the discussion in the above paras, the applicable
threshold limit for registration for Prithiviraj in the given case is ₹ 40 lakh. Thus, he is not liable to get
registered under GST.
If in above example, all other things remaining the same, Prithiviraj is exclusively engaged in supply of pan
masala instead of shoes, he will not be eligible for higher threshold limit of ₹ 40 lakh and the applicable
threshold limit for registration in that given case will be ₹ 20 lakh. Thus, Prithiviraj will be liable to get
registered under GST.
If instead of pan masala, Prithiviraj is exclusively engaged in supply of taxable services, the applicable
threshold limit for registration will still be ₹ 20 lakh. Thus, Prithiviraj will be liable to get registered under
GST.
Further, if Prithiviraj is engaged in supply of both taxable goods and services, the applicable threshold limit
for registration will be ₹ 20 lakh only. Thus, Prithiviraj will be liable to get registered under GST.

Example: Ashoka of Manipur is exclusively engaged in intra-State supply of paper. Its aggregate turnover
in the current financial year is ₹ 12 lakh. Since Ashoka is making taxable supplies from Manipur which is a
Special Category State, the applicable threshold limit for registration for Ashoka in the given case is ₹ 10
lakh. Thus, he is liable to get registered under GST.
If in above example, all other things remaining the same, Ashoka is exclusively engaged in supply of
taxable services instead of paper, the applicable threshold limit for registration will still be ₹ 10 lakh. Thus,
Ashoka will be liable to get registered under GST.
 Registration 151

Further, if Ashoka is engaged in supply of both taxable goods and services, the applicable threshold limit for
registration in that given case will be ₹ 10 lakh only. Thus, Ashoka will be liable to get registered under
GST.

Example: Raghav of Assam is exclusively engaged in intra-State supply of readymade garments. Its
turnover in the current FY from Assam showroom is ₹ 28 lakh. It has another showroom in Tripura with a
turnover of ₹ 11 lakh in the current FY. Since Raghav is engaged in supplying garments from a Special
Category State as per section 22, the applicable threshold limit for him gets reduced to ₹ 10 lakh. Further,
Raghav is liable to get registered under GST in both Assam and Tripura on his aggregate turnover crossing
the threshold limit of ₹ 10 lakh.

Example: Uday Enterprises is engaged in supply of taxable goods in Maharashtra. It also supplies alcoholic
liquor for human consumption from Nagaland. Its turnover in the current financial year is ₹ 34 lakh in
Maharashtra and ₹ 8 lakh in Nagaland.
Since Uday Enterprises is exclusively engaged in making taxable supplies of goods from Maharashtra, the
applicable threshold limit for obtaining registration is ₹ 40 lakh. However, the threshold limit will not be
reduced to ₹ 10 lakh in this case, as supply of alcoholic liquor for human consumption from Nagaland (one
of the Special Category States) are non-taxable supplies3.
In the given case, since the aggregate turnover of Uday Enterprises exceeds the applicable threshold limit of
₹ 40 lakh, it is liable to obtain registration. It will obtain registration in Maharashtra, but is not required to
obtain registration in Nagaland as he is not making any taxable supplies from said State.

Question 4: Explain procedure for registration.

Answer: Procedure for Registration Section 25
(1) Every person who is liable to be registered shall apply for registration in every such State or Union
territory from where he is making supply, within thirty days from the date on which he becomes liable to
registration.
Provided further that a person having a unit, in a Special Economic Zone or being a Special Economic
Zone developer shall have to apply for a separate registration, as distinct from his place of business
located outside the Special Economic Zone in the same State or Union territory.
(2) A person shall be granted a single registration in a State or Union territory, however a person having
multiple places of business in a State or Union territory shall have the option to take a separate
registration for each such place of business.
(3) A person is allowed to take voluntary registration at any time.
(4)/(5) A person who has obtained more than one registration, shall, in respect of each such registration,
be treated as distinct persons for the purposes of this Act.
(6) Every person must have Permanent Account Number issued under the Income- tax Act, 1961 in
order to be eligible for grant of registration:
(6A) Every registered person shall undergo authentication of Aadhaar number otherwise his certificate
shall be deemed to be invalid.
(6B) Every individual shall, in order to be eligible for grant of registration, undergo authentication of
Aadhaar number.
(6C) Every person, other than an individual, shall undergo authentication of Aadhaar number of the
Karta, Managing Director, whole time Director, such number of partners, Members of Managing
Committee of Association, Board of Trustees, authorised representative, authorised signatory and such
other class of persons, in such manner, as the Government may specify:
Where person or class of persons covered under section 25(6A) or 25(6B) or 25(6C) have not been
assigned the Aadhaar Number, they shall be offered alternate and viable means of identification in such
manner as the Government may specify.
 Registration 152

(6D) The provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to.
 A person who is not a citizen of India
 Department or establishment of State Government or Central Government
 Local authority
 Statutory body
 Public Sector Undertaking
 A person applying for Unique Identity Number
[Notification No.03/2021 CT dated 23.02.2021]

Application for registration Rule 8

(1) Every person has to apply for registration in the prescribed form as given below:
Sl.No Persons Covered Form
01. Registration as Input Service Distributor (Not covered in syllabus) REG-01
02. Casual Taxable Person and Other Persons REG-01
03. Registration as Non-Resident Taxable Person REG-09
04. Registration of persons Deducting tax at Source u/s 51 (Not covered in syllabus) REG-07
05. Registration of persons Collecting tax at Source u/s 52 (ECO) (Not covered in REG-07
syllabus)
06. Registration as OIDAR (Not covered in syllabus) REG-10
07. Application for Grant of Unique Identity Number (UIN) REG-13

Procedure for Registration Rule 8/Rule 9

Every person applying for registration shall submit information in part A of REG-01 on the common portal
and it will contain details like legal name, Permanent Account Number and the state / union territory. The
Permanent Account Number shall be validated online by the common portal from the database maintained
by the Central Board of Direct Taxes and shall also be verified through separate one-time passwords sent to
the mobile number and e-mail address linked to the Permanent Account Number.
After verification of the PAN and email id and phone number, a temporary reference number (TRN) shall be
generated and sent on email / mobile no. of the applicant.
Using TRN, the applicant shall submit part B of REG-01. There will be two categories of registration.
Category -1: Applicant opting for Aadhaar authentication
Where an applicant, opts for authentication of Aadhaar number, he shall, undergo authentication of Aadhaar
number and the date of submission of the application in such cases shall be the date of authentication of the
Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01
whichever is earlier:
If such applicant is identified on the common portal on the basis of data analysis and risk parameters, such
person shall be required to under go biometric-based aadhaar authentication and photograph of the applicant
or other specified person and also original copy of the documents shall be verified at the specified
Facilitation Centre (at present setup only in Gujrat) and the date of application shall be the date of
completion of such process.
In this case registration shall be granted in Form No. REG-06 within 7 days or if there is any discrepancy, it
will be reported to the applicant within 7 days and applicant shall be required to rectify within 7 days
otherwise application shall be rejected. If he has rectified the discrepancy, certificate shall be given within 7
days. If the department has not issued certificate in 7 days, the registration shall be deemed to have been
approved.
Category-2: Others
It will be applicable in the following cases:
(i) A person who has failed to undergo authentication of Aadhaar number or has not opted for authentication
of Aadhaar number; or
 Registration 153

(ii) a person, who has undergone authentication of Aadhaar number is identified on the common portal,
based on data analysis and risk parameters, for carrying out physical verification of places of business; or
(iii) the proper officer, with the approval of an officer authorised by the Commissioner not below the rank of
Assistant Commissioner, deems it fit to carry out physical verification of places of business,

In the above cases registration shall be granted within 30 days of submission of application or if there is any
discrepancy, it will be reported within 30 days and the applicant shall be required to rectify within 7 days
otherwise application shall be rejected. If he has rectified the discrepancy, certificate shall be given within 7
days. If the department has not issued certificate in 7 days, the registration shall be deemed to have been
approved.

Issue of Registration certificate

Certificate of registration shall be granted in form no. REG-06 and if supplier has more than one branch in
a State or Union Territory, he will get one registration certificate and all the places of the supplier shall be
mentioned in the certificate. The supplier shall be allotted goods and service tax identification number and it
will consist of
(a) two characters for the State code.
(b) ten characters for the Permanent Account Number or the Tax Deduction and Collection Account
Number.
(c) two characters for the entity code and
(d) one checksum character.

Effective Date of Registration

If applicant has submitted application within a period of 30 days, he will be considered to be registered from
the date on which he becomes liable to registration and if application is given after 30 days, effective date of
registration shall be the date of granting registration.
Example:
1. In case of Mr. X supplying goods limit of ₹ 40,00,000 exceeded on 10th August 2022 and he applied for
registration on 20th August 2022 and registration was granted on 30th August 2022, In this case effective
date shall be 10th August 2022 but if he has applied on 15th September 2022 and registration was granted on
25th September 2022, Registration shall be effective from 25th September 2022.
2. Turnover of Mr. X supplying goods on 10th August 2022 is ₹ 35,00,000 and he applied for voluntary
registration and registration was granted on 25th August 2022, In this case registration is effective from 25th
August 2022 but if his Turnover has exceeded ₹40,00,000 on 20th August 2022, In this case applicant should
inform the department for change of category (REG-04) and registration granted shall be applicable from
20th August 2022.

Question 5: Explain Issue of Revised Invoice at the time of registration

Answer: Issue of Revised Invoice at the time of registration Section 31(3)(a)
A registered person is allowed to issue revised invoice for the invoice already issued from the effective date
of registration till the date of issuance of registration certificate. Further revised invoice should be issued
within one month from the date of issuing of registration certificate.
The registered person may issue a consolidated revised tax invoice in respect of all taxable supplies made to
a recipient who is not registered.

Example: Mr. A, a registered supplier has made supplies to unregistered recipient as given below: supply 1
₹60,000, supply 2 ₹40,000, supply 3 ₹70,000, supply 4 ₹1,00,000, in this case consolidated revised tax
invoice can be issued for all the supplies.
 Registration 154

In the case of inter-State supplies, where the value of a supply does not exceed two lakh and fifty thousand
rupees, a consolidated revised invoice may be issued separately in respect of all the recipients located in a
State, who are not registered.
Example: Mr. A, a registered supplier has made supplies to unregistered recipient as given below: supply 1
₹60,000, supply 2 ₹40,000, supply 3 ₹70,000, supply 4 ₹1,00,000, in this case consolidated revised tax
invoice can be issued for all the supplies.
In the case of inter-State supplies, where the value of a supply does not exceed two lakh and fifty thousand
rupees, a consolidated revised invoice may be issued separately in respect of all the recipients located in a
State, who are not registered.
Illustration 1
Luv & Kush Pvt. Ltd. of Meghalaya engaged in the supply of gifts items and repair services, provides you
the following details:-
S.No. Particulars Date
1. Commencement of the business of supplying goods and services 01st August
2. Turnover exceeds ₹ 10,00,000 on 15th August
3. Turnover exceeds ₹ 20,00,000 on 05th September
4. Application for registration made on 28th September
5. Registration certificate granted on 06th October
The company seeks your advice as to how it should raise revised tax invoices for supplies made. Is there any
specific provision for issuance of revised tax invoices to unregistered customers? Explain.
Answer:
A supplier of both goods and services whose aggregate turnover in a financial year exceeds the prescribed
limit 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.) in terms of section 22. In case of Meghalaya threshold limit is ₹ 20
lakh.
Further, where the application is submitted within said period, the effective date of registration is the date on
which the person becomes liable to registration; otherwise it is the date of grant of registration.
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 within 1 month from the date of
issuance of registration certificate in respect of taxable supplies effected during this period i.e. from the
effective date of registration till the date of issuance of registration.
Since Luv & Kush Pvt. Ltd. has made the application for registration within 30 days of becoming liable for
registration, the effective date of registration becomes the date on which the company becomes liable to
registration i.e. 5th September.
Thus, Luv & Kush Pvt. Ltd. may issue revised tax invoices against the invoices already issued during the
period between effective date of registration (5th September) and the date of issuance of registration
certificate (6th October), within 1 month from 6th October.
Further, Luv & Kush Pvt. Ltd may issue a consolidated revised tax invoice in respect of all taxable supplies
made to unregistered dealers during such period. However, in case of inter-State supplies made to
unregistered dealers, a consolidated revised tax invoice cannot be issued in respect of all the recipients
located in a State, if the value of a supply exceeds ₹ 2,50,000.
Question 6: Write a note on separate registration for multiple places of business within a state or
union territory.
Answer: Separate registration for multiple places of business within a State or a Union territory
Section 25(2)
A registered person having two or more places of business in a State or a Union territory shall have the
option to take one registration or separate registration for each branch. If separate registration is taken they
 Registration 155

will be called deemed distinct persons and in case of supply to each other they will issue invoice and
charge GST and also ITC shall be allowed. All the branches should be either in the normal scheme or in the
composition scheme.
If earlier there was one registration but now separate registration has been taken, in such cases input tax
credit can be transferred to the branch but in the ratio of value of asset held by them at the time of
registration.
Question 7: Explain Suo motu registration.
Answer:
Suo motu registration Section 25(8)
If GST officer is find that a person is liable to registration but he has not taken registration, in that case GST
officer can register him suo motu and such person shall stand register from the date of order issued by the
GST Officer and such person shall be liable to file application for registration within 90 days from the date
of granting suo motu registration.
Such person can file an appeal with the Appellate Authority and if Appellate Authority has also confirmed
such Suo motu registration, in that case he should apply for registration within 30 days of passing the order
by the Appellate Authority and registration shall be effective from the date of granting suo motu registration.

Question 8: write a note on amendment in Registration Certificate.

Answer:
Amendment of registration Section 28
A registered person may apply for amendment of registration in REG-14 within 15 days of occurring of such
change and GST Officer shall grant amendment within 15 days of receiving the intimation or the GST
Officer shall raise objection within 7 days of the intimation. The applicant should remove objection within 7
days of receiving the intimation and GST Officer shall grant amendment within 7 days of receiving the
intimation.
Amendment is allowed with regard to the following:
(i) legal name of business;
(ii) address of the principal place of business or any additional place(s) of business; or
(iii) addition, deletion or retirement of partners or directors, Karta, Managing Committee, Board of
Trustees, Chief Executive Officer or equivalent, responsible for the day to day affairs of the
business,-

If the proper officer fails to take any action,—

(a) within a period of fifteen working days from the date of submission of the application, or
(b) within a period of seven working days from the date of the receipt of the reply to the notice to show
cause,
the certificate of registration shall stand amended to the extent applied for and the amended certificate shall
be made available to the registered person on the common portal.

If amendment is for change in mobile no. or email address and such amendment shall be applicable upon
submission of application in REG-14 but there will be online verification through OTP.

Question 9: Explain cancellation of registration Section 29.

Answer:
Cancellation shall be of two types:
1. At the request of the applicant
2. Suo motto

1. At the request of the applicant: Registration can be cancelled at the request of the applicant and for
this purpose application should be given in Form REG-16 within 30 days of the occurrence of the
event leading to cancellation and GST Officer shall pass orders within 30 days from the date of
application.
 Registration 156

2. Suo motto: Department can issue a notice in REG-17 for cancellation of registration certificate and a
period of 7 days shall be allowed to the applicant to reply such notice. If the GST Officer is not
satisfied, certificate shall be cancelled.

Certificate can be cancelled in the following cases:

1. Business/Profession has been closed
2. The registered person has expired
3. The person is not required to be registered under section 22 or section 24
4. He has not filed return under section 39(1) for a period exceeding 6 months if return was to be filed on
monthly basis and for period exceeding 2 quarters if return was to be filed on quarterly basis
5. In case of a composition dealer, if he has not filed annual return in GSTR-4 for a period exceeding 3
months.
6. If he has taken voluntary registration but he has not commenced business within 6 months from the date
of registration
7. He issued invoice without supply of goods or services
8. He has violated the provisions of section 171
9. He avails ITC in violation of section 16
10. If the amounts reported in GSTR-1 and GSTR-2B are different from the amounts reported in GSTR-3B
11. Violates the provision of rule 86B.
12. Violates the provision of rule 10A. As per rule 10A, after registration has been granted, registered person
shall furnish details of his bank accounts within 30 days from the date of registration or the date of filing
return in GSTR-1 or using invoice furnishing facility whichever is earlier. E.g. if registration is granted on
01.05.2023, bank details should be submitted upto 30.05.2023 but if registration has been granted on
20.05.2023, details should be submitted upto 11.06.2023.
Suspension of registration
Before cancellation, certificate of registration shall be suspended during the proceedings of cancellation. In
case of cancellation at the request of the applicant, certificate shall be suspended from the date of
submission of application or from the date from which cancellation is requested whichever is later.
E.g. Mr. X has applied for cancellation on 15.10.2022 that his registration should be cancelled from
01.11.2022, in this case certificate shall be suspended from 01.11.2022.
If the department decides to cancel the certificate, they will suspend the registration from a particular
date to be decided by them and for this purpose notice shall be given in REG-17 and a time period of 7
days shall be allowed to submit reply.
A registered person, whose registration has been suspended shall not make any taxable supply during the
period of suspension and shall not be required to furnish any return under section 39 i.e. the registered
person shall not issue a tax invoice and, accordingly, not charge tax on supplies made by him during the
period of suspension. Further such person shall not be granted any refund during the period of suspension.
The proper officer shall have the powers to revoke the suspension and in that case suspension shall be
revoked from the date from which it has come into operation and the person shall be required to issue
revised invoice for such period and also provision of section 40 shall be applicable. (First return Section 40,
every registered person who has made outward supplies in the period between the date on which he became
liable to registration till the date on which registration has been granted shall declare the same in the first
return furnished by him after grant of registration.)
If registration was suspended for not filing the return, suspension shall be deemed to be revoked on
submission of all the pending returns along with payment of tax, interest or late fee etc.

Question 10: write a note on revocation of cancellation of Registration Section 30.

Answer:
Any registered person, whose registration is cancelled may apply for revocation of cancellation within 90
days from the date of service of the cancellation order:
 Registration 157

However such period may, on sufficient cause being shown be extended by the Commissioner or an officer
authorized by him not below the rank of the Joint Commissioner or Additional Commissioner, for a further
period of 180 days.
The proper officer may, either revoke cancellation of the registration or reject the application:
Provided that no application for revocation shall be filed, if the registration has been cancelled for the
failure of the registered person to furnish returns, unless such returns are furnished and any amount due as
tax, in terms of such returns, has been paid along with any amount payable towards interest, penalty and late
fee in respect of the said returns.

If the proper officer is satisfied, he shall revoke the cancellation of registration within a period of 30 days
from the date of the receipt of the application.

The proper officer may reject the application but before rejecting, a notice shall be given and a reply shall be
given within 7 days and final decision shall be taken within 30 days.

As per Rule 10B, the registered person while applying for revocation of cancellation shall be required to
under go Aadhaar Authentication.
Provided that if Aadhaar number has not been assigned to the person required to undergo authentication of
the Aadhaar number, such person shall furnish the following identification documents, namely: -
(a) her/his Aadhaar Enrolment ID slip; and
(b) (i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988 (59 of 1988):

Question 11: Explain tax liability with regard to the goods lying in stock at the time of cancellation of
registration certificate.
Answer:
As per Schedule II, if any person ceases to be a taxable person, any goods forming part of the assets of any
business carried on by him shall be deemed to be supplied by him.
As per section 29(5), every registered person whose registration is cancelled shall pay an amount,
equivalent to the 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 of such cancellation or the output
tax payable on such goods, whichever is higher.
However, in case of capital goods, the amount payable shall be computed for the remaining life of the
capital goods (Rule 44) or the tax on the transaction value of such capital goods, whichever is higher.

Examples
1. A dealer ‘X’ engaged in supplying of goods has two offices – one in Delhi and another in Haryana. In
order to determine whether ‘X’ is liable for registration, turnover of both the offices would be taken into
account and only if the same exceeds ₹40 lakh, X is liable for registration.

2. R Oils, Punjab, is engaged in supplying machine oil as well as petrol. Supply of petrol is not leviable to
GST, but supply of machine oil is taxable. In order to determine whether R Oils is liable for registration,
turnover of both the supplies – non-taxable as well as taxable - would be taken into account and if the same
exceeds ₹40 lakh, R Oils is liable for registration.

3. M Enterprises has appointed M/s ABC & Associates as its agent. All the supplies of goods made by M/s
ABC & Associates as agent of M Enterprises will also be included in the aggregate turnover of M/s ABC &
Associates.
 Registration 158

4. ABC Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. The turnover of ABC
Services Ltd. exceeded ₹20 lakh on 1st November. It is liable apply for registration by 1st December in the
State of Madhya Pradesh.
5. Mr. X, a Chartered Accountant, has a registered head office in Delhi. He has also obtained registration in
the State of West Bengal in respect of his newly opened branch office. Mr. X shall be treated as distinct
persons in respect of registrations in West Bengal and Delhi.

6. XYZ Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. The turnover of XYZ
Services Ltd. exceeded ₹20 lakh on 1st November. It is liable to apply for registration by 1st December [30
days] in the State of Madhya Pradesh. It applies for registration on 28th November and is granted
registration certificate on 5th December. The effective date of registration of XYZ Services Ltd. is 1st
November.
In above example, if XYZ Services Ltd. applies for registration on 3rd December and is granted registration
certificate on 10th December. The effective date of registration of XYZ Services Ltd. is 10th December.

Question 12: Explain GST provisions in case of casual taxable person.

Answer: Casual Taxable person
As per section 2 (20), "casual taxable person" means a person who occasionally undertakes transactions
involving supply of goods or services or both in the course or furtherance of business, whether as principal,
agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.

Every casual taxable person shall also be required to take registration irrespective of the turnover and
procedure shall be same. For this purpose he will apply in REG-01.
He should apply for registration atleast 5 days prior to commencement of business. Registration shall be
granted only after the applicant has paid estimated amount of GST in advance.

As per section 27, Certificate shall be valid for the specified period but maximum 90 days however proper
officer may extend it further but for maximum 90 days i.e. total period can be maximum 180 days. Such
person shall make advance deposit of GST as estimated by him.

Every casual taxable person shall be required to submit monthly return similarly as required to be filed by
normal registered person. (GSTR-1) however such person is allowed to file GSTR-1 before the end of the
current tax period in case of closure of their business.
The amount of advance tax deposited by casual taxable person shall not be refunded unless he furnished
GSTR 3B.

Question. Rohan Toys is a registered supplier of goods in Delhi. It intends to attend a 7 days’ Business Fair
organised in Mumbai (next month) where it does not have a fixed place of business. Examine which of the
following statements are true for Rohan Toys:
(a) Rohan Toys is not required to obtain registration in Mumbai for attending a 7 days’ Business Fair.
(b) Rohan Toys has to obtain registration as a casual taxable person for attending the Business Fair.
(c) Rohan Toys has to obtain a Unique Identification Number for attending the Business Fair.
(d) None of the above
Answer: (b)

Question 13: Explain GST provisions in case of Non-Resident taxable person.

Answer: Non – Resident Taxable Person
As per section 2 (77), "non-resident taxable person" means any person who occasionally undertakes
transactions involving supply of goods or services or both, whether as principal or agent or in any other
capacity, but who has no fixed place of business or residence in India.
NRTP shall also be required to take registration irrespective of the turnover and he has to apply in REG-09.
 Registration 159

He should apply for registration atleast 5 days prior to commencement of business. Registration shall be
granted only after the applicant has paid estimated amount of GST in advance.

A non-resident taxable person shall electronically submit an application, along with a self-attested copy of
his valid passport. In the case of a business entity incorporated or established outside India, the application
for registration shall be submitted along with its tax identification number or unique number on the basis of
which the entity is identified by the Government of that country or its Permanent Account Number, if
available.

As per section 27, Certificate shall be valid for the specified period but maximum 90 days however proper
officer may extend it further but for maximum 90 days i.e. total period can be maximum 180 days.
Extension in period of operation by non-resident taxable person Rule 15
As per Rule 63, Return shall be furnished in form GSTR-5 within 13 days after the end of the month or
within 7 days after the last day of validity of registration. Whichever is earlier. (NRTP is not required to file
GSTR-1 or GSTR-3B or annual return)
Question . Which of the following persons are compulsorily required to obtain registration?
(a) Persons making any inter-State taxable supply
(b) Non-resident taxable persons making taxable supply
(c) Casual taxable persons making taxable supply
(d) All of the above
Answer: (d)

Question 14: Explain the manner in which GST is payable by an electronic commerce operator
covered u/s 9(5).
Answer: As per section 9(5), The Government may, on the recommendations of the Council, by
notification, specify categories of services the tax on supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to
such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply
of such services.

Further if an electronic commerce operator does not have a physical presence in the taxable territory, such
electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax
and such person shall be liable to pay tax.

NOTIFICATION NO. 17/2017-CENTRAL TAX (RATE)

In case of the following categories of services, the tax on intra-State supplies shall be paid by the electronic
commerce operator—
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motor cycle, omnibus
or any other motor vehicle;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes, except where the person supplying such
service through electronic commerce operator is liable for registration under section 22 of the said Central
Goods and Services Tax Act;
(iii) services by way of house-keeping, such as plumbing, carpentering etc., except where the person
supplying such service through electronic commerce operator is liable for registration under section 22 of
the said Central Goods and Services Tax Act.
(iv) supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at
specified premises. Specified premises means premises providing hotel accommodation service having
declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or
equivalent.
 Registration 160

Example: Mr. X has taken services of UBER cabs and has paid ₹10,000 plus GST ₹1,000 in this case
UBER cabs shall be responsible to pay GST of ₹ 1,000 to the Government. Further the real owner of the cab
shall charge amount from UBER cabs and if such amount is ₹ 8,000, it will be paid by UBER cabs to the
real owner but if real owner is also registered under GST, he will charge ₹ 8,000 plus GST 800 and UBER
cabs shall take ITC of ₹ 800 and pay ₹ 200 to the Government.

Q. A radio taxi driver has provided his services through Electronic Commerce Operator – Kuber Cabs. The
tax on such supplies shall be paid by the _________________.
(a) Electronic Commerce Operator – Kuber Cabs
(b) Radio taxi driver
(c) Customer receiving the services from radio taxi driver
(d) None of the above
Answer: (a)
Q. A hotel owner provided accommodation in Haryana, through an electronic commerce operator – Cool
Trips. The hotel owner is not liable to get registered as per the provisions of section 22 of the CGST Act.
Who is the person liable to pay GST in this case? Would your answer be different if the Electronic
Commerce Operator Cool Trips does not have a physical presence in India?
Answer: Services by way of providing accommodation in hotels through electronic commerce operator is a
specified service for said purpose. Thus, person liable to pay GST in this case is the Electronic Commerce
Operator Cool Trips. All the provisions of the GST law shall apply to such electronic commerce operator as
if he is the supplier liable for paying the tax in relation to the supply of such services.

Yes, answer would be different if the ECO does not have physical presence in India in that case person
representing such ECO in India shall be liable to pay GST.
Q. Can any person other than the supplier or recipient be liable to pay tax under GST?
Answer: Yes, the Government can specify categories of services the tax on which shall be paid by the
Electronic Commerce Operator, if such services are supplied through it and all the provisions of the GST
law shall apply to such electronic commerce operator as if he is the person liable to pay tax in relation to
supply of such services.

Question 15: Explain Registration in case of Special Economic Zone.

Answer: Registration in case of Special Economic Zone
Special Economic Zone
The term SEZ is defined in SEZ Act, 2005, Section 2(za), SEZ Means a specific area with well - defined
physical boundaries and which has been declared to be SEZ and a Development commissioner is appointed
by the Government.

A person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer
shall make a separate application for registration as a distinct from his other units located outside the Special
Economic Zone.

Example: ABC limited has 2 Units in UP. One in SEZ and one Outside SEZ, In this case Company should
take 2 Registration. If Company has 2 units in SEZ and one outside SEZ, Still 2 registration are required i.e.
one for all Units of SEZ and One for Unit Outside SEZ.

Question 16: Explain special provisions with regard to Notified International Agencies.
Answer:
As per section 25 (9), Certain agencies shall be required to obtain Unique Identity Number and are as given
below:
1. Any agency of the United Nations Organisation.
2. Consulate or Embassy of foreign countries.
 Registration 161

3. Any other person or class of persons, as may be notified by the Commissioner.

Such agencies should apply in REG-13 for obtaining an UIN.
Persons supplying goods/services to such agencies shall collect GST and the number so given shall be
mentioned in the Invoice but such agencies can claim refund subsequently. As per notification no. 16/2017
CT (R) 28-06-2017, such agencies are allowed to claim refund of the taxes paid by them.
They will be required to claim refund before expiry of 2 years from the last day of the quarter in which
supply was received.
Such agencies shall be required to furnish details in GSTR-11 on quarterly basis to claim refund but
maximum within time allowed under section 54 i.e. within 2 years.
 Registration 162

PRACTICE PROBLEMS
Q 1. Determine the effective date of registration in following cases:
(a) The aggregate turnover of Dhampur Industries of Delhi engaged in taxable supply of goods has exceeded
₹40 lakh on 1st September. It submits the application for registration on 20th September. Registration
certificate is granted to it on 25th September.
Answer: Every supplier of goods becomes liable to registration if his turnover exceeds ₹40 lakh in a
financial year. Since in the given case, the turnover of Dhampur Industries exceeded ₹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. Therefore,
the effective date of registration is 1st September.
(b) Mehta Teleservices is an internet service provider in Lucknow. Its aggregate turnover exceeds ₹20 lakh
on 25th October. It submits the application for registration on 27th November. Registration certificate is
granted to it on 5th December.
Answer: Since in the given case, the turnover of Mehta Teleservices exceeds ₹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.

Q2. 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 ₹40 lakh during the financial year.
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land.
Answer:
(a) Section 22 stipulates that every supplier of goods becomes liable to registration if his turnover exceeds
₹40 lakh in a State/UT 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 ₹40 lakh 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.

Q3. What are the advantages of taking registration in GST?

Answer: 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.

Q4. Can a person without GST registration collect GST and claim ITC?
Answer: No, a person without GST registration can neither collect GST from his customers nor can claim
any input tax credit of GST paid by him.

Q5. If a person is operating in different States, with the same PAN number, can he operate with a single
registration?
Answer: No. Every person who is liable to take a registration will have to get registered separately for each
of the States where he has a business operation (and is liable to pay GST)
 Registration 163

Q6. Is there a provision for a person to get himself voluntarily registered though he may not be liable to pay
GST?
Answer: Yes. In terms of section 25 (3), a person, though not liable to be registered under sections 22 or 24
may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered taxable
person, shall apply to such person.

Q7. Can the Department, through the proper officer, suo-moto proceed to register of a person?
Answer: Yes. In terms of section 25, where a person who is liable to be registered under GST law fails to
obtain registration, the proper officer may, without prejudice to any action which may be taken under CGST
Act, or under any other law for the time being in force, proceed to register such person in the manner as is
prescribed in the CGST Rules, 2017.

Q8. Whether the registration granted to any person is permanent?

Answer: Yes, the registration certificate once granted is permanent unless surrendered, cancelled,
suspended or revoked.

Q9. What happens when the registration is obtained by means of willful misstatement, fraud or suppression
of facts?
Answer: In such cases, the registration may be cancelled with retrospective effect by the proper officer.

Q10. Is there an option to take centralized registration for services under GST Law?
Answer: No, the tax paper has to take separate registration in every State from where he makes taxable
supplies.

Q11. What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Answer: The transferee or the successor shall be liable to be registered with effect from such transfer or
succession and he will have to obtain a fresh registration with effect from the date of such transfer or
succession [Section 22(3)]

Q12. At the time of registration, will the assessee have to declare all his places of business?
Answer: Yes. The principal place of business and place of business have been separately defined under
section 2(89) & 2(85) of the CGST Act respectively.
The taxpayer will have to declare the principal place of business as well as the details of additional places of
business in the registration form.
2(85) "place of business" includes—
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a
godown or any other place where a taxable person stores his goods, supplies or receives
goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name
called;
2(89) "principal place of business" means the place of business specified as the principal place of
business in the certificate of registration;

Q13. What will be the time limit for the decision on the on-line registration application in case the person
undergoes Aadhaar Authentication?
Answer: If the information and the uploaded documents are found in order, the proper officer has to respond
to the application within 7 common working days. If he communicates any deficiency or discrepancy in the
application within such time, then the applicant will have to remove the discrepancy /deficiency within 7
days of such communication. Thereafter, for either approving the application or rejecting it, the proper
officer has 7 days’ time from the date when the taxable person communicates removal of deficiencies. In
 Registration 164

case no response is given by the proper officer within the said time line, the portal shall automatically
generate the registration.

Q14. What will be the time of response by the applicant if any query is raised in the online application?
Answer: If during the process of verification, one of the tax authorities raises some query or notices some
error, the same shall be communicated to the applicant and to the other tax authority through the GST
Common Portal within 7 common working days, if the applicant undergoes Aadhaar Authentication
otherwise within 30 days. The applicant will reply to the query/rectify the error/ answer the query within a
period of 7 days from the date of receipt of deficiency intimation.
On receipt of additional document or clarification, the relevant tax authority will respond within 7 common
working days from the date of receipt of clarification.

Q15. Does cancellation of registration impose any tax obligations on the person whose registration is so
cancelled?
Answer: Yes, as per section 29(5) of the CGST Act, every registered taxable person whose registration is
cancelled shall pay an amount, by way of debit in the electronic cash ledger or electronic credit ledger,
equivalent to the credit of input tax in respect of inputs held in stock / semi-finished / finished goods or
capital goods on the day immediately preceding the date of such cancellation or the output tax payable on
such goods, whichever is higher.

Q16. At the time of registration, will the assessee have to declare all his places of business?
Answer: Yes. The principal place of business and place of business have been separately defined under
section 2(89) & 2(85) of the CGST Act respectively. The taxpayer will have to declare the principal place of
business as well as the details of additional places of business in the registration form.

Q17. 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.
Answer: A Permanent Account Number is mandatory to be eligible for grant of registration. One exception
to this is a non-resident taxable person. A nonresident 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 [Section 25(6) & (7)].

Q18. Pure Oils, Delhi has supplied machine oil and high-speed diesel in the month of April as per the details
given in table below. Pure Oils is not yet registered.
Sl.No. Particulars Amount (₹)*
(i) Supply of machine oil in Delhi 15,00,000
(ii) Supply of high speed diesel in Delhi 10,00,000
(iii) Supply of machine oil made in Punjab by Pure Oils from its branch 10,00,000
located in Punjab
*excluding GST
Determine whether Pure Oils is liable for registration.
Answer: As per section 22, 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:-
(a) ₹ 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) ₹ 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) ₹ 40 lakh for rest of India except persons engaged in making supplies of ice cream and other edible ice,
whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco substitutes.
As per sect ion 2(6), aggregate turnover includes the aggregate value of:
 Registration 165

(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.
Section 9(2) provides that CGST is not leviable on five petroleum products i.e. petroleum crude, motor spirit
(petrol), high speed diesel, natural gas and aviation turbine fuel. As per section 2(47), exempt supply
includes nontaxable supply. Thus, supply of high speed diesel in Delhi, being a nontaxable supply, is an
exempt supply and is, therefore, includible while computing the aggregate turnover.
In the backdrop of the above-mentioned discussion, the aggregate turnover
of Pure Oils for the month of April is computed as under:
S.No. Particulars Amount (in ₹)
(i) Supply of machine oils in Delhi 15,00,000
(ii) Add: Supply of high speed diesel in Delhi 10,00,000
(iii) Add: Supply of machine oil made by Pure Oils from its branch 10,00,000
located in Punjab
Aggregate Turnover 35,00,000
Pure Oils is making exclusive supply of goods and hence the threshold limit for registration would be
₹40,00,000. Since the aggregate turnover does not exceed ₹ 40,00,000, Pure Oils is not liable to be
registered.

(b) Presume Pure Oils supplies the high speed diesel in Delhi in the capacity of an agent of Mixed Oils
Ltd.?
Answer:
In case Pure Oils makes the supply in capacity of an agent of Mixed Oils Ltd.:
Section 24 provides that an agent who is engaged in making taxable supplying of goods on behalf of other
taxable persons, shall be liable to obtain registration irrespective of the threshold turnover limit. However, in
the present case, if Pure Oils supply high speed diesel on behalf of Mixed Oil Ltd. in Delhi as its agent, it
shall still not be liable to obtain registration in Delhi since section 24 comes into play only when agent is
making taxable supply of goods on behalf of principal whereas in the given case, Pure Oils is supplying non-
taxable goods on behalf of Mixed Oils Ltd.

Q19. Examine whether the supplier of goods is liable to get registered in the following independent cases:-
(i) Raghav of Assam is exclusively engaged in intra-State taxable supply of readymade garments. His
turnover in the current financial year (FY) from Assam showroom is ₹ 33 lakh. He has another showroom in
Tripura with a turnover of ₹ 11 lakh in the current FY.
(ii) Pulkit of Panjim, Goa is exclusively engaged in intra-State taxable supply of shoes. His aggregate
turnover in the current financial year is ₹ 22 lakh.
(iii) Harshit of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala. His aggregate
turnover in the current financial year is ₹ 24 lakh.
Answer:
As per section 22, 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:-
(a) ₹ 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) ₹ 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) ₹ 40 lakh for rest of India except persons engaged in making supplies of ice cream and other edible ice,
whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco substitutes.
In the light of the afore-mentioned provisions, the answer to the independent cases is as under:-
(i) Raghav is eligible for higher threshold limit of turnover for registration, i.e. ₹ 40 lakh as he is exclusively
engaged in intra-State supply of goods. However, since Raghav is engaged in supplying readymade
 Registration 166

garments from a Special Category State i.e. Tripura, the threshold limit gets reduced to ₹ 10 lakh. Thus,
Raghav is liable to get registered under GST as his turnover exceeds ₹10 lakh. Further, he is required to
obtain registration in both Assam and Tripura as he is making taxable supplies from both the States.
(ii) The applicable threshold limit for registration for Pulkit in the given case is ₹ 40 lakh as he is exclusively
engaged in intra-State taxable supply of goods in Goa. Thus, he is not liable to get registered under GST as
his turnover is less than the threshold limit.
(iii) Harshit being exclusively engaged in supply of pan masala is not eligible for higher threshold limit of
₹40 lakh. The applicable threshold limit for registration in this case is ₹20 lakh. Thus, Harshit is liable to get
registered under GST.

Q20. What are the advantage of taking registration in GST?

Answer: 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.

Q21. Can a person without GST registration collect GST and claim ITC?
Answer: No, a person without GST registration can neither collect GST from his customers nor can claim
any input tax credit of GST paid by him.

Q22. If a person is making taxable supplies from different States, with the same PAN number, can he
operate with a single registration?
Answer: No. Every person who is liable to take a registration will have to get registered separately for each
of the States where he has a business operation (and making taxable supplies) provided his aggregate
turnover exceeds applicable threshold limit.

Q23. Can a person having multiple places of business in a State obtain separate registrations for each place
of business?
Answer: Yes. In terms of section 25, a person having multiple places of business in a State may obtain a
separate registration for each place of business, subject to such conditions as may be prescribed.

Q24. Is there a provision for a person to get himself voluntarily registered though he may not be liable to
pay GST?
Answer: Yes. In terms of sub-section (3) of section 25, a person, though not liable to be registered under
sections 22 or 24 may get himself registered voluntarily, and all provisions of this Act, as are applicable to a
registered taxable person, shall apply to such person.

Q25. Can the Department, through the proper officer, suo-moto proceed to register a person under GST?
Answer: Yes. In terms of section 25, where a person who is liable to be registered under GST law fails to
obtain registration, the proper officer may, without prejudice to any action which may be taken under CGST
Act, or under any other law for the time being in force, proceed to register such person in the manner as is
prescribed in the CGST Rules.

Q26. Whether the registration granted to any person is permanent?

Answer: Yes, the registration certificate once granted is permanent unless surrendered, cancelled,
suspended or revoked.

Q27. Is it necessary for the UN bodies to get registration under GST?

 Registration 167

Answer: In terms of section 25(9) of the CGST Act, all notified UN bodies, Consulate or Embassy of
foreign countries and any other class of persons so notified would be required to obtain a unique
identification number (UIN) from the GST portal.
The structure of the said ID would be uniform across the States in conformity with GSTIN structure and the
same will be common for the Centre and the States. This UIN will be needed for claiming refund of taxes
paid on notified supplies of goods and services received by them, and for any other purpose as may be
notified.

Q28. What is the responsibility of the taxable person making supplies to UN bodies?
Answer: The taxable supplier making supplies to UN bodies is expected to mention the UIN on the invoices
and treat such supplies as supplies to another registered person (B2B).

Q29. What is the validity period of the registration certificate issued to a casual taxable person and non-
resident taxable person?
Answer: In terms of section 27, 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.

Q30. What happens when the registration is obtained by means of willful misstatement, fraud or suppression
of facts?
Answer: In such cases, the registration may be cancelled with retrospective effect by the proper officer.

Q31. Is there an option to take centralized registration for services under GST Law?
Answer: No, the tax paper has to take separate registration in every State from where he makes taxable
supply of services.

Q32. What could be the liabilities (in so far as registration is concerned) on transfer of a business?
Answer: The transferee or the successor shall be liable to be registered with effect from such transfer or
succession and he will have to obtain a fresh registration with effect from the date of such transfer or
succession.
 Registration 168

MULTIPLE CHOICE QUESTIONS

1. Which of the following is not included in aggregate turnover?
(a) Exempt supplies of goods or services or both
(b) Export of goods or services or both
(c) Inter-State supply of goods or services or both
(d) Value of inward supplies on which tax is paid under reverse charge
2. Within how many days an application for revocation of cancellation of registration can be made?
(a) Within 7 days from the date of service of the cancellation order.
(b) Within 15 days from the date of issue of the cancellation order.
(c) Within 45 days from the date of issue of the cancellation order.
(d) Within 30 days from the date of service of the cancellation order.
3. Mr. A has started supply of goods in Delhi. He is required to obtain registration if his aggregate
turnover exceeds ____________ during a financial year.
(a) ₹10 lakh
(b) ₹20 lakh
(c) ₹30 lakh
(d) ₹40 lakh
4. Aggregate turnover includes:
(a) Taxable supplies
(b) Exempt supplies
(c) Exports
(d) All of the above
5. Which of the statements is correct?
(a) Person making any inter-State taxable supply of goods is required to obtain registration compulsorily.
(b) A person to whom a UIN has been granted cannot apply for cancellation of registration.
(c) The cancellation of registration under either SGST Act/UTGST Act shall be deemed to be a cancellation
of registration under CGST Act
(d) All of the above
6. Which of the following persons are not liable for registration?
(a) Any person engaged exclusively in supplying services wholly exempt from tax
(b) Persons making any inter-State taxable supply of goods
(c) Both (a) and (b)
(d) None of the above
7. The persons making inter-State supplies from Madhya Pradesh is compulsorily required to get
registered under GST, _____
(a) if his all India based aggregate turnover exceeds ₹20 lakh in a financial year
(b) if his all India based aggregate turnover exceeds ₹10 lakh in a financial year
(c) irrespective of the amount of aggregate turnover in a financial year
(d) if his all India based aggregate turnover exceeds ₹40 lakh in a financial year
8. Which of the following statement is true for Mr. X, a casual taxable person?
(a) Mr. X is not required to take registration under GST.
(b) Mr. X is required to get registration under GST, if the aggregate turnover in a financial year exceeds ₹20
lakh.
(c) Mr. X can opt for voluntary registration under GST.
(d) Mr. X has to compulsorily get registered under GST irrespective of the threshold limit.
9. The registration certificate granted to Non resident taxable person is valid for _____days from the
effective date of registration.
(a) 30
(b) 60
(c) 90
 Registration 169

(d) 120
10. How the aggregate turnover is calculated for computing threshold limit of registration?
(i) 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, export of goods/services and interstate
supplies of a person having same PAN computed on all India basis.
(ii) 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, export of goods/services and interstate
supplies of a person computed for each state separately.
(iii) Aggregate value of all taxable intrastate supplies, export of goods/services and exempt supplies of
a person having same PAN computed for each state separately.
(iv) 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, export of goods/services and interstate
supplies of a person having same PAN computed on all India basis and excluding taxes if any charged
under CGST Act, SGST Act and IGST Act.
(a) (i)
(b) (ii)
(c) (iii)
(d) (iv)
11. Within how many days a person should apply for registration?
(a) Within 60 days from the date he becomes liable for registration.
(b) Within 30 days from the date he becomes liable for registration.
(c) No Time Limit
(d) Within 90 days from the date he becomes liable for registration.
12. A person having ____business verticals (branches) in a State ____obtain a separate registration for
each business vertical (branch).
(a) Single, shall
(b) Multiple, shall
(c) Multiple, may
(d) Single, May
13. What is the validity of the registration certificate?
(a) One year
(b) No validity
(c) Valid till it is cancelled.
(d) Five years.
14. Mr. A has started supply of services in Mizoram. He is required to obtain registration if his
aggregate turnover exceeds ____________ during a financial year.
(a) ₹10 lakh
(b) ₹20 lakh
(c) ₹30 lakh
(d) ₹50 lakh
15. Mr. A has started supply of goods within J&K. He is required to obtain registration if his
aggregate turnover exceeds ____________ during a financial year.
(a) ₹10 lakh
(b) ₹40 lakh
(c) ₹30 lakh
(d) ₹50 lakh
16. The Aggregate turnover of ABC Industries of Delhi engaged in taxable supply of goods has
exceeded ₹40 lakh on 1st September. It submits the application on 20th September. Registration
certificate is granted to it on 25th September, effective date of registration shall be-
(a) 20th September (b) 30th September
st
(c) 01 September (d) 25th September
17. Which of the form is used for registration by normal category person?
 Registration 170

(a) Form GSTR -1 (b) Form GST REG–06

(c) Form GST REG-01 (d) Form GST RFD -01
18. Which of the form is used for registration by Non-Resident Taxable person?
(a) Form GSTR -1 (b) Form GST REG–09
(c) Form GST REG-01 (d) Form GST RFD -01
19. Where the application for grant of registration has been approved, a certificate of registration in
_____shall be made available to the applicant
(a) FORM GST REG-06 (b) FORM GST REG-01
(c) FORM GST REG-04 (d) FORM GST REG-10
20. Every registered taxable person shall display his certificate of registration in a prominent location
at his principal and at every other place of business also GSTIN shall be displayed on the name board
at the entry of such places.
(a) No, certificate of registration to be displayed only at a registered place of business and GSTIN need not
be displayed on the name board.
(b) Yes, above statement is correct.
(c) No, GSTIN to be displayed only on the invoices.
(d) Above statement is correct subject to certificate of registration to be displayed only at registered place of
business.
21. Every registered person shall apply online for amendment in form no. ______ within ______
working days of any change.
(a) REG-03, 30 days
(b) REG-14, 15 days
(c) REG-14, 30 days
(d) REG-03, 15 days
22. Every registered person shall submit an application for cancellation in form no. ______ within
______ days.
(a) REG-16, 30 days
(b) REG-14, 15 days
(c) REG-14, 30 days
(d) REG-16, 15 days
23. Non- resident taxable person is required to take registration in GST
(a) if his aggregate turnover exceeds ₹10 lakh
(b) if his aggregate turnover exceeds ₹20 lakh
(c) if his aggregate turnover exceeds ₹30 lakh
(d) Irrespective of turnover
24. If proper officer fails to take action within ________ working days from the date of submission of
application (where the person undergoes Aadhar Authentication) or within 7 working days from the
date of receipt of clarification, registration shall be deemed to have been approved.
(a) 5 days (b) 10 days (c) 7 days (d) 15 days
25. Where a change in constitution of any business results in change of the PAN, old certificate shall
be _________.
(a) amended. (b) cancelled. (c) changed (d) none of the above.

Answer:
1. (d); 2. (d); 3. (d); 4. (d); 5. (d); 6. (a); 7. (c); 8. (d); 9. (c); 10. (d); 11. (b); 12. (c); 13. (c); 14. (a); 15. (b);
16. (c); 17. (c); 18. (b); 19. (a); 20. (b); 21. (b); 22. (a); 23. (d); 24. (c); 25. (b)
 Registration 171

EXAMINATION QUESTION
JULY– 2021
Question 7 (a). (5 Marks)
P Ltd, a registered person provided following information for the month of October, 2022:
Particulars Amount (₹)
Intrastate outward supply 8,00,000
Interstate exempt outward supply 4,00,000
Turnover of exported goods 20,00,000
Payment of IGST 1,20,000
Payment of CGST and SGST 45,000 each
Payment of custom duty on export 40,000
Payment made for availing GTA Services 3,00,000

GST is payable of Reverse Charge for GTA services.

Explain the meaning of aggregate turnover u/s 2(6) of CGST Act and compute the aggregate turnover of P
Ltd. for the month of October, 2022. All amounts are exclusive of GST.
Answer:
The term aggregate turnover means the aggregate value of:
(i) all taxable supplies
(ii) exempt supplies,
(iii) exports of goods or services or both and
(iv) inter-State supplies of persons having the same Permanent Account Number, to be computed on all
India basis but excluding
(i) central tax, State tax, Union territory tax, integrated tax and cess.
(ii) the value of inward supplies on which tax is payable by a person on reverse charge basis

Computation of aggregate turnover of P Ltd. for the month of October, 2022

Particulars Amount
(₹)
In terms of the definition of the aggregate turnover given above, the aggregate turnover of
P Ltd. has been computed as follows:
Intra-State outward supply 8,00,000
Inter-State exempt outward supply 4,00,000
Turnover of exported goods 20,00,000
Payment of IGST Nil
Payment of CGST and SGST Nil
Payment of customs duty on export 40,000
Payment made under reverse charge for availing GTA services Nil
Aggregate turnover 32,40,000
Question.8. (b) (5 Marks)
Examine the following cases and explain with reasons whether the supplier of goods is liable to get
registered in GST:
 Registration 172

(i) Krishna of Himachal Pradesh is exclusively engaged in intrastate taxable supply of readymade suits.
His turnover in the current financial year from Himachal Pradesh showroom is ₹ 25 lakh. He has two
more showrooms one in Manipur & another in Sikkim with a turnover of ₹ 15 lakh and ₹ 18 lakh
respectively in the current financial year.
(ii) Ankit of Telangana is exclusively engaged in intra-state taxable supply of footwears. His aggregate
turnover in the current financial year is ₹ 25 lakh.
(iii) Aakash of Uttar Pradesh is exclusively engaged in intra – state supply of pan masala. His aggregate
turnover in the current financial year is ₹ 30 lakh.
Answer:
Every person engaged in making a taxable supply is required to obtain registration if his aggregate turnover
exceeds ₹ 20 lakh in a financial year. An enhanced threshold limit for registration of ₹ 40 lakh is available to
persons engaged exclusively in intra-State supply of goods in specified States.
(i) The applicable threshold limit for registration gets reduced to ₹ 10 lakh in case a person is engaged in
making taxable supply from a Special Category State.
Since Krishna is making taxable supply from Manipur – a Special Category State, the applicable threshold
limit will get reduced to ₹ 10 lakh. Thus, it is liable to be registered under GST as its aggregate turnover
exceeds the said threshold limit.
(ii) Since Ankit is exclusively engaged in intra-State supply of goods in Telangana, which is not a specified
State for enhanced threshold limit, the applicable threshold limit for registration is ₹ 20 lakh.
Thus, Ankit is liable to be registered under GST as its aggregate turnover exceeds the said threshold limit.
(iii) Though the enhanced threshold limit for registration of ₹ 40 lakh is available to Uttar Pradesh, the same
will not be applicable if the person is engaged in supply of pan masala.
In view of the same, the applicable threshold limit for Aakash is ₹ 20 lakh. Thus, it is liable to be registered
under GST as its aggregate turnover exceeds the said threshold limit.

JAN 2021
Question 8(b) (5 Marks)
Under the provision of section 29(1) of CGST Act, 2017 read with rule 21A of CGST Rules, 2017 related to
suspension of registration if the registered person has applied for cancellation of registration, what is the
period and manner of suspension of registration?
Where a registered person has applied for cancellation of registration, the registration shall be deemed to be
suspended from:
(a) the date of submission of the application or
(b) the date from which the cancellation is sought, whichever is later, pending the completion of proceedings
for cancellation of registration.
Such person shall not make any taxable supply during the period of suspension and shall not be required to
furnish any return.
The expression “shall not make any taxable supply” mean that the registered person shall not issue a tax
invoice and, accordingly, not charge tax on supplies made by him during the suspension period.

JAN 2021
OR
Question 8(b) (5 Marks)
Explain the circumstances under which proper officer can cancel the registration on his own of a registered
person under CGST Act, 2017.
Answer
The circumstances under which proper officer can cancel the registration on his own of a registered person
under the CGST Act, 2017 are as under:-
(a) does not conduct any business from the declared place of business; or
(b) issues invoice or bill without supply of goods or services or both in violation of the provisions of
 Registration 173

the Act, or the rules made thereunder; or

(c) violates the provisions of section 171 of the Act or the rules made thereunder.
(d) violates the provision of rule 10A. As per rule 10A, after a certificate of registration in FORM GST
REG-06 has been made available on the common portal and a Goods and Services Tax
Identification Number has been assigned, the registered person, shall as soon as may be, but not
later than forty five days from the date of grant of registration or the date on which the return
required under section 39 is due to be furnished, whichever is earlier, furnish information with
respect to details of bank account, or any other information, as may be required on the common
portal in order to comply with any other provision.
(e) avails input tax credit in violation of the provisions of section 16 of the Act
(f) furnishes the details of outward supplies in FORM GSTR-1 under section 37 for one or more tax
periods which is in excess of the outward supplies declared by him in his valid return under section
39 (GSTR 3B) for the said tax periods; or
(g) violates the provision of rule 86B
(h) being a registered person required to file return under sub-section (1) of section 39 for each month
or part thereof, has not furnished returns for a continuous period of six months
(i) being a registered person required to file return under proviso to sub-section (1) of section 39 for
each quarter or part thereof, has not furnished returns for a continuous period of two tax periods

NOV 2020
Question 7 (a). (4 Marks)
BBD Pvt. Ltd. of Gujarat exclusively manufactures and sells product 'Z' which is exempt from GST vide
notifications issued under relevant GST legislations. The company sells 'Z' only within Gujarat and is not
registered under GST laws. The turnover of the company in the previous year 21-22 was ₹50 lakh. The
company expects the sales to grow by 10% in the current year 2022-23.
However, effective from 01.01.2023 exemption available on 'Z' was withdrawn by the Central Government
and GST @ 5% was imposed thereon. The turnover of the company for the nine months ended on
31.12.2022 was ₹42 lakh.
BBD Pvt. Ltd. is of opinion that it does not require to get registered under GST for current financial year
2022-23.
Examine the above scenario and advise BBD Pvt. Ltd. whether' it needs to get registered under GST or not?
Answer:
As per section 22, every supplier of goods shall be liable to be registered in the State of Gujarat, if his
aggregate turnover in a financial year exceeds 40,00,000.
As per section 23, any person engaged exclusively in the business of supplying goods or services or both
that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and
Services Tax Act shall not be liable to registration.
As per section 2(6), "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 Permanent Account
Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess.

In the given case, the goods become taxable w.e.f. 01.01.2023 and the aggregate turnover exceeds 40,00,000
hence BBD Private limited is liable to registered and opinion of BBD private limited is wrong.

NOV 2019
Question.7. (a) (5 Marks)
Explain the registration requirements under GST law in the following independent cases
 Registration 174

(i) Mr. Ahmad of Jammu engaged in the business of supplying tobacco based Pan Masala with an aggregate
turnover of ₹ 24 lacs.
(ii) Mr. Lepcha of Mizoram is engaged in the supply of papers with an aggregate turnover of ₹ 13 lacs.
Will your answer be different if Mr. Lepcha is located in Meghalaya?
Answer:
As per section 22, every supplier of goods shall be liable to be registered in the State / Union Territory, if
his aggregate turnover in a financial year exceeds the specified limit which is given below:
Limit for person supplying within the State/UT.
SL.No Name of State/UT Limit for person
supplying only goods
01 Mizoram 10,00,000
02 Meghalaya 20,00,000
03 Jammu 40,00,000

SL. Name of State/UT Limit for person supplying Specified goods i.e.
No ice cream and other edible ice, pan masala,
Tobacco etc.
01 Jammu 20,00,000
(i) As per the above limits Mr. Ahmad of Jammu is engaged in the supply of tobacco based pan masala with
an aggregate turnover exceeding ₹20,00,000, hence he liable to registration.
(ii) As per the above limits Mr. Lepcha of Mizoram is engaged in the supply of paper with an aggregate
turnover exceeding ₹10,00,000, hence he liable to registration.
Yes answer will change if Mr. Lepcha is located in Meghalaya limit of 20,00,000 shall be applicable and
aggregate turnover is less than 20,00,000 hence he is not liable for registration.

NOV 2019
Question.8. (b) (4 Marks)
Examine, with reason, whether registration is required under CGST Act, 2017 in the following independent
cases:
(i) Aadhav Computers of Gujarat is providing Computer Maintenance Service. Aggregate Turnover of
Aadhav Computers is ₹ 15 Lakhs which comprises both inter-state and intra-state supply.
(ii) Soft wings of west Bengal, exclusively trading in garments. Supplies its taxable goods to various states
in India. Aggregate Turnover of Wild Wings is ₹ 35 Lakhs.
Answer:
(i) As per section 22, every supplier of services shall be liable to be registered if his aggregate turnover in a
financial year exceeds ₹20,00,000 and limit is applicable if person is providing inter state services. In the
given case aggregate turnover is less than specified limit hence Aadhav Computers is not liable for
registration though Aadhav computers providing inter state supply.

(ii) As per section 24, if any person making inter state supply of goods then registration is compulsory
irrespective of turnover. In the given case, Soft wings of west bengal is supplying inter-state hence
registration is compulsory irrespective of turnover.

MAY 2019
Question 7 (c) (4 Marks)
State with brief reason, whether following supplies of taxable goods are required to register under the GST
Law:
 Registration 175

(i) Mr. Raghav is engaged in wholesale cum retail trading of medicines in the State of Assam. His aggregate
turnover during the financial year is ₹9,00,000 which consists of ₹8,00,000 as Intra-State supply and ₹
1,00,000 as Inter-State supply.
(ii) Mr. S.N. Gupta of Rajasthan is engaged in trading of taxable goods on his own account and also acting
as an agent of Mr. Rishi of Delhi. His turnover in the financial year 2022-23 is of ₹ 32 lakhs on his own
account and ₹ 9 lakhs on behalf of principal. Both turnovers are Intra-State supply.
Answer:
(i) As per section 24, if any person making inter-state supply of goods then registration is compulsory
irrespective of turnover. In the given case, Mr. Raghav is supplying inter-state hence registration is
compulsory irrespective of turnover.

(ii) As per section 22, every supplier of goods shall be liable to be registered if his aggregate turnover in a
financial year exceeds ₹40,00,000.
Aggregate turnover shall include all supplies made by the taxable person whether on his own or on behalf of
his principals.
In the given case, aggregate turnover of Mr. S.N. Gupta is exceeding ₹40,00,000 (i.e. 32,00,000+9,00,000)
hence GST registration is compulsory.

MAY 2019
Question 8 (c) (5 Marks)
Answer the following questions with respect to casual taxable person under the CGST Act, 2017:
(i) Who is a causal taxable person?
(ii) Can a casual taxable person opt for the composition scheme?
(iii) When is the causal taxable person liable to get registered?
(iv) What is the validity period of the registration certificate issued to a casual taxable person?
(v) Can the validity of registration certificate issued to a casual taxable person be extended? If
yes, what will be the period of extension?
Answer:
(i) As per section 2 (20), "casual taxable person" means a person who occasionally undertakes transactions
involving supply of goods or services or both in the course or furtherance of business, whether as principal,
agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.
(ii) As per rule 5, a casual taxable person cannot opt for composition scheme.

(iii) As per section 24, Every casual taxable person shall also be required to take registration irrespective
of the turnover and procedure shall be same. He should apply for registration atleast 5 days prior to
commencement of business. Registration shall be granted only after the applicant has paid estimated amount
of GST in advance.

(iv) As per section 27, Certificate shall be valid for the specified period but maximum 90 days.

(v) Yes it can be extended. Proper officer may extend it further but for maximum 90 days i.e. total period
can be maximum 180 days. Such person shall make advance deposit of GST as estimated by him.

MAY 2019
Question 8 (a) (2+2+1 Marks)
Examine the liability of compulsory registration under section 24 of the CGST Act, 2017, in each
independent cases mentioned below:
 Registration 176

(1) Meenu is a supplier in Maharashtra, is engaged in supply of potatoes within Maharashtra and also
outside Maharashtra, whose turnover exceeds threshold limit under GST Law.
Answer:
As per section 23, If a person is supplying exclusively exempted goods then registration under GST is not
required. In the given case Meenu is supplying potatoes which is exempted under GST hence GST
registration is not required.
(2) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Total turnover of machine oil is
₹30 lakh and of petrol is ₹15 lakh.
Answer:
Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Supply of petrol is not leviable to
GST, but supply of machine oil is taxable. In order to determine whether Jinu Oils is liable for registration,
turnover of both the supplies – non-taxable as well as taxable - would be taken into account and if the same
exceeds ₹40 lakh, Jinu Oils is liable for registration.
In the given case, aggregate turnover is exceeding ₹40 lakh hence Jinu Oils is liable for registration.
(3) Tilu is working as an agent, he is supplying goods as an agent of Tiku (who is registered taxable person)
and its aggregate turnover does not exceed ₹40 lakh during the financial year.
Answer:
As per section 24, if a person is supplying goods on behalf of another registered person then the person
shall be liable to be registered under GST irrespective of turnover. In the given case Tilu is supplying goods
as agent of Tiku (who is registered taxable person) hence Tilu is liable to registered under GST.

NOV 2018
Question 11(a) (3 Marks)
Determine with brief reasons, whether the following statements are True or False:
Registration under the CGST Act, 2017 can be cancelled by the proper officer, if the voluntarily registered
person has not commenced the business within three months from the date of Registration.
Answer:
False: As per section 29/Rule 20 to 22, registration can be cancelled by the proper officer, if the voluntarily
registered person has not commenced the business within 6 months from the date of registration, in the given
case period mentioned is 3 months instead of 6 months hence statement is false.

NOV 2018
Question 12 (5 Marks)
(a) State the persons who are not liable for registration as per provisions of Section 23 of Central Goods and
Service Tax Act, 2017.
Answer: Refer answer given in the book

NOV 2018
(b) Mr. Allan, a non-resident person, wishes to provide taxable supply of goods. He has no fixed place of
business or residence in India. He seeks your advise on the following aspects, relating to CGST Act, 2017:
(i) When shall he apply for registration?
(ii) Is PAN mandatory for his registration?
(iii) What is the period of validity of RC granted to him ?
(iv) Will he be able to extend the validity of his registration? If yes, what will be the period of
extension ?
 Registration 177

Answer:
(i) As per section 24, NRTP shall also be required to take registration irrespective of the turnover and he
has to apply in REG-09.
As per section 25, He should apply for registration atleast 5 days prior to commencement of business.
Registration shall be granted only after the applicant has paid estimated amount of GST in advance
(ii) No, PAN is not mandatory for his registration
(iii) As per section 27, Certificate shall be valid for the specified period but maximum 90 days
(iv) As per section 27, proper officer may extend it further but for maximum 90 days i.e. total period can
be maximum 180 days.

NOV 2018
Question 10 (a)(i) (2 Marks)
There is a dairy farm selling milk and milk products in Delhi. The turnover of his dairy farm is as below:
Milk (Exempted): ₹39,90,000
Butter (Taxable): ₹50,000
What is the registration liability under GST for the above mentioned person assuming he has same PAN ?
Answer:
As per section 22, every supplier of goods shall be liable to be registered in the State / Union Territory if his
aggregate turnover in a financial year exceeds ₹40,00,000.

As per section 23, If any person supplying only exempt supply then he is not liable for registration.

As per section 2(6), "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 Permanent Account
Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess.

In the given case, as per the definition of aggregate turnover it includes value of all taxable supplies as well
as exempt supplies and in the given case aggregate turnover exceeds ₹40,00,000 so dairy firm is liable for
registration and as per section 25, dairy firm has to apply within 30 days from the date on which he becomes
liable for registration.

Question 11(c) (2 Marks)

The Aggregate Turnover of Vikas Enterprise of Mumbai (Maharashtra) engaged in taxable supply of services
has exceeded ₹20 Lakhs on 25th January, 2023. It submits the application for Registration on 15th
February,2023. Registration certificate is granted on 20th February, 2023. Determine the effective date of
Registration under CGST Act, 2017.
Answer:
As per section 22 of the CGST Act, a supplier is liable to be registered in the State/Union territory from
where he makes a taxable supply of services, if his aggregate turnover in a financial year exceeds ₹20 lakh,
within 30 days from the date on which it becomes so liable to registration. 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 otherwise it is the date of grant of
registration.
In the given case Vikas Enterprise applied for registration before the expiry of 30 days from the date on
which it becomes liable for registration, the effective date of registration in its case is 25.01.2023.
 Registration 178

NOV 2018
Question 10 (a)(ii) (2 Marks)
Amit, a taxable person, is operating in Tamil Nādu, Punjab and West Bengal, with the same PAN. Can he
operate with a single registration in West Bengal?
Answer:
As per section 25, if any person operating in different States and aggregate turnover exceeds specified limit
then he has to apply for different registration in each State but if a person has different branches in same
state then only one registration is required.
In the given case he has been operating in different States hence separate registration is required and he
cannot operate with a single registration.
Question 10 (c) (2 Marks)
Can a person get himself voluntarily registered though he may not be liable to pay GST?
Answer: Yes, as per section 25(3) Any person can take voluntary registration though he may not be liable
to pay GST.

MAY 2018
Question 12 (5 Marks)
(b) List the inclusions and exclusions for computing the "Aggregate Turnover" under CGST Act, 2017.
Answer: Refer answer given in the book
MAY 2018
Question 11 (a) (4 Marks)
Determine the effective date of registration in the following instances:
(i) The aggregate turnover of Madhu Ltd., engaged in taxable supply of services in the state of Punjab,
exceeded ₹20 Lakhs on 25th August, 2022. It applies for registration on 19th September, 2022 and is granted
registration certificate on 29th September, 2022.
Answer: As per section 22 of the CGST Act, a supplier is liable to be registered in the State/Union territory
from where he makes a taxable supply of services, if his aggregate turnover in a financial year exceeds ₹20
lakh, within 30 days from the date on which it becomes so liable to registration. 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 otherwise it is the date of grant of
registration.
In the given case Madhu Ltd. applied for registration before the expiry of 30 days from the date on which it
becomes liable for registration, the effective date of registration in its case is 25.08.2022.
(ii) What will be your answer, if in the above scenario, Madhu Ltd. submits the application for registration
on 27th September, 2022 and is granted registration on 5th October, 2022?
Answer: Yes Answer will be different if Madhu Ltd. applies for registration after the expiry of 30 days,
effective date of registration shall be the date of grant of registration i.e. 5th October, 2022.

MAY 2018
Question 11 (a) (4 Marks)
Determine the effective date of registration under CGST Act, 2017 in respect of the following cases with
explanation:
(i) The aggregate turnover of Varun Industries of Mumbai engaged in taxable supply of goods has exceeded
₹40 lakhs on 1st August, 2022. It submits the application for registration on 20th August, 2022. Registration
certificate granted on 25th August, 2022.
Answer: As per section 22 of the CGST Act, a supplier is liable to be registered in the State/Union territory
from where he makes a taxable supply of goods, if his aggregate turnover in a financial year exceeds ₹40
lakh, within 30 days from the date on which it becomes so liable to registration. Where an applicant submits
 Registration 179

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 otherwise it is the date of grant of
registration.
In the given case Varun Industries applies for registration before the expiry of 30 days from the date on
which it becomes liable for registration, the effective date of registration in its case is 01.08.2022.
(ii) Sweta InfoTech Services are the provider of internet services in Pune. The aggregate turnover of them
exceeds ₹20 lakhs on 25th September, 2022. It submits the application for registration on 27th October,
2022. Registration certificate is granted on the 5 November, 2022.
Answer: As per section 22 of the CGST Act, a supplier is liable to be registered in the State/Union territory
from where he makes a taxable supply of services, if his aggregate turnover in a financial year exceeds ₹20
lakh, within 30 days from the date on which it becomes so liable to registration. 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 otherwise it is the date of grant of
registration.
In the given case Sweta InfoTech services applies for registration after the expiry of 30 days from the date
on which it becomes liable for registration, the effective date of registration in its case is 05.11.2022.

MAY 2018
Question 11 (c) (2 Marks)
State with reason whether following statement is true or false:
"When there is change in constitution of business results in change in PAN, the business entity can apply for
amendment of registration in prescribed manner within 15 days."
Answer: False: As per section 28, when there is change in constitution of business which results in change
in PAN, certificate can be cancelled and the new business entity can apply for fresh registration

IPC NOV 2017

Question 7 (5 Marks)
Sophomore of USA intends to start business as an ECO u/s 9(5) in India. He wants to understand his
obligations under GST law as an ECO. He requires your advice of how he has to go about in discharging the
tax liability as an ECO, while he continues to reside in USA.
Answer: As per section 9(5), any electronic commerce operator who is providing services under his own
brand name and is also collecting payment on behalf of the supplier, in such cases such person shall be liable
to pay GST.
ECO u/s 9(5) means a person, who owns and manages a web based software application, and by means of
the application and a communication device, enables a potential customer to connect with persons providing
service of a particular kind under the brand name or trade name of the aggregator” , eg. UBER cabs/ OLA
cabs etc. Similarly it will include services relating to providing accommodation in hotels, inns, and guest
house etc. as notified by the Government, where payment is collected by such ECO. Such ECO shall also be
required to take registration u/s 9(5).
Example: Mr. X has taken services of UBER cabs and has paid ₹ 10,000 plus GST ₹ 1,000 in this case
UBER cabs shall be responsible to pay GST of ₹ 1,000 to the Government. Further the real owner of the cab
shall charge amount from UBER cabs and if such amount is ₹ 8,000, it will be paid by UBER cabs to the
real owner but if real owner is also registered under GST, he will charge ₹ 8,000 plus GST 800 and UBER
cabs shall take ITC of ₹ 800 and pay ₹ 200 to the Government.
 Meaning of Supply 180

MEANING OF SUPPLY
SECTION 7 & SECTION 8, CGST ACT
SCHEDULE I, II & III
Question 1: Explain Supply under GST.
Answer: Scope of supply Section 7.
"Supply" includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or
furtherance of business.
Example :
(i) ABC limited has sold certain goods for a consideration of ₹ 10,00,000, in this case it will be considered
to be supply and company shall charge GST from the buyer and pay it to the Government.
(ii) A Chartered Accountant has supplied services to a client for a consideration of ₹ 10,00,000, in this case
it will be considered to be supply and CA will charge GST from the client and pay it to the Government.
(iii) A dealer of laptop has taken one LCD from a dealer of LCD as a barter, in this case GST shall be
payable on the transaction value as per section 15 i.e. value applicable in general and if such value is ₹
50,000, each of the dealer shall pay GST.
(iv) If a dealer of Maruti car has given one motor for ₹ 8,00,000 and has also taken used motor car of the
customer, in this GST is payable on the transaction value and if such value is ₹ 10,00,000, GST is payable
on ₹ 10,00,000 but no GST by the customer because it is not in the course of business.
Question 2: Explain Deemed supply under schedule I
Answer: Schedule I: Deemed supply i.e. supply without consideration
In order to constitute supply there must be consideration but infact even the supply without consideration is
taxable but only in situation given in schedule I and is as given below:
1. Permanent Transfer or disposal of assets of business where input tax credit has been availed
If any person has taken ITC with regard to assets of business and subsequently such assets have been
disposed off by him without consideration, it will be considered to be supply and GST shall be payable but if
services have been supplied without consideration, it will not be considered to be supply. Further if goods or
services have been supplied to the Relative / Related person or to the deemed distinct person, it will be
considered to be supply even if no ITC has been taken.
Example
(i) A dealer of air-conditioners purchased AC and has taken ITC but after that permanently transfers an air
conditioner from his stock in trade, for personal use at his residence. The transaction will constitute a supply
as it is a permanent transfer/ disposal of business assets. The only condition is that input tax credit should
have been availed on such assets.
(ii) A Chartered Accountant has purchased one laptop for use in his office for ₹ 50,000 and paid Input tax
₹10,000 and tax credit of ₹10,000 was taken but after 3 years it was given by him to one of his friend
without consideration, in this case it will be considered to be supply and output GST shall be payable on the
transaction value. If transaction value is ₹20,000 and rate of GST is 15%, output GST shall be ₹3,000 (also
provisions of section 18(6) shall be applicable: in this case remaining life is 24 month and tax credit to be
reversed shall be 10,000 / 60 X 24 = 4,000. Hence GST Payable shall be ₹ 4,000).
(iii) Mr. X purchased one motor car for the purpose of his business on which no ITC was allowed u/s 17(5)
and subsequently it was gifted by him to one of his friends, in this case it will not be considered to be supply
because no ITC was taken on it but if it is sold for a consideration, it will be considered to be a supply and
GST shall be payable.(as per section 7)
(iv) A Chartered Accountant has rendered services to one of its client without consideration, in this case it is
not a supply.
(v) ABC limited purchased 10 laptops and has taken ITC but after 2 years it was given free of cost to some
students, it will be considered to be supply (also provisions of section 18(6) shall be applicable).
 Meaning of Supply 181

(vi) Mr. X has rendered free services to one of the related persons, in this case it will be considered to be
supply but if free services were given to a person who is neither a related a person nor a Distinct person, in
that case it will not be considered to be supply.
(vii) Mr. Y has sold certain goods on which no ITC has been taken, to one of the related persons, in this case
it will be considered to be supply but if goods were given to a person who is neither a related a person nor a
Distinct person, in that case it will not be considered to be supply.
(vii) ABC limited has transferred certain goods on which no ITC was taken, to its own branch in some other
State without consideration, it will be considered to be supply.
(ix) Raghubir Fabrics transfers 1000 shirts from his factory (whether ITC taken or not) located in Lucknow
to his retail showroom in Delhi so that the same can be sold from there. The factory and retail showroom of
Raghubir Fabrics are registered in the States where they are located. Although no consideration is charged,
supply of goods from factory to retail showroom constitutes supply.
If goods or services have been given by employer to the employee, they will be considered to be related
person and GST shall be payable even if there is no consideration but if value of such goods or services is
upto ₹50,000 during a particular financial year, it will not be considered to be supply, however as per section
17(5), any ITC taken with regard to such goods has to be reversed.
Example
(i) ABC limited has gifted certain items valued ₹ 45,000 to its employee Mr. X, it will not be considered to
be supply.
(ii) ABC limited has gifted certain items valued ₹ 2,00,000 to its employee Mr. X, it will be considered to be
supply. (whether ₹1,50,000 or ₹2,00,000 is not clear.) but if it is because of contractual agreement, it will
not be considered to be supply. E.g. ABC Ltd. has employed Mr. X and as per agreement salary of
₹1,00,000 p.m. shall be given to Mr. X. Also goods of value of ₹ 2,00,000 shall be given free of cost on
Diwali in this case no GST is payable on supply of goods valued ₹ 2,00,000.
2. Supply of goods by principal to agent
Any supply of goods by a principal to his agent where the agent undertakes to supply such goods on behalf
of the principal shall be considered to be supply. Similarly any supply of goods by an agent to his principal
where the agent undertakes to receive such goods on behalf of the principal shall be considered to be supply.
E.g. If Mr. X has authorized Mr. Y to sell certain goods and Mr. Y has sold the goods to Mr. Z in his own
name, in this case Mr. Y is agent of Mr. X and if goods were supplied by Mr. X to Mr. Y free of cost, it will
be considered to be supply but if Mr. Y has sold the goods in name of Mr. X, he will not be considered to be
agent.
Example 1: Anmol appoints Bholu to procure certain goods from the market. Bholu identifies various
suppliers who can provide the goods as desired by Anmol and asks the supplier (Golu) to send the goods and
to issue the invoice directly to Anmol.
In this scenario, Bholu has in no way involved himself in the supply or receipt of the goods. Hence, in
accordance with the provisions of this Act, Bholu is not an agent of Anmol for supply of goods.
Example 2: M/s Tintin, a banking company, appoints Mandaar (auctioneer) to auction certain goods. The
auctioneer arranges for the auction and identifies the potential bidders.
The highest bid is accepted and the goods are sold to the highest bidder by M/s Tintin. The invoice for the
supply of the goods is issued by M/s Tintin to the successful bidder.
In this scenario, the auctioneer is merely providing the auctioneering services with no role played in the
supply of the goods. Even in this scenario, Mandaar is not an agent of M/s Tintin for the supply of goods.
Example 3: Gautam, an artist, appoints Gambhir (auctioneer) to auction his painting. Gambhir arranges for
the auction and identifies the potential bidders. The highest bid is accepted and the painting is sold to the
highest bidder.
The invoice for the supply of the painting is issued by Gambhir on the behalf of Gautam but in his own
name and the painting is delivered to the successful bidder.
In this scenario, Gambhir is not merely providing auctioneering services, but is also supplying the painting
on behalf of Gautam to the bidder, and has the authority to transfer the title of the painting on behalf of
Gautam. This scenario is covered under Schedule I.
 Meaning of Supply 182

Example 4: A C&F agent or commission agent takes possession of the goods from the principal and issues
the invoice in his own name. In such cases, the C&F commission agent is an agent of the principal for the
supply of goods in terms of Schedule I. The disclosure or non-disclosure of the name of the principal is
immaterial in such situations.
Example 5: Ravi sells agricultural produce by utilizing the services of Kavi who is a commission agent as
per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Kavi identifies the buyers
and sells the agricultural produce on behalf of Ravi for which he charges a commission from Ravi.
As per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on
behalf of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and
receives, by way of remuneration, a commission or percentage upon the amount involved in such
transaction.
In cases where the invoice is issued by Kavi to the buyer, the former is an agent covered under Schedule I.
However, in cases where the invoice is issued directly by Ravi to the buyer, the commission agent (Kavi)
doesn’t fall under the category of agent under schedule I.

Question 3: Explain taxability if GST in case of Import of Services

Answer: As per section 7, Import of services for a consideration for business purpose or for personal
purpose shall be considered to be supply, however as per notification no. 9/2017 IT(R), Services imported
by an individual for personal purpose shall be exempt from GST but no such exemption shall be allowed in
case of OIDAR services i.e. online information and data base access and retrieval services. If individual is
not registered, GST shall be collected by OIDAR and tax shall be paid by OIDAR and if individual is
registered, GST shall be paid by individual under reverse charge.
As per schedule I, Import of services without consideration by a person from a related person or from any
of his establishment outside India in the course or furtherance of business shall be taxable i.e. no GST in any
other case without consideration.
Example
(i) Mr. X imported services from outside India for a consideration for business purpose, it is taxable and Mr.
X will pay tax under reverse charge.
(ii) Mr. X imported services from outside India for a consideration for personal purpose, it is supply as per
section 7(1)(b) but it is exempt as per notification no. 9/2017.
(iii) Mr. X imported services from outside India without consideration for business purpose, it is exempt as
per schedule I.
(iv) Mr. X imported services from outside India without consideration and it is OIDAR service, it is exempt
in the hands of Mr. X and also in the hands of supplier as per schedule I.
(v) Mr. X imported services from outside India for a consideration and it is OIDAR service, it is exempt in
the hands of Mr. X if he is unregistered and tax shall be paid by provider of OIDAR service but if Mr. X is
registered, he will be required to pay tax under reverse charge.
(vi) ABC limited has taken services from outside India for business without consideration, it is exempt but
if services are taken from a related person or from its establishment outside India, it will be taxable and GST
is to be paid by ABC limited under reverse charge.
(vii) Sumedha, a proprietor registered in Delhi, has sought architect services from his brother without
consideration, located in US, with respect to his newly constructed house in Delhi. In this case it will not be
considered to be supply as per schedule I but if there is a consideration it will be supply as per section
7(1)(b) however it will be exempt as per notification no. 9/2017.
(viii) ABC Associates received legal consultancy services from its head office located in Malaysia. The head
office has rendered such services free of cost to its branch office. Since ABC Associates and the branch
office are related persons, services received by ABC Associates will qualify as supply even though the head
office has not charged anything from it.
Conclusion:
1. Import of services without consideration is always exempt except when imported by a person from a
related person in the course of business.
 Meaning of Supply 183

2. Import of service for consideration is always taxable except when taken by Individual for personal
purpose other than OIDAR services.
Question 4: Write a note on Composite and Mixed supplies.
Answer: Tax liability on composite and mixed supplies. Section 8.
The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
(a) 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; and
(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular
supply which attracts the highest rate of tax.
As per section 2(30), "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.
As per section 2(74), "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:
Example
1. Charger supplied alongwith mobile phone is a composite supply.
2. A gift pack comprising of chocolates and sweets is a mixed supply.
3. Suvarna Manufacturers entered into a contract with XYZ Ltd. for supply of readymade shirts packed in
designer boxes at XYZ Ltd.’s outlet. Further, Suvarna Manufacturers would also get them insured during
transit. In this case, supply of goods, packing materials, transport & insurance is a composite supply wherein
supply of goods is principal supply.
4. When a consumer buys a television set and he also gets warranty and a maintenance contract with the TV,
this supply is a composite supply. In this example, supply of TV is the principal supply, warranty and
maintenance services are ancillary.
5. A travel ticket from Mumbai to Delhi may include service of food being served on board, free insurance,
and the use of airport lounge. In this case, the transport of passenger, constitutes the pre-dominant element
of the composite supply, and is treated as the principal supply and all other supplies are ancillary.
6. A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and
fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied
separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied
separately.
7. A shopkeeper selling storage water bottles along with refrigerator. Bottles and the refrigerator can easily
be priced and sold independently and are not naturally bundled. So, such supplies are mixed supplies.
Question 5: 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
alongwith the room accommodation.
(b) A toothpaste company has offered the scheme of free toothbrush alongwith the toothpaste.
Answer: 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.
In view of the same,
(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 alongwith the toothpaste are not naturally bundled, said supplies do not
qualify as ‘composite supply’.
Meaning of Business 2(17)
"business" includes—
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
 Meaning of Supply 184

activity, whether or not it is for a pecuniary benefit;

(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members;
Example : A Resident Welfare Association provides the service of depositing the electricity bills of the
residents in lieu of some nominal charges. Provision of service by a club or association or society to its
members is treated as business as this is included in the definition of ‘business’.
(f) admission, for a consideration, of persons to any premises;
Example : Services by way of admission to circus, cinema halls, amusement parks including theme parks,
water parks, etc. are considered as business as these are services by way of admission of persons to any
premises for a consideration.
(g) services supplied by a person as the holder of an office which has been accepted by him in the
course or furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker or activities
of a licensed book maker in such club; and
Example : Royal Turf Race Club is engaged in facilitating the wagering (betting) transactions on horses
placed through totalisator. For providing the service of facilitating wagering transactions, Royal Turf Race
Club gets commission which is deducted and retained by the club from the total bet value. Said services
amount to supply as the activities of a race club are included in business.
(i) any activity or transaction undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities;

Government may act in two different capacities

1. Sovereign authority: Activities like dispensing justice, maintaining armed forces, conducting audit by
CAG, Elections to Parliament etc. shall be considered to be activities as Sovereign Authority and it is not
covered in business and no GST is payable.
2. Public authority: All other activities except above are activities as public authority and is business and is
subject to GST.( some of these activities have been specifically exempted.
Totalisator is a computerised device that pools the wagers/bets (after deduction of charges and statutory
taxes) of various persons placing the bet and also divides the total wager amount to be distributed to the
winning persons.
Meaning of Consideration 2(31)
"consideration" in relation to the supply of goods / services includes—
(a) any payment made whether in money or otherwise in respect of the supply of goods / services, whether
by the recipient or by any other person but shall not include any subsidy given by the Central Government or
a State Government.

Example
(i) Mr. X purchased goods from Mr. Y and payment was made to Mr. Y by Mr. Z on behalf of Mr. X, it will
be considered to be consideration.
(ii) ABC limited is selling a product for ₹1,000 but Govt. has given subsidy of ₹200, In this case
consideration shall be ₹800 and GST shall be payable on ₹800 but if subsidy is given by any other person
instead of Govt., consideration shall be ₹1,000.
(b) the monetary value of any act or forbearance in respect of the supply of goods / services whether by the
recipient or by any other person.
 Meaning of Supply 185

Provided that a deposit given in respect of the supply of goods / services shall not be considered as
payment made for such supply unless the supplier applies such deposit as consideration for the said supply.

Example:
Mr. X has taken a property on rent ₹ 20,000 p.m. and has given security deposit of ₹ 60,000, In this case
GST shall be payable on ₹ 20,000. Mr. X has not paid rent for 2 months and the owner has adjusted ₹ 40,000
out of security towards rent, In this case GST shall be payable on ₹ 40,000.
Meaning of Goods Section 2(52)
"Goods" means every kind of movable property other than money and securities but includes actionable
claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed
before supply or under a contract of supply. (As per schedule 3 actionable claim shall not be considered to
be supply except lottery, betting and gambling.)
Meaning of Services Section 2(102)
"services" means anything other than goods, money and securities but includes activities relating to the use
of money or its conversion by cash or by any other mode, from one form, currency or denomination, to
another form, currency or denomination for which a separate consideration is charged.
Explanation.—For the removal of doubts, it is hereby clarified that the expression "services" includes
facilitating or arranging transactions in securities.

Meaning of Money 2(75)

"money" means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange,
letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other
instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or
exchange with Indian legal tender of another denomination but shall not include any currency that is held
for its numismatic value;

Question 6: Explain activities to be considered as supply of goods or services under schedule II.
Answer: Activities or transactions to be treated as supply of goods or supply of services: Schedule II
(i) any transfer of title in goods under an agreement which stipulates that property in goods shall pass
at a future date upon payment of full consideration as agreed, is a supply of goods.
(ii) Any treatment or process which is applied to another person's goods is a supply of services.
(iii) where any person ceases to be a taxable person, any goods forming part of the assets of any
business carried on by him shall be deemed to be supplied by him in the course or furtherance of his
business immediately before he ceases to be a taxable person.
(iv) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
The following composite supplies shall be treated as a supply of services, namely:—
(a) works contract as defined in clause (119) of section 2; and
(b) supply, by way of being food or any other article for human consumption or any drink (other than
alcoholic liquor for human consumption).

Q: Examine whether the following activities would amount to supply under section 7 of the CGST Act.
(a) Damodar Charitable Trust, a trust who gets the eye treatment of needy people done free of cost, donates
clothes and toys to children living in slum area.
(b) 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.
Answer:
(a) Section 7 of the CGST Act, inter alia, 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 clothes and toys to children living in slum area would not amount to supply under
section 7 of the CGST Act.
 Meaning of Supply 186

(b) Schedule I of CGST Act, inter alia, stipulates that supply of goods or services or both between related
persons or between distinct persons, is supply even without consideration provided it is made in the course
or furtherance of business. Further, 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. In view of the same, factory and depot of Sulekha
Manufacturers are establishments of two distinct persons. Therefore, supply of goods from Delhi factory of
Sulekha Manufacturers to Mumbai Depot without consideration, but in course/furtherance of business, is
supply under section 7 of the CGST Act.

CLARIFICATION
1. Free samples and gifts:
It is a common practice among certain sections of trade and industry, such as, pharmaceutical companies
which often provide drug samples to their stockists, dealers, medical practitioners, etc. without charging any
consideration. In such cases, the supplier should not take ITC as per section 17(5) and also it will not be
considered to be supply as per schedule-I or the supplier should take ITC and it will be considered to be
supply as per schedule-I.
(Circular no. 92/2019)

2. Art works sent by artists to galleries for exhibition is not a supply

Artists give their work of art to galleries where it is exhibited for supply. However, no consideration flows
from the gallery to the artist when the art works are sent to the gallery for exhibition and therefore, the same
is not a supply. It is only when a buyer selects a particular art work displayed at the gallery, that the actual
supply takes place and applicable GST would be payable at the time of such supply.
[Circular No. 22/22/2017 GST dated 21.12.2017].

3. CBIC has clarified Taxability of ‘tenancy rights’/pagadi under GST as under:

Pagadi system, i.e. transfer of tenancy rights against tenancy premium, is prevalent in some States. The
activity of transfer of tenancy right against consideration [i.e. tenancy premium] is covered under supply of
service liable to GST. It is a form of lease or renting of property.
Although stamp duty and registration charges have been levied on such transfer of tenancy rights, it shall be
still subject to GST since 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. Consequently, a consideration for
the said activity shall attract levy of GST.
To sum up, transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium
is taxable. Further, services provided by outgoing tenant by way of surrendering the tenancy rights against
consideration in the form of tenancy premium is liable to GST[Circular No.44/18/2018 CGST dated
02.05.2018].

4. Inter-State movement of various modes of conveyance

Inter-State movement of various modes of conveyance, between distinct persons as specified in section
25(4) of the CGST Act, including-
• Trains,
• Buses,
• Trucks,
• Tankers,
• Trailers,
• Vessels,
• Containers,
• Aircrafts,
 Meaning of Supply 187

(a) carrying goods or passengers or both; or

(b) for repairs and maintenance,
[except in cases where such movement is for further supply of the same conveyance] was discussed in GST
Council’s meeting held on 11th June, 2017 and the Council recommended that such inter-State movement
shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be leviable to IGST.
Thus, above activity may not be treated as supply and consequently IGST will not be payable on such
supply. However, applicable CGST/SGST/IGST, as the case may be, shall be leviable on repairs and
maintenance done for such conveyance [Circular No. 1/1/2017 IGST dated 07.07.2017].

5. Donation
Individual donors provide financial help or any other support in the form of donation or gift to institutions
such as religious institutions, charitable organisations, schools, hospitals, orphanages, old age homes etc.
The recipient institutions place a name plate or similar such acknowledgement in their premises to express
the gratitude. When the name of the donor is displayed in recipient institution 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 publicity of the business or the profession of the donor, in that case there is no supply and GST not
payable. There is no obligation (quid pro quo) on part of recipient of the donation or gift to do anything
(supply a service). E.g. (i) “Good wishes from Mr. Rajesh” printed underneath a digital blackboard donated
by Mr. Rajesh to a charitable Yoga institution, in this case there is no supply. (ii) “Donated by Smt. Malati
Devi in the memory of her father” written on the door or floor of a room or any part of a temple complex
which was constructed from such donation, there is no supply.
In each of these examples, it may be noticed that there is no reference or mention of any business activity of
the donor which otherwise would have got advertised. [Circular No. 116/35/2019 GST dated 11.10.2019]

6. Services of Del Crede Agent (DCA)

If a DCA has issued invoice in his name, he will be considered to be agent as per schedule I but if he has
issued invoice in the name of Principal (Consignor), he will not be considered to be agent. If DCA has given
a loan to the recipient, interest shall be added to the value of supply only when the invoice was issued in the
name of DCA. It will not be added to the value of supply if invoice was issued in the name of Principal.
(Circular No. 73/47/2018 GST dated 05.11.2018)

NOV – 2022 Exam (6 Marks)

6(a). Charm Limited, registered under GST in the State of Jharkhand, manufactures cosmetic products and
appointed Mr. Handsome of Mumbai, who is registered under GST in the State of Maharashtra, as their Del-
credere agent (DCA) to sell their products. Being a DCA, he agrees to raise invoices in his own name and
also guarantees for the realization of payments from customers to Charm Limited.
In order to realize the payments from customers on time, he extends short term transaction based loans to
them and charges interest for the same.
Mr. Handsome provides you the following details of transactions carried out during the month of March
2022:

Sl. Particulars Amount

No. in ₹
Outward Supply:
i. Goods sold by Mr. Handsome in his DCA capacity (Intra-State transaction) 2,80,000
ii. Interest earned from the above customers for short term credit facility 20,000
provided for timely payment of dues. (Intra-State transaction)
iii. Commission bill raised on Charm Limited (Inter- State transaction) in respect 30,000
of DCA services provided.
 Meaning of Supply 188

Inward Supply :
iv. Inter-State supply of goods received from Charm Limited. Since being a Nil
DCA, no consideration was paid. Value under section 15 – ₹2,00,000
v. Received training in marketing and distribution from Charm Limited as per
DCA agreement, free of cost. Company charges ₹75,000 for such training Nil
when they provide the same to others.

Applicable rate of tax on both inward and outward supplies is 9% each for CGST and SGST and 18% for
IGST. Amount given above are exclusive of taxes wherever applicable. Subject to the information given
above, necessary conditions are complied with for availment of Input Tax Credit.
You are required to calculate the gross GST liability and eligible Input Tax Credit for the month of March
2022 of Mr. Handsome. Brief notes should form part of your answer for treatment of items in Sl. No. (i) to
(v).
Solution:
Computation of gross GST liability of Mr. Handsome for the month of March 2022

Particulars CGST SGST IGST

(₹) (₹) (₹)
Goods sold by Mr. Handsome in his DCA capacity 2,80,000 27,000 27,000
[3,00,000 [3,00,000
Add: Interest earned for short term credit facility 20,000 × 9%] × 9%]
provided to above Customers
[Interest included in the value of supply of the goods
sold since where DCA is an agent under Schedule - I
of the CGST Act, short term credit facility provided
by DCA to the buyer is subsumed in the supply of
the goods by the DCA to the buyer.]
Commission charged for DCA services 5,400
[Being taxable supply of services.] [30,000 ×
18%]
Gross GST liability 27,000 27,000 5,400
Note: Since the invoice for goods sold is issued by the DCA – Mr. Handsome in his own name, he would
fall under the ambit of an agent under Schedule – I of the CGST Act.

Computation of eligible ITC for the month of March 2022

Particulars CGST SGST IGST (₹)
(₹) (₹)
Inward supply of goods from Charm Limited free of cost 36,000
[Supply of goods by principal – Charm Limited to the agent – Mr. [2,00,000
Handsome qualifies as supply even though it is made without × 18%]
consideration.]
 Meaning of Supply 189

Training in marketing and distribution received from Charm Limited -- -- --

free of cost
[Since no consideration is charged for the services provided, said
services do not qualify as supply. As no GST is paid on the same, ITC
is not available]
Total ITC available Nil Nil 36,000
 Meaning of Supply 190

SCHEDULE I
[See section 7]
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
2. 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:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both.
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the
principal.
4. Import of services by a person from a related person or from any of his other establishments outside India,
in the course or furtherance of business.

SCHEDULE III
[See section 7]
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF
GOODS NOR A SUPPLY OF SERVICES
1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services by any court or Tribunal established under any law for the time being in force.
3. (a)The functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities;
(b) The duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
(c) The duties performed by any person as a Chairperson or a Member or a Director in a body established
by the Central Government or a State Government or local authority and who is not deemed as an
employee.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and sale of building.
6. Actionable claims, other than lottery, betting and gambling.
Some of the examples of actionable claims are: Right to recover insurance money, claim for arrears of
rent, unsecured loans, unsecured debentures, bills of exchange, promissory notes, bank guarantee, Fixed
Deposit Receipt, right to the benefit of a contract, etc.
Examination MAY – 2023 (3 Marks)
Question 8(a)
List any 5 (Five) activities/transactions specified under Schedule III of the CGST Act, 2017 which shall be
neither treated as supply of goods nor as supply of services. Detailed explanations is not required.
Answer:
Activities or transactions which shall be treated neither as a supply of goods nor a supply of services are as
under:-
(1) Services by an employee to the employer in the course of or in relation to his employment.
(2) Services by any court or Tribunal established under any law for the time being in force.
(3) Functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities.
 Meaning of Supply 191

(4) Duties performed by any person who holds any post in pursuance of the provisions of the Constitution
in that capacity.
(5) Duties performed by any person as a Chairperson or a Member or a Director in a body established by
the Central Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.
(6) Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
(7) Sale of land and, subject to paragraph 5(b) of Schedule II, sale of building. (i.e. in case, where entire
consideration for sale of building received after issuance of completion certificate or after its first
occupation, whichever is earlier).
(8) Actionable claims, other than lottery, betting and gambling.
Example 1: When a new car worth ₹ 5,00,000 is purchased in exchange of an old car alongwith the
monetary consideration of ₹ 4,00,000 paid for the said purchase. There is a supply for the seller of car.
Example 2: Manikarnika sold her old gold bangles and earrings to ‘Aabhushan Jewellers’. Sale of old gold
jewellery by an individual to a jeweller will not constitute supply as the same cannot be said to be in the
course or furtherance of business of the individual.
Example 3: Sundaram Acharya, a famous actor, paints some paintings and sells them. The consideration
from such sale is to be donated to a Charitable Trust – ‘Kind Human’. The sale of paintings by the actor
qualifies as supply.
Example 4: Ramaiyaa, a proprietor, has received the architect services for his house from an architect
located in New York at an agreed consideration of $ 5,000. The import of services by Ramaiyaa is supply
under section 7(1)(b) though it is not in course or furtherance of business, however it is exempt as per
notification no. 9/2017
Example 5: Dhruv gives old laptops being used in his business to his friend free of cost. This will qualify as
supply provided input tax credit has been availed by Dhruv on such laptops.
Example 6: A dealer of air-conditioners permanently transfers the motor vehicle free of cost. ITC on said
motor vehicle is blocked. The transaction will not constitute a supply as the condition of availment of ITC
on the business asset transferred is not fulfilled.
Example 7: Mohan, a Chartered Accountant, has a registered head office in Delhi. He has also obtained
registration in the State of West Bengal in respect of his newly opened branch office. Mohan shall be treated
as distinct persons in respect of registrations in West Bengal and Delhi.
Example 8: Rishabh Enterprises, a registered supplier, owns an airconditioned restaurant in Virar,
Maharashtra. It has opened a liquor shop in Raipur, Uttarakhand for trading of alcoholic liquor for human
consumption. Since supply of alcoholic liquor for human consumption in Uttarakhand is a non-taxable
supply, Rishabh Enterprises is not required to obtain registration with respect to the same in Uttarakhand. In
this case, airconditioned restaurant in Maharashtra and liquor shop [though unregistered] in Uttarakhand
shall be treated as establishments of distinct persons. Supply by Maharashtra restaurant to Uttarakhand shop,
in course or furtherance of business, even without consideration will qualify as supply.
Example 9: Raghubir Fabrics transfers 1000 shirts from his factory located in Lucknow to his retail
showroom in Delhi so that the same can be sold from there. The factory and retail showroom of Raghubir
Fabrics are registered in the States where they are located. Although no consideration is charged, supply of
goods from factory to retail showroom constitutes supply.
Example 10: Jhumroo Associates received legal consultancy services from its head office located in
Malaysia. The head office has rendered such services free of cost to its branch office. Since Jhumroo
Associates and the head office are related persons, services received by Jhumroo Associates will qualify as
supply even though the head office has not charged anything from it.
Example 11: Chakmak, a proprietor registered in Delhi, has sought architect services from his son located
in US, with respect to his newly constructed house in Delhi. Although services have been received by
 Meaning of Supply 192

Chakmak without consideration from his son - a related person, yet it will not qualify as supply since the
same has not been received in course or furtherance of business.
Example 12: Under earlier tax regime, the restaurants used to charge both service tax and VAT on the value
of food served. This so because both sale of goods and provision of service were involved and therefore
taxable event under both the Statutes i.e. respective VAT law and service tax law got triggered.
Under GST, the supply by a restaurant is treated as composite supply since food and service is naturally
bundled in ordinary course of business. Further, Schedule II specifically provides that such composite
supply shall be treated as supply of service. Hence, the entire value of invoice shall be treated as value of
service and leviable to GST accordingly.

As per schedule II, in the following cases it will be supply of goods / services
Example 1: Dhruva Capitals supplied goods on hire purchase basis to customers: shall be considered to be
supply of goods.
Example 2: Optima Manufacturers supplies toys to retailers on ‘sale or return basis’: shall be considered to
be supply of goods.
Example 3: Lease agreement for land: shall be considered to be supply of services.
Example 4: Damani Dying House dyes the clothes given by Shubham Textiles Ltd. on job work basis: shall
be considered to be supply of services.
Example 5: Arun, a trader, is winding up his business. Any goods left in stock shall be deemed to be
supplied by him: shall be considered to be supply of goods.
Example 6: Renting of a commercial complex: shall be considered to be supply of services.
Example 7: Permitting use of immoveable property for placing vending/dispensing machines: shall be
considered to be supply of services.
Example 8: Rathi Builders has constructed individual residential units for agreed consideration of ₹ 1.2
crore per unit. ₹ 90 lakh per unit were received before issuance of completion certificate by the competent
authority and balance after completion: shall be considered to be supply of services.
Example 9: Temporary transfer of patent: shall be considered to be supply of services.
Example 10: Suvidha Solutions develops an accounting software for a business: shall be considered to be
supply of services.
Example 11: Cable operator - Sakharam has entered into an agreement with Cable operator - Aatmaram that
Sakharam will not provide cable connections in the specified areas where Aatmaram is providing the
connections. Non-compete agreements constitute supply of service: shall be considered to be supply of
services.
Example 12: Late delivery charges recovered from supplier for non-fulfilment of contract within stipulated
time: shall be considered to be supply of services.
Example 13: Notice pay recovered from employee for leaving the job before agreed period of notice for
leaving a job: shall be considered to be supply of services.
Example 14: Machinery given on hire: shall be considered to be supply of services.
Example 15: Resident Welfare Association (RWA) of Sanskriti Society supplies air-conditioners to its
members at a concessional price: shall be considered to be supply of goods.

As per schedule III, the following shall neither be supply of goods nor supply of services.
Example 1: Amounts received by an employee from the employer on premature termination of contract of
employment are treatable as amounts paid in relation to services provided by the employee to the employer
in the course of employment.
 Meaning of Supply 193

Example 2: Services provided by casual worker to employer who gives wages on daily basis to the worker
are services provided by the worker in the course of employment.
Example 3: Casual workers employed by a construction contractor for execution of a building contract for
him are services in the course of employment. Similarly, casual workers employed by a security services
agency for provision of security services to a client are also services in the course of employment.
Example 4: Services provided on contract basis by a person to another i.e. principal-to-principal basis are
not services provided in the course of employment19.
Example 5: Any amount paid by employer to employee for not joining a competing business is paid for
providing the service of forbearance to act and cannot be considered for providing services in the course of
employment.
Example 6: Duties performed by President of India, Vice President of India, Prime Minister of India, Chief
Justice of India, Speaker of the Lok Sabha, Chief Election Commissioner, Comptroller and Auditor General
of India, Chairman of Union Public Service Commission, Attorney General of India, in that capacity.

Examples of Composite supply

Example 1: Works contract and restaurant services are classic examples of composite supplies.
Example 2: Mobile phone is always sold with battery.
Example 3: Bundle of catering on board and transport by air is a bundle offered by a majority of airlines.
Example 4: Service of stay in a hotel is often combined with provision of breakfast and dinner provided free
of cost during the stay. Such service is an ancillary service to the provision of hotel accommodation and the
resultant package would be treated as services naturally bundled in the ordinary course of business.
Example 5: Poshaak Manufacturers entered into a contract with Cheeku Ltd. for supply of readymade shirts
packed in designer boxes at Cheeku Ltd.’s outlet. Further, Poshaak Manufacturers would also get them
insured during transit. In this case, supply of goods, packing materials, transport & insurance is a composite
supply wherein supply of goods is principal supply.
Example 6: When a consumer buys a television set and he also gets mandatory warranty and a maintenance
contract with the TV, this supply is a composite supply. In this example, supply of TV is the principal
supply, warranty and maintenance services are ancillary.
Example 7: A travel ticket from Mumbai to Delhi may include service of food being served on board, free
insurance, and the use of airport lounge. In this case, the transportation of passenger, constitutes the pre-
dominant element of the composite supply, and is treated as the principal supply and all other supplies are
ancillary.
Example 8: Rati Computers supplies laptop (worth ₹ 52,000) alongwith laptop bag (worth ₹ 3,000) to a
customer for ₹ 55,000. Being naturally bundled, supply of laptop bag along with the laptop is composite
supply which is treated as the supply of the principal supply [viz. laptop]. Assuming that the rate of tax
applicable on laptop is 18% and on laptop bag is 28%, in the given case, rate of principal supply, i.e. laptop
@ 18% will be charged on the entire value of ₹ 55,000.

Examples of Mixed Supply

Example 1: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated
drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied
separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied
separately.
Example 2: A shopkeeper selling storage water bottles along with refrigerator. Bottles and the refrigerator
can easily be priced and sold independently and are not naturally bundled. So, such supplies are mixed
supplies.
 Meaning of Supply 194

Example 3: A house is given on rent through a single rent deed - one floor of which is to be used as
residence and the other for housing a printing press, at a lump sum rent amount. Such renting for two
different purposes is not naturally bundled in the ordinary course of business. Said supplies are mixed
supply.
Example 4: Sringaar Enterprises supplies 10,000 kits (at ₹ 50 each) amounting to ₹ 5,00,000 to Raghav
General Store. Each kit consists of 1 shampoo, 1 face wash and 1 kajal pencil. It is a mixed supply and is
treated as supply of that particular supply which attracts highest tax rate. Assuming that the rate of tax
applicable on shampoo is 18%, on face wash is 28% and on kajal pencil is 12%, in the given case, highest
tax rate [viz. face wash] @ 28% will be charged on the entire value of ₹ 5,00,000.
 Meaning of Supply 195

PRACTICE PROBLEMS
Q1. What is the taxable event under GST?
Answer: Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be
levied on intra-State supplies. IGST will be levied on inter- State supplies.

Q2. What is the tax treatment of composite supply and mixed supply under GST?
Answer: Composite supply shall be treated as supply of the principal supply. Mixed supply would be
treated as supply of that particular goods or services which attracts the highest rate of tax.

Q3. Supply of all goods and/or services is taxable under GST. Discuss the validity of the statement.
Answer: The statement is incorrect. Supplies of all goods and services are taxable except alcoholic liquor
for human consumption. Supply of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel shall be taxable with effect from a future date. This date
would be notified by the Government on the recommendations of the GST Council.

Q4. Whether transfer of title and/or possession is necessary for a transaction to constitute supply of goods?
Answer: Title as well as possession both have to be transferred for a transaction to be considered as a
supply of goods. In case title is not transferred, the transaction would be treated as supply of service in terms
of Schedule II 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.

Q5. 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) Possession of goods under an agreement which stipulates that title in property shall pass at a future date.
Answer:
(a) Supply of services
(b) Supply of goods
(c) Supply of services
(d) Supply of goods

Q6. Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of services?
Give reason.
Answer: Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title,
albeit at a future date.

Q7. Meghraj & Co. wishes to commence the business of supplying ready-made garments within Punjab and
in the neighbouring States of Delhi and Haryana. Kindly state as to what is the taxable event under GST and
leviability of CGST, SGST/UTGST and IGST on the same?
Answer: Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be
levied on intra-State supplies. IGST will be levied on inter-State supplies.

Q8. Damodar Private Ltd., registered in Delhi, has transferred some goods to its branch, registered in West
Bengal, so that the goods can be sold from the branch. The goods have been transferred without any
consideration. The company believes that the transaction undertaken by it does not qualify as supply as no
consideration is involved. Ascertain whether the transfer of goods by Damodar Private Ltd. to its branch
office qualifies as supply.
 Meaning of Supply 196

Answer: As per Schedule I of the CGST Act, 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, is
deemed as supply even if made without consideration. In the given case, since the Damodar Private Ltd. and
its branch located in another State are distinct persons, supply of goods between them qualifies as supply.

Q9. Prithvi Associates is engaged in supply of taxable goods. It enquires from its tax advisor as to whether
any activity can be treated as supply even if made without consideration in accordance with the provisions
of the CGST Act. Enumerate such activities, if any.
Answer: Section 7 stipulates that the supply should be for a consideration and should be in the course or
furtherance of business. However, Schedule I of the CGST Act enumerates the cases where an activity is
treated as supply, even if the same is without consideration. These are as follows:
(i) Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
(ii) 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.
However, gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both.
(iii) Supply of goods —
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the
principal.
(iv) Import of services by a person from a related person or from any of his other establishments outside
India, in the course or furtherance of business.

Q10. Composite supply is treated as supply of that particular goods or services which attracts the highest
rate of tax. Examine the validity of the statement.
Answer: The statement is not correct. Composite supply is treated as supply of the principal supply. It is the
mixed supply that is treated as supply of that particular goods or services which attracts the highest rate of
tax.

Q11. Transfer of title and/or possession is necessary for a transaction to constitute supply of goods.
Examine.
Answer: Title as well as possession both have to be transferred for a transaction to be considered as a
supply of 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.

Q12. 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?
Answer:
(a) Schedule I of CGST Act, inter alia, stipulates 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. Further, a person who has obtained more than one
 Meaning of Supply 197

registration, whether in one State/Union territory or more than one State/Union territory shall, in respect of
each such registration, be treated as distinct persons [Section 25(4) of the CGST Act].
In view of the same, factory and depot of Sulekha Manufacturers are distinct persons. Therefore, supply of
goods from Delhi factory of Sulekha Manufacturers to Mumbai Depot without consideration, but in
course/furtherance of business, is supply under section 7 read with Schedule I of the CGST Act.
(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
wellknown 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 read with Schedule I of the CGST
Act.
(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.

Q13. Determine whether the following supplies would be treated as supply of goods or supply of services as
per Schedule II of the CGST Act:
(a) Temporary transfer or permitting use or enjoyment of any intellectual property right.
(b) Any treatment or process which is applied to another person’s goods.
(c) Transfer of title in goods.
Answer:
(a) Supply of services
(b) Supply of services
(c) Supply of goods

Q14. The goods supplied on hire purchase basis will be treated as supply of services. Examine the validity
of the statement.
Answer: The statement is not correct. Supply of goods on hire purchase shall be treated as supply of goods
as there is transfer of title, albeit at a future date.

Q15. Examine whether the activity of import of service in the following independent cases would amount to
supply under section 7 of the CGST Act, 2017:
(i) Miss Shriniti Kaushik received interior decoration services for her residence located at Bandra, Mumbai
from Mr. Racheal of Sydney (Australia). The amount paid for the said service is 5,000 Australian dollar.
(ii) Miss Shriniti Kaushik received interior decoration services for her residence located at Bandra, Mumbai
from her brother, Mr. Varun residing in Sydney (Australia) [wholly dependent on Miss Shriniti]. Further,
Miss Shriniti did not pay any consideration for the said service.
(iii) Will your answer change if in the above case, if Miss Shriniti has taken interior decoration services with
regard to her business premises and not her residence?
Note: Any specific exemption by way of notification needs to be ignored.
Answer:
(i) Supply, under section 7 of the CGST Act, 2017, inter alia,
 includes import of services for a consideration
 Meaning of Supply 198

 even if it is not in the course or furtherance of business.

Thus, although the import of service for consideration by Miss. Shriniti Kaushik is not in course or
furtherance of business [as the interior decoration services have been availed in respect of residence], it
would amount to supply.
(ii) 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, Miss Shriniti Kaushik has received interior decoration services from her brother. In view
of section 2(49)(ii) above, Miss Shriniti and her brother shall be considered to be related as Miss Shriniti’s
brother is wholly dependent on her.
However, Miss Shrinti has taken interior decoration services for her residence and not in course or
furtherance of business. Consequently, services provided by Miss Shrinti’s brother to her would not be
treated as supply under section 7 read with Schedule I of the CGST Act.
(iii) In the above case, if Miss Shriniti has taken interior decoration services with regard to her business
premises, services provided by Miss Shriniti’s brother to her would be treated as supply under section 7 of
the CGST Act read with Schedule I of the CGST Act, 2017.

Q16. 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
alongwith the room accommodation.
(b) A toothpaste company has offered the scheme of free soap alongwith the toothpaste.
Answer: 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,
(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 soap alongwith the toothpaste are not naturally bundled, said supplies do not qualify as
‘composite supply’.

Q17. Dumdum Electronics has sold the following electronic items to Akbar Retail Store.
(i) Refrigerator (500 litres) taxable @ 18%
(ii) Stabilizer for refrigerator taxable @ 12%
(iii) LED television (42 inches) taxable @ 12%
(iv) Split air conditioner (2 Tons) taxable @ 28%
(v) Stabilizer for air conditioner taxable @12%
Dumdum Electronics has issued a single invoice, indicating price of each of the above items separately in
the same. Akbar Retail Store has given a single cheque of ₹ 1,00,000/- for all the items as a composite
discounted price. State the type of supply and the tax rate applicable in this case.
Answer: In the given case, the items supplied by Dumdum Electronics are not naturally bundled in the
ordinary course of business. Therefore, such supply is not a composite supply. Further, although Akbar
Retail Store has paid a composite discounted price for these goods, Dumdum Electronics has not charged a
single price for the said supply. Therefore, said supply is also not a mixed supply.
Supply of these goods is, therefore, supply of individual items which are taxable at the respective rates
applicable to them.
 Meaning of Supply 199

Q18. Manikaran, a registered supplier of Delhi, has supplied 20,000 packages at ₹ 30 each to Mukhija Gift
Shop in Punjab. Each package consists of 2 chocolates, 2 fruit juice bottles and a packet of toy balloons.
Determine the rate(s) of GST applicable in the given case assuming the rates of GST to be as under:
Goods/services supplied GST rate
Chocolates 18%
Fruit juice bottles 12%
Toy balloons 5%
Answer: 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] and the rate of GST applicable on the package of ₹ 6,00,000 (20,000 × ₹ 30)
is 18%.

Q19. Gagan Engineering Pvt. Ltd., registered in Haryana, is engaged in providing maintenance and repair
services for heavy steel machinery. For carrying out the repair work, Gagan Engineering Pvt. Ltd. sends its
container trucks equipped with items like repair equipments, consumables, tools, parts etc. from Haryana
workshop to its own repairing centres (registered under GST law) located in other States across India where
the clients’ machinery are being brought and are being repaired.
Discuss the leviability of GST on the inter-State movement of trucks from the workshop of Gagan
Engineering Pvt. Ltd. in Haryana to its own repairing centres located in other States across India.
Answer: As per section 25(4), 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 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,
when made in the course or furtherance of business is one such activity included in Schedule I under para 2.
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 [Circular No. 1/1/2017 IGST dated 07.07.2017].
Thus, in the given case, inter-State movement of trucks from the workshop of Gagan Engineering Pvt. Ltd.
located in Haryana to its repair centres located in other States is ‘neither a supply of goods nor supply of
service’.

Q20. PTL Pvt. Ltd. is a retail store of merchandise located in 25 States/UTs in the country. For the purpose
of clearance of stock of merchandise and to attract consumers, PTL Pvt. Ltd. launched scheme of “Buy One
Get One Free” for the same type of merchandise, for instance, one shirt to be given free with purchase of
one shirt. Determine how the taxability of the goods supplied under “Buy One Get One Free” scheme is
determined.
Answer: As per section 7(1)(a), the goods or services which are supplied free of cost (without any
consideration) are not treated as “supply” except in case of activities mentioned in Schedule I of the CGST
Act. Under “Buy One Get One Free” scheme, 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. However, 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 accordingly.
 Meaning of Supply 200

Q21. Sarvanna & Sons wishes to start supplying liquor in the State of Tamil Nadu. Therefore, it applies for
license for selling liquor to the Tamil Nadu Government for it has charged specified fee from it. Examine
whether the grant of alcoholic liquor license by the Tamil Nadu Government to Sarvanna & Sons qualifies
as supply.
Answer: Services by way of grant of alcoholic liquor license by the State Governments have been notified
to be treated neither as a supply of goods nor as a supply of service. Such licence is granted against
consideration in the form of licence fee or application fee or by whatever name it is called. This special
dispensation is applicable only to supply of service by way of grant of liquor licenses by the State
Governments as an agreement between the Centre and States and is not applicable/has no precedence value
in relation to grant of other licenses and privileges for a fee in other situations, where GST is payable.
Thus, in the given case, the grant of alcoholic liquor license by the Tamil Nadu Government to Sarvanna &
Sons is neither a supply of goods nor a supply of service.
 Meaning of Supply 201

MULTIPLE CHOICE QUESTIONS

1. Which of the following is not a supply as per section 7 of the CGST Act?
(a) Management consultancy services not in course or furtherance of business
(b) Import of service for consideration not in course or furtherance of business
(c) Both (a) and (b)
(d) None of the above
2. _____________ specifies the activities to be treated as supply even if made without consideration.
(a) Schedule I of CGST Act (b) Schedule II of CGST Act
(c) Schedule III of CGST Act (d) All of the above
3. Which of the following activity is outside the scope of supply and not taxable under GST?
(a) Services by an employee to the employer in the course of or in relation to his employment
(b) Services of funeral
(c) Actionable claims, other than lottery, betting and gambling.
(d) All of the above
4. Which of the following supplies are naturally bundled?
(a) Rent deed executed for renting of two different floors of a building-one for residential and another for
commercial purpose to same person.
(b) Pack of watch, tie and belt
(c) Package of canned food such as burger, chocolates, sweets, cake etc.
(d) None of the above
5. A _______________ supply comprising of two or more supplies shall be treated as the supply of that
particular supply that attracts highest rate of tax.
(a) Composite
(b) Mixed
(c) Both (a) and (b)
(d) None of the above
6. Which of the following activities is a supply of services?
(a) Transfer of right in goods/ undivided share in goods without transfer of title in goods
(b) Transfer of title in goods
(c) Transfer of title in goods under an agreement which stipulates that property shall pass at a future date.
(d) All of the above
7. Which of the following activity shall be treated neither as a supply of goods nor a supply of
services?
(i) Permanent transfer of business assets where input tax credit has been availed on such assets
(ii) temporary transfer of intellectual property right
(iii) transportation of deceased
(iv) services by an employee to the employer in the course of employment
(a) (i) & (iii)
(b) (ii) & (iv)
(c) (i) & (ii)
(d) (iii) & (iv)
8. As per section 7(1)(a) supply includes
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental,
lease or disposal made or agreed to be made with or without consideration by a person in the course or
furtherance of business
(b) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental,
lease or disposal made or agreed to be made for a consideration by a person whether or not in the course or
furtherance of business
(c) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental,
lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of
business
 Meaning of Supply 202

(d) none of these

9. As per section 7(1)(b) Supply includes
(a) import of services with or without consideration whether or not in the course or furtherance of business
(b) import of services for a consideration in the course or furtherance of business
(c) import of services for a consideration whether or not in the course or furtherance of business
(d) none of these
10. As per section 7(1)(c) supply includes
(a) the activities specified in Schedule II, made or agreed to be made without a consideration
(b) the activities specified in Schedule I, made or agreed to be made with a consideration
(c) the activities specified in Schedule I, made or agreed to be made without a consideration
(d) none of these
11. As per schedule I, activity to be treated as supply even if made without consideration shall include
(a) Permanent transfer or disposal of business assets where input tax credit has been availed on such assets
(b) Permanent transfer or disposal of business assets where input tax credit has not been availed on such
assets
(c) Temporary transfer or disposal of business assets where input tax credit has been availed on such assets
(d) none of these
12. As per schedule I, activity to be treated as supply even if made without consideration shall include
(a) Supply of goods or services or both between related persons or between distinct persons as specified in
section 25, whether or not made in the course or furtherance of business
(b) 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
(c) Supply of goods or services or both between unrelated persons as specified in section 25, when made in
the course or furtherance of business
(d) none of these
13. As per schedule I, activity to be treated as supply even if made without consideration shall include
Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
(b) by a principal to his agent where the agent undertakes to supply such goods on his own behalf or by an
agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
(c) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
by an agent to his principal where the agent undertakes to receive such goods on his own behalf.
(d) none of these
14. Which of the following transactions is not covered in schedule III
(a) Services by an employee to the employer in the course of or in relation to his employment.
(b) Services by any court or Tribunal established under any law for the time being in force.
(c) Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
(d) Pre school education or education upto higher secondary school or equivalent
(e) none of these
15. Which of the following transactions is not covered in schedule III
(a) Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
(b) Sale of land and, subject to clause (b)of paragraph 5 of Schedule II, sale of building.
(c) agricultural operations directly related to production of any agricultural produce including cultivation,
harvesting, threshing, plant protection or testing;
(d) Actionable claims, other than lottery, betting and gambling.
(e) none of these
Answer:
1. (a); 2. (a); 3. (d); 4. (d); 5. (b); 6. (a); 7. (d); 8. (c); 9. (c); 10. (c); 11 (a); 12. (b); 13(a); 14.(d); 15. (c)
 Meaning of Supply 203

EXAMINATION QUESTION
JULY 2021
Question 1 (8 Marks)
X Electronics is a registered manufacturer of electrical appliances.
It made contract with dealers, that purchase of air conditioners of capacity 1.5 Ton in the month of October,
2022 of quantity of more than 50 units will entitle them for 10% discount.
Interstate supply made during the month of October 2022 is ₹ 50,00,000
Details of Intrastate supply:
Particulars Amount (₹)
Supply of Microwave Oven 15,00,000
Supply of Refrigerators with Stabilizers being a mixed supply, rate of GST on 40,00,000
Refrigerator is 28% (14% CGST & 14% SGST), rate of GST on Stabilizer is 18% (9%
CGST & 9% SGST)
Supply of Air Conditioners of capacity 1.5 Ton @ ₹ 50,000 per Air Conditioner 50,00,000

Intrastate inward supplies are:

Particulars Amount (₹)
Raw material 20,00,000
Paid Gym membership for employees 50,000
Truck purchased for transportation of goods 30,00,000

X Electronics made supply of Air Conditioners (Capacity 1.5 Ton) to only one dealer named Mr. L.
Gym membership for employees is not obligatory for X Electronics under any law
Opening Balance of ITC is as under:
CGST: ₹ 58,000
SGST: ₹ 70,000
IGST: ₹ 10,00,000
Note:
(i) Rate of CGST, IGST are 9%, 9% and 18% respectively for both inward and outward supplies except
where specifically provided.
(ii) Both inward and outward supplies are exclusive of taxes.
(iii) All the conditions for availing the ITC have been fulfilled.
Compute the Net GST payable in cash by X Electronics for the month of October, 2022
 Meaning of Supply 204

Answer:
Computation of net GST payable in cash by X Electronics for October 2022
Particulars Amount CGST SGST IGST
(₹) (₹) (₹) (₹)
I. Intra-State supply
Supply of microwave oven 15,00,000 1,35,000 1,35,000
Supply of refrigerators with stabilizers 40,00,000 5,60,000 5,60,000
[Being mixed supply, the supply shall
be treated as a supply of that particular
supply which attracts the highest rate
of tax and taxed accordingly. Thus, it
will be taxed @ 14% CGST and
14% SGST.]
Supply of 100 (₹ 50 lakh/₹ 50,000) air 45,00,000 4,05,000 4,05,000
conditioners [Since 100 air [₹ 50,00,000
conditioners have been supplied, x 90%]
discount @ 10% will be available.]
II. Inter-State supply @ 18% 50,00,000 9,00,000
Total outward tax liability 11,00,000 11,00,000 9,00,000
Less: Input Tax Credit (Refer Working Note below)
IGST credit first utilized towards payment of IGST. Remaining 1,00,000 9,00,000
amount can be utilized towards CGST (IGST) (IGST)
and SGST in any order and in any proportion
CGST credit set off against CGST liability and SGST credit set 5,08,000 5,20,000
off against SGST liability as CGST credit cannot be utilized (CGST) (SGST)
towards payment of SGST
and vice versa.
Net GST liability payable in cash 4,92,000 5,80,000 Nil
Working Note
Computation of ITC available with X Electronics
Particulars CGST SGST IGST
(₹) (₹) (₹)
Opening balance of ITC 58,000 70,000 10,00,000
Intra-State inward supplies
 Meaning of Supply 205

Raw material 20,00,000 1,80,000 1,80,000

Gym membership for employees 50,000 Nil Nil
[ITC on membership of a health and fitness
centre is blocked if there is no statutory
obligation for the employer to provide the same.]
Truck purchased for transportation of goods 30,00,000 2,70,000 2,70,000
[ITC on motor vehicles used for transportation
of goods is not blocked.]
Total ITC 5,08,000 5,20,000 10,00,000
Note:
(i) In the above answer, tax payable in cash has been computed by setting off the IGST credit against CGST
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 other ways as well. In
all such cases, net CGST and net SGST payable in cash will differ though the total amount of net GST
payable (₹ 10,72,000) in cash will remain the same.
(ii) It has been presumed that there is one supply transaction for 100 ACs and thus, the discount has been
given in the invoice itself. Alternatively, even if there have been multiple supply transactions for the ACs
during the month and the discount has been given vide credit note, it has been presumed that the credit note
has been issued in October 2022 and all other conditions prescribed in section 15(3)(b) of the CGST Act,
2017 have been complied with. Thus, the effect of the discount has been adjusted in the month of October
2022 itself.
(iii) It has been assumed that depreciation has not been claimed on tax component.

JULY 2021
Question 6(b) (4 Marks)
Explain the composite supply and mixed supply. If a trader launches a package sales for marriage
contained double bed, refrigerator, washing machine, wooden wardrobe at a single rate. He is issuing of
invoice showing value of each goods separately, whether this is case of mixed supply of composite supply.
Explain.
Answer:
Composite supply comprises 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.

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.

Items such as double bed, refrigerator, washing machine and wooden wardrobe are not naturally bundled
and also the invoice for the supply shows separate values for each item i.e., the package is not supplied for a
single price.
Therefore, supply of such items as a package will neither constitute a composite supply nor a mixed supply.
Thus, the various items of the package will be treated as being supplied individually.
 Meaning of Supply 206

Note: The question specifies that the various items are supplied at a ‘single rate’. The “single rate”
expression is construed as single rate of tax in the above answer. Further, the “single rate” may also be
construed as single price as given in the below mentioned answer.

Items such as double bed, refrigerator, washing machine and wooden wardrobe are not naturally bundled.
Therefore, supply of such items as a package will not constitute composite supply. Further, a single price has
been charged for the package.

Consequently, supply of such items as a package will be treated as mixed supply.

NOV 2020
Question 8 (c). (5 Marks)
With reference to provisions of CGST Act, 2017 discuss in brief, when “Importation of services” to be
considered as supply and when it is not to be considered as supply.
Answer: As per section 7 (1) (b), Import of services for a consideration for business purpose or for
personal purpose shall be considered to be supply, however as per notification no. 9/2017 IT(R), Services
imported by an individual for personal purpose shall be exempt from GST but no such exemption shall be
allowed in case of OIDAR services i.e. online information and data base access and retrieval services. If
individual is not registered, GST shall be collected by OIDAR and tax shall be paid by OIDAR and if
individual is registered, GST shall be paid by individual under reverse charge. Further as per schedule I
Import of services without consideration by a person from a related person or from any of his establishment
outside India in the course or furtherance of business shall be taxable i.e. no GST in any other case without
consideration.

NOV 2019
Question.5. (8 Marks)
M/s Grey, a registered taxable person under scheme provides following information in respect of supplies
made by it during the month of April 2022:
(All
amount in
rupees)
(i) Inter- state supply of goods 1,00,000
(ii) Intra- state supply of 500 packets of detergent @ ₹ 400 each alongwith a plastic bucket
worth ₹ 100 each with each packet, being a mixed supply. (Rate of GST on detergent is 18%
and on plastic bucket is 28%)
(iii) Supply of online educational journals to M/s Pinnacle, a private coaching centre 50,000
providing tuitions to students of Class X-XII, being intra-state supply.
M/s Grey has also received the following inward supplies:
(iv) Inter-state supply of goods (out of which invoice for goods worth ₹ 20,000 is missing 70,000
and no other tax paying document is available)
(v) Repairing of bus with seating capacity of 20 passengers used to transport its employees 50,000
from their residence, being intra-state supply,
Details of opening balances of ITC as on 1-4-2022 are as Follows: (₹)
 Meaning of Supply 207

CGST 5,000
SGST 5,000
IGST 40,000
Following additional information is provided:
(a) Rate of GST in respect of all inward and outward supplies except item (ii) above is 18% i.e. CGST and
SGST @ 9% and IGST @ 18%.
(b) All figures mentioned above are exclusive of taxes.
(c) All the conditions for availing the ITC have been fulfilled except specifically given and M/s. Grey is not
eligible for any threshold exemption.
Compute the maximum net GST payable in cash by M/s. Grey for the month of April 2022.
Solution: Computation of Net GST Payable in cash for the month of Apr 2022 ₹
Output Tax
(i) Inter state supply of goods 1,00,000
Add: IGST @ 18% 18,000

(ii) Intra State Sale of Taxable goods

Detergent (500 x 500) 2,50,000
Add: CGST @ 14% 35,000
Add: SGST @ 14% 35,000

(iii) Intra State Sale of educational journal

50,000
Add: CGST @ 9% 4,500
Add: SGST @ 9% 4,500

Input Tax
Input inter state purchase 50,000
Add: IGST @ 18% 9,000

Repairing of bus 50,000

Add: CGST @ 9% 4,500
Add: SGST @ 9% 4,500

Computation of Net Tax Liability

CGST
Output Tax (35,000+4,500) 39,500
Less: ITC -IGST (30,000)
Less: ITC -CGST (9,500)
Net Tax Liability Nil

SGST
Output Tax (35,000+4,500) 39,500
Less: ITC -IGST (1,000)
Less: ITC -SGST (9,500)
Net Tax Liability 29,000

IGST
Output Tax 18,000
 Meaning of Supply 208

Less: ITC -IGST (18,000)

Net Tax Liability Nil
Note:
In case of mixed supply highest rate of tax shall be considered.

MAY 2019
Question 7 (a) (5 Marks)
Koli Ltd. Supplies machinery to G Ltd. (Dealer in same State), provides following particulars regarding
the same. Determine the value of taxable supply of machinery.

No. Particulars Amount(₹)

(i) Price of Machinery (exclusive of taxes and discounts) 5,50,000
(ii) One part is directly fitted in machinery at place of G Ltd. 20,000
(Amount paid by G Ltd. Directly to supplier, as per contract
this amount should be paid by Koli Ltd. and not included in
price)
(iii) Installation and testing charges for machinery, not included in 25,000
price.
(iv) Discount 2% on machinery price (Recorded in the invoice)
(v) Koli Ltd. Provides additional 1% discount at year end, based
on additional purchase of other machinery.
Solution:
Computation of taxable value of supply of machinery
Particulars Amount (₹)
(i) Price of Machinery (exclusive of taxes and discounts) 5,50,000
(ii) One part is directly fitted in machinery at place of G Ltd. 20,000
(iii) Installation and testing charges for machinery 25,000
(iv) Less: Discount 2% on machinery price (2% of 5,50,000) (11,000)
Taxable value of supply 5,84,000
Notes:
1. If the supplier has given any discount before or at the time of supply, it will be allowed to be
deducted and additional discount allowed at year end shall not be allowed to be deducted.
2. As per section 15, any amount that the supplier is liable to pay in relation to such supply but which
has been incurred by the recipient of supply and not included in price then such amount shall be
included.
3. Amount charged for anything done at the time of or before the delivery of goods or supply of
services shall be included in the transaction value.

MAY 2019
Question 10 (a) (4 Marks)
Explain the services provided by way of tolerating non-performance of a contract and its chargeability
under the provisions of the CGST Act, 2017
 Meaning of Supply 209

Answer:
As per schedule II, agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or
to do an act shall be treated as supply of services

As per section 2(102) “services" means anything other than goods, money and securities but includes
activities relating to the use of money or its conversion by cash or by any other mode, from one form,
currency or denomination, to another form, currency or denomination for which a separate consideration is
charged.

Services provided by way of tolerating non-performance of a contract shall be treated as supply of services
because agreeing to obligation to refrain from an act, or to tolerate an act or situation shall be treated as
supply of service. (section 7(1A), schedule II)
Example: A Ltd given a contract to B Ltd. to complete a work in 4 years and B Ltd. did not completed the
work within 4 years, in this case it a non - performance of a contract and shall be treated as supply of
services and any consideration received for non-performance shall be treated as supply of service and GST
shall be chargeable.

NOV 2018
Question 9 (b) (5 Marks)
Explain the meaning of supply as per provisions of Section 7(1) of Central Goods and Service Tax Act,
2017.
Answer: Refer answer given in the book

NOV 2018
Question 12 (5 Marks)
(c) State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule-II of CGST Act:
(i) Renting of Immovable Property
(ii) Transfer of right in goods without transfer of title in goods.
(iii) Works Contract Services
(iv) Temporary transfer of permitting use or enjoyment of any intellectual property right.
(v) Sale of personal car to dealer.
Answer:
As per Schedule -II of CGST Act:
(i) Renting of Immovable property shall be treated as Supply of services.
(ii) Transfer of right in goods without transfer of title in goods shall be treated as Supply of services.
(iii)Works contract services shall be treated as Supply of services.
(iv) Temporary transfer of permitting use or enjoyment of any intellectual property right shall be treated
as Supply of services.
(v) As per section 7(1)(a), it cannot be considered to be a supply.

MAY 2018
Question 8 (b) (5 Marks)
List the activities to be treated as supply under CGST Act, 2017 even if made without consideration.
Answer: Refer answer given in the book
 Meaning of Supply 210

MAY 2018
Question 12 (b) (5 Marks)
Mrs. Pragati received legal advice for her personal problems & paid 1,000 pound as a legal fees to Mrs.
Unnati of U.K. (London).
Explain whether the above activity of import of service would amount to supply u/s. 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?
Answer: As per section 7, import of services for a consideration whether or not in the course or furtherance
of business shall be treated as supply.
In the given case, import of service is for consideration hence it is treated as supply however it is exempt as
per exemption notification.
In the second case, if import of service without consideration for personal purpose shall not be treated as
supply.
In the third case, as per schedule 1 if import of service without consideration for business purpose, shall be
treated as supply.

IPC NOV 2017 (MODIFIED)

Question 5 (3 Marks)
Discuss with reference to the provisions of GST, whether the under mentioned transactions constitute
consideration for service.
(i) Fines and penalties imposed against violation of law.
(ii) X provides services to Y. However, Y’s debtor makes payment to X on the instructions of Y.
(iii) Grant given to a researcher to carry out research of his/her choice.
Answer:
As per section 2 (31), "consideration" in relation to the supply of goods / services includes-
(a) any payment made whether in money or otherwise in respect of the supply of goods / services, whether
by the recipient or by any other person but shall not include any subsidy given by the Central Government or
a State Government.
(b) the monetary value of any act or forbearance in respect of the supply of goods / services whether by the
recipient or by any other person but shall not include any subsidy given by the Central Government or a
State Government.
Provided that a deposit given in respect of the supply of goods / services shall not be considered as payment
made for such supply unless the supplier applies such deposit as consideration for the said supply.
(i) Fines and penalties imposed against violation of law shall not be considered as consideration of service as
there is no supply of service in case of violation of law.
(ii) As per the above definition payment made by any other person on behalf of other shall constitute
consideration for service.
(iii) Grant given to a researcher to carry out research of his/her choice shall not be treated as consideration
for service.
 Input Tax Credit 211

INPUT TAX CREDIT

SECTION 16, 17, 18
RULE 36, 37, 40, 42, 43, 44
Question 1: Explain conditions for taking Tax Credit under GST.
Answer: Condition for taking input tax credit. Section 16(1)/(2)/ Rule 36 & 37
Input tax credit shall be allowed if
1. The supplier and recipient should be registered person and the supply of goods/services is for
business/profession
2. Registered person has received the goods / services or such goods or services have been received by his
agent or any other person specified by him. If the goods against an invoice are received in lots or
instalments, the registered person shall be entitled to take credit upon receipt of the last lot or
instalment:
3. Registered person has received a tax invoice/debit note/a bill of entry/ other such documents and it
should contain at least the GSTIN of the supplier and recipient, details of goods or services, total value of
supply of goods or services, GST.
4. The details of the invoice or debit note has been furnished by the supplier in GSTR-1 and the details of
input tax credit has been informed to recipient in GSTR-2B and also it is not restricted in GSTR 2B.
further the recipient has furnished GSTR-3B
5. If the recipient has not made the payment, still ITC shall be allowed but payment has to be made within
180 days from the date of issue of invoice otherwise amount of ITC has to be paid along with interest @
18% p.a. computed in the manner given under section 50. If payment is made subsequently he can again
take tax credit. Further restriction of time limit of section 16(4), shall not be applicable. (However this
procedure is not applicable in case of reverse charge because the recipient himself has to pay GST to the
Government)
As per section 16(3), If the person purchasing capital goods has taken ITC, depreciation shall not be
allowed on such amount. e.g. ABC limited purchased one plant for ₹ 30,00,000 and paid GST of ₹ 6,00,000
and has taken ITC, in this case depreciation shall be allowed on ₹ 30,00,000.
Time limit for availing ITC
As per section 16(4), A registered person shall not be entitled to take input tax credit
• after the 30th day of November following the end of financial year to which such invoice or such debit
note pertains or
• furnishing of the relevant annual return (as per section 44/Rule 80, every person has to file annual return
in form no. GSTR-9 upto 31st December of the subsequent year)
whichever is earlier.

Example 1
ABC limited has received invoice dated 10th December, 2022, In this case last date for taking ITC shall be
30th November 2023 but if annual return has been filed on 31st July 2023, last date shall be 31st July 2023.
If any debit note has been issued in connection with any invoice, date of debit note shall be taken into
consideration for the purpose of determining the time limit and not the date of invoice, e.g. Invoice is issued
on 10/01/2023 and debit note is issued on 20/04/2023 in this case ITC can be taken maximum upto
30/11/2024 or the date of filing annual return whichever is earlier.

Example 2
A is a trader who places an order on B for a consignment of soda. A receives a buying order from C for the
same quantity of soda. A instructs B to deliver the goods to C, and in turn he raises an invoice on C. Though
 Input Tax Credit 212

the goods are not physically received at the premises of A, in this case it will be deemed to be a delivery to
Mr. A and Mr. A is entitled to ITC on the consignment.
Example 3
XYZ makes an advance payment in August and orders 10 quintals of a particular chemical which is in short
supply. The supplier of the chemical raises a bill for the entire amount in August and collects GST from
XYZ on the advance paid. The chemical is delivered in lots over a period of three months and the supply is
completed in November. XYZ can take the ITC only on receipt of last instalment of the chemical in the
month of November.
Example 4
Due to a quality dispute, P Ltd withheld payment on a machine supplied by a vendor till it could be rectified.
Over 180 days went by in this dispute. The credit taken by P on the invoice got added to the output tax
liability of P and thus, it had to pay back the credit. Only after the vendor rectified the machine and P
released the payment, P can take the credit again.
Example 5
Hercules Machinery delivered a machine to XYZ in January 2023 under Invoice no. 49 dated 28th January,
2023 for ₹ 4,15,000 plus GST, and undertook trial runs and calibration of the machine as per the
requirements of XYZ. The amount chargeable for the post-delivery activities was covered in a debit note
raised in April 2023 for ₹50,000 plus GST.
Though the debit note was received in the next financial year, it relates to an invoice received in the
financial year ending March 2023. Therefore, the time limit for XYZ for taking ITC available on ₹ 4,15,000
is 30th November, 2023 (i.e. earlier of the date of filing the annual return for 2022-23 or 30th November
2023.) and on ₹ 50,000 is 30th November, 2024 (i.e. earlier of the date of filing the annual return for 2023-
24 or 30th November 2024.)

Illustration 1: XYZ Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with
XYZ Ltd. for the month of October, 2022 from the following particulars:-
S. No. Inward supplies GST (₹) Remarks
(i) Inputs ‘A’ 1,00,000 One invoice on which GST payable was ₹ 10,000,
is missing
(ii) Inputs ‘B’ 50,000 Inputs are to be received in two instalments.
First instalment has been received in October, 2022.
(iii) Capital goods 1,20,000 XYZ Ltd. has capitalised the capital goods at full
invoice value inclusive of GST as it will avail
depreciation on the full invoice value.
(iv) Input services 2,25,000 One invoice dated 20.01.2022 on which GST payable
was ₹50,000 has been received in October, 2022.
Note:
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) ABC Co. Ltd. is not eligible for any threshold exemption.
(iii) The annual return for the financial year 2021-22 was filed on 15th September, 2022.
Answer
Computation of ITC available with XYZ Ltd. for the month of October, 2022
S. No. Inward supplies GST (₹)
(i) Inputs ‘A’ [ITC cannot be taken on missing invoice. The registered person should 90,000
have the invoice in its possession to claim ITC]
(ii) Inputs ‘B’ [When inputs are received in instalments, ITC can be availed only on receipt Nil
of last instalment]
(iii) Capital goods [Input tax paid on capital goods cannot be availed as ITC, if depreciation Nil
has been claimed on such tax component]
(iv) Input services 1,75,000
[ITC on an invoice cannot be availed after 30.11.2022 or the date of filing annual
return whichever is earlier. Since return has been filed on 15.09.2022, ITC can not
 Input Tax Credit 213

be availed after 15.09.2022]

Total 2,65,000

Question 2: Availment of Tax credit in case of new registration.

Answer: Tax credit in case of new registration
Compulsory Registration
As per section 18(1)(a)/Rule 40, A person who has applied for registration under this Act 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 / semi-finished / finished goods on the day
immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act.
No tax credit shall be allowed for input services and capital goods.
If any person has applied for registration after expiry of 30 days, tax credit shall not be allowed.
Example: Mr. X becomes liable to pay tax on 01/08/2022 and has applied for registration on 16/08/2022
obtained registration on 16/09/2022. Mr. X is eligible for ITC on inputs held in stock/ semi-finished /
finished goods as on 31st July. Mr. X cannot take ITC on capital goods.
Voluntary Registration
As per section 18(1)(b)/Rule 40, A person who takes voluntary registration shall be entitled to take credit
of input tax in respect of inputs held in stock and inputs/ semi-finished / finished goods on the day
immediately preceding the date of grant of registration. No tax credit shall be allowed for input services and
capital goods.
Example: Mr. A applies for voluntary registration on 5th June and obtains registration on 22nd June. Mr. A
is eligible for ITC on inputs held in stock/ semi-finished goods / finished goods as on 21st June. Mr. A
cannot take ITC on capital goods.
For this purpose the applicant has to submit form no. ITC-01 within 30 days from the date on which he
becomes eligible to avail ITC. Further ITC-01 should be verified by Chartered Accountant/ Cost Accountant
if the total amount of ITC is exceeding ₹ 2,00,000.

As per section 18 (2), Tax credit shall be allowed maximum within one year from the date of invoice.

Example 1
Mr. Z becomes liable to pay tax on 01/08/2022 and has applied for registration on 05/09/2022 and obtained
registration on 10/09/2022, in this case Mr. Z is not eligible for claiming ITC because application for
registration has been given after 30 days.

Example 2
Mr. A applies for voluntary registration on 5th June and obtains registration on 22th June. Mr. A is eligible
for ITC on inputs / semi-finished goods / finished goods as on 21st June. Mr. A cannot take ITC on capital
goods.

Example 3
Mr. X purchased goods vide invoice dated 01/07/2022 ₹10,00,000 plus GST ₹2,00,000 and he is
unregistered. His turnover has crossed the Limit of ₹ 40,00,000 in the year 2023-24 on 10/08/2023, in this
case as per section 18(2) tax credit for the goods lying in the stock is not allowed because one year has
elapsed from the date of invoice.

Example 4
Mr. X purchased goods vide invoice dated 01/03/2023 ₹10,00,000 plus GST ₹2,00,000 and he is
unregistered. His turnover has crossed the Limit of ₹ 40,00,000 in 2023-24 on 01/01/2024 and he applied for
registration on 01/01/2024 and was granted registration on 10/01/2024, in this case as per section 16(4) tax
credit for the goods lying in the stock is not allowed because time limit prescribed under 16(4) has elapsed.

Illustration 2: ABC Ltd. Started Business on 01/10/2022.

 Input Tax Credit 214

Purchased raw material ₹50,00,000 + CGST @ 12% + SGST @ 12% and also purchased plant machinery
₹30,00,000 + CGST @ 12% + SGST @ 12%.
Turnover of the company crossed ₹40,00,000 on 10/01/2023 and company has taken registration on
10/01/2023 and at that time 50% of the raw material has been utilised.
Company had turnover ₹30,00,000 from 10/01/2023 to 31/01/2023 and rate of CGST @ 12% and SGST @
12%.
Compute ITC /Output tax and Net Tax for Jan 2023
Solution:
₹
Purchased raw material 50,00,000
Add: CGST @12% 6,00,000
Add: SGST @12% 6,00,000
Total 62,00,000
ITC allowed
CGST (50%) 3,00,000
SGST (50%) 3,00,000

Plant & Machinery 30,00,000

Add: CGST @12% 3,60,000
Add: SGST @12% 3,60,000
Total 37,20,000
As per Section 18 (1) (a) / Rule 40, no tax credit shall be allowed for capital goods.

Output Tax
Transaction Value 30,00,000
Add: CGST @12% 3,60,000
Add: SGST @12% 3,60,000
Total 37,20,000
Computation of Net Tax Payable
CGST
Output Tax 3,60,000
Less: ITC raw material (3,00,000)
Tax Payable 60,000

SGST
Output Tax 3,60,000
Less: ITC raw material (3,00,000)
Tax Payable 60,000

Illustration 3:
Mr. X started his business on 01/04/2022 and he is unregistered dealer. He purchased goods A for
₹50,00,000 + IGST 20% and 60% of the goods were sold by him upto 30/06/2022 for ₹40,00,000.
He applied for registration on 10/07/2022 and was registered on 18/07/2022.
He purchased plant and machinery X on 01/05/2022 for ₹16,00,000 + CGST @ 10% + SGST @ 10%.
He purchased goods B on 01/08/2022 for ₹30,00,000 + CGST @ 10% + SGST @ 10% and goods were sold
for ₹40,00,000 + IGST @ 20%.
He purchased plant Y on 01/09/2022 for ₹13,00,000 + CGST @ 10% + SGST @ 10%.
Compute ITC /Output tax /Net Tax.
Solution:
Computation of Net Tax Liability of Mr. X. ₹
Input Tax Credit
Goods A 50,00,000
 Input Tax Credit 215

Add: IGST @ 20% 10,00,000

Total 60,00,000

No ITC is allowed in the beginning as he is an unregistered dealer.

40% credit is allowed (10,00,000 x 40%) = 4,00,000

As per section 18(1)(a), No ITC is allowed for capital goods.

Goods B 30,00,000
Add: CGST @ 10% 3,00,000
Add: SGST @ 10% 3,00,000
Total 36,00,000

ITC
CGST 3,00,000
SGST 3,00,000

Plant Y 13,00,000
Add: CGST @ 10% 1,30,000
Add: SGST @ 10% 1,30,000
Total 15,60,000
ITC
CGST 1,30,000
SGST 1,30,000

Output Tax
Goods B 40,00,000
Add: IGST @ 20% 8,00,000
Total 48,00,000

Computation of Net Tax

IGST
Output Tax 8,00,000.00
Less: ITC goods A – IGST (4,00,000.00)
Less: ITC goods B – CGST (3,00,000.00)
Less: ITC plant Y – CGST (1,00,000.00)
Net tax payable Nil
ITC to be carried forward
CGST 30,000
SGST 4,30,000

Illustration 4: ABC limited started its business on 01-07-2022 and purchased goods ₹48,00,000 + CGST
10% + SGST 10% and purchased capital goods for conducting business for ₹ 18,00,000 + CGST 10% +
SGST 10%. Company sold 50% of the goods upto 31-12-2022 for ₹ 40,00,000 and applied for registration
on 1-1-2023 and registration was granted on 15-01-2023. Company sold remaining 50% of the goods upto
31/03/2023 for ₹ 39,00,000 + CGST 10% + SGST 10%
Compute ITC allowed at the time of registration and net tax payable by the company.
Solution:
No tax credit shall be allowed in the beginning because unregistered supplier is not eligible for ITC.
As per section 18(1) (a), ITC shall be allowed at the time of registration but only for inputs lying in the stock
and amount of ITC shall be 48,00,000 x 50% = 24,00,000
(Since 50% of the goods have been sold)
 Input Tax Credit 216

CGST @ 10% 2,40,000

SGST @ 10% 2,40,000
No ITC for capital Goods.
Sale of remaining goods 39,00,000
CGST 10% 3,90,000
SGST 10% 3,90,000
CGST SGST
Output tax 3,90,000 3,90,000
Less ITC (2,40,000) (2,40,000)
Net tax 1,50,000 1,50,000

Illustration 5: ABC limited started its business on 01-07-2022 and purchased goods ₹ 48,00,000 + CGST
10% + SGST 10% and purchased capital goods for conducting business for ₹ 18,00,000 + CGST 10% +
SGST 10%. Company sold 50% of the goods upto 31-12-2022 for ₹ 40,00,000 and applied for registration
on 10-2-2023 and registration was granted on 15-02-2023. Company purchased one Plant and machinery on
20-02-2023 ₹ 6,00,000 + CGST @ 10% + SGST @ 10% . Remaining goods were sold upto 31-03-2023 for
₹42,00,000 + CGST 10% + SGST 10%
Compute ITC allowed at the time of registration and also net tax payable by the company.
Solution:
No tax credit shall be allowed because company has applied after expiry of 30 days. However tax credit
shall be allowed for the plant and machinery purchased after registration.
Plant and machinery purchased 6,00,000
CGST 60,000
SGST 60,000
ITC
CGST 60,000
SGST 60,000
CGST SGST
Output tax (42,00,000 X 10%) 4,20,000 4,20,000
Less ITC (60,000) (60,000)
Net tax 3,60,000 3,60,000

Question 3: Explain Availment of tax credit in case of shifting from composition scheme to normal
scheme.
Answer: Tax credit in case of shifting from composition scheme to normal scheme. Section 18 (1) (c) /
Rule 40.
If any registered person has shifted from composition scheme to normal scheme, such person shall be
entitled to take credit of input tax in respect of inputs held in stock/ semi-finished / finished goods and on
capital goods on the day immediately preceding the date from which he becomes liable to pay tax.
The credit on capital goods shall be reduced by 5% per quarter of a year or part thereof from the date of
invoice.
For this purpose the applicant has to submit form no. ITC-01 within 30 days from the date on which he
becomes eligible to avail ITC. Further ITC-01 should be verified by Chartered Accountant/ Cost Accountant
if the total amount of ITC is exceeding ₹ 2,00,000.

As per section 18(2), Tax credit shall be allowed maximum within one year from the date of invoice.
As per section 2 (92), "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;

Example 1: Mr. A, a registered taxable person, was paying tax at composition scheme upto 30th June.
However, w.e.f. 1st July, Mr. A becomes liable to pay tax under regular scheme. Mr. A will be eligible for
ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on
 Input Tax Credit 217

capital goods as on 30th June. ITC on capital goods will be reduced by 5% per quarter from the date of the
invoice.

Example 2.
Mr. X has opted for composition scheme at the time of registration and purchased a plant and machinery ₹
30,00,000 and paid input tax at a rate of 18% and tax credit was not allowed but after a period of 9 month
and 10 days the dealer has opted for payment u/s 9 i.e. normal scheme. Compute amount of tax credit
allowed to Mr. X.
(b) Presume time period is 11 month and 20 days
Solution: ₹
(a) Total Input Tax (30,00,000 x 18%) 5,40,000
Asset already used for 9 months and 10 days = 4 Quarters
Less: Tax credit not allowed (5,40,000 x (4 x 5%)) (1,08,000)
Amount of Tax credit allowed 4,32,000

(b) Total Input Tax (30,00,000 x 18%) 5,40,000

Asset already used for 11 months and 20 days = 4 Quarters
Less: Tax credit not allowed (5,40,000 x (4 x 5%)) (1,08,000)
Amount of Tax credit allowed 4,32,000

Question 4: Explain Availment of tax credit in case of exempt supply becomes taxable supply.
Answer: Tax credit in case of exempt supply becomes taxable supply. Section 18 (1) (d) / Rule 40.
If any exempt supply becomes taxable supply, in that case, registered person shall be entitled to take credit
of input tax in respect of inputs held in stock/ semi-finished / finished goods and on capital goods on the day
immediately preceding the date from which it becomes taxable.
The credit on capital goods shall be reduced by 5% per quarter of a year or part thereof from the date of
invoice.
For this purpose the applicant has to submit form no. ITC-01 within 30 days from the date on which he
becomes eligible to avail ITC. Further ITC-01 should be verified by Chartered Accountant/ Cost Accountant
if the total amount of ITC is exceeding ₹ 2,00,000.

As per section 18(2), Tax credit shall be allowed maximum within one year from the date of invoice.

Example 1:
ABC Limited purchased one plant and machinery ₹20,00,000 and paid input tax ₹3,00,000 and it is being
used for exempted goods but after 7 months and 10 days , it is used for taxable goods. In this case, its tax
credit allowed shall be
Total input tax ₹ 3,00,000
Less: 5% per quarter or part thereof i.e. 3,00,000 x (5% x 3) (₹ 45,000)
Amount of tax credit allowed 2,55,000
Example 2:
Mamta Sales trades in exempt goods and provides taxable services. It is registered under GST. On 1st
October, the exemption available on its goods gets withdrawn. Analyze the scenario and determine the
eligibility of Mamta Sales for availing ITC, if any, on inputs and/or capital goods used in the supply of
exempt goods.
Answer: If the exempt supply made by a registered person becomes a taxable supply, provisions of section
18(1)(d) of the CGST Act, 2017 become applicable. In the given case, since Mamta Sales is a registered
person, section 18(1)(d) will be applicable. As per section 18(1)(d), Mamta Sales will 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 relatable to such exempt supply and on capital goods exclusively used for such exempt supply
 Input Tax Credit 218

on the day immediately preceding the date from which such supply becomes taxable, i.e. 30th September.
Input tax credit on capital goods will be reduced by 5% per quarter or part thereof from the date of invoice.

Question 5: Explain Reversal of tax credit in case of shifting from normal scheme to composition
scheme or where taxable supply becomes exempt supply.
Answer: Tax credit in case of shifting from normal scheme to composition scheme or where taxable
supply becomes exempt supply section 18 (4)/ Rule 44
Where any registered person who has availed of input tax credit opts to pay tax under composition
scheme or, where taxable supply becomes exempt supply, he shall pay an amount, equivalent to the credit
of input tax in respect of stock.
In case of capital goods, remaining tax credit has to be reversed taking the life to be 60 month and part of the
month shall be ignored
After payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger
shall lapse.
For this purpose the applicant has to submit form no. ITC-03

Example 1:
ABC Limited purchased one plant and machinery ₹20,00,000 and paid input tax ₹3,00,000 and it is being
used for taxable goods but after one year and 2 months and 10 days , it is used for exempted goods. In this
tax credit to be reversed shall be
Remaining life 60 month – 14 month 10 days = 45 months 20 days
Ignore 20 days i.e. 45 months
3,00,000 /60 x 45 = ₹2,25,000
Example 2:
Mr. X has opted for payment under section 9 and he purchased a plant and machinery ₹ 60,00,000 and paid
input tax at a rate of 20% but he has shifted to composition scheme after 38 month and 10 days. Compute
amount of tax credit to be reversed by Mr. X.
(b) Presume time period is 11 month and 20 days
(c) Presume time period is 55 month and 21 days.
Solution: ₹
(a) Total Input Tax (60,00,000 x 20%) 12,00,000
Remaining life of the asset = (60 month – 38 month and 10 days)
= 21 month and 20 days i.e. 21 month (part shall be ignored)
Amount of credit to be reversed = 12,00,000/60 x 21 = 4,20,000

(b) Total Input Tax (60,00,000 x 20%) 12,00,000

Remaining life of the asset = (60 month – 11 month and 20 days)
= 48 month and 10 days i.e. 48 month (part shall be ignored)
Amount of credit to be reversed = 12,00,000/60 x 48 = 9,60,000

(c) Total Input Tax (60,00,000 x 20%) 12,00,000

Remaining life of the asset = (60 month – 55 month and 21 days)
= 4 month and 9 days i.e. 4 month (part shall be ignored)
Amount of credit to be reversed = 12,00,000/60 x 4 = 80,000

Question 6: Explain Reversal of tax credit in case of supply of capital goods on which tax credit has
been taken.
Answer: Payment of tax in case of supply of capital goods on which tax credit has been taken Section
18 (6)/ Rule 44
 Input Tax Credit 219

In case of supply of capital goods, on which input tax credit has been taken, the registered person shall pay
an amount on the basis of remaining life considering total life to be 60 months however part of the month
shall be ignored as per rule 44 or the tax on the transaction value of such capital goods, whichever is higher.
Example
If a plant and machinery was purchased for ₹ 20,00,000 and input tax credit was ₹ 2,00,000 and supplier has
sold it after using for one year and 2 months and 15 days, amount to be reversed shall be –
Remaining life shall be = 45 months 15 days i.e. 45 months
Amount to be reversed 2,00,000/60 x 45 = 1,50,000
If the plant is sold for ₹ 15,00,000 and rate of GST is 12%, Amount to be reversed shall be ₹1,80,000
If the plant is sold for ₹ 12,00,000 and rate of GST is 12%, Amount to be reversed shall be ₹1,50,000 and
not ₹ 1,44,000.
In case of supply of goods, registered person shall report it in GSTR-1.

Illustration 6: Mr. X is registered in GST and is manufacturing taxable goods. He purchased one plant and
machinery ₹ 60,00,000 plus CGST @ 10% plus SGST @ 10% and has taken ITC but after 2 years 7 months
and 22 days it was sold by him for ₹ 40,00,000 when rate of CGST @ 12% and SGST @ 12%. Determine
the amount to be paid and also mention section and Rules.
Solution:
Total Input Tax
CGST (60,00,000 x 10%) 6,00,000
SGST (60,00,000 x 10%) 6,00,000
Remaining life of the asset = (60 month – 31 month and 22 days)
= 28 month and 8 days i.e. 28 month (part shall be ignored)
Amount of credit to be reversed CGST = 6,00,000/60 x 28 = 2,80,000
Amount of credit to be reversed SGST = 6,00,000/60 x 28 = 2,80,000

If Plant and Machinery is sold for ₹ 40,00,000, Amount to be reversed

CGST (40,00,000 x 12%) 4,80,000
SGST (40,00,000 x 12%) 4,80,000

Therefore amount to be paid will be higher of the two which is CGST ₹ 4,80,000 & SGST ₹ 4,80,000 as per
section 18(6)/Rule 44.

Question 7: Explain tax credits in case of Inputs/Capital Goods are used for taxable as well as
exempted supply.
Answer: The fundamental principle of credit scheme under value added tax is that tax paid on inputs, input
services and capital goods can be availed as credit only when the output is taxable. Thus, when tax is not
payable on output, credit cannot be availed. Accordingly, ITC under GST can be availed and utilised for
payment of tax on output supply. Consequently, ITC cannot be availed when tax is not payable on output
supply, i.e. on exempt supply. The only exception to the above principle is ‘zero rated supply, where ITC is
available even if no tax is payable on output supply.
If a taxable person is making both taxable and exempt supply, he is entitled to full credit of ITC in respect of
inputs, input services and capital goods exclusively used for taxable supply and no credit at all for inputs,
input services and capital goods exclusively used for exempt supply. If common inputs, input services and
capital goods are used for taxable as well as exempt supply, only proportionate ITC attributable to the
taxable supply is available. The common ITC is apportioned in the ratio of value of taxable supply and
exempt supply. Elaborate provisions have been made in sub-sections (1) and (2) of section 17 and rules 42
and 43 for calculation of such proportionate ITC.
 Input Tax Credit 220

Apportionment of credit Section 17 (1)/17 (2)/ 17 (3) / Rule 42/43.

As per section 17(1)/ 17(2)/ 17(3), if any person is supplying goods or services which are taxable as well as
exempt, in such cases tax credit shall be allowed only for taxable supply and zero rated supply (i.e. supply
for export or supply to SEZ units or SEZ developer).
No tax credit shall be allowed for exempt supply or non-taxable supply (supply on which GST can not be
levied e.g. alcoholic liquor and petroleum product) or supply for non-business purpose or supply for
personal purpose.
Exempt supply shall include (i) supplies on which recipient is liable to pay tax on reverse charge eg. If
goods transport agency has transported goods for a company and reverse charge is applicable, it will be
considered to be exempt supply for goods transport agency. (ii) transaction in sale purchase of shares and
securities (because securities transaction is paid), (iii) sale of land or building (because stamp duty is paid)

Example 1
Out of 10 containers purchased by a registered person engaged in taxable supply of goods, 5 are used for
storing non-taxable goods (exempt supply) such as petroleum (petroleum is out of GST gamut till the time
the GST Council takes a decision in this regard). ITC on 5 containers used for non-taxable goods cannot be
availed.
Example 2
A registered person (partnership firm) purchases 5 laptops but one of the laptop is being used by the son of
one of the partners of the firm. ITC will not be available on such laptop as it is used for personal purposes.
Apportionment of ITC of Inputs Section 17(1)/ 17(2)/ 17(3) / Rule 42
As per Rule 42, In case of Inputs or Input services, tax credit shall be allowed but subsequently
proportionate amount relating to exempt supplies shall be reversed on the basis of turnover, eg. ABC limited
is manufacturing two type of shoes one low cost exempt and other high cost taxable and company purchased
leather and other material to be used in both type of shoes and paid ₹ 5,00,000 plus CGST @ 10% plus
SGST @ 10% and company has taken ITC, In this case, if total turnover during the month is ₹12,00,000 out
of which exempt is ₹4,00,000 and taxable is ₹ 8,00,000, in this case tax credit to be reversed shall be
CGST = 50,000 /12,00,000 x 4,00,000 = ₹16,666.67 rounded off u/s 170 ₹16,667
SGST = 50,000 /12,00,000 x 4,00,000 = ₹16,666.67 rounded off u/s 170 ₹16,667

Illustration 7: A garment factory receives a Government order for making uniforms for a commando unit.
This supply is exempt from tax under a special notification. 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 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 ₹5000 and ₹15000 respectively.
Calculate the eligible ITC on thread and lining material.
Answer: 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 added to the output tax liability in terms of rule 42 of the CGST Rules, 2017.
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 = 20,000 / 5 crores X 1 crore = ₹4,000.
Ineligible credit of ₹4,000 will be added to the output tax liability for the month of July.
Illustration 8: Eezee Footwear, manufacturer of two varieties of Hawai slippers and five varieties of other
sandals and shoes. Hawai slippers are exempted. Dyes are used in the manufacture of all footwear. However,
 Input Tax Credit 221

bright pink is used only for one of the Hawai varieties, and black is used only for the sandals and shoes.
Blue and yellow are used for all the varieties. Brown is used for non-business purposes.
Eezee footwear has the following turnover in October
Turnover of Hawai 1 plus Hawai 2 is ₹ 3 crores
Turnover of all varieties of taxable shoes and sandals: ₹ 2 crore
Total turnover of all footwear during the month: ₹ 5 crores
No inputs/input services are used for non-business purposes.
Inward supplies during the month -
Input tax on brown dye (non-business): 10,000
Input tax on bright pink dye (used for Hawai slippers): 90,000
Input tax on black dye (used only for sandals and shoes): 40,000
Input tax on blue dye (used for all i.e. mixed use): 1,00,000
Input tax on yellow dye (used for all i.e. mixed use): 15,000
Total input tax: 2,55,000
In this case no tax credit shall be allowed for brown dye, bright pink dye. Full ITC shall be allowed for black
dye. ITC for blue dye and yellow dye (1,00,000 + 15,000 = 1,15,000) shall be allowed in full but
proportionate amount of exempted turnover shall be recovered.
1,15,000 / 5 crore X 3 crore = 69,000

Apportionment of ITC of Capital Goods Section 17(1) & (2) Rule 43

As per Rule 43, In case of capital goods also tax credit shall be availed in the beginning but proportionate
amount of ITC shall be reversed every month on the basis of turnover along with interest @ 18% per annum.
Life of every capital goods shall be taken to be 60 month.

Example 1
ABC Limited purchased one plant and machinery ₹20,00,000 on 01.04.2022 and paid input tax ₹3,00,000
and tax credit has been taken and it is being used for taxable as well as exempt goods. In this case, if
turnover for April 22, of taxable goods is ₹6,00,000 and turnover of exempt goods is ₹2,00,000,
In this case tax credit of 3,00,000 shall be taken on 20th May 2022 and tax credit for April 22 shall be
reversed on 20th May 2022 and shall be computed in the manner given below:

3,00,000/60 x 2,00,000/8,00,000 = ₹1,250

No interest is payable because tax credit is taken on 20th May 22 and is also reversed on 20th May 22

Turnover for the month of May 2022 taxable ₹7,00,000 , exempt ₹3,00,000, in this case tax credit shall be
reversed on 20th June 2022 and interest shall be paid for one month:
3,00,000/60 x 3,00,000 /10,00,000 = 1,500
Interest payable = 1500 x 18% x 1/12 = 22.5 (rounded off 23)

Turnover for the month of June 2022 taxable 8,00,000 , exempt 2,00,000, in this case tax credit shall be
reversed on 20th July 22
and interest shall be paid for two month:
3,00,000/60 x 2,00,000 /10,00,000 = 1,000

Interest payable = 1000 x 18% x 2/12 = 30

If capital goods were used for manufacturing exempt goods but subsequently it is being used for
manufacturing of exempt goods and taxable goods, in that case full tax credit shall be allowed but
proportionate amount of input tax for the exempt period shall be added to the output tax liability for that
month. It will be 5% per quarter or part thereof.
 Input Tax Credit 222

Example 2
ABC Limited purchased one plant and machinery on 01.04.2022 for ₹20,00,000 and paid input tax
₹3,00,000 and it is being used for exempted goods but after 12 months, it is used for exempted as well as
taxable goods. In this case treatment of ITC shall be as given below,

Full tax credit of 3,00,000 shall be allowed for the month of April 2023 but proportionate ITC for 12 months
shall be added to the output tax liability for April 2023: 3,00,000 x 5% x 4 = 60,000
If after availing ITC turnover for April 2023 is: taxable ₹4,00,000 and exempt ₹2,00,000, Credit amount to
be reversed every month shall be
3,00,000 /60 x 2,00,000/6,00,000 = ₹1,666.67
Also interest shall be payable in the subsequent month (not for the first month)

Example 3
ABC limited purchased one plant and machinery on 01.04.2022 for ₹30,00,000 + GST @ 12% and started
manufacturing taxable goods and taken ITC of ₹3,60,000 on 20.05.2022.
Company started manufacturing taxable as well as exempt goods w.e.f. 01.10.2022 and taxable turnover for
the month of October was ₹20,00,000 and exempt turnover was ₹5,00,000. In this case ITC to be reversed
on 20.11.2022 shall be
3,60,000/60 x 5,00,000 /25,00,000 = 1,200
Interest payable = 1200 x 18% x 6/12 = 108
If taxable turnover for the month of November was ₹22,00,000 and exempt turnover was ₹3,00,000. In this
case ITC to be reversed on 20.12.2022 shall be
3,60,000/60 x 3,00,000 /25,00,000 = 720

Interest payable = 720 x 18% x 7/12 = 75.6 or 76

Illustration 9:
Mr. X is a dealer registered in GST and has purchased one Plant and Machinery on 01/10/2022 ₹ 60,00,000
+ CGST @10% + SGST @ 10%. He purchases raw material ₹ 30,00,000 + CGST @ 12% + SGST @ 12%
on first of every month. He is manufacturing two products A & B. Product A is exempt and Product B is
taxable.
Turnover of product A in October 2022 is ₹22,00,000 and Turnover of product B is ₹32,00,000. Rate of
CGST @ 15% and SGST @ 15%. Compute ITC/ Output tax/ Net Tax for the month of October 2022.
Solution:
Computation of Net Tax Liability of Mr. X ₹
Raw Material 30,00,000
Add: CGST @ 12% 3,60,000
Add: SGST @ 12% 3,60,000
Total 37,20,000
Input tax credit
CGST 3,60,000
SGST 3,60,000
Cost of Raw Material 30,00,000
ITC on capital Goods
Plant and Machinery 60,00,000
CGST @ 10% 6,00,000
SGST @ 10% 6,00,000
ITC CGST 6,00,000
ITC SGST 6,00,000
 Input Tax Credit 223

Cost of Plant and Machinery 60,00,000

Output Tax
Turnover 32,00,000
CGST @ 15% 4,80,000
SGST @ 15% 4,80,000
Add: ITC to be reversed
Raw Material - Rule 42
CGST 3,60,000/54,00,000 x 22,00,000 1,46,666.67
SGST 3,60,000/54,00,000 x 22,00,000 1,46,666.67
Capital Goods –Rule 43
CGST (6,00,000/60 x 1)/54,00,000 x 22,00,000 4,074.07
SGST (6,00,000/60 x 1)/54,00,000 x 22,00,000 4,074.07

Computation of Net Tax

CGST
Output Tax
Sale 4,80,000.00
Raw Material 1,46,666.67
Plant and Machinery 4,074.07
Total 6,30,740.79
Less: ITC
Raw Material (3,60,000.00)
Capital Goods (6,00,000.00)
ITC to be carried forward 3,29,259.26
SGST
Output Tax
Sale 4,80,000.00
Raw Material 1,46,666.67
Plant and Machinery 4,074.07
Total 6,30,740.79
Less: ITC
Raw Material (3,60,000.00)
Capital Goods (6,00,000.00)
ITC to be carried forward 3,29,259.26

Illustration 10:
ABC Ltd.is registered in GST and company has purchased raw material ₹10,00,000 + CGST @ 10% +
SGST @ 10% on 01/11/2022 and also Plant and Machinery ₹ 20,00,000 + CGST @10% + SGST @ 10%.
Company is manufacturing two products A & B. Product A is exempt and Product B is taxable.
Turnover of product A in November 2022 is ₹18,00,000 and Turnover of product B is ₹30,00,000. Rate of
Output CGST @ 10% and SGST @ 10%.
Compute ITC/ Output tax/ Net Tax for the month of November 2022.
Solution:
Computation of Net Tax Liability of ABC Ltd. ₹
Raw Material 10,00,000
Add: CGST @ 10% 1,00,000
Add: SGST @ 10% 1,00,000
Total 12,00,000
Input tax credit
CGST 1,00,000
SGST 1,00,000
Cost of Raw Material 10,00,000
 Input Tax Credit 224

ITC on capital Goods

Plant and Machinery 20,00,000
CGST @ 10% 2,00,000
SGST @ 10% 2,00,000
ITC CGST 2,00,000
ITC SGST 2,00,000
Cost of Plant and Machinery 20,00,000
Output Tax
Turnover 30,00,000
CGST @ 10% 3,00,000
SGST @ 10% 3,00,000
Add: ITC to be reversed
Raw Material - Rule 42
CGST 1,00,000/48,00,000 x 18,00,000 37,500.00
SGST 1,00,000/48,00,000 x 18,00,000 37,500.00
Capital Goods –Rule 43
CGST (2,00,000/60 x 1)/48,00,000 x 18,00,000 1,250.00
SGST (2,00,000/60 x 1)/48,00,000 x 18,00,000 1,250.00
Computation of Net Tax - CGST
Output Tax
Sale 3,00,000.00
Raw Material 37,500.00
Plant and Machinery 1,250.00
Total 3,38,750.00
Less: ITC
Raw Material (1,00,000.00)
Capital Goods (2,00,000.00)
Tax Payable 38,750.00
Computation of Net Tax - SGST
Output Tax
Sale 3,00,000.00
Raw Material 37,500.00
Plant and Machinery 1,250.00
Total 3,38,750.00
Less: ITC
Raw Material (1,00,000.00)
Capital Goods (2,00,000.00)
Tax Payable 38,750.00
Question 8: Explain the goods for which tax credit is not allowed i.e. blocked credit.
Answer: Blocked Credit section 17(5)
No tax credit shall be allowed in the following cases:
1. Tax credit is not allowed in case of motor vehicle for transportation of persons provided approved
seating capacity is not more than 13 persons (including the driver) i.e. if seating capacity is more than 13
persons, in that case tax credit shall be allowed.
Tax credit shall be allowed where such motor vehicle is for further supply of such motor vehicles (i.e. for
sale purchase of such vehicle) or for transportation of passengers or for imparting training on driving such
motor vehicles.
Tax credit shall also be allowed if any vehicle is given on rent or lease or for hiring for the purpose specified
above.
Since two wheeler is covered in motor vehicle for transportation of persons, tax credit shall not be allowed.
 Input Tax Credit 225

If motor vehicle is for transportation of goods, tax credit shall be allowed. Similarly in case of motor vehicle
for other purpose, tax credit shall be allowed e.g. JCB machine, Road Roller, Concrete Mixer Vehicle,
Tractor etc.

2. No tax credit shall be allowed in case of vessels and aircraft, however tax credit shall be allowed in case
of vessels and aircraft in the following cases
(i) further supply of such vessels or aircraft
(ii) transportation of passengers
(iii) imparting training on navigating such vessels
(iv) imparting training on flying such aircraft
(v) for transportation of goods
Tax credit is also allowed in case of renting or hiring or leasing of such aircraft or vessels for the purpose
specified above.
In other words, tax credit shall not be allowed when such aircraft etc. are used for personal purpose or
business purpose other than mentioned above
Example 1 : ABC limited purchased one passenger vehicle (with seating capacity not more than 13 people)
for transportation of the employees, tax credit is not allowed.
Example 2 : ABC limited purchased one two wheeler for use of the employees, tax credit is not allowed.
Example 3 : ABC limited purchased one truck for transportation of inputs/ final product, tax credit is
allowed.
Example 4 : Mr. X purchased one motor car (with seating capacity more than 13 people) for going to his
factory, tax credit allowed.
Example 5 : ABC limited purchased one truck and it was given on rent , tax credit is allowed.
Example 6: ABC limited purchased one bus for transportation of passenger, tax credit is allowed.
Example 7 : ABC limited a tent house purchased one truck for transportation of goods relating to service
of tent house, tax credit is allowed.
Example 8 : ABC limited purchased one motor car for training of driving skills, tax credit is allowed.
Example 9: A car dealer is allowed ITC on cars purchased for resale.
Example 10: A cab service is allowed ITC on cars purchased for use as cabs.
Example 11: A driving school is allowed ITC on cars purchased for imparting training on driving.
Example 12: ITC on cars (with seating capacity upto 13 persons) purchased by a manufacturing company
for official use of its employees is blocked.
Example 13: ITC on cars purchased by a car dealer for sale to customers is allowed.
Example 14: ITC on cars purchased by a company engaged in renting out cars for transportation of
passengers, is allowed.
Example 15: ITC on cars purchased by a car driving school is allowed.
Example 16: ITC on buses (seating capacity for 24 persons) purchased by a company for transportation of
its employees from their residence to office and back, is allowed.
Example 17: ITC on trucks purchased by a company for transportation of its finished goods is allowed.
Example 18: ITC on cars (seating capacity more than 13 persons) purchased by a manufacturing company
for official use of its employees is allowed.
Example 19: ITC on aircraft purchased by a manufacturing company for official use of its CEO is blocked.
Example 20: ITC on aircraft purchased by an Aviation School providing training on non-flying aircrafts, is
allowed.
Example 21: ITC on aircraft purchased by a manufacturing company for official use of its CEO is blocked.

Question. A taxable person is in the business of information technology. He buys a motor vehicle for use of
his Executive Directors. Can he avail the ITC in respect of GST paid on purchase of such motor vehicle?
Answer: No. As per section 17 (5) , ITC on motor vehicles can be availed only if the taxable person is in the
business of transport of passengers or is providing the services of imparting training on
driving/flying/navigating motor vehicles or is in the business of supply of motor vehicles.
 Input Tax Credit 226

Question. A flying school imports an aircraft for use in its training activity, and takes ITC of the IGST paid
on the import. The departmental audit raises an objection that ITC is not allowed on aircraft. Offer your
comments.
Answer: Under section 17 (5) of the CGST Act, ITC is allowed on aircraft if they are used to make the
taxable supply of imparting training on flying an aircraft. Therefore, the credit is correctly taken.
3. Input tax credit for services taken in connection with general insurance, servicing, repair and
maintenance shall be allowed if it is in connection with the motor cars or vessels or aircrafts for which tax
credit is allowed. Tax credit shall also be allowed to the insurance companies doing insurance of vehicle or
aircrafts etc.
Example 1: ITC on general insurance taken on a car used by employees of a manufacturing company for
official purposes, is blocked.
Example 2: ITC on maintenance & repair services availed by a company for a truck used for transporting
its finished goods, is allowed.
Example 3: ITC on general insurance services taken on cars manufactured by a car manufacturing company
is allowed.
Example 4: ITC on general insurance taken on a car used by employees of a manufacturing company for
official purposes, is blocked.
Example 5: ITC on maintenance & repair services availed by a company for a truck used for transporting its
finished goods, is allowed.
Example 6: ITC on general insurance services taken on cars manufactured by a car manufacturing company
is allowed.
4. No tax credit shall be allowed if input tax has been paid in connection with the goods or services as
mentioned below
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, life
insurance and health insurance.
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel concession:
However tax credit shall be allowed to the employer where it is obligatory for the employer to provide
above facilities.
However tax credit shall be allowed to the person engaged in business of supplying such goods or services.
Example 1: ABC limited is engaged in providing outdoor catering services and the company has purchased
inputs and input services for the purpose of providing output services, in this case tax credit is allowed.
Example 2: Mr. X is engaged in the business of beauty treatment, he will be allowed tax credit for the
inputs goods / services.
Example 3: Mr. C caterer for a wedding gets the sweet dish course supplied by a specialist in desserts. He is
allowed ITC of the tax paid by him to the specialist.
Example 4: A manufacturing company purchases food items for being served to its customers, free of cost.
ITC on such goods is blocked.
Example 5: AB & Co., a caterer of Amritsar, has been awarded a contract for catering in a marriage to be
held at Ludhiana. The firm has given the contract for supply of snacks, to be served in the marriage, to CD
& Sons, a local caterer of Ludhiana. ITC on such outdoor catering services availed by AB & Co., is allowed.
Example 6: ITC on outdoor catering services availed by a garment exporter for a marketing event organised
for its prospective customers, is blocked.
Example 7: Outdoor catering service is availed by a company to run a free canteen in its factory. The
Factories Act, 1948 requires the company to set up a canteen in its factory. ITC on such outdoor catering is
allowed.
Example 8: The Managing Director of a company has taken membership of a club, the fees for which is
paid by the company. ITC on such service is blocked.
Example 9: A company avails services of a travel agency for organizing a free vacation for its top
performing employees. ITC on such services is blocked.
 Input Tax Credit 227

5. Input tax credit for works contract services (construction services) when supplied for construction of an
immovable property (other than plant and machinery) shall not be allowed however tax credit shall be
allowed to the person who is engaged in providing construction services i.e. a builder etc. If any person has
given contract to any person for construction or he himself is doing construction, tax credit shall not be
allowed for inputs or input services or capital goods. ABC Ltd. has constructed one factory building for its
use, no tax credit shall be allowed even if it is for the purpose of business. For this purpose "construction"
includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the
said immovable property
Input tax credit in connection with plant and machinery shall be allowed e.g. ITC in connection with lift or
escalator etc. shall be allowed. For this purpose "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 or services or both and includes such foundation and structural supports but excludes—
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
Section 2(119) "Works Contract" means a contract for building, construction, fabrication, completion,
erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or
commissioning 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.
Example 1: ABC limited has given a contract to XYZ limited for construction of an office building. ABC
limited cannot take input tax credit of the GST charged by XYZ limited for work contract services.
Example 2: ABC limited has given a contract to XYZ limited for construction of an office building and
XYZ limited sub- contracted some portion to G limited. The work contract services provided by G limited to
XYZ limited is an input service for further supply of work contract by XYZ limited to ABC limited and
XYZ limited is entitled for input tax credit of the tax paid on the services provided by G limited.
Example 3: Mr. A is a builder and he is building a house for himself. He is not entitled to input tax credit on
any goods or services which are purchased or acquired for construction of the house.
Example 4: Z limited is a developer of commercial and residential units. It builds a corporate office for
itself. Z limited cannot take credit of input supplies which are used for construction of that office, even if the
office will be used for business purpose.
Example 5: ABC company buys material and hires a contractor to construct an office building to house the
plant supervisory staff. The input tax paid on such goods and services is not allowed as credit.
Example 6: ITC on works contracts services availed by a software company for construction of its office, is
blocked.
Example 7: CD & Co., a works contractor of Noida, has been awarded a contract for construction of a
commercial complex in Lucknow. The firm avails services of EF & Co., a local works contractor of
Lucknow, for the construction of complex. ITC on such works contract services availed by CD & Co., is
allowed.
Example 8: ITC on works contract services availed by an automobile company for construction of a
foundation on which a machinery (to be used in the production process) is to be mounted permanently, is
allowed.
Example 9: ITC on works contract services availed by a manufacturing company for construction of
pipelines to be laid outside its factory, is blocked.
Example 10: A consulting firm has availed services of a works contractor for repair of its office building.
The company has booked such expenditure in its profit and loss account. ITC on such services is allowed.
Example 11: A telecommunication company has availed services of a works contractor for repair of its
office building. The company has capitalized such expenditure. ITC on such services is blocked.
Example 12: A company buys cement, tiles etc. and avails the services of an architect for construction of its
office building. ITC on such goods and services is blocked.
 Input Tax Credit 228

Example 13: MN & Constructions procures cement, paint, iron rods and services of architects and interior
designers for construction of a commercial complex for one of its clients. ITC on such goods and services is
allowed to MN & Co.
Example 14: A company buys cement, tiles etc. and avails the services of an architect for renovation of its
office building. The company has booked such expenditure in its profit and loss account. ITC on such goods
and services is allowed.
Example 15: ITC on works contracts services availed by a software company for construction of its office,
is blocked.
Example 16: CD & Co., a works contractor of Noida, has been awarded a contract for construction of a
commercial complex in Lucknow. The firm avails services of EF & Co., a local works contractor of
Lucknow, for the construction of complex. ITC on such works contract services availed by CD & Co., is
allowed.
Example 17: ITC on works contract services availed by a manufacturing company for construction of
pipelines to be laid outside its factory, is blocked.
Example 18: A consulting firm has availed services of a works contractor for repair of its office building.
The company has booked such expenditure in its profit and loss account. ITC on such services is allowed.
Example 19: A telecommunication company has availed services of a works contractor for repair of its
office building. The company has capitalized such expenditure. ITC on such services is blocked.

6. CSR Section 135 of Companies Act No tax credit shall be allowed for the goods or services in
connection with activities under Corporate Social responsibility.

7. Composition scheme: Goods or services or both on which tax has been paid under section 10
A supplier registered under composition scheme cannot collect tax from its customers. Thus, such supplier
issues bill of supply and not a tax invoice. A composition supplier pays a lumpsum tax at a specified rate on
its quarterly turnover. Tax paid on goods and/or services under composition scheme is not available as ITC.
Since a composition supplier cannot collect any tax on its supplies, from the recipient of its supplies, it is
obvious that no ITC can be availed in respect of such supplies by the recipients. Nevertheless, section 17(5)
specifically blocks the ITC on inward supplies received by a taxable person from a composition supplier.
8. goods or services or both received by a non-resident taxable person except on goods imported by him;
Essentially, a non resident taxable person has no fixed place of business in India but he sporadically supplies
goods or services in India. Tax paid on goods and/or services received by such non-resident taxable person,
is not available as ITC. However, tax paid by him on imported goods is allowed as ITC.
9. goods or services or both used for personal consumption
Example: Mr. X owns a grocery store. He procures rice, wheat and biscuits for being sold in its store. Out
of the inventory so purchased, he gives 10 kgs each of rice and wheat to his wife for household use. Being
used for personal consumption, ITC on 10 kg of rice and 10 kg of wheat is blocked.
10. goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples
ITC in respect of goods that are disposed off by way of gift or free samples is not available. Also, ITC is
blocked on lost goods, stolen goods, destroyed goods and goods that are written off. This is because
principally, ITC is available only for payment of tax on output supply. If no tax is payable on output supply,
ITC on inputs/input services/capital goods relating to such output supply is not eligible. Hence, ITC on gifts
and free samples is blocked as no tax is payable on its outward supply. In case of lost/destroyed/stolen
written off goods also, ITC is not available as these goods cannot be said to have been used for making a
taxable supply.
11. any tax paid in accordance with the provisions of sections 74, 129 and 130.
 Input Tax Credit 229

Question 9: Explain Availment of tax credit in case of zero rated supplies.

Answer:
As per section 16 of the IGST Act, Supply for exports or supply to a unit in SEZ or supply to a developer
of SEZ shall be considered to be zero rated supply and in such cases it is exempt from output tax but still tax
credit shall be allowed. Further as per section 54, refund is allowed for unutilized tax credit in case of supply
of zero rated goods.
Question 12. A technical testing agency tests and certifies each batch of machine tools before dispatch by
BMT Ltd. Some of these tools are dispatched to a unit in a SEZ without payment of GST as these supplies
are not taxable. The finance personnel of BMT Ltd. want to know whether they need to carry out reversal of
ITC on the testing agency’s services to the extent attributable to the SEZ supplies. Give your comments.
Answer: Under section 16 of the IGST Act, credit of input tax is allowed to be taken for inward supplies
used to make zero rated supplies. Under section 17 of the CGST Act also, ITC is disallowed only to the
extent it pertains to supplies used for non-business purposes or supplies other than taxable and zero-rated
supplies. Supplies to SEZ units are zero rated supplies in terms of section 16 of IGST Act. Thus, full ITC is
allowed on inward supplies of BMT Ltd. used for effecting supplies to the unit in the SEZ.

Question 10: Explain Reversal of input tax credit in the case of non-payment of tax by the supplier
and re-availment thereof. Section 41 / Rule 37A
Answer: Reversal of input tax credit in the case of non-payment of tax by the supplier and re-
availment thereof Section 41 Rule 37A
If a registered person has availed or utilised input tax credit and the details have been furnished by the
supplier in GSTR-1 / IFF but output tax has not been paid by him, in such cases the supplier must pay tax
and submit GSTR-3B maximum upto 30th September following the end of the financial year otherwise the
recipient shall be required to refund the amount of ITC maximum upto 30th November of the same year
otherwise he will be required to pay such tax along with interest as per section 50. If supplier has paid the
amount of tax subsequently, the recipient shall be allowed to take ITC in the subsequent tax period.
Examination – Nov – 2023 (5 Marks)
Question 8 (a)
Briefly explain the provisions relating to reversal of input tax credit in case of non-payment of tax by the
supplier and re-availment thereof ?
Solution:
Refer Answer to Question No.10

Illustration 11: ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following
items during the month of July.
S. No. Items GST paid (₹)
(i) Electrical transformers to be used in the manufacturing process 5,20,000
(ii) Trucks used for the transport of raw material 1,00,000
(iii) Raw material 2,00,000
(iv) Confectionery items for consumption of employees working in the factory 25,000
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving necessary
explanations for treatment of various items.

Note:
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) ABC Co. Ltd. is not eligible for any threshold exemption.
Answer: Computation of ITC available with ABC Co. Ltd. for the month of July
S. No. Items ITC (₹)
(i) Electrical transformers 5,20,000
[Being goods used in the course or furtherance of business, ITC thereon is available]
(ii) Trucks used for the transport of raw material 1,00,000
 Input Tax Credit 230

[ITC on motor vehicles used for transportation of goods is allowed.]

(iii) Raw material 2,00,000
[Being goods used in the course or furtherance of business, ITC thereon is available]
(iv) Confectionery items for consumption of employees working in the factory Nil
[ITC on food or beverages is specifically disallowed 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]
Total ITC 8,20,000
Illustration: ABC limited has purchased the goods/ services as given below:
1. Purchased one motor car for use of employees (with seating capacity more than 13) on 01-07-2022
₹10,00,000 plus GST ₹ 2,80,000. Date of invoice is 31-07-2022 and delivery was taken on 3rd August 2022.
2. Purchased one truck for transportation of goods on 01-07-2022 ₹ 10,00,000 plus GST ₹ 2,80,000. Date of
invoice is 31-07-2022 and delivery was taken on 3rd August 2022.
3. Purchased food items for employees and customers on 01-07-2022 ₹ 10,00,000 plus GST ₹ 2,80,000.
Date of invoice is 31-07-2022 and delivery was taken on 3rd August 2022.
4. Purchased certain items on 01-07-2022 ₹ 10,00,000 plus GST ₹ 2,80,000. Date of invoice is 31-07-2022
and delivery was taken on 3rd August 2022. Subsequently these items were gifted to employees
5. Purchased house hold items for employees to be given as per contractual obligation for employment on
01-07-2022 ₹ 10,00,000 plus GST ₹ 2,80,000. Date of invoice is 31-07-2022 and delivery was taken on 3rd
August 2022.
6. Construction of one building through a builder for office purpose on 01-07-2022 and paid ₹ 10,00,000
plus GST ₹ 2,80,000. Date of invoice is 31-07-2022.
7. Incurred ₹ 5,00,000 plus GST ₹ 1,00,000 on repairs and renovation of one office building. Payment was
made on 01-08-2022 and invoice is dated 31-07-2022.
Discuss whether ITC is allowed and also the month in which it will be allowed.
Solution:
1. ITC of a motor car is allowed as seating capacity is exceeding 13 person.
2. ITC shall be allowed in the month of August 2022.
3. As per section 17(5), ITC of a food items is not allowed.
4. ITC is allowed in the month of August 2022, but ITC shall be reversed subsequently as per section 17(5).
5. ITC shall be allowed and when given to the employees it will not be considered to be supply as per
schedule I however at that time tax credit shall be reversed.
6. As per section 17(5), ITC of building is not allowed.
7. As per section 17(5), ITC of renovation /repairs of building is not allowed.
 Input Tax Credit 231

PRACTICE PROBLEMS
Q 1. Can a person take ITC without payment of consideration for the supply and also amount of GST, to the
supplier?
Answer: Yes, the recipient can take ITC. However, he is required to pay the consideration and also amount
of GST within 180 days from the date of issue of invoice.

Q 2. What is the ITC entitlement of a newly registered person?

Answer: A person applying for registration can take input tax credit of inputs held in stock/semi- finished /
finished goods on the day immediately preceding the date of grant of registration. If the person was liable to
take registration and he has applied for registration within thirty days from the date on which he became
liable to registration, then ITC of inputs held in stock/semi- finished / finished goods on the day immediately
preceding the date on which he became liable to pay tax can be taken.

Q 3. What is the tax implication of supply of capital goods by a registered person who had taken ITC on
such capital goods?
Answer: As per section 18(6)/Rule 44, in case of supply of capital goods on which ITC has been taken, the
registered person shall pay an amount computed for the remaining life ignoring part of the month or the tax
on the transaction value of such capital goods, whichever is higher.

Q 4. Mr. A, a registered person was paying tax under Composition Scheme up to 30th July. However, w.e.f.
31st July, Mr. A becomes liable to pay tax under regular scheme. Is he eligible for ITC?
Answer: Mr. A is eligible for ITC on inputs held in stock and inputs contained in semi finished or finished
goods held in stock and capital goods as on 30th July. ITC on capital goods will be reduced by 5% per
quarter or part thereof from the date of invoice.

Q 5. What is input tax?

Answer: Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union territory
tax (UTGST) charged on supply of goods or services or both made to a registered person. It also includes tax
paid on reverse charge basis and integrated goods and services tax charged on import of goods. It does not
include tax paid under composition levy.

Q 6. What are the conditions necessary for availing ITC?

Answer: Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:
(a) he is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both;
(c) subject to section 41, the supplier has actually paid the tax charged in respect of the supply to the
Government; and
(d) he has furnished the return under section 39.

Q 7. Can a person take ITC without payment of consideration for the supply along with tax?
Answer: Yes, the recipient can take ITC. However, he is required to pay the consideration along with tax
within 180 days from the date of issue of invoice. This condition is not applicable where tax is payable on
reverse charge basis.

Q 8. What is the time limit for taking ITC and reasons therefore?
Answer: “Time limit for availing ITC: Due date of filing return for the month of September of succeeding
financial year or date of filing of annual return, whichever is earlier”.

Q 9. What is the ITC entitlement of a newly registered person?

 Input Tax Credit 232

Answer: A person applying for registration can take input tax credit of inputs held in stock and inputs
contained in semi- finished or finished goods held in stock on the day immediately preceding the date of
grant of registration. If the person was liable to take registration and he has applied for registration within
thirty days from the date on which he became liable to registration, then ITC of inputs held in stock and
inputs contained in semi- finished or finished goods held in stock on the day immediately preceding the date
on which he became liable to pay tax can be taken.
In case of voluntary registration, ITC of such goods held in stock on the day immediately preceding the date
of registration can be taken.

Q 10. What is the tax implication of supply of capital goods by a registered person who had taken ITC on
such capital goods?
Answer: In case of supply of capital goods or plant and machinery on which ITC has been taken, the
registered person shall pay an amount equal to the ITC taken on the said capital goods or plant and
machinery reduced by 5% per quarter or part thereof from the date of invoice or the tax on the transaction
value of such capital goods, whichever is higher.
However, in case of refractory bricks, moulds and dies, jigs and fixtures when these are supplied as scrap,
the person can pay tax on the transaction value.

Q 11. A registered person transfers its business to another person.

Is such registered person allowed to transfer the unutilized ITC lying in its electronic credit ledger to such
transferred business? Discuss.
Answer: As per section 18(3), in case of sale, merger, demerger, amalgamation, transfer or change in
ownership of business etc., the ITC that remains unutilized in the electronic credit ledger of the registered
person can be transferred to the new entity, provided there is a specific provision for transfer of liabilities in
such change of constitution.
The registered person should furnish the details of change in constitution on the common portal and submit a
certificate from practicing Chartered Account/Cost Accountant certifying that the change in constitution has
been done with a specific provision for transfer of liabilities. Upon acceptance of such details by the
transferee on the common portal, the unutilized ITC gets credited to his electronic credit ledger. The
transferee should record the inputs and capital goods so transferred in his books of account.

Q12. Swastik Pvt. Ltd. is a manufacturer of taxable goods. It purchased a machinery for ₹ 8,00,000 on
which IGST of ₹ 14,400 is paid. The company has claimed depreciation under the Income-tax Act, 1961 on
the full value of the machine, i.e. including the IGST component as also availed ITC of ₹ 14,400 paid by it
as IGST.
Examine if the stand taken by the company is correct in law.
Answer: As per section 16(3), if the person taking the ITC on capital goods and plant and machinery has
claimed depreciation on the tax component of the cost of the said items under the Income-tax Act 1961, the
ITC on the said tax component shall not be allowed.
Since in the given case, Swastik Pvt. Ltd. has claimed depreciation on the tax component of the cost of the
machine, it cannot claim ITC of IGST of ₹ 14,400 paid by it on the machine. It can either claim depreciation
on the tax component or avail ITC of such tax but cannot avail both the benefits simultaneously.

Q13. Sigma Consultants, an LLP of finance professionals, provides financial consultancy services. It made
an advance payment of ₹ 1,18,000 (inclusive of IGST @ 18%) in the month of October to Azuro Computer
Services for developing a software. The software would be used by the LLP to enhance the precision of the
financial advice given by it to various clients. The balance payment is to be made after the successful test
run of the software in the month of December. Sigma Consultants has availed ITC of IGST of ₹ 18,000 in
the month of October.
Do you think Sigma Consultants can avail such ITC? Examine the scenario with reference to the relevant
legal provisions.
 Input Tax Credit 233

Answer: As per section 16(2)(b), tax paid on supply of goods and/or services can be availed as ITC only if
such goods and/or services are received by the registered person.
In the given case, Sigma Consultants has paid IGST of ₹ 18,000, in the month of October, on advance for IT
services intended to be used in the course or furtherance of business. However, it cannot avail ITC of such
tax in the month of October as the services in relation to which the advance payment has been made have
not been received in that month.

Q14. A taxable person is in the business of information technology. He buys a car (maximum seating
capacity–5 persons) for use of his Executive Directors. Can he avail the ITC in respect of GST paid on
purchase of such car?
Answer: No. ITC on motor vehicles for transportation of persons with seating capacity of up to 13 persons
(including driver), can be availed only if the taxable person is in the business of transport of passengers or is
providing the services of imparting training on driving such motor vehicles or is in the business of supply of
such motor vehicles.

Q15. A technical testing agency tests and certifies each batch of machine tools before dispatch by BMT Ltd.
Some of these tools are dispatched to a unit in a SEZ without payment of GST as these supplies are not
taxable.
The finance personnel of BMT Ltd. want to know whether they need to carry out reversal of ITC on the
testing agency’s services to the extent attributable to the SEZ supplies. Give your comments.
Answer: ITC is disallowed only to the extent it pertains to supplies used for nonbusiness purposes or
supplies other than taxable and zero-rated supplies. Supplies to SEZ units are zero rated supplies in terms of
section 16(1) of the IGST Act. Thus, full ITC is allowed on inward supplies of BMT Ltd. used for
effecting supplies to the unit in the SEZ.

Q16. ‘AB’, a registered person, was paying tax under composition scheme up to 30th July. However, w.e.f.
31st July, ‘AB’ becomes liable to pay tax under regular scheme.
Is ‘AB’ eligible for any ITC?
Answer: ‘AB’ is eligible for ITC on inputs held in stock and inputs contained in semifinished or finished
goods held in stock and capital goods as on 30th July. ITC on capital goods will be reduced by 5% per
quarter or part thereof from the date of invoice.

Q17. Comfortable (P) Ltd. is registered under GST in the State of Odisha. It is engaged in the business of
manufacturing of iron and steel products. It has received IT engineering services from High-Fi Infotech (P)
Ltd. for ₹ 11,00,000/- (excluding GST @ 18%) on 28th October. Invoice for service rendered was issued on
5th November.
Comfortable (P) Ltd. made part payment of ₹ 4,20,000/- on 30th November. Being unhappy with service
provided by High-fi Infotech (P) Ltd., it did not make the balance payment. Deficiency in service rendered
was made good by High-Fi Infotech (P) Ltd. by 15th April of next year. Comfortable (P) Ltd. made the
balance payment on 6th July of next year.
Examine the availability of ITC with Comfortable (P) Ltd. in respect of IT engineering services received by
it from High-Fi Infotech (P) Ltd.
Answer: Every registered person is entitled to take credit of input tax charged on any supply of goods
and/or services which are used or intended to be used in the course or furtherance of his business if, inter
alia, he is in possession of a tax invoice issued by a supplier and he has received the goods and/or services.
The registered person must pay to the supplier, the value of the goods and/or services along with the tax
within 180 days from the date of issue of invoice. In the event of failure to do so, the corresponding credits
availed by the registered person would be added to his output tax liability, with interest. However, once the
recipient makes the payment of value of goods and/or services along with tax, he will be entitled to avail the
credit again without any time limit. In case part-payment has been made, proportionate credit would be
allowed.
 Input Tax Credit 234

In the given case, High-fi Infotech (P) Ltd. provides the service in the month of October and Comfortable
(P) Ltd. receives the invoice in the month of November. Therefore, in view of the above provisions and
assuming all other conditions required for availing ITC having been fulfilled, ITC of ₹ 1,98,000 (₹
11,00,000 x 18%) will be availed by Comfortable (P) Ltd. in the month of November when it receives the
invoice issued by High-fi Infotech (P) Ltd.
However, proportionate ITC amounting to ₹ 1,33,932 ⇒ [(₹ 12,98,000 - ₹ 4,20,000)/118] x 18] will be
added to the output tax liability of Comfortable (P) Ltd. as full payment has not been made within 180 days
of issuance of the invoice, i.e. by 4th May of next year. ITC of ₹ 1,33,932 can, however, be availed again by
Comfortable (P) Ltd. in the month of July next year when it makes the balance payment.

Q18. M/s. Diwan & Sons of New Delhi, has placed an order for 250 kg of plastic granules @ ₹ 50 per kg
(exclusive of GST) on M/s. Karim & Bros. of Noida, U.P. M/s. Karim & Bros. has agreed to deliver the
goods at the warehouse of M/s. Diwan & Sons at New Delhi.
While the order was getting packed at the factory of M/s. Karim & Bros., M/s. Diwan & Sons got an order
from Shubhkamna Sales of Hapur, U.P. for 250 kg of plastic granules @ ₹ 60 per kg (exclusive of GST). In
order to save on transportation cost, M/s. Diwan & Sons asks M/s. Karim & Bros. to directly deliver the
plastic granules to Shubhkamna Sales at its godown located in Hapur. Accordingly, M/s. Karim & Bros. has
delivered the plastic granules at the godown of Shubhkamna Sales at Hapur.
Examine the availability of ITC with M/s. Diwan & Sons & M/s. Karim & Bros.
Note: All the parties are registered under GST and rate of GST is 18%.
Answer: One of the conditions for availing ITC is that the registered person taking the ITC must have
received the goods and / or services. However, goods delivered to a third person on the direction of the
registered person by way of transfer of documents of title or otherwise, either before or during the
movement, are deemed to have been received by such registered person. So, ITC is available to the
registered person, on whose order the goods are delivered to a third person even though the registered person
does not receive the goods.
In the given case, goods have been delivered by M/s. Karim & Bros. (supplier) to Shubhkamna Sales (third
person) on the direction of M/s. Diwan & Sons (registered person). Therefore, in view of the above
provisions, ITC of ₹ 2,250 (₹ 50 x 250 x 18%) will be available to M/s. Diwan & Sons (registered person)
on the purchase of 250 kg of plastic granules @ 50 per kg.
Further, in this case there is another supply between Diwan & Sons (supplier) and Shubhkamna Sales
(recipient). Therefore, Shubhkamna Sales can avail ITC of ₹ 2,700 (₹ 60 x 250 x 18%) on the purchase of
250 kg of plastic granules @ 60 per kg.

Q19. Paritosh & Co., a supplier of goods, pays GST under regular scheme. It has made the following
outward taxable supplies in a tax period:
Particulars Amount (₹)
Intra-State supply of goods 10,00,000
Inter-State supply of goods 8,00,000
It has also furnished the following information in respect of purchases made by it in that tax period:
Particulars Amount (₹)
Intra-State purchases of goods 3,00,000
Inter-State purchases of goods 2,50,000
Paritosh & Co. has following ITCs with it at the beginning of the tax period:
Particulars Amount (₹)
CGST 57,000
SGST 60,000
IGST 1,40,000
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing ITC have been fulfilled.
 Input Tax Credit 235

Compute the minimum GST, payable in cash, by Paritosh & Co. for the tax period and the ITC to be carried
forward to the next month. Make suitable assumptions as required.
Answer: Computation of GST payable on outward supplies
S.No. Particulars CGST @ SGST @ IGST @ Total (₹)
9% (₹) 9% (₹) 18% (₹)
(i) Intra-State supply of goods for ₹10,00,000 90,000 90,000 - 1,80,000
(ii) Inter-State supply of goods for ₹8,00,000 1,44,000 1,44,000
Total GST payable 3,24,000
Computation of total ITC
Particulars CGST @ SGST @ IGST @
9% (₹) 9% (₹) 18% (₹)
Opening ITC 57,000 60,000 1,40,000
Add: ITC on Intra-State purchases of goods valuing ₹3,00,000 27,000 27,000 Nil
Add: ITC on Inter-State purchases of goods valuing ₹2,50,000 Nil Nil 45,000
Total ITC 84,000 87,000 1,85,000
Computation of minimum GST payable from electronic cash ledger
Particulars CGST @ SGST @ IGST @ Total (₹)
9% (₹) 9% (₹) 18% (₹)
GST payable 90,000 90,000 1,44,000 3,24,000
Less: ITC [First ITC of IGST should be utilized in (38,000) (3,000) (1,44,000) 1,85,000
full - first against IGST liability and then against IGST IGST IGST
CGST and SGST liabilities in a manner to
minimize cash outflow]
(52,000) (87,000) 1,39,000
CGST SGST
Minimum GST payable in cash Nil Nil Nil Nil
ITC balance to be carried forward next month 32,000 Nil Nil 32,000
Note : The above computation is one of the many ways to set off the ITC of IGST (₹ 41,000-after set off
against IGST liability) against CGST and SGST liability to compute minimum GST payable in cash. To
illustrate, IGST of ₹ 10,000 can be set off against SGST payable and IGST of ₹ 31,000 can be set off against
CGST payable. In this situation also, the net GST payable will be nil but the ITC of CGST and SGST to be
carried forward will be ₹ 25,000 and ₹ 7,000 (totaling to ₹ 32,000) respectively. However, if the entire ITC
of ₹ 41,000 is set off against CGST payable, then SGST of ₹ 3,000 will be payable in cash thus, increasing
the cash outflow. Therefore, such a set off would not be advisable for computing the minimum GST
payable.
 Input Tax Credit 236

MULTIPLE CHOICE QUESTIONS

1. Which of the following statement is true for a composition tax payer?
(a) A composition tax payer can avail only 50% of ITC on capital goods.
(b) A composition tax payer can avail 100% ITC on inputs.
(c) ITC is not available on inward supplies made by a composition tax payer.
(d) Composition tax will be available as ITC to the recipient only if the tax is mentioned separately in the
invoice raised by the composition tax payer.
2. In which of the following situations, taxpayer needs to reverse the credit already taken?
(a) If payment is not made to the supplier within 45 days from the date of invoice
(b) If payment is not made to the supplier within 90 days from the date of invoice
(c) If payment is not made to the supplier within 180 days from the date of invoice
(d) None of the above
3. What is the time limit for taking ITC?
(a) 180 days (b) 1 year (c) 30th November of the next financial year or the date of filing annual
return whichever is earlier (d) No limit
4. If the goods are received in lots/installment, ------------------------------
(a) 50% ITC can be taken on receipt of 1st installment and balance 50% on receipt of last installment.
(b) ITC can be availed upon receipt of last installment.
(c) 100% ITC can be taken on receipt of 1st installment.
(d) Proportionate ITC can be availed on receipt of each lot/installment.
5. A supplier takes deduction of depreciation on the GST component of the cost of capital goods as per
Income- tax Act, 1961. The supplier can-
(a) avail only 50% of the said tax component as ITC (b) not avail ITC on the said tax component
(c) avail 100% ITC of the said tax component (d) avail only 25% of the said tax component as
ITC
6. Which of the following inward supplies are not eligible for ITC in case of a company manufacturing
shoes?
(a) Food and beverages (b) Outdoor catering (c) Health services (d) All of the
above
7. Input tax credit is not available in respect of _______.
(a) services on which tax has been paid under composition levy (b) free samples
(c) goods used for personal consumption (d) all of the above
8. Input tax credit is allowed to _______.
(a) registered person (b) registered person except composition dealer
(c) unregistered dealer (d) all of the above
9. Under section 16(2) of CGST Act how many conditions are to be fulfilled for the entitlement of
credit?
(a) All conditions specified u/s 16(2) (b) Any two conditions specified u/s 16(2)
(c) Conditions not specified (d) any one specified u/s 16(2)
10. Whether credit on inputs should be availed based on receipt of documents or receipt of goods
(a) Receipt of goods (b) Receipt of Documents
(c) Both (d) Either receipt of documents or Receipt of goods
11. Input tax credit on capital goods can be availed in one installment or in multiple installments?
(a) In thirty-six installments (b) In twelve installments
(c) In one installment (d) In two installments
12. Input tax credit on Inputs can be availed in one installment or in multiple installments?
(a) In thirty-six installments (b) In twelve installments
(c) In one installment (d) In two installments
13. Tax Credit shall be allowed on the basis of
(a) tax invoice (b) debit note (c) bill of entry (d) all of the above
 Input Tax Credit 237

14. ITC can be claimed by a registered person for

(a) Taxable supplies for business purpose (b) Taxable supplies for non-business purpose
(c) Exempted supplies (d) Non-taxable supplies (e) All of above
15. ABC Limited purchased one plant and machinery of ₹30,00,000 and paid GST ₹6,00,000 and has
taken ITC, depreciation shall be allowed on -
(a) ₹6,00,000 (b) ₹30,00,000 (c) ₹36,00,000 (d) ₹33,00,000
16. Where the goods or services or both are used by the registered person partly for the purpose of
business and partly for non business purposes, the amount of credit allowed shall be on -
(a) input tax as is attributable for taxable supplies for business purpose
(b) input tax as is attributable for taxable supplies for non-business purpose
(c) input tax as is attributable for all supplies
(d) input tax as is attributable for non-business purpose
(e) No credit is allowed
17. Where the goods or services or both are used by the registered person partly for effecting taxable
supplies and partly for exempt supplies, the amount of credit allowed shall be on -
(a) input tax as is attributable for taxable supplies only. (b) input tax as is attributable for exempt
supplies
(c) input tax as is attributable for all supplies (d) No credit is allowed on all supplies
18. Credit on Input services or capital goods held in stock can be availed in case of new
Registration/Voluntary Registration?
(a) Yes (b) No (c) Yes, on Input services only (d) Yes, on capital goods only
19. In case of Compulsory registration, input tax credit can be availed on
(a) stocks held on the day immediately preceding the date from which he becomes liable to pay tax under the
provisions of this Act, provided application for registration is filed within 30 days from the due date
(b) stocks held on the day immediately preceding the date of grant of registration under the provisions of this
Act.
(c) stocks held on the day immediately preceding the date of application of registration under the provisions
of this Act.
(d) None of the above
20. In case of Voluntary registration, input tax credit can be availed by submitting form no. _______
within 30 days.
(a) ITC-02 (b) ITC-03 (c) ITC-01 (d) ITC-04
21. In case of shifting from normal scheme to composition scheme, input tax credit can be reversed by
submitting form no. _______ .
(a) ITC-02 (b) ITC-03 (c) ITC-01 (d) ITC-04
22. Input tax credit is not available in respect of _______.
(a) Goods lost (b) Goods stolen (c) Goods destroyed (d) all of the above
23. ABC Limited purchased one plant and machinery of ₹20,00,000 and paid GST ₹3,00,000 and has
not taken ITC of GST paid, depreciation shall be allowed on -
(a) ₹3,00,000 (b) ₹20,00,000 (c) ₹23,00,000 (d) ₹17,00,000
24. Mr. Z becomes liable to pay tax on 1st August and has obtained registration on 15th August. Mr.
Z is eligible for ITC on inputs held in stock / semi-finished goods / finished goods as on _________
(a) 01st August (b) 15th August t (c) 31st July (d) None of the above
25. Mr. A, a registered taxable person, was paying tax at composition scheme upto 30th June.
However, w.e.f. 1st July, Mr. A becomes liable to pay tax under regular scheme. Mr. A will be eligible
for ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock
and on capital goods as on 30th June. ITC on capital goods will be reduced by _____ % per quarter
from the date of the invoice.
(a) 10% (b) 25% (c) 5% (d) 15%
Answer:
1. (c); 2. (c); 3. (c); 4. (b); 5. (b); 6. (d); 7. (d); 8 (b); 9 (a); 10 (c); 11 (c); 12 (c); 13 (d); 14 (a); 15 (b); 16 (a);
17 (a); 18 (b); 19. (a); 20. (c); 21. (b); 22. (d); 23. (c); 24. (c); 25. (c).
 Input Tax Credit 238

EXAMINATION QUESTION
JULY 2021
Question 6(a) (6 Marks)
A Ltd. procured the following goods in the month of December, 2022
Inward Supplies GST (₹)
(1) Goods used in constructing an additional floor of office building 18,450
(2) Goods given as free sample to prospective customers 15,000
(3) Trucks used for transportation of inputs in the factory 11,000
(4) Inputs used in trial runs 9,850
(5) Confectionary items for consumption of employees working in the factory 3,250
(6) Cement used for making foundation and structural support to plant and 8,050
machinery
Compute the amount of ITC available with A Ltd, for the month of December 2022 by giving necessary
explanations. Assume, that all the other conditions necessary for availing ITC have been fulfilled.
Solution:
Computation of amount of ITC available for the month of December 2022
S. No. Particulars GST (₹)
(1) Goods used in construction of additional floor of office building [ITC on goods Nil
received by a taxable person for construction of an immovable property on his own
account is blocked even if the same is used in the course or furtherance of
business. It has been assumed that cost of construction of additional floor has been
capitalized.]
(2) Goods given as free samples to prospective customers Nil
[ITC on goods disposed of by way of free samples is blocked.]
(3) Trucks used for transportation of inputs in the factory 11,000
[ITC on motor vehicles used for transportation of goods is not blocked.] (Note 1)
(4) Inputs used in trial runs 9,850
[Being used in trial runs, inputs are used in the course or furtherance of business
and hence ITC thereon is allowed.]
(5) Confectionary items for consumption of employees working in the factory Nil
[ITC on food or beverages is blocked unless the same is used in same line of
business or as an element of the taxable composite or mixed supply. Further, ITC
on goods and/or service used for personal consumption is blocked.]
(6) Cement used for making foundation and structural support to plant and machinery 8,050
[ITC on goods used for construction of plant and machinery is not blocked. Plant
and machinery includes foundation and structural supports through which the same
is fixed to earth.]
Total eligible ITC 28,900
 Input Tax Credit 239

NOV 2020
Question 5. (8 Marks)
KNK Ltd., a registered supplier of Mumbai is a manufacturer of heavy machines. Its outward supplies
(exclusive of GST) for the month of January,2023 are as follows:
S. No Particulars Amount (₹)
(i) Inter- State 85,00,000
(ii) Intra State 15,00,000

Applicable rate of CGST, SGST and IGST on outward supply are 9%, 9% and 18% respectively.
Details of GST paid on inward supplies during the month of January,2023 are as follows:
S. No Particulars CGST paid ₹ SGST paid ₹
(i) Raw materials A 60,000 60,000
(of which 70% of inputs procured were used
and 30% were in stock at the end of the
January, 2023)
(ii) Raw materials B 50,000 50,000
(of which 90% material received in factory and
remaining material completely damaged due to
a road accident on the way to factory. There
was no negligence on the part of the KNK Ltd.)
(iii) Construction of pipelines laid outside the 30,000 30,000
factory premises
(iv) Insurance charges paid for trucks used for 55,000 55,000
transportation of goods

Additional information:
(i) There is no opening balance of any Input Tax Credit and all the conditions necessary for availing the
Input Tax Credit (ITC) have been fulfilled.
(ii) Details of GST paid on inward supplies are available in GSTR 2B except for item (i) i.e. Raw Material
A, for which supplier has not filed its GSTR-1 for the month of January 2023, hence corresponding
Input Tax Credit (ITC) is not reflecting in GSTR.2B of KNK Ltd. in January, 2023.
Compute the following:
(i) Amount of eligible Input Tax Credit (ITC) available for the month of January, 2023
(ii) Net minimum GST payable in Cash, for the month of January, 2023 after using available Input Tax
Credit.
Working notes should form part of your answer.
Solution:
(i) Amount of eligible Input Tax Credit (ITC) available for the month of January, 2023
Raw Material B
CGST (50,000 X 90%) 45,000
SGST (50,000 X 90%) 45,000
Insurance charges for trucks used for transportation of goods (eligible)
CGST 55,000
SGST 55,000

Total ITC of CGST 1,00,000

Total ITC of SGST 1,00,000

Output tax
Inter State Sale 85,00,000
IGST @ 18% 15,30,000
 Input Tax Credit 240

Intra State Sale 15,00,000

CGST @ 9% 1,35,000
SGST @ 9% 1,35,000

(ii) Calculation of Net Minimum GST payable in cash

IGST CGST SGST
Output tax 15,30,000 1,35,000 1,35,000
ITC CGST/SGST - (1,00,000) (1,00,000)
Net Tax Payable in cash 15,30,000 35,000 35,000
Notes:
1. In case of Raw material A supplier has not furnished GSTR-1 and due to this amount is not shown in
GSTR-2B of the purchaser in this case KNK Ltd is not eligible to take credit as per rule 36(4).
2. As per section 17(5), ITC on goods lost, stolen, destroyed, written off or disposed of by way of gift or
free samples shall not be allowed hence only 90% tax credit shall be allowed in case of Raw Material B
3. As per section 17(5), ITC on construction of pipelines laid outside the factory premises shall not be
allowed.

NOV 2019
Question.7. (a) (5 Marks)
Dina Ltd., a registered supplier from Maharashtra is engaged in the manufacturing of passenger auto. The
company provides the following details of purchase made/services availed by it during the month of March
2023:
Sl. Particulars GST Paid
No. ₹
i. Purchase of iron which is used as a raw material (Goods were received in two 2,50,000
instalments, first on in March 2023 and the second instalment was received in April )
ii. Purchase of accessories which were delivered directly to the Dealers of the company. 90,000
Only invoice was received by Dina Ltd.
iii. Purchase of Bus (seating capacity 15) for the transportation of employees from their 1,97,000
residence to company and back
iv. Input tax credit on general insurance taken on a car used by Executives of the company 5,200
for official purposes.
v Payment made to M/s Tasty Caterers for providing daily breakfast & lunch to the 54,700
employees of the company, as voluntary staff welfare measure.
You are required to determine the eligible input Tax Credit available to M/s Dina Ltd. for the month of
March 2023, by giving brief explanations for treatment of various items. Subject to the information given
above, all the other conditions necessary for availing input tax credit have been fulfilled.
Solution:
Computation of eligible tax credit to M/s Dina Ltd. for the month of March 2023
(i) Purchase of iron which is used as a raw material Nil
(ii) Purchase of accessories which were delivered directly to the Dealers of the company. 90,000
Only invoice was received by Dina Ltd. (ITC is allowed)
(iii) Purchase of Bus (seating capacity 15) for the transportation of employees 1,97,000
from their residence to company and back (ITC is allowed)
(iv) Input tax credit on general insurance taken on a car used by Executives of the company Nil
for official purposes.
 Input Tax Credit 241

(v) Payment made to M/s Tasty Caterers for providing daily breakfast & lunch to the employees Nil
of the company, as voluntary staff welfare measure.
Total 2,87,000
Notes:
(i) As per 16(2), If the goods are received in installments, tax credit shall be allowed only when last
installment has been received. In the given case last installment is received in April 2022 hence credit shall
be allowed in the month of April.
(ii) As per 17(5), ITC of motor vehicles for transportation of persons having approved seating capacity of
not more than thirteen persons (including the driver) is not allowed in the given case bus is of 15 seating
capacity.
(iii) As per 17(5), ITC of food and beverages, outdoor catering, beauty treatment, health services, cosmetic
and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or
clause (aa) except when used for the purposes specified therein, life insurance and health insurance is not
allowed.

NOV 2019
Question.10. (a) (4 Marks)
Documents based on which ITC is taken should contain at least certain details, What are they?
Answer: Refer answer given in the book

MAY 2019
Question 5 (8 Marks)
Mr. Himanshu, a registered supplier of chemicals, pays GST under regular scheme. He is not eligible for any
threshold exemption. He has made the following outward taxable supplies for the months of September
2022:
Intra-State supply of goods ₹25,00,000
Inter-State supply of goods ₹5,00,000
He has also made the following inward supply:
Intra-State purchase of goods from Registered Dealer ₹14,00,000
Intra-State purchase of goods from Unregistered Dealer ₹2,00,000
Inter-State purchase of goods from Registered Dealer ₹4,00,000
Balance of ITC at the beginning of September 2022:
CGST ₹ 95,000
SGST ₹ 60,000
IGST ₹ 50,000
Additional Information:
He purchased a car (Intra-State supply) used for business purpose at a price of ₹ 6,72,000/- (including CGST
of ₹ 36,000 & SGST of ₹ 36,000) on September 15, 2022. He capitalized the full value including GST in the
books on the same date to claim depreciation.
Out of Inter-State purchase from registered dealer, goods worth ₹ 1,00,000 were received on October 3,
2022 due to road traffic jams.
Note:
(i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled except mentioned above.
Compute the net CGST, SGST and IGST payable in cash by Mr. Himanshu for the month of September
2022.
 Input Tax Credit 242

Solution:
Output Tax
Intra-State supply of Goods
25,00,000
Add: CGST @ 9% 2,25,000
Add: SGST @ 9% 2,25,000
Total 29,50,000

Inter-State supply of Goods

5,00,000
Add: IGST @ 18% 90,000
Total 5,90,000

Input Tax Credit

Intra state purchase of goods
14,00,000
Add: CGST @ 9% 1,26,000
Add: SGST @ 9% 1,26,000
Total 16,52,000

ITC
CGST 1,26,000
SGST 1,26,000

Intra State Purchase of goods from unregistered dealer

No ITC shall be allowed

Inter state purchase of goods

3,00,000
Add: IGST @ 18% 54,000
Total 3,54,000

ITC
IGST 54,000
ITC of goods received in the month of October shall be allowed in the month of October.
Computation of Net Tax
Particulars IGST ₹
Output Tax 90,000
Less: opening ITC – IGST (50,000)
Less: ITC -IGST (40,000)
Net Tax Payable Nil
Balance IGST credit of ₹14,000 can be adjusted either from CGST/SGST. In the given case we have
adjusted from SGST.
Computation of Net Tax
Particulars CGST ₹
Output Tax 2,25,000
Less: opening ITC – CGST (95,000)
Less: ITC – CGST (1,26,000)
Net Tax Payable 4,000
Computation of Net Tax
Particulars SGST ₹
Output Tax 2,25,000
 Input Tax Credit 243

Less: ITC – IGST (14,000)

Less: opening ITC – SGST (60,000)
Less: ITC – SGST (1,26,000)
Net Tax Payable 25,000

Note: As per section 17, ITC of car is not allowed.

MAY 2019
Question 7 (b) (4 Marks)
Jamku Ltd. a registered person is engaged in the business of spices. It provides following details for GST
paid during October. 2022.

No. Particulars GST Paid (₹)

1. Raw spices purchase
- Raw spices used for furtherance of spices 50,000
- Raw spices used for personal use of Directors 20,000
2. Electric machinery purchased to be used in the manufacturing process. 25,000
3. Motor vehicle used for transportation of the employee 55,000
4. Payment made for material and to contractor for construction of staff 1,25,000
quarter.
Determine the amount of ITC available to Jamku Ltd. for the month of October, 2022 with all related
workings and explanations.
All the conditions necessary for availing the ITC have been fulfilled.
Solution: Computation of ITC Available to Jamku Ltd. for the Month of October 2022
Particulars GST Paid (₹)
1. Raw Spices used for furtherance of Business 50,000
2. Raw Spices for personal use (ITC not allowed) Nil
3. Electric machinery purchased to be used in the manufacturing process. 25,000
4. Motor vehicle used for transportation of the employee (Not allowed) Nil
5. Payment made for material and to contractor for construction of staff quarter. (Not allowed) Nil
Total ITC Allowed 75,000
Notes:
1. Input tax credit shall be allowed only if the same is used for business purpose if it is used for
personal purpose then no ITC shall be allowed. (section 16)
2. As per section 17(5), ITC of motor vehicle seating capacity upto 13 persons used for transportation
of employee is not allowed.
3. As per section 17(5), ITC of material and payment to contractor (works contract service) for staff
quarter is not allowed.
NOV 2018
Question 8 (b) (4 Marks)
CANWIN Ltd.., a registered supplier, is engaged in the manufacture of Tanks. The company provides the
following information pertaining to GST paid on purchases made/input services availed by it during the
month of January 2023:
Particulars GST Paid ₹
(i) Purchase of Machinery where debit note is issued 1,15,000
(ii) Input purchased was directly delivered to Mr. Joe, a job worker and a registered supplier 80,000
(iii) Computers purchased (Depreciation was claimed on the said GST 50,000
portion under the Income-Tax Act, 1961)
(iv) Works Contract services availed for construction of Staff quarters
 Input Tax Credit 244

within the company premises 4,25,000

Determine the amount of ITC available to M/s. CANWIN Ltd. for the month of January 2023 by giving
brief explanations for treatment of various items. Subject to the information given above, all the conditions
necessary for availing the ITC have been fulfilled.

Solution: Computation of the amount of ITC available to M/s CANWIN Ltd.

Particulars GST Paid ₹
(i) Purchase of Machinery where debit note is issued 1,15,000
(ii) Input purchased was directly delivered to Mr. Joe, a job worker and a registered supplier 80,000
(iii) Computers purchased (Depreciation was claimed on the said GST Nil
portion under the Income-Tax Act, 1961)
(iv) Works Contract services availed for construction of Staff quarters within the company premises Nil
Total 1,95,000
Note:
1. As per section 16(2), A registered shall be entitled to take credit on the basis of debit note.
2. As per section 16(2), if goods is received by other person on behalf of registered person then also
credit shall be allowed.
3. As per section 16(3), if registered person has taken tax credit of input tax then it shall not be added to
the cost of the asset in the given case depreciation was claimed on the tax amount hence no credit
shall be allowed.
4. As per section 17(5), no tax credit shall be allowed on works contract services availed for
construction of immovable property.

NOV 2018
Question 7 (b) (4 Marks)
M/s J & Co. Chartered Accountants a partnership firm having its registered and head office in Mumbai
and Registered under the GST Act in the State of Maharashtra only. It does not have any branches in other
state. The Gross Receipts of the firm in the Financial Year 2021-22 was 60 Lakhs. Firm has submitted
following information for the month of August, 2022:
Particulars Amount in (₹)
(Excluding GST)
Professional Services Provided and Bills Raised during the month for Providing of services
of ITR Filing and Income Tax Consultancy 1,00,000
Internal Audit of X Pvt. Ltd. at their office in Mumbai 50,000
(Registered in the state of Maharashtra)
Statutory Audit Services provided to M/s Tirupati Trading 70,000
Pvt Ltd. at Ahmedabad (Registered in the State of Gujarat)
Firm has also furnished following information in respect of input services availed from registered dealers for
providing of output services during the month August, 2022:
Particulars Amount in (₹) CGST SGST IGST
(Excluding GST)
Services availed from Courier Agency 5,000 450 450 -
Railway Travelling Expenses from
 Input Tax Credit 245

Mumbai to Ahmedabad and Return Ticket

for conducting of Audit of M/s Tirupati
Trading Pvt. Ltd. for 3 Tier AC 12,000 Nil Nil 600
Service Availed from Another Professional
Firm at Mumbai amount is paid without 20,000 1,800 1,800 Nil
TDS U/s 194J of Income Tax Act.
Notes:
(i) Rate of CGST, SGST and IGST to be 9%, 9% & 18% respectively, on outward supplies.
(ii) All the conditions necessary for availing the ITC have been fulfilled.
(iii) Opening Balance of available input tax credit is NIL for CGST, SGST and IGST.
Compute the Net GST Payable by M/s J & Co. for the month August, 2022 after adjusting the GST Credit.
Brief reasoning should form part of your answer.
Solution:
Services provided by Chartered accountants are taxable under GST and no exemption is provided to
Chartered accountants.
Computation of Net GST Payable by M/s J & Co. for the month of August 2022 ₹
Output Tax
(1) Professional services provided and bill raised during the month. 1,00,000
Add: CGST @ 9% 9,000
Add: SGST @ 9% 9,000

(2) Internal audit of X Pvt. Ltd. at Mumbai 50,000

Add: CGST @ 9% 4,500
Add: SGST @ 9% 4,500

(3) Statutory audit at Ahmedabad (Inter -State supply) 70,000

Add: IGST @ 18% 12,600

Input Tax
Input service of courier service 5,000
Add: CGST @ 9% 450
Add: SGST @ 9% 450

Railway services for official tour 12,000

Add: IGST @ 5% 600

Input service from other firm in Mumbai 20,000

Add: CGST @ 9% 1,800
Add: SGST @ 9% 1,800

Computation of Net Tax Liability

CGST
Output Tax 13,500
Less: ITC -CGST (2,250)
Net Tax Liability 11,250
SGST
Output Tax 13,500
 Input Tax Credit 246

Less: ITC -SGST (2,250)

Net Tax Liability 11,250
IGST
Output Tax 12,600
Less: ITC -IGST (600)
Net Tax Liability 12,000

NOV 2018
Question 9 (b) (5 Marks)
Harshgeet Pvt. Ltd. a registered supplier is engaged in the manufacture of taxable goods. The company
provides the following information pertaining to GST paid on the purchases made/input services availed by
it during the month of July, 2022:
Sr. No. Particulars GST paid
(1) Raw Material (To be received in September, 2022) 2,50,000
(2) Membership of a club availed for employees working in the factory 1,45,000
(3) Inputs to be received in 5 lots, out of which 3rd lot was received during the month 80,000
(4) Trucks used for transport of raw material 40,000
(5) Capital Goods (out of 3 items, invoice for 2 item is missing and GST paid on that 1,50,000
Item is 80,000
Determine the amount of Tax Credit available with Harshgeet Pvt. Ltd. for the month of July, 2022 by
giving the necessary explanation for treatment of various items. All the conditions necessary for availing the
ITC have been fulfilled.
Solution:
Sr. No. Particulars GST paid
(1) Raw Material (To be received in September, 2022) Nil
(2) Membership of a club availed for employees working in the factory Nil
(3) Inputs to be received in 5 lots, out of which 3rd lot was received during the month Nil
(4) Trucks used for transport of raw material 40,000
(5) Capital Goods (out of 3 items, invoice for 2 item is missing and GST paid on that 70,000
Item is 80,000)
Total 1,10,000
Notes:
1. As per section 16(2), Tax credit shall be allowed when the goods is received in the given case raw
material is received in September hence credit will be allowed in the month of September.
2. As per section 17(5), tax credit of club membership for employees is not allowed.
3. As per section 16 (2), where the goods against an invoice are received in lots the registered person
shall be entitled to take credit upon receipt of last lot. In the given case third lot was received during
this month hence credit shall not be allowed.
4. ITC on motor vehicles is disallowed in terms of section 17(5) of the CGST Act, 2017, except when
they are used inter alia, for transportation of goods.
5. ITC cannot be taken on missing invoice. The registered person should have the invoice in its
possession to claim ITC [Section 16(2)]

MAY 2018
Question 8 (b) (4 Marks)
Fun Pharma Private Limited, a registered supplier is engaged in the manufacture of taxable goods. The
company provides the following information of GST paid on the purchases made/input services availed by it
during the month of September 2022:
 Input Tax Credit 247

Particulars GST paid (₹)

(i) Purchase of cabs used for the transportation of its employees 3,30,000
(ii) Inputs consisting of three lots, out of which first lot was received during the month 1,25,000
(iii) Capital Goods 2,50,000
(out of three items, invoice for one item was missing and GST paid on that item was, ₹25,000)
(iv) Outdoor catering service availed on Women's day 72,000
Determine the amount of Input Tax Credit available with M/s Fun Pharma Private Limited for the month of
September 2022 by giving necessary explanations for treatment of various items. All the conditions
necessary for availing the input tax credit have been fulfilled.
Solution: Computation of amount of Input Tax Credit available with M/s Fun Pharma Private
Limited for the month of September 2022
Particulars GST paid (₹)
(i) Purchase of cabs used for the transportation of its employees Nil
(ii) Inputs consisting of three lots, out of which first lot was received during the month Nil
(iii) Capital Goods 2,25,000
(out of three items, invoice for one item was missing and GST paid on that item was, ₹25,000)
(iv) Outdoor catering service availed on Women's day Nil
Input Tax Credit Available 2,25,000
Notes:
1. As per section 17(5), Input tax credit shall not be available for purchase of cabs.
2. As per section 16 (2), where the goods against an invoice are received in lots the registered person shall
be entitled to take credit upon receipt of last lot. In the given case first lot was received during this month
hence credit shall not be allowed.
3. As per section 16(2), tax credit shall be allowed if assesse is in possession of a tax invoice in the given
case of capital goods invoice for one item is missing hence credit for such item is not allowed.
4. As per section 17(5), Input tax credit of outdoor catering is not allowed.

MAY 2018
Question 9 (c) (4 Marks)
Bharat Associates Pvt. Ltd. Purchased machinery worth ₹ 9,00,000 (excluding GST) on 20-07-2022 on
which it paid GST @ 18%. It availed the ITC. On 05-03-2023 it sold the machinery for ₹7,00,000
(excluding GST) to Hindustan Associates Pvt. Ltd. The GST rate on sale is 18%. What will be the course of
action for Bharat Associates Pvt. Ltd. to follow under CGST Act, 2017?
Answer: As per Section 18 (6) of the CGST Act, 2017 read with CGST Rule 44, in case of supply of
capital goods, on which input tax credit has been taken, the registered person shall pay an amount on the
basis of remaining life considering total life to be 60 months however part of the month shall be ignored or
the tax on the transaction value of such capital goods, whichever is higher.
Accordingly, the amount payable on supply of machine shall be computed as follows:
In this case the machine has been used from 20th July 2022 to 05th March 2023 i.e. 7 months and 14 days
Remaining life shall be = 52 months 16 days i.e. 52 months
Amount to be reversed (A) 1,62,000/60 x 52 = 1,40,400
Duty leviable on transaction value (₹ 7,00,000 × 18%) (B) 1,26,000
Amount payable towards disposal of machine is higher of (A) and (B) 1,40,400

IPC NOV 2017 (MODIFIED)

Question 2 (4 Marks)
Rajesh Ltd. has submitted particulars of sale or purchase for the month of January 2023. Compute GST
Payable if Rate of CGST @ 10% and SGST @ 10% (The amounts are exclusive of GST.)
 Input Tax Credit 248

Particulars Amt. in (₹)

(i) Purchase from composition dealers 5,00,000
(ii) Inter-state purchases 18,00,000
(iii) Purchase of capital goods 9,00,000
(iv) Sales within the State effected during the month of January, 2023 12,00,000
Solution:
₹
Sales 12,00,000
Add: CGST @ 10% 1,20,000
Add: SGST @ 10% 1,20,000
Total 14,40,000

Capital Goods
Transaction Value 9,00,000
Add: CGST @ 10% 90,000
Add: SGST @ 10% 90,000
Total 10,80,000

Inter - state purchase

Transaction Value 18,00,000
Add: IGST @ 20% 3,60,000
Computation of Net Tax
Particulars CGST ₹
Output Tax Goods 1,20,000
Less: ITC Goods – IGST (1,20,000)

Net Tax Payable Nil

Computation of Net Tax

Particulars SGST ₹
Output Tax Goods 1,20,000
Less: ITC Goods – IGST (1,20,000)

Net Tax Payable Nil

Carried Forward:
IGST –₹ 1,20,000
CGST –₹ 90,000
SGST –₹ 90,000

IPC NOV 2017 (MODIFIED)

Question 8 (2 Marks)
Raghavan, a service provider, has taken credit based on the invoice made available to him. He has received
the invoice on 10-07-2022 and has made payment against the invoice on 01-01-2023. Explain the
consequences of credit that he has taken on 10-07-2022.
Answer:
As per section 16(2), Payment should be made within 180 days from the date of invoice otherwise credit
taken earlier shall be added to the output tax liability alongwith interest but if later he makes payment
after 180 days, then again he is eligible to take tax credit and limit of section 16(4) shall not be applicable. In
the given case payment has been made within 180 days of the date of invoice hence tax credit is taken
correctly.
 Input Tax Credit 249

Question 9 (2 Marks)
Mahesh has received invoices but they have remained unaccounted for more than a year. He intends to take
credit while accounting for it now. Advice him on his decision.
Answer:
As per section 16(4), A registered person shall not be eligible to take credit after the 30th Day of November
of the subsequent year or furnishing the annual return, whichever is earlier provided the assessee has made
the payment to the supplier. In the given case if the assessee has made the payment to the supplier and 30th
November of subsequent year or filing of annual return is not crossed then he is eligible to take credit.
 Tax Invoice, Credit and Debit Notes 250

TAX INVOICE, CREDIT AND DEBIT NOTES/RECEIPT

VOUCHER/REFUND VOUCHER/DELIVERY CHALLAN
(SECTION 31/32/33/34 CGST ACT)

Question 1: Explain provisions regarding issue of tax invoice in case of supply of goods.
Answer: Tax invoice. Section 31(1)
(1) A registered person supplying taxable goods shall, before or at the time of,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice.

Example
If goods are delivered on 10th July 2022, invoice should be issued maximum upto 10th July 2022. If the
goods are to be delivered at some other place and goods were removed from place of business on 10th
August 2022 and delivered at destination on 28th August 2022, invoice should be issued maximum upto 10th
August 2022.

Question 2: Explain Time Limit for issuing tax invoice in case of supply of services.
Answer: Time limit for issuing tax invoice Section 31(2)/Rule 47
The invoice in the case of the taxable supply of services, shall be issued within a period of 30 days from the
date of the supply of service:
In case of an insurer or a banking company or a financial institution, invoice shall be issued shall be 45
days from the date of the supply of service:
Further an insurer or a banking company or a financial institution, or a telecom operator, making
taxable supplies of services between distinct persons, may issue the invoice before the expiry of the quarter
during which the supply was made.

Question 3: Write a note on issue of tax invoice under section 31/ Rule 46/Rule 48.
Answer:
Tax invoice shall contain the following particulars
(i) Name, Address and Goods and Services Tax Identification Number of the Supplier and Recipient
(ii) Serial number and date of issue of invoice
(iii) Description of goods or services, Quantity, Value, Discount, Rate of GST and Amount of GSTand HSN
Code
(iv) Place of supply along with the name of the State, in the case of a supply in the course of inter-State
trade or commerce;
(v) Whether the tax is payable on reverse charge basis; and
(vi) name and address of the recipient and the address of delivery, along with the name of the State and its
code, if such recipient is un-registered and where the value of the taxable supply is fifty thousand
rupees or more;
(vii) Signature or digital signature of the supplier or his authorised representative:
The invoice shall be prepared in triplicate, in the case of supply of goods, in the following manner,
namely,—
(a) the original copy being marked as ORIGINAL FOR RECIPIENT;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner,
namely,—
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
 Tax Invoice, Credit and Debit Notes 251

Restriction with regard to number of copies shall not be applicable in case of e-invoicing.

Question 4: Explain provisions regarding issue of tax invoice in case of continuous supply of goods.
Answer: Invoice in case of Continuous Supply of Goods
As per section 31 (4), in case of continuous supply of goods, where successive statements of accounts or
successive payments are involved, the invoice shall be issued before or at the time each such statement is
issued or, as the case may be, each such payment is received.

As per section 2(32), "continuous supply of goods" means a supply of goods which is provided, or agreed
to be provided, continuously or on recurrent basis, under a contract and for which the supplier invoices the
recipient on a regular or periodic basis and includes supply of such goods as the Government may specify.

Invoice in case of Continuous supply of Services

As per section 31 (5), in case of continuous supply of services,—
(i) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or
before the due date of payment.

(ii) where the payment is linked to the completion of an event, the invoice shall be issued on or before
the date of completion of that event.

(iii) 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.
As per section 31 (6), in a case where the supply of services ceases under a contract before the completion
of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued
to the extent of the supply made before such cessation.
As per section 2(33), "continuous supply of services" means a supply of services which is provided, or
agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three
months with periodic payment obligations and includes supply of such services as the Government may
notify.

Example: ABC Cinemas entered into an annual maintenance contract with XYZ Services Ltd. for one year
[April-March] for the Air conditioners fitted in their theaters. As per the contract, payment for said services
had to be made on 7th April. However, ABC cinemas made the payment on 15th April. Since services
provided by XYZ Services Ltd. to ABC Cinemas is a continuous supply of services and due date of payment
is ascertainable from the contract, XYZ Services Ltd. had to issue a tax invoice on or before such due date,
viz. 7th April.

Example: ABC Caretakers, a registered person, provides the services of repair and maintenance of electrical
appliances. On April 1, it has entered into an annual maintenance contract with Mr. X 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 ABC Caretakers issue the invoice for the services
rendered?
Answer: Continuous supply of service means 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. Therefore, the given situation is a case of continuous supply of service as
repair and maintenance services have been provided by ABC Caretakers on a quarterly basis, under a
contract, for a period of one year with the obligation for quarterly payment. In terms of section 31, 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, ABC
Caretakers should issue quarterly invoices on or before April 1, July 1, October 1, and January 1.
 Tax Invoice, Credit and Debit Notes 252

Question 5: Explain provisions regarding issue of invoice in case of goods sent on approval basis.
Answer: Goods sent on approval for Sale or Return
As per section 31 (7), 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.
Question 6: Explain Credit Note.
Answer: Credit Note/Debit Note Section 34
Credit Note
(1) Where one or more tax invoices have been issued for supply of any goods or services or both and the
taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect
of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both
supplied are found to be deficient, the registered person, who has supplied such goods or services or both,
may issue to the recipient one or more credit notes for supplies made in a financial year containing such
particulars as may be prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall
declare the details of such credit note in the return for the month during which such credit note has been
issued but not later than 30th day of November following the end of the financial year in which such supply
was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability
shall be adjusted in such manner as may be prescribed:
Example: ABC Ltd. issued an invoice on 10.01.2023 ₹ 10,00,000 + GST 2,00,000 and paid GST to the
government on 20.02.2023. The recipient informed the goods supplied were of ₹ 8,00,000 and GST should
be 1,60,000, in this case ABC Ltd. will issue a credit note for ₹ 2,00,000 + GST 40,000. ABC Ltd. shall be
allowed to reduce its tax liability in the subsequent month by ₹ 40,000 and the recipient shall increase tax
liability by ₹ 40,000 because he might have taken ITC of ₹ 2,00,000. If this error is detected on 01.12.2023,
no adjustment allowed after 30.11.2023.
Debit Note
(3) Where one or more tax invoices have been issued for supply of any goods or services or both and the
taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in
respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to
the recipient one or more debit notes for supplies made in a financial year containing such particulars as may
be prescribed.
(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall
declare the details of such debit note in the return for the month during which such debit note has been
issued and the tax liability shall be adjusted in such manner as may be prescribed.
Explanation.— For the purposes of this Act, the expression "debit note" shall include a supplementary
invoice.
Example: ABC Ltd. issued an invoice on 10.01.2023 ₹ 10,00,000 + GST 2,00,000 and paid GST to the
government on 20.02.2023. The recipient informed the goods supplied were of ₹ 12,00,000 and GST should
be 2,40,000, in this ABC Ltd. shall issue a debit note for ₹ 2,00,000 + GST 40,000 and shall pay GST of
₹40,000 to Government in the next month and recipient shall take tax credit of ₹ 40,000 in the subsequent
month.

Question 7: Explain provisions of issue of invoice where amount is less than ₹200
Answer : Issue of Tax Invoice where amount is less than ₹200 Section 31(3)(b) / Rule 46
A registered person may not issue a tax invoice subject to the following conditions, namely,—
(a) the recipient is not a registered person; and
(b) the recipient does not require such invoice, and
shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such
supplies.

Example: ABC limited has supplied goods worth ₹150 to an unregistered dealer/ consumer, in this case
there is no requirement to issue invoice but if it is demanded by the recipient, invoice is to be issued.
 Tax Invoice, Credit and Debit Notes 253

But it will not be applicable in case of a supplier engaged in making supply of services by way of admission
to exhibition of cinematograph films in multiplex screens.
Issue of Bill of Supply where amount is less than ₹200 Section 31(3)(c) / Rule 49
Similar provision shall be applicable in case of bill of supply, eg. A composition dealer has sold goods of ₹
150 to a consumer, he is exempt from issuing bill of supply but at the end of the day, a consolidated bill of
supply has to be issued. (purpose is to make accounting of total sales for the purpose of paying composition
tax.)

Illustration 1: ABC is a trader dealing in stationery items. It is registered under GST and has undertaken
following sales during the day:
S. No. Recipient of supply Amount (₹)
1. R Traders - a registered retail dealer (Composition Dealer) 190
2. D Enterprises – an unregistered trader 358
3. G – a Painter [unregistered] 500
4. O Orphanage – an unregistered entity 188
5. A – a Student [unregistered] 158
None of the recipients require a tax invoice.
Determine in respect of which of the above supplies, ABC may issue a Consolidated Tax Invoice instead of
Tax Invoice at the end of the day?
Solution:
In the given illustration, ABC can issue a Consolidated Tax Invoice only with respect to supplies made to O
Orphanage [worth ₹188] and A [worth ₹158] as the value of goods supplied to these recipients is less than
₹200 as also these recipients are unregistered and don’t require a tax invoice.
As regards the supply made to R Traders, although the value of goods supplied to it is less than ₹200, R
Traders 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 D Enterprises and G although
both of them are unregistered, because the value of goods supplied is not less than ₹200.
Question 8: Explain Invoice-cum-bill of supply.
Answer: Invoice-cum-bill of supply Rule 46A
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.

Question 9: Write a note on bill of supply under Rule 49.

Answer: Bill of supply under Rule 49
A registered person supplying exempted goods or services or both or paying tax under the provisions of
section 10 shall issue, instead of a tax invoice, a bill of supply containing particulars given below:
(a) Name, address and Goods and Services Tax Identification Number of the supplier and recipient
(b) Serial No. and date of issue
(c) Description of goods, quantity and value of supply also discount allowed.
(d) Harmonised System of Nomenclature Code for goods or services;
(e) Signature or digital signature of the supplier or his authorised representative:

Question 10: Write a note on Receipt Voucher under Rule 50.

Answer: Receipt voucher Section 31(3)(d) Rule 50.
A registered person shall, on receipt of advance payment with respect to any supply of goods / services,
issue a receipt voucher or any other document.
A receipt voucher shall contain the following particulars, namely,—
(a) Name, address and Goods and Services Tax Identification Number of the supplier and recipient
(b) Serial No. and date of issue
(c) Description of goods, quantity and advance taken, rate and amount of GST
 Tax Invoice, Credit and Debit Notes 254

(d) Harmonised System of Nomenclature Code for goods or services;

(e) Signature of the supplier or his authorised representative:

Question 11: Write a note on Refund Voucher under Rule 51.

Answer: Refund voucher Section 31(3)(e) Rule 51
Where, on receipt of advance payment with respect to any supply of goods / services the registered person
issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued the said registered
person shall be allowed to refund the amount and shall take refund voucher from such person. The supplier
shall not be allowed to decrease his tax liability rather he has to claim refund by filing RFD 01.
A refund voucher shall contain the following particulars, namely:—
(a) name, address and Goods and Services Tax Identification Number of the supplier and recipient;
(b) Serial number and date of issue
(c) number and date of receipt voucher issued earlier
(d) description of goods or services in
(e) amount of refund, rate of tax / amount of tax.
(f) whether the tax is payable on reverse charge basis; and
(g) signature of the supplier or his authorised representative.

Question 12: Explain Transportation of Goods without issue of invoice i.e. by issuing Delivery challan.
Answer: In the following cases goods can be removed without issue of invoice but a delivery challan
should be issued

(i) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier
is not known,
(ii) transportation of goods for job work,
(iii) transportation of goods for reasons other than by way of supply,(Stock Transfer or goods sent on
approval etc.)or
(iv) such other supplies as may be notified by the Board (Goods sent on sale of return basis)

Contents of delivery challan

(i) Name, address and Goods and Services Tax Identification Number of the consigner and consignee
(ii) Serial number and date
(iii) Quantity (provisional, where the exact quantity being supplied is not known), taxable value, tax rate and
amount of tax
(iv) Harmonised System of Nomenclature code and description of goods;
(v) place of supply, in case of inter-State movement;
(vi) signature.

The delivery challan shall be prepared in triplicate:

(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.

Where goods are being transported on a delivery challan, e-way bill has to be prepared.

Question 13: Explain transportation of goods in a semi knocked down or completely knocked down
condition or in batches or lots.
Answer:
(a) the supplier shall issue the complete invoice before dispatch of the first consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of
the invoice;
 Tax Invoice, Credit and Debit Notes 255

(c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a
duly certified copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment.

Question 14: Explain provisions of facility of digital payment to recipient.

Answer: Facility of digital payment to recipient. Section 31A
The Government may, on the recommendations of the Council, prescribe a class of registered persons who
shall provide prescribed modes of electronic payment to the recipient of supply of goods or services or both
made by him and give option to such recipient to make payment accordingly, in such manner and subject to
such conditions and restrictions, as may be prescribed.

Question 15: Explain Tax Invoice in special cases.

Answer: Tax Invoice in special cases Rule 54.
(1) Where the supplier of taxable service is an insurer or a banking company or a financial institution, the
said supplier may issue a consolidated tax invoice or any other document for the supply of services made
during a month at the end of the month, whether issued or made available, physically or electronically
whether or not serially numbered, and whether or not containing the address of the recipient of taxable
service.
(2) Where the supplier of taxable service is a goods transport agency the said supplier shall issue a tax
invoice or any other document in lieu thereof, by whatever name called, containing the gross weight of the
consignment, name of the consigner and the consignee, registration number of goods carriage in which the
goods are transported, details of goods transported, details of place of origin and destination, Goods and
Services Tax Identification Number of the person liable for paying tax whether as consigner, consignee or
goods transport agency.
(3) Where the supplier of taxable service is supplying passenger transportation service, a tax invoice shall
include ticket in any form, whether or not serially numbered, and whether or not containing the address of
the recipient of service.
(4) A registered person supplying services by way of admission to exhibition of cinematograph films in
multiplex screens shall be required to issue an electronic ticket and the said electronic ticket shall be deemed
to be a tax invoice for all purposes of the Act, even if such ticket does not contain the details of the recipient
of service.
Provided that the supplier of such service in a screen other than multiplex screens may, at his option, follow
the above procedure.

Question 16: Explain E invoicing

Answer:
All registered persons having turnover more the 10 crores in any financial year from 2017-18 onwards
(Notification no 17/2022-CT dated 01-08-2022) shall make invoice in form GST INV-01 called ‘e-invoice
schema’ and it will be uploaded on invoice registration portal (www.einvoice1.gst.gov.in to
www.einvoice10.gst.gov.in) but it will be applicable only in case of B2B supply i.e. it is not applicable in
case of B2C invoices. Similar procedure shall be applicable in case of credit note and debit note. The invoice
uploaded shall be return after obtaining an invoice reference number and a QR Code and also the invoice
shall be digitally signed. It will also be applicable in case of supply for export or supply to SEZ unit.

The advantages to E invoicing are that the particulars shall be filed in GSTR-1 or E-way bill or GSTR-2B
etc. automatically. It will also reduce transcription errors.

Exemption from e-invoicing (Notification no. 13/2020 dated: 21.03.2020)

The entities mentioned below shall be exempt from issue of e-invoicing.
• Special Economic Zone units
• Insurer or banking company or financial institution including NBFC
 Tax Invoice, Credit and Debit Notes 256

• GTA supplying services in relation to transportation of goods

• Supplier of passenger transportation service
• Person supplying services by way of admission to exhibition of cinematograph films in multiplex
screens
• Government department and a local authority
Thus, above mentioned entities are not required to issue e-invoices even if their turnover exceeds ₹ 10 crore
in the preceding financial year from 2017-18 onwards. However in such cases a declaration has to be given
as mention below:
'I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18
onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to
prepare an invoice in terms of the provisions of the said sub-rule'.
Only SEZ units and not SEZ developers are exempt from issuing e-invoices. Thus, SEZ developers whose
turnover exceeds ₹ 10 crores in any preceding financial year from 2017-18 onwards are mandatorily
required to issue e-invoices.
How e-invoice data is consumed by GST System for generation of e-way bill or populating relevant
parts GST Returns?
Invoice Registration Portal sends the e-invoice data along with Invoice Reference Number to the GST
System as well as to E-Way Bill System. The GST system will auto-populate them into GSTR-1 of the
supplier and GSTR-2B of respective receivers. With source marked as ‘e-invoice’, IRN and its date will also
be shown in GSTR-1 and GSTR-2B.

Invoice Registration Portal (IRP)

IRP is the website for uploading/reporting of invoices by the notified persons. Following IRPs have been
notified for the purpose of preparation of the e-invoice:
www.einvoice1.gst.gov.in
www.einvoice2.gst.gov.in
www.einvoice3.gst.gov.in
www.einvoice4.gst.gov.in
www.einvoice5.gst.gov.in
www.einvoice6.gst.gov.in
www.einvoice7.gst.gov.in
www.einvoice8.gst.gov.in
www.einvoice9.gst.gov.in
www.einvoice10.gst.gov.in

GST invoice will be valid only with a valid IRN. IRN is different from invoice number. Invoice no. (e.g.
ABC/1/2019-20) is assigned by supplier and is internal to business. IRN, on other hand, is a unique
reference number (hash) generated and returned by IRP, on successful registration of e-invoice, for instance,
35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06bbe

Question 17: Explain Dynamic QR code.

Answer:
Dynamic QR code
All B2C invoices issued by a registered person whose aggregate turnover in any preceding financial year
from 2017-18 onwards exceeds ₹ 500 crores are proposed to have a QR code from December 1, 2020.
Sixth proviso to rule 46 has empowered the Government to specify that the tax invoice shall have Quick
Response (QR) code. Resultantly, it has been notified that invoice issued by a registered person (except
specified class of persons), whose aggregate turnover in a financial year exceeds ₹ 500 crores, in respect of
B2C supplies (supply of goods or services or both to an unregistered person) shall have Dynamic QR code.
 Tax Invoice, Credit and Debit Notes 257

A Dynamic Quick Response (QR) code made available to buyer by such registered person through digital
display (with payment cross reference) shall be deemed to be having QR code. The purpose of this provision
is to enable and encourage digital payments where buyer can scan the dynamic QR code and make payment
from mobile wallet directly. Today, many shops have static QR code at the payment counter which is
scanned by the buyer, but the buyer has to enter the amount to be paid to the shop in the mobile payment
App. The dynamic QR code, on the other hand, will have the payment details and thus ‘scan and pay’ in one
go is possible. This has no relevance or applicability to the e-invoicing in respect to B2B supplies by
notified class of taxpayers. Dynamic QR Code will be generated by the seller himself either on the Point of
Sale (PoS) machine or the invoice issued.

CLARIFICATIONS
Goods moved within the State or from the State of registration to another State for supply on approval basis
and Art works sent by artists to galleries for exhibition Suppliers of jewellery etc. who are registered in one
State may have to visit other States (other than their State of registration) and need to carry the goods (such
as jewellery) along for approval. In such cases if jewellery etc. is approved by the buyer, then the supplier
issues a tax invoice only at the time of supply. Since the suppliers are not able to ascertain their actual
supplies beforehand and while ascertainment of tax liability in advance is a mandatory requirement for
registration as a casual taxable person, the supplier is not able to register as a casual taxable person. Such
goods are also carried within the same State for the purposes of supply.
In view of relevant provisions of rule 55, it is clarified that 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 alongwith the e-way bill wherever applicable and
the invoice may be issued at the time of delivery of goods. For this purpose, the person carrying the goods
for such supply can carry the invoice book with him so that he can issue the invoice once the supply is
fructified [Circular No. 10/10/2017 GST dated 18.10.2017].
Likewise, in case where artists supply art works in different States -other than the State in which they are
registered as a taxable person and if the art work is selected by the buyer, then the supplier issues a tax
invoice only at the time of supply, it is clarified that the art work for supply on approval basis can be moved
from the place of business of the registered person (artist) to another place within the same State or to a
place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice
may be issued at the time of actual supply of art work [Circular No. 22/22/2017 GST dated 21.12.2017]
 Tax Invoice, Credit and Debit Notes 258

PRACTICE PROBLEMS
Q1. 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.
Answer: 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.

Q2. The aggregate turnover of Sangri Services Ltd. exceeded ₹20 lakh on 12th August. It 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.
Answer: 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 ₹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 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.

Q3. 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.
Answer: 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 Therefore, in the given case, Shyam Fabrics cannot issue tax invoice. Instead, it shall issue a Bill
of Supply.

Q4. 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. For the occasion, it gets the
service by way of makeover of its models from Aura Beauty Services Ltd., Ashok Vihar, for which a
consideration is ₹ 5,00,000 (excluding GST) has been charged. Aura Beauty Services Ltd. issued a duly
signed tax invoice on 10th February showing the lumpsum amount of ₹ 5,90,000 inclusive of CGST and
SGST @ 9% each for the services provided. 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.
 Tax Invoice, Credit and Debit Notes 259

Answer
(i) As per section 31 read with the CGST Rules, 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 3rd February. However, the invoice has
been issued on 10th February.
(ii) Section 31 read with the CGST Rules, inter alia, provides that tax invoice in addition to other mandatory
details shall also contain the amount of tax charged in respect of taxable goods or services (central tax, State
tax, integrated tax, Union territory tax or cess). Further, 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.
The objection raised by the tax consultant of Royal Fashions suggesting that the amount of tax charged in
respect of the taxable supply of makeover services should be shown separately in the invoice raised by Aura
Beauty Services Ltd., is valid in law.

Q5. Kidzee Toys Ltd., a wholesaler of toys registered in Chandigarh, is renowned in the local market for
the variety of toys and their reasonable prices. Kidzee Toys Ltd. makes supply of 100 pieces of baby’s
learning laptops and chat learning phones to Nancy General Store on 25th September by issuing a tax
invoice amounting to ₹ 1,00,000.
However, the said toys were returned by Nancy General Store on 30th September. Discuss which document
Kidzee Toys Ltd. is required to issue in such a case?
Answer: Kidzee Ltd. is required to issue a credit note in such a case.
As per section 34, where one or more tax invoices have been issued for supply of any goods or services or
both and the goods supplied are returned by the recipient the registered person, who has supplied such
goods or services or both, may issue to the recipient one or more credit notes for supplies made in a
financial year containing such particulars as may be prescribed. Therefore, Kidzee Ltd. is required to issue a
credit note to Nancy General Store for the good returned.

Q6. Rana Sanga Ltd., a registered supplier has made following taxable supplies to its customer Babur in the
quarter ending 30th June.
Date Bill No. Particulars Invoice value
(including GST) [₹]
5th April 102 Notebooks [10 in numbers] 1,200
10th May 197 Chart Paper [4 in number] 600
20th May 230 Crayon colors [2 packets] 500
2nd June 254 Poster colors [5 packets] 900
22nd June 304 Pencil box [4 sets] 700
Goods in respect of bill no. 102, 230 and 254 have been returned by Babur. You are required to advise Rana
Sanga Ltd. whether it can issue a consolidated credit note against all the three invoices?
Answer: 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.
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.
 Tax Invoice, Credit and Debit Notes 260

Hence, in view of the above-mentioned provisions, Rana Sanga Ltd. Can issue a consolidated credit note for
the goods returned in respect of all the three invoices.

Q7. Chidanand Products Pvt. Ltd. is a registered supplier who has opted for composition levy in the current
financial year. He wishes to know whether the issue of a bill of supply can be dispensed with under any
circumstances. You are required to advise him.
Answer: Yes. Chidanand Products Pvt. Ltd. may not issue a bill of supply if the value of the goods or
services or both supplied is less than ₹ 200 subject to the condition that:
(a) the recipient is not a registered person; and
(b) the recipient does not require such bill of supply,
and he shall issue a consolidated bill of supply for such supplies at the close of each day in respect of all
such supplies.

Q8. A registered person has to mandatorily issue separate invoices for taxable and exempted goods when
supplying both taxable as well as exempted goods to an unregistered person. Examine the validity of the
statement.
Answer: The statement is not valid in law. As per the CGST Rules, 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.

Q9. A non-banking financial company can issue a consolidated tax invoice at the end of every month for
the supply made during that month. Examine the validity of the statement.
Answer: The said statement is valid in law. A customer may avail numerous services from a non-banking
financial company in a given tax period. It may issue a consolidated tax invoice/ statement/ advice, any
other document in lieu thereof, by whatever name called may be issued/ made available, physically/
electronically, for supply of services made during a month at the end of the month.

Q10. Sakthi Enterprises, Kolkata entered into a contract with Suraj Enterprises, Surat for supply of goods
and the delivery shall be made on or before 31st October. The goods were removed from the factory at
Kolkata on 11th October. As per the agreement, the goods were to be delivered on or before 31st October.
Suraj Enterprises has received the goods on 14th October. Determine the time of issue of invoice as per the
provisions of CGST Act.
Answer: A registered person supplying taxable goods shall issue a tax invoice, before or at the time of
removal of goods for supply to the recipient, where the supply involves movement of goods.
Therefore, in the given case, invoice has to be issued on or before, 11th October (the time of removal of
goods).

Q11. Trust and Fun Ltd., an event management company, has provided its services for an event at Kapoor
Film Agencies, Mumbai on 5th June. Payment for the event was made on 19th June. Determine the time of
issue of invoice as per the provisions of CGST Act.
Answer: A registered person [other than an insurer/banking company/financial institution, including an
NBFC] supplying taxable services shall issue a tax invoice before or after the provision of service, but
within a period of 30 days from the date of supply of service.
Thus, in the given case, invoice has to be issued within 30 days of 5th June (date of supply of service), i.e.
on or before, 5th July.

Q12. Udai Singh, a registered supplier, has received advance payment with respect to services to be
supplied to Sujamal. His accountant asked him to issue the receipt voucher with respect to such services to
be supplied. However, he is apprehensive as to what would happen in case a receipt voucher is issued, but
subsequently no services are supplied. You are required to advise Udai Singh regarding the same.
Answer: Udai Singh is required to issue a receipt voucher at the time of receipt of advance payment with
respect to services to be supplied to Sujamal. A receipt voucher is a document evidencing receipt of
 Tax Invoice, Credit and Debit Notes 261

advance money towards a supply of goods and/or services or both. A registered person, on receipt of
advance payment with respect to any supply of goods or services or both, shall issue a receipt voucher or
any other document, evidencing receipt of such payment.
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. Therefore, in case subsequently no services are supplied by Udai Singh, and
no tax invoice is issued in pursuance thereof, Udai Singh may issue a refund voucher against such payment
to Sujamal.

Q13. Bhoj Raj, a registered person, has availed GTA services on which he is liable to pay tax under reverse
charge. He wishes to know whether he is required to issue an invoice. Please advise him discussing the
relevant provisions under CGST Act and rules thereunder.
Answer: Bhoj Raj is required to issue an invoice with regard to the GTA services availed by him. A
registered person who is liable to pay tax under subsection (3) or sub-section (4) of section 9 (i.e. where the
recipient is liable to discharge GST on reverse charge basis) shall issue an invoice in respect of goods or
services or both received by him from the supplier on the date of receipt of goods or services or both.

Q14. Sitaram Textiles has to send cloth for dyeing to its job-worker. It wishes to know whether it needs to
issue a tax invoice at the time of sending the goods to job-worker. Please advise him with reference to the
provisions of the CGST Act.
Answer: Sitaram Textiles has to issue a delivery challan and not the tax invoice at the time of sending the
goods to job-worker. Rule 55, inter alia, stipulates that for the purposes of transportation of goods for job
work, the consignor may issue a delivery challan, serially numbered, in one or multiple series, in lieu of
invoice at the time of removal of goods for transportation, containing the following details, namely:-
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of the
consignee, if registered;
(iv) Harmonised System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess, where the
transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature.
The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner,
namely:–
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.
 Tax Invoice, Credit and Debit Notes 262

MULTIPLE CHOICE QUESTIONS

1. In case of taxable supply of services, invoice shall be issued within a period of__________ from the
date of supply of service.
(a) 30 days
(b) 45 days
(c) 60 days
(d) 90 days
2. In case of taxable supply of services by an insurer, invoice shall be issued within a period of
__________ from the date of supply of service.
(a) 30 days
(b) 45 days
(c) 60 days
(d) 90 days
3. In case of continuous supply of services, where due date of payment is ascertainable from the
contract, invoice shall be issued:
(a) before or at the time when the supplier of service receives the payment
(b) on or before the due date of payment
(c) Either (a) or (b)
(d) None of the above
4. In case of continuous supply of services, where due date of payment is not ascertainable from the
contract, invoice shall be issued:
(a) before or at the time when the supplier of service receives the payment
(b) on or before the due date of payment
(c) Either (a) or (b)
(d) None of the above
5. 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:
(a) before/at the time of supply
(b) 6 months from the date of removal
(c) Earlier of (a) or (b)
(d) None of the above
6. Mr. X, a registered person deals in supply of taxable goods. He need not issue tax invoice for the
goods supplied on 16.04.2022 as the value of the goods is ___.
(a) ₹1,200
(b) ₹600
(c) ₹150
(d) ₹200
7.Tax invoice must be issued by________
(a) Every supplier
(b) Every taxable person
(c) Registered persons not paying tax under composition scheme
(d) All the above
8. A bill of supply can be issued in case of:
(a) Exempted supplies
(b) Supplies to unregistered persons
(c) Both of above
(d) None of the above.
9. Which of the following statement is correct.
(a) A registered person supplying taxable goods shall within 30days of,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
 Tax Invoice, Credit and Debit Notes 263

(b) delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such
other particulars as may be prescribed.
(b) A registered person supplying taxable goods shall, before,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such
other particulars as may be prescribed
(c) A registered person supplying taxable goods shall, before or at the time of,—
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case,
issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such
other particulars as may be prescribed
(d) none of these
10. Which of the following statement is correct.
(a) a registered person may, within two month from the date of issuance of certificate of registration and in
such manner as may be prescribed, 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
to him
(b) a registered person may, within 15days from the date of issuance of certificate of registration and in
such manner as may be prescribed, 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
to him
(c) a registered person may, within one month from the date of issuance of certificate of registration and in
such manner as may be prescribed, 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
to him
(d) none of these
11. Which of the following statement is correct.
(a) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is
less than two hundred rupees subject to such conditions and in such manner as may be prescribed
(b) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is
less than one hundred rupees subject to such conditions and in such manner as may be prescribed
(c) a registered person may not issue a tax invoice if the value of the goods or services or both supplied is
less than five hundred rupees subject to such conditions and in such manner as may be prescribed
(d) none of these
12. Which of the following statement is correct.
(a) a registered person supplying exempted goods or services or both or paying tax under the provisions of
section 10 shall issue, instead of a bill of supply, tax invoice containing such particulars and in such manner
as may be prescribed
(b) a registered person supplying exempted goods or services or both or paying tax under the provisions of
section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such
manner as may be prescribed
(c) a registered person supplying taxable goods or services or both or paying tax under the provisions of
section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such
manner as may be prescribed
(d) none of these
 Tax Invoice, Credit and Debit Notes 264

13. Which of the following statement is correct.

(a) In case of continuous supply of goods, where successive statements of accounts or successive payments
are involved, the invoice shall be issued after each such statement is issued or, as the case may be, each
such payment is received.
(b) In case of continuous supply of goods, where successive statements of accounts or successive payments
are involved, the invoice shall be issued before each such statement is issued or, as the case may be, each
such payment is received.
(c) In case of continuous supply of goods, where successive statements of accounts or successive payments
are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case
may be, each such payment is received.
(d) none of these
14. Which of the following statement is correct.
(a) In case of continuous supply of services, where the due date of payment is ascertainable from the
contract, the invoice shall be issued on or before the due date of payment
(b) In case of continuous supply of services, where the due date of payment is ascertainable from the
contract, the invoice shall be issued after the due date of payment
(c) In case of continuous supply of services, where the due date of payment is ascertainable from the
contract, the invoice shall be issued before the due date of payment
(d) none of these
15. In which of the following cases, a deliver challan can be issued instead of tax invoice
(a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier
is not known
(b) transportation of goods for job work
(c) transportation of goods for reasons other than by way of supply
(d) (a) & (b)
(e) (a) & (c)
(f) any of the above
Answer:
1. (a); 2. (b); 3. (b); 4. (a); 5. (c); 6. (c) ; 7. (c) ; 8. (a); 9(c); 10(c); 11. (a); 12. (b); 13. (c); 14. (a); 15. (f)
 Tax Invoice, Credit and Debit Notes 265

EXAMINATION QUESTION
JAN 2021
Question 7(a) (4 Marks)
ABC Cinemas, a registered person engaged in making supply of services by way of admission to exhibition
of cinematograph films in multiplex screens was issuing consolidated tax invoice for supplies at the close of
each day in terms of section 31(3)(b) of CGST Act, 2017 read with fourth proviso to rule 46 of CGST Rules,
2017.
During the month of October, 2022, the Department raised objection for this practice and asked to issue
separate tax invoices for each ticket.
Advise ABC Cinemas for the procedure to be followed in the light of recent notification.
Answer
The procedure to be followed by ABC Cinemas, a registered person engaged in making supply of services
by way of admission to exhibition of cinematograph films in multiplex screens, is as under:-
The option to issue consolidated tax invoice is not available to a supplier engaged in making supply of
services by way of admission to exhibition of cinematograph films in multiplex screens. Thus, ABC
Cinemas cannot issue consolidated tax invoice for supplies made by it at the close of each day.
ABC Cinemas is required to issue an electronic ticket.
The said electronic ticket shall be deemed to be a tax invoice, even if such ticket does not contain the details
of the recipient of service but contains the other information as prescribed to be mentioned.

NOV 2019
Question.8. (a) (5 Marks)
Kartik & Co., a registered supplier under GST, provides the following information regarding various tax
invoices issued by it during the month of March 2023:
(i) Value of supply charged in an invoice was ₹ 2,50,000 against the actual taxable value of ₹ 2,30,000
(ii) Tax Charged in an Invoice was ₹ 32,000 against the actual tax liability of ₹ 68,000 due to wrong HSN
code being chosen while issuing invoice
(iii) Value charged in an Invoice was ₹ 3,20,000 as against the actual value of ₹ 4,20,000 due to wrong
quantity considered while billing.
Kartik & Co. asks you to answer the following:
(1) Who shall issue a Debit/Credit Note under CGST Act, 2017?
(2) Whether Debit Note or Credit Note has to be issued in each of the above circumstances and, if so,
quantify the amount for which it is to be issued.
(3) What is the maximum time-limit available for declaring the credit note in the GST Return?
Answer:
(1) A supplier of goods / services is mandatorily required to issue a tax invoice. However, during the course
of trade or commerce, after the invoice has been issued there could be situations like:
• The supplier has erroneously declared a value which is more than the actual value of the goods / services
provided.
• The supplier has erroneously declared a higher tax rate than what is applicable for the kind of the goods /
services supplied.
• The quantity received by the recipient is less than what has been declared in the tax invoice.
• The quality of the goods / services supplied is not to the satisfaction of the recipient thereby necessitating a
partial or total reimbursement on the invoice value.
• Any other similar reasons.
(2)
 Tax Invoice, Credit and Debit Notes 266

(i) Credit note can be issued as the supplier has erroneously declared a value which is more than the actual
value of goods.
(ii) Debit Note can be issued by the supplier as tax charged is lesser than the actual tax.
(iii)Debit Note can be issued by the supplier as the supplier has erroneously declared a value which is less
than the actual value of goods.
(3) Maximum time limit available for declaring credit note in the GST Return is 30th November of the
subsequent year.

MAY 2019
Question 7 (a) (4 Marks)
Examine the following independent cases of supply of goods and services and determine the time of issue of
invoice under each of the cases as per the provisions of CGST Act, 2017:
(i) Sakthi Enterprises, Kolkata entered into a contract with Suraj Enterprises, Surat for supply of goods
on 3rd October, 2022. The goods were removed from the factory at Kolkata on 11th October, 2022.
As per the agreement, the goods were to be delivered by 31st October, 2022. Suraj Enterprises has
received the goods on 14th October, 2022.
(ii) Trust and Fun Ltd, an event management company, has provided its services for an event at Kapoor
Film Agencies, Mumbai on 5th June, 2022. Payment for the event was made on 19th June, 2022.
Answer:
(i) As per section 31(1), a registered person supplying taxable goods shall issue a tax invoice, before or at
the time of delivery of goods or making available thereof to the recipient. If the supply involves movement
of goods, invoice should be issued before removal of goods.
In the given case, supply involves movement of goods, invoice should be issued before removal of goods i.e
before 11th October 2022.
(ii) As per Rule 47 , the invoice referred to in rule 46, in the case of the taxable supply of services, shall be
issued within a period of thirty days from the date of the supply of service.
In the given case, invoice shall be issued within 30 days from the date of supply of service i.e. 30 days from
5th June 2022.

MAY 2019
Question 8 (b) (4 Marks)
Jolla provides continuous supply of services regarding Annual Maintenance Contract (AMC) of Air
conditioner and all electronic items in Khotu Ltd. He provides following details regarding same:
They made contract for the AMC. As mentioned in contract AMC will be starts from 01-10-2022 and AMC
is valid for a year. AMC ends on 30-09-2022. Jolla receives payment for the AMC on 31-10-2022.
Explain time of issue of invoice in Continuous Supply of Service (CSS) as per provisions of CGST Act,
2017 and accordingly determine time of issue of Invoice in following different circumstances:
(1) As mentioned in contract Khotu Ltd. have to make payment on 05-11-2022.
(2) If terms of payment is not mentioned in AMC and also not agreed by both the parties.
Answer:
Invoice in case of Continuous supply of Services
As per section 31 (5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply
of services—
(i) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or
before the due date of payment.
 Tax Invoice, Credit and Debit Notes 267

(ii) where the payment is linked to the completion of an event, the invoice shall be issued on or before
the date of completion of that event.

(iii) 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.
In the given case
(1) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or
before the due date of payment i.e. 05-11-2022.
(2) 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 i.e. 31-10-2022.

NOV 2018
Question 11 (b) (5 Marks)
Mr. Lakhan provides Continuous Supply of Services (CSS) to M/s. TNB Limited. He furnishes the
following further information:
(i) Date of commencement of Providing CSS - 01-10-2022
(ii) Date of completion of Providing CSS - 31-01-2023
(iii) Date of receipt of payment by Mr. Lakhan - 30-03-2023

Determine the time of issue of invoice as per provisions of CGST Act, 2017, in the following circumstances:
(i) If no due date for payment is agreed upon by both under the contract of CSS.
(ii) If payment is linked to the completion of service.
(iii) If M/s. TNB Limited has to make payment on 25-03-2023 as per the contract between them.
Answer:
Invoice in case of Continuous supply of Services
As per section 31 (5) Subject to the provisions of clause (d) of sub-section (3), in case of continuous supply
of services—
(i) where the due date of payment is ascertainable from the contract, the invoice shall be issued on or
before the due date of payment.

(ii) where the payment is linked to the completion of an event, the invoice shall be issued on or before
the date of completion of that event.

(iii) 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.
In the given case
(i) Since the date of payment is not ascertainable from the contract, invoice shall be issued before or at the
time when the supplier of service receives the payment i.e. on or before 30-03-2023.
(ii) Since the date of payment is linked to the completion of service, invoice shall be issued on or before the
date of completion of service i.e. on or before 31-01-2023.
(iii) Since the date of payment is ascertainable from the contract, invoice shall be issued on or before the due
date of payment. i.e. on or before 25-03-2023.

MAY 2018
Question 11 (b) (1.5 Marks)
Determine with reason whether the following statements are true or false:
(i) A registered person shall issue a separate invoice for supplying both taxable as well as exempted goods to
an unregistered person.
 Tax Invoice, Credit and Debit Notes 268

Answer:
False: As per rule 46A, a registered person shall issue a single "invoice-cum-bill of supply" for supplying
taxable as well as exempted goods or services or both to an unregistered person.
Question 11 (b) (3 Marks)
(ii) A Non-banking financial company can issue a consolidated tax invoice at the end of every month for the
supply made during that month.
Answer:
True: As per Rule 54, Where the supplier of taxable service is an insurer or a banking company or a
financial institution, the said supplier shall issue a consolidated tax invoice or any other document in lieu
thereof, by whatever name called for the supply of services made during a month at the end of the month,
whether issued or made available, physically or electronically whether or not serially numbered, and
whether or not containing the address of the recipient of taxable service.

MAY 2018
Question 10 (a) (5 Marks)
Under what circumstances needs of issuance of debit note and credit note arise under section 34 of CGST
Act, 2017?
Answer: Refer answer given in the book

Question 7: Write a note on Revised Tax Invoice and credit or debit notes under Rule 53.
See section 31(3)(a) Rule 53

MAY 2018
Question 11 (b) (4 Marks)
Chidanand Products Pvt. Ltd. started its business of supply of goods on 1st August, 2022. It's turnover
exceeds ₹40,00,000 on 5th September, 2022. It applied for registration on 28th September, 2022 & granted
registration certificate on 6th October, 2022. Guide the company regarding invoices to be issued between 5th
September, 2022 to 6th October, 2022 to registered dealers. Further it had also made supplies to unregistered
dealers in that period. How it can raise invoices?
Answer: Refer Answer Given in the book
 E-way Bill 269

E-WAY BILL
(Section 68/Rule 138,138A,138B,138C,138D,138E)
Inspection of goods in movement. Section 68/Rule 138
E-way bill shall be prepared by the supplier before movement of goods and it will be prepared on the site e-
waybillgst.gov.in by filling in Form No. EWB-01. Part A shall be filled in by the supplier and Part B by the
transporter. If supplier is unregistered but recipient is registered, e-way bill shall be prepared by the
recipient. When Part A is filled, the portal shall generate a unique number which will be assign to the
transporter and the transporter shall fill in Part B and after that e-way bill is generated and also the portal
will generate the e-way bill number. In case there is movement of goods but there is no supply e.g. stock
transfer or the goods sent on approval basis etc., even in such cases e-way bill also be generated.

E-way bill shall be generated only if consignment value is exceeding ₹50,000 but in case of movement of
goods to job worker and also in case of movement of handicraft goods, e-way bill has to be generated
irrespective of the value.
Part A has to be filled in by the person who is causing movement of goods but such person can authorise the
transporter or the courier or the electronic commerce operator to fill in Part A.

Consignment value means the value determined as per section 15 but it will not include value of exempted
goods but it will include the amount of GST e.g. if value is ₹48,000 and GST is ₹4,800, in this case e-way
bill has to be generated.

If the supplier has his own vehicle, Part A and Part B shall be filled in by the supplier.

In general movement of goods without generating e-way bill is not allowed but movement is allowed by
filling in Part A if the goods are transported for a distance of upto fifty kilometers within the State or
Union Territory from the place of business of the consignor to the place of business of the transporter for
further transportation.

In case of change of vehicle, number of new vehicle has to be updated on the common portal but movement
is allowed without updation of the new vehicle Where the goods are transported for a distance of upto fifty
kilometers within the State or Union Territory from the place of business of the transporter finally to the
place of business of the consignee.

Transportation of goods by railways/ air/ vessel

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 of FORM GST EWB-01.

Change of conveyance
Where the goods are transferred from one conveyance to another, the consignor or the recipient, who has
provided information in Part A of the FORM GST EWB-01, or the transporter shall, before such transfer
and further movement of goods, update the details of conveyance in the e-way bill on the common portal in
Part B of FORM GST EWB-01:
Change of transporter
The consignor or the recipient, who has furnished the information in Part A of FORM GST EWB-01, or the
transporter, may assign the e-way bill number to another registered or enrolled transporter for updating the
information in Part B of FORM GST EWB-01 for further movement of the consignment. Provided that
 E-way Bill 270

after the details of the conveyance have been updated by the transporter in Part B of FORM GST EWB-01,
the consignor or recipient, as the case may be, who has furnished the information in Part A of FORM GST
EWB-01 shall not be allowed to assign the e-way bill number to another transporter.
Example: A consignor is required to move goods from City X to City Z. He appoints Transporter A for
movement of his goods. Transporter A moves the goods from City X to City Y. For completing the
movement of goods i.e., from City Y to City Z, Transporter A now hands over the goods to Transporter B.
Thereafter, the goods are moved to the destination i.e. from City Y to City Z by Transporter B. In such a
scenario, only one e-way bill would be required. Part A can be filled by the consignor and then the e-way
bill will be assigned by the consignor to Transporter A. Transporter A will fill the vehicle details, etc. in Part
B and will move the goods from City X to City Y. On reaching City Y, Transporter A will assign the said e-
way bill to the Transporter B. Thereafter, Transporter B will be able to update the details of Part B.
Transporter B will fill the details of his vehicle and move the goods from City Y to City Z [Press Release
No. 144/2018 dated 31.03.2018]

Consolidated e-way bill

After e-way bill has been generated where multiple consignments are intended to be transported in one
conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each such
consignment electronically on the common portal and a consolidated e-way bill in FORM GST EWB-02
may be generated by him.
Where the consignor or the consignee has not generated the e-way bill in FORM GST EWB-01 and the
aggregate of the consignment value of goods carried in the conveyance is more than fifty thousand rupees,
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 in FORM GST EWB-01 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 in FORM GST
EWB-02 on the common portal prior to the movement of goods:
Information for GSTR 1
The information furnished in Part A of FORM GST EWB-01 shall be made available to the registered
supplier on the common portal who may utilize the same for furnishing the details in FORM GSTR-1.
Cancellation of e-way bill
Where an e-way bill has been generated under this rule, but goods are either not transported or are not
transported as per the details furnished in the e-way bill, the e-way bill may be cancelled electronically on
the common portal within twenty four hours of generation of the e-way bill. Provided that an e-way bill
cannot be cancelled if it has been verified in transit in accordance with the provisions of rule 138B:
Validity of e-way bill
An e-way bill or a consolidated e-way bill shall be valid for the period as mentioned below from the
relevant date.
Sl. Distance Validity period
No.
1. Upto 200 km. One day
2. For every 200 km. or part One additional day
thereof thereafter
3. Upto 20 km. One day in case of Over Dimensional Cargo or multimodal shipment in
which at least one leg involves transport by ship
4. For every 20 km. or part One additional day in case of Over Dimensional Cargo or multimodal
thereof thereafter shipment in which at least one leg involves transport by ship
 E-way Bill 271

The period of validity shall be counted from the time at which the e-way bill has been generated and each
day shall be counted as the period expiring at midnight of the day immediately following the date of
generation of e-way bill.
The expression "Over Dimensional Cargo" shall mean a cargo carried as a single indivisible unit and which
exceeds the dimensional limits.
Example: A consignor hands over his goods for transportation on Friday to transporter. However, the
assigned transporter starts the movement of goods on Monday. The validity period of e-way bill starts only
after the details in Part B are updated by the transporter for the first time. In the given situation, Consignor
can fill the details in Part A on Friday and handover his goods to the transporter. When the transporter is
ready to move the goods, he can fill Part B i.e. the assigned transporter can fill the details in Part B on
Monday and the validity period of the e-way bill will start from Monday [Press Release No. 144/2018 dated
31.03.2018].
Extension of Time Limit for e-way bill
Where, under circumstances of an exceptional nature, the goods cannot be transported within the validity
period of the e-way bill, the transporter may extend the validity period after updating the details in Part B of
FORM GST EWB-01, if required, but the validity of the e-way bill may be extended within eight hours
from the time of its expiry.
Intimation of e-way bill
The details of the e-way bill generated under this rule shall be made available to the—
(a) supplier, where the information in Part A of FORM GST EWB-01 has been furnished by the
recipient or the transporter; or
(b) recipient, where the information in Part A of FORM GST EWB-01 has been furnished by the
supplier or the transporter,
on the common portal, and the supplier or the recipient, as the case may be, shall communicate his
acceptance or rejection of the consignment covered by the e-way bill. Where the person to whom the
information has been made available does not communicate his acceptance or rejection within seventy two
hours of the details being made available to him on the common portal, or the time of delivery of goods
whichever is earlier, it shall be deemed that he has accepted the said details.

Circumstances when e-way not required 138(14)

Notwithstanding anything contained in this rule, no e-way bill is required to be generated—
(i) Transportation of LPG / Kerosene / Postal baggage / Jewellery / Diamonds / Currency
(ii) where the goods are being transported by a non-motorised conveyance;
(iii) where the goods are being transported from the customs port, airport, air cargo complex and land
customs station to an inland container depot or a container freight station for clearance by Customs;
(iv) Goods exempted from GST
(v) where the goods being transported are alcoholic liquor for human consumption / petroleum products
(vi) where the supply of goods being transported is treated as no supply under Schedule III of the Act ;
(vii) where the goods being transported are transit cargo from or to Nepal or Bhutan;
(viii) any movement of goods caused by defence formation under Ministry of defence
(ix) where the consignor of goods is the Central Government, Government of any State or a local
authority for transport of goods by rail;
(x) where empty cargo containers are being transported;
(xi) where the goods are being transported upto a distance of twenty kilometers from the place of the
business of the consignor to a weighbridge for weighment or from the weighbridge back to the place
of the business of the said consignor subject to the condition that the movement of goods is
accompanied by a delivery challan issued in accordance with rule 55; and
 E-way Bill 272

Documents and devices to be carried by a person-in-charge of a conveyance. Rule 138A.

(1) The person in charge of a conveyance shall carry—
(a) the invoice or bill of supply or delivery challan, as the case may be; and
(b) a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to
a Radio Frequency Identification Device embedded on to the conveyance in such manner as may
be notified by the Commissioner:
In case of imported goods, the person in charge of a conveyance shall also carry a copy of the bill of entry.
(2) If a registered person is covered under e invoicing and has obtained invoice reference number with QR
code from invoice registration portal, in that case he may produce the same for verification instead of
carrying a physical copy of invoice.
(3) Where the registered person has obtained invoice reference number with QR code, the information in
Part A of FORM GST EWB-01 shall be auto-populated by the common portal.
(4) The Commissioner may, by notification, require a class of transporters to obtain a unique Radio
Frequency Identification Device and get the said device embedded on to the conveyance and map the e-way
bill to the Radio Frequency Identification Device prior to the movement of goods.

Verification of documents and conveyances. Rule 138B.

(1) The Commissioner or an officer empowered by him in this behalf may authorize the proper officer to
intercept any conveyance to verify the e-way bill in physical or electronic form.
(2) The Commissioner shall get Radio Frequency Identification Device readers installed at places where the
verification of movement of goods is required to be carried out and verification of movement of vehicles
shall be done through such device readers where the e-way bill has been mapped with the said device.

Inspection and verification of goods. Rule 138C.

(1) A summary report of every inspection of goods in transit shall be recorded online by the proper
officer in Part A of FORM GST EWB-03 within twenty four hours of inspection and the final report
in Part B of FORM GST EWB-03 shall be recorded within three days of such inspection:
The Commissioner, or any other officer authorised by him, may, on sufficient cause being shown, extend
the time for recording of the final report in Part B of FORM EWB-03, for a further period not exceeding
three days.
Explanation.—The period of twenty four hours or, as the case may be, three days shall be counted from the
midnight of the date on which the vehicle was intercepted.
(2) Where the physical verification of goods being transported on any conveyance has been done during
transit at one place within the State or Union Territory or in any other State or Union Territory, no further
physical verification of the said conveyance shall be carried out again in the State or Union Territory,
unless a specific information relating to evasion of tax is made available subsequently.

Facility for uploading information regarding detention of vehicle. Rule 138D.

Where a vehicle has been intercepted and detained for a period exceeding thirty minutes, the
transporter may upload the said information in FORM GST EWB-04 on the common portal.

Restriction on furnishing of information in PART A of FORM GST EWB-01. Rule 138E.

Notwithstanding anything contained in sub-rule (1) of rule 138, no person (including a consignor,
consignee, transporter, an e-commerce operator or a courier agency) shall be allowed to furnish the
information in PART A of FORM GST EWB-01 in respect of any outward movement of goods of a
registered person, who,—
 E-way Bill 273

(a) being a person paying tax under section 10, statement in FORM GST CMP-08 for two
consecutive quarters; or
(b) being a person other than a person specified in clause (a), has not furnished the returns for a
consecutive period of two tax periods:
(c) being a person other than a person specified in clause (a), has not furnished the statement of
outward supplies for any two months or quarters, as the case may be.
(d) being a person, whose registration has been suspended under rule 21A:
Provided that the Commissioner may, on receipt of an application from a registered person in FORM GST
EWB-05, on sufficient cause being shown and for reasons to be recorded in writing, by order, in FORM
GST EWB-06 allow furnishing of the said information in PART A of FORM GST EWB- 01.
Provided further that no order rejecting the request of such person to furnish the information in PART A of
FORM GST EWB-01, shall be passed without affording the said person a reasonable opportunity of being
heard:
Special Provision for movement of Gold or precious stones etc. Rule 138F
In case of intra-state movement of Gold etc. of the value of ₹ 2 lakh or more as notified, E-way bill has to be
created. For this purpose only Part A of FORM GST EWB-01, shall be required to be submitted and E-way
bill shall be generated on the basis of such Form. There will not be any requirement to fill Part B of EWB-
01. Other provisions of E-way bill shall be applicable in the normal manner.
Example:
1. ABC Ltd., Delhi dispatched goods of value ₹ 48,000 + GST 12%, in this case eway bill is required
because consignment value for the purpose of eway bill shall include GST also but if value of taxable
goods is ₹ 30,000 and value of exempt goods is ₹ 18,000. GST on taxable goods is 12% in this case
eway bill is not required because consignment value for the purpose of eway bill do not include
exempt goods.
2. ABC Ltd., Delhi has transferred stock to its own branch in Delhi. Consignment value is ₹ 2,00,000 and
no GST payable even if goods are taxable because the company has only one registration, in this case
eway bill is required because if there is movement of goods eway bill is required even if it is not a
supply.
3. Part A of EWB 01 is filled in by the person causing the movement of goods and such person may be
consigner or consignee depending upon the situation as who is causing the movement. If such
consigner or consignee has their own transport, in that case part B of EWB 01 shall also be filled in by
such consigner or consignee.
4. If the consigner or consignee has directed the transporter, Part A can be filled by such transporter.
Similarly part A can be filled in by the ECO or Courier Agency

E-way Bill in case of ‘Bill To Ship To’ Model

In a “Bill To Ship To” model of supply, there are three persons involved in a transaction, namely:
‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’.
‘B’ is the person who is sending goods directly to ‘C’ on behalf of ‘A’.
‘C’ is the recipient of goods.
In this complete scenario. two supplies are involved and accordingly two tax invoices are required to be
issued:
Invoice -1: which would be issued by ‘B’ to ‘A’.
Invoice -2: which would be issued by ‘A’ to ‘C’.
It is clarified that as per the CGST Rules, either A or B can generate the e-Way Bill but it may be noted that
only one e-Way Bill is required to be generated [Press Release dated 23.04.2018]
 E-way Bill 274

FORM GST EWB-01

(See rule 138)
E-Way Bill

E-Way Bill No. :

E-Way Bill date :
Generator :
Valid from :
Valid until :
Part A
A.1 GSTIN of Supplier
A.2 Place of Dispatch
A.3 GSTIN of Recipient
A.4 Place of Delivery
A.5 Document Number
A.6 Document Date
A.7 Value of Goods
A.8 HSN Code
A.9 Reason for Transportation
Part B
B.1 Vehicle Number for Road

B.2 Transport Document Number/Defence Vehicle No./ Temporary Vehicle

Registration No./Nepal or Bhutan Vehicle Registration No.

Notes:
1. HSN Code in column A.8 shall be indicated at minimum two digit level for taxpayers having
annual turnover upto five crore rupees in the preceding financial year and at four digit level for
taxpayers having annual turnover above five crore rupees in the preceding financial year.
2. Document Number may be of Tax Invoice, Bill of Supply, Delivery Challan or Bill of Entry.
3. Transport Document number indicates Goods Receipt Number or Railway Receipt Number or
Forwarding Note number or Parcel way bill number issued by railways or Airway Bill Number
or Bill of Lading Number.
4. Place of Delivery shall indicate the PIN Code of place of delivery.
5. Place of dispatch shall indicate the PIN Code of place of dispatch.
6. Where the supplier or the recipient is not registered, then the letters “URP” are to be filled-
in in column A.l or, as the case may be, A.3.
7. Reason for Transportation shall be chosen from one of the following:—

Code Description

1 Supply
2 Export or Import
 E-way Bill 275

3 Job Work
4 SKD or CKD or supply in batches or lots
5 Recipient not known
6 Line Sales
7 Sales Return
8 Exhibition or fairs
9 For own use
10 Others

Action Points
1. E-way Bill is generated in this form.
2. Rule 138 provides that every registered person who causes movement of goods of consignment value
exceeding fifty thousand rupees –
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to inward supply from an unregistered person,
Shall, before commencement of such movement, furnish information relating to the said goods as specified
in Part A of Form GST EWB-01, electronically, on the common portal along with such other information as
may be required on the common portal and a unique number will be generated on the said portal.
3. Also read notes attached to the Form.
 E-way Bill 276

FORM GST EWB-02

(See rule 138)
Consolidated E-Way Bill

Consolidated E-Way Bill No. :

Consolidated E-Way Bill Date :
Generator :
Vehicle Number :
Number of E-Way Bills (Total)

E-Way Bill Number

1.
2.
3.
4.

Action Points

1. Consolidated E-way Bill is generated in this form.

2. Rule 138 provides that once an E-way Bill has been generated in accordance with the provisions of sub-
rule (1) of Rule 138, where multiple consignments are intended to be transported in one conveyance, the
transporter may indicate the serial number of e-way bills generated in respect of each such consignment
electronically on the common portal and a consolidated E-way Bill in Form GST EWB-02 may be generated
by him on the said common portal prior to the movement of goods.
3. The form contains the details of E-way Bill for which consolidated E-way Bill has been issued.
 E-way Bill 277

FORM GST EWB-03

(See rule 138C)
Verification Report

Part A

Name of the Officer

Place of inspection

Time of inspection

Vehicle Number

E-Way Bill Number

Tax Invoice or Bill of Supply or Delivery

Challan or Bill of Entry date

Tax Invoice or Bill of Supply or Delivery

Challan or Bill of Entry Number

Name of person in-charge of vehicle

Description of goods

Declared quantity of goods

Declared value of goods

Brief description of the discrepancy

Whether goods were detained?

If not, date and time of release of vehicle

Part B

Actual quantity of goods

Actual value of the Goods

Tax payable

Integrated tax

Central tax

State or Union territory tax

Cess
 E-way Bill 278

Penalty payable

Integrated tax

Central tax

State or Union territory tax

Cess

Details of Notice

Date

Number

Summary of findings

Action Points

1. This form is relevant for verification report of every inspection of goods in transit.
2. Rule 138C provides that a summary report of every inspection of goods in transit shall be recorded online
by the proper officer in Part A of Form GST EWB-03 with twenty four hours of inspection and the final
report in Part B of Form GST EWB-03 shall be recorded within three days of such inspection.
 E-way Bill 279

FORM GST EWB-04

(See rule138D)
Report of detention

E-Way Bill Number

Approximate Location of
detention

Period of detention

Name of Officer in-charge (if known)

Date
Time

Action Points

1. This form is relevant for preparation of detention report.

2. Rule 138D provides that where a vehicle has been intercepted and detained for a period exceeding thirty
minutes, the transporter may upload the said information in Form GST EWB-04 on the common portal.
 E-way Bill 280

“FORM GST EWB-05

[See rule 138 E]
Application for unblocking of the facility for generation of E-Way Bill

1 GSTIN <Auto>
2 Legal Name <Auto>
3 Trade Name <Auto>
4 Address <Auto>

5 Facility of furnishing of information in Part A <Auto>

of FORM GST EWB 01 (i.e. facility for
generation of E-Way Bill) blocked w.e.f.
6 Reasons of unblocking of facility for <User input>
generation of E- Way Bill
(i)
(ii)
(iii)
7 Expected date for filing of returns for the <User input>
period under default

8. Verification
I hereby solemnly affirm and declare that the information given hereinabove is true and correct to the
best of my knowledge and belief and nothing has been concealed therefrom.

Signature of Authorised Signatory

Name
Designation /Status
Date:
 E-way Bill 281

FORM GST EWB – 06

[See rule 138 E]
Reference No.: Date:
To
GSTIN
---------------------- Name
Address

Order for permitting / rejecting application for unblocking of the facility for generation of E-Way
Bill

Application ARN: Date:

The facility for generation of E- Way Bill was blocked in respect of the aforementioned
registered person w.e.f. -------- in terms of rule 138E of the Central Goods and Services Tax Rules, 2017.
I have carefully considered the facts of the case and the application / submissions made by the
aforementioned registered person.
I hereby accept the application and order for unblocking of the facility for generation of E- Way Bill on
the following grounds:
1.
2.
Please note that the system will block the facility for generation of E-Way Bill after (date)
if the registered person continues to be defaulter in terms of rule 138E of the Central Goods and Services
Tax Rules, 2017.

OR

I have carefully considered the facts of the case and the application / submissions made by the
aforementioned registered person.
I hereby reject the application for unblocking the facility for generation of E-Way Bill on following
grounds:
1.
2.

Signature:
Name:
Designation:
Jurisdiction:
Address:

Note: Separate document may be attached for detailed order / reason(s).”

 E-way Bill 282

EXAMINATION QUESTION
JAN – 2021
Question 7(b) (3 Marks)
Agni Ltd. a registered supplier wishes to transport cargo by road between two cities situated at a distance of
368 kilometres. Calculate the validity period of e-way bill under rule 138(10) of CGST Rules, 2017 for
transport of the said cargo, if it is over dimensional cargo or otherwise.
Answer
The validity period of e-way bill under rule 138(10) of the CGST Rules, 2017 for transport of cargo by road
between two cities situated at a distance of 368 km is as under:
(i) If it is over dimensional cargo: the validity period of the e-way bill is one day from relevant date upto 20
km and one additional day for every 20 km or part thereof thereafter.
Thus, validity period in given case:
= 1 day + 18 days
= 19 days
(ii) If it is a cargo other than over dimensional cargo: the validity period of the e-way bill is one day from
relevant date upto 200 km and one additional day for every 200 km or part thereof thereafter.
Thus, validity period in given case:
= 1 day + 1 days
= 2 days

NOV 2020
Question 7 (b). (3 Marks)
"It is mandatory to furnish the details of conveyance in 'Part-B of E- way Bill."
Comment on the validity of the above statement with reference to provisions of E- Way Bill under CGST
Rules, 2017"
Answer: As per the explanation 2 of rule 138, yes it is mandatory to furnish the details of conveyance in
Part-B of E-way Bill otherwise e-way bill shall be treated as invalid but in case where the goods are
transported for a distance of upto fifty kilometers within the State or Union Territory from the place of
business of the consignor to the place of business of the transporter for further transportation, the supplier or
the recipient, or as the case may be, the transporter may not furnish the details of conveyance in Part B of
FORM GST EWB-01.

NOV 2019
Question.7. (b) (5 Marks)
Mr. Shah, a consignor is required to move goods from Ahmedabad (Gujarat) to Nadiad (Gujarat). He
appoints Mehta Transporter for movement of goods. Mehta Transporter moves the goods from Ahmedabad
(Gujarat) to Kheda (Gujarat). For completing the movement of goods from Kheda (Gujarat) to Nadiad
(Gujarat), Mehta Transporter now hands over the goods to Parikh Transporter.
Explain the procedure regarding e-way bill to be followed by consignor and transporter as per provisions of
GST law and rules made thereunder.
Answer: In the given scenario, only one e-way bill is required to be issued. Part A can be filled by either
Mr. Shah or recipient of goods or Mehta Transporter on the appropriate authorisation. Where the goods are
transferred from one conveyance to another, the consignor or the recipient, who has provided information in
Part A, or the transporter shall, before such transfer and further movement of goods, update the details of
conveyance in the e-way bill on the common portal in Part B.
 E-way Bill 283

Thus, on reaching Kheda, Mr. Shah or the recipient of the goods, who has filled Part A of the e-way bill, or
Mehta Transporter can, before the transfer and further movement of goods, update the details of conveyance
in Part B of the e-way bill. Further, the consignor or the recipient, who has furnished the information in Part
A, or the transporter, may assign the e-way bill number to another registered or enrolled transporter for
updating the information in Part B for further movement of the consignment. Thus, on reaching Kheda, Mr.
Shah or the recipient of the goods, or Mehta Transporter can assign the said e-way bill to Parikh Transporter
who will thereafter update the details of conveyance in Part B. However, upon updation of the details of the
conveyance by Parikh transporter in Part B, Mr. Shah or recipient, as the case may be, who has furnished the
information in Part A shall not be allowed to assign the e-way bill number to another transporter.
 Reverse Charge 284

Reverse Charge
Section 9(3) of CGST Act /Notification No. 13/2017 CTR dated 28.06.2017
Section 5(3) of IGST Act /Notification No.10/2017 ITR dated 28.06.2017
Reverse Charge Mechanism
Generally, the supplier of goods or services is liable to pay GST. However, under the reverse charge
mechanism, the liability to pay GST is cast on the recipient of the goods or services.
1. Goods Transport Agency
In case of good transport agency, they have the option to pay tax under reverse charge or under forward
charge and for this purpose they have to give declaration. If they have opted for forward charge, reverse
charge shall not applicable for them. Declaration shall be given in the manner given below:
I/we have taken registration under GST and have exercised the option to pay tax on services of GTA in
relation to transport of goods supplied by us during the Financial Year ________under forward charge.
Reverse charge shall be applicable only if GTA has given services to any of the following persons.
Further under reverse charge tax shall be paid by the recipient of GTA service and Recipient of GTA service
is the person who pays/is liable to pay freight for transportation of goods by road in goods carriage, located
in the taxable territory.
(a) any factory
(b) any society
(c) any co-operative society
(d) any person registered under GST or;
(e) any body corporate established, under any law; or
(f) any partnership firm
(g) any casual taxable person which is registered under GST.
If services has been provided to unregistered individual or unregistered HUF or unregistered casual
taxable person, in that case reverse charge is not applicable (further it is exempt from GST).
Reverse charge mechanism (RCM) shall not apply to services provided by a GTA, by way of transport of
goods in a goods carriage by road to-
(a) a Department/ establishment of the Central Government/ State Government/ Union territory; or
(b) local authority; or
(c) Governmental agencies,
which has taken registration under the CGST Act only for the purpose of deducting tax under section 51
and not for making a taxable supply of goods or services (because it exempt from GST).
Example
(i) ABC Ltd., consignor is in Delhi and consignee XYZ Ltd. is in UP and GTA, Z Ltd. is in Delhi and
freight is to be paid by ABC Ltd., in this case reverse charge is applicable and GST shall be paid by ABC
Ltd. and if freight is to be paid by XYZ Ltd., reverse charge shall be applicable and XYZ Ltd. has to pay
GST under reverse charge.
If the person making payment of freight is individual or HUF who is unregistered, it will be exempt from
GST.
(ii) ABC Ltd., consignor is in Delhi and consignee Mr. X is in U.P. who is unregistered and GTA, Z Ltd. is
in Delhi and freight is to be paid by Mr. X, in this case it will be exempt from GST.
Illustration 1: ABC Ltd., a carrying and forwarding agency, started its operations on October 1, 2022. It
utilized the services of Big Carriers, a goods transport agency, in the month of November, 2022. Big
 Reverse Charge 285

Carriers have communicated to ABC Ltd. that GST on the services provided by them is required to be paid
by ABC Ltd. under reverse charge.
You are required to critically examine stand taken by each of the two parties to arrive at the final conclusion.
Solution: In case of goods transport agency, reverse charge is applicable and GST shall be paid by the
service recipient i.e. ABC Ltd. and not by Big Carriers., hence ABC Ltd. has to pay GST to the Government.

Examination MAY – 2023 (3 Marks)

Question 8(a)
GTA services provided to an unregistered person (including unregistered casual taxable person) are exempt
from GST by virtue of Entry 21 A of GST Laws. Discuss the validity of above statement.
Answer: The said statement is invalid.
Services provided by a GTA to an unregistered person, including an unregistered casual taxable person are
exempt except when provided to a:
(a) factory
(b) society
(c) co-operative society
(d) body corporate
(e) partnership firm
(f) registered casual taxable person
2. Legal Services:
Reverse charge shall be applicable in case of legal services provided by an individual advocate including a
senior advocate or firm of advocates and services should given to Any business entity registered under
GST.
3. Services supplied by an Arbitral Tribunal
Reverse charge shall be applicable if arbitral tribunal has given services to any business entity registered
under GST.
Illustration 2: Vakil & Vakil, a firm of lawyers rendered legal advice to Mr. B, an architect, and MNO Ltd.,
an advertising agency during December, 2022. Who is liable to pay GST in this case? Will your answer be
different if Mr. B and MNO Ltd. sought legal advice from Mr. A, a lawyer?
Aggregate Turnover of Mr. B and MNO Ltd. are exceeding prescribed limit in the preceding year.
Solution: In case of taxable services provided to any business entity by an individual advocate or a firm of
advocates by way of legal services, person liable to pay GST is the person receiving such service.
Further, services provided by an individual advocate or a partnership firm of advocates by way of legal
services to a business entity with a turnover up to prescribed limit in the preceding financial year are exempt
from GST.
In the given case, turnover of services of both Mr. B and MNO Ltd. is more than prescribed limit in the
preceding financial year and hence, legal services provided by Vakil and Vakil (firm of advocates) or Mr. A
(individual lawyer) during December, 2022 will be taxable.
Therefore, GST will be payable by service receivers, Mr. B and MNO Ltd. irrespective of whether the legal
advice is sought from a firm of lawyers or from Mr. A, an individual lawyer.
Illustration 3: Gupta Associates, a firm of lawyers rendered legal Advice to Mr. Das, an Architect and
Surya Ltd. an Advertising agency during December, 2022.
Who is Liable to pay GST in this Case? Will your answer be different if Mr. Das and Surya Ltd. sought
Legal Advice from Mr. Dev a Lawyer.
Aggregate Turnover of Mr. Das and Surya Ltd. are exceeding prescribed limit in the preceding year.
Solution:
In case of taxable services provided to any business entity by an individual advocate or a firm of advocates
by way of legal services, GST is payable under reverse charge, however services provided by an individual
 Reverse Charge 286

advocate or a partnership firm of advocates by way of legal services to a business entity with a turnover up
to prescribed limit in the preceding financial year are exempt from GST.
In the given case, turnover of both Mr. Das and Surya Ltd. is more than prescribed limit in the preceding
financial year and also they are business entity hence legal services provided by Gupta Associates (firm of
advocates) during December, 2022 shall be taxable and service recipient will be required to pay tax under
reverse charge.
It will not make any difference if services have been taken from Mr. Dev an individual lawyer.
4. Sponsorship Services
Reverse charge shall be applicable in case of sponsorship services provided such services are given to any
body corporate or partnership firm.
Example
(i) Sponsorer is in Delhi and organizer of programme is also in Delhi and it is company or partnership firm,
Reverse charge is applicable and GST shall be paid by the sponsorer.
(ii) If programme has been sponsored by an individual/HUF, the organizer shall collect GST from
individual/HUF and shall pay it to the Government.
Illustration 4: Mr. A sponsored a dance competition organized by ‘Taal Academy’, a dance school run by
an individual. The dance competition was named as ‘Mr. A’s Dance Show’ by ‘Taal Academy’. Who is
liable to pay GST in this case? Will your answer be different if ‘Taal Academy’ is run by a partnership firm?
Solution: In case of service provided by way of sponsorship to any body corporate or partnership firm,
person liable to pay GST is the person receiving such service i.e. reverse charge is applicable, but if services
are given to any other person, reverse charge is not applicable.
In the given case sponsorship service is provided to an individual, the person liable to pay GST will be
service provider i.e., ‘Taal Academy’. Further, since the status of service receiver is relevant for determining
as to who would pay GST, status of service provider is immaterial. Therefore, as long as sponsorship service
is rendered to an individual, GST will be payable by service provider i.e., ‘Taal Academy’ irrespective of
whether the same is run by an individual or a partnership firm.
5. Services By Government or Local Authority
Reverse charge shall be applicable in case of services supplied by the Central Government, State
Government, Union territory or local authority to a business entity but reverse charge is not applicable in the
following cases:
(1) services by the Department of Posts.
(2) services by Ministry of Railways (Indian Railways)
(3) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(4) transport of goods or passengers.
(5) renting of immovable property given to unregistered person (i.e. reverse charge shall be applicable
only if the service has been given to a registered person)
Example: Mr. X has sent one speed post through post office and has paid ₹ 30 + GST, in this case reverse
charge is not applicable whether Mr. X is registered or unregistered.
Example: Mr. X purchased one railway ticket 1st class ₹ 1,000 + GST, in this case reverse charge is not
applicable whether Mr. X is registered or unregistered.
Example: Mr. X has taken one building on rent from MCD ₹ 10,000 p.m. + GST, in this case reverse
charge not applicable if he is unregistered but reverse charge applicable if he is registered.
6. Reverse charge shall be applicable in case of service by way of renting of residential dwelling to a
registered person.
 Reverse Charge 287

7. Reverse charge shall be applicable in case of Long term lease of land (30 years or more) by any person
against consideration in form of upfront amount (called as premium, salami, cost, price, development
charges or by any other name) and/or periodic rent for construction of a project by a promoter
8. Reverse charge shall be applicable in case of services supplied by a Director of a company/body
corporate to the said company/body corporate.
If the director is an employee, in that case it will be covered in Schedule III and it will not be considered
to be supply.
9. Reverse charge shall be applicable in case of Services supplied by an insurance agent to any person
carrying on insurance business.
10. Reverse charge shall be applicable in case of services provided by a recovery agent to a banking
company/financial institution or a non-banking financial company.
11. Services by Music Composer, Photographer, Artist, Author etc. Reverse charge shall be
applicable in case of Supply of services by a music composer, photographer, artist, author or the like by
way of transfer or permitting the use or enjoyment of a copyright relating to original dramatic, musical or
artistic works to a music company, producer, publisher or the like.
However, an author can choose to pay tax under forward charge if-
(i) he has taken registration under the CGST Act and filed a declaration, in the prescribed form, that he
exercises the option to pay CGST on the said service under forward charge in accordance with section
9(1) of the CGST Act and to comply with all the provisions as they apply to a person liable for paying the
tax in relation to the supply of any goods and/or services and that he shall not withdraw the said option
within a period of 1 year from the date of exercising such option and also he makes a declaration on the
invoice issued by him in prescribed form to the publisher.
12. Reverse charge shall be applicable in case of supply of services by the members of Overseeing
Committee to Reserve Bank of India (RBI).
13. Reverse charge shall be applicable in case of services supplied by individual Direct Selling Agents
(DSAs) other than a body corporate, partnership or limited liability partnership (LLP) firm to bank or
nonbanking financial company (NBFCs).
14. Reverse charge shall be applicable in case of services provided by business facilitator to a banking
company.
15. Reverse charge shall be applicable in case of services provided by an agent of business correspondent
to business correspondent.
16. Services provided by way of Supply of Security Personnel
Reverse charge shall be applicable in case of security services provided by any person other than a body
corporate and further services are provided to a registered person.
However, nothing contained in this entry shall apply to:
(i)
(a) a Department or Establishment of the Central Government or State Government or Union territory;
or
(b) local authority; or
(c) Governmental agencies;
which has taken registration under the CGST Act, 2017 only for the purpose of deducting tax under
section 51 of the said Act and not for making a taxable supply of goods or services; or
(ii) a registered person paying tax under composition scheme.
Example
1. Mr. X is providing security services to ABC limited (registered under GST), in this case reverse charge is
applicable.
2. Mr. X is providing security services to ABC limited (not registered under GST), in this case reverse
charge is not applicable.
3. Services are given by ABC limited to Mr. X or services are given by ABC limited to XYZ limited,
reverse charge is not applicable.
 Reverse Charge 288

17. Services provided by way of Renting of any Motor Vehicle

Service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is
included in the consideration charged from the service recipient are taxable at the following two rates:
(i) @ 5% (2.5% CGST+2.5% SGST/UTGST or 5% IGST) provided supplier of services has taken only the
limited ITC (of input services in the same line of business). In this case reverse charge shall be applicable.
(ii) @ 12% (6% CGST+6% SGST/UTGST or 12% IGST) where supplier of services opts to pay GST at
said rate. In this case, there is no restriction on availing ITC on goods or services used in supplying
renting of motor vehicles service by the supplier of service. In this case reverse charge not applicable
(iii) Renting of motor vehicle without fuel, in this case rate of GST shall be 18% and reverse charge is not
applicable.
Reverse charge shall be applicable if such services are given by any person, other than a body corporate
and services are given to a body corporate.
Examples on RCM for renting of motor vehicle
1. Mr. X a registered dealer is providing renting of motor vehicle services without cost of fuel, in this case
reverse charge is not applicable and the supplier shall charge tax @ 18% (because RCM is not applicable
in case of renting of motor vehicle without cost of fuel.)
2. Mr. X a registered dealer is providing renting of motor vehicle services with cost of fuel and GST is
payable @12%, in this case reverse charge is not applicable because GST is being charged @ 12%.
3. Mr. X a registered dealer is providing renting of motor vehicle services with cost of fuel and GST is
payable @ 5%, in this case reverse charge is applicable because GST is being charged @ 5%. However
supply should be given to a body corporate. If supply given to any other person reverse charge is not
applicable.
4. ABC Ltd. a registered dealer is providing renting of motor vehicle services with cost of fuel and GST is
payable @ 5%, in this case reverse charge is not applicable because services have been provided by a
body corporate.
18. Services of lending of securities under Securities Lending Scheme
If any person has provided services of lending of securities under Securities Lending Scheme, 1997 of
Securities and Exchange Board of India, in that case reverse charge shall be applicable and GST shall be
paid by the person who borrows the securities.
19. Services from Non-Taxable Territory to Taxable Territory
Reverse charge shall be applicable in respect of any taxable services provided or agreed to be provided by
any person who is located in a non-taxable territory and received by any person located in the taxable
territory.
No such reverse charge shall be applicable in case of OIDAR services received by an unregistered person.
Example
(i) ABC limited has taken services of an architect of USA on payment basis for construction of one
building, In this case GST is payable by ABC limited under reverse charge.
(ii) Mr. X has taken OIDAR services on payment basis, GST shall be payable by Mr. X if he is registered
but if he is unregistered, Person providing OIDAR services shall collect GST from him and shall pay to the
Government.
(iii) Mr. X has taken OIDAR services free of cost for personal or business purpose, in this case no GST is
payable either by Mr. X or by the person providing OIDAR services.
Notification No. 10/2017- Integrated Tax (Rate)
20. Services supplied 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. In this case tax shall be paid
by the Importer who is located in the taxable territory.
Question 1: Explain TOS of services in case of reverse charge
Answer: TOS of services in case of reverse charge. Section 13(3)
TOS shall be earliest of the following dates:
(a) the date of payment as entered in the books of account of the recipient or the date on which the payment
is debited in his bank account, whichever is earlier.
 Reverse Charge 289

(b) the date immediately following sixty days from the date of issue of invoice.
If it is not possible to determine the time of supply in the manner given above, the time of supply shall be
the date of entry in the books of account of the recipient of supply.
Question 2: Explain issue of Payment Voucher
Answer: Payment voucher section 31(3)(g) / Rule 52.
A registered person who is liable to pay tax under reverse charge shall issue a payment voucher at the time
of making payment to the supplier.
A payment voucher shall contain the following particulars, namely:—
(a) name, address and Goods and Services Tax Identification Number of the supplier if registered;
(b) a consecutive serial number not exceeding sixteen characters.
(c) date of its issue;
(d) name, address and Goods and Services Tax Identification Number of the recipient;
(e) description of goods or services;
(f) amount paid;
(g) rate of tax / amount of tax.
(h) place of supply along with the name of State and its code, in case of a supply in the course of inter-
State trade or commerce; and
(i) signature or digital signature of the supplier or his authorised representative.

Illustration 5:
Determine the time of supply from the given information. (Assuming that service being supplied is taxable
under reverse charge)
May 4: The supplier of service issues invoice for service provided. There is a dispute about amount
payable, and payment is delayed.
August 21: Payment made to the supplier of service
Answer: Here, July 4 (May 27, June 30, July 3) will be the time of supply, being the earlier of the two
stipulated dates namely, date of payment and date immediately following 60 days since issue of invoice.

Illustration 6: Determine the time of supply in the following cases assuming that GST is payable under
reverse charge:
S. No. payment for receipt of services Issue of invoice
(i) 10.08.2022 29.06.2022
(ii) 10.08.2022 01.06.2022
(iii) Part payment made on 30.06.2022 and balance amount paid on 01.09.2022 29.06.2022
(iv) Payment is entered in the books of account on 28.06.2022 and debited in 01.06.2022
recipient’s bank account on 30.06.2022
(v) Payment is entered in the books of account on 30.06.2022 and debited in 29.06.2022
recipient’s bank account on 26.06.2022
Answer:
S. payment for receipt of services Issue of Date Time of supply
No. invoice immediately of goods
following
60 days
from
invoice
(i) 10.08.2022 29.06.2022 29.08.2022 10.08.2022
(June-1, July-
31, Aug-28)
 Reverse Charge 290

(ii) 10.08.2022 01.06.2022 01.08.2022 01.08.2022

(June-29,
July-31)
(iii) Part payment made on 30.06.2022 and 29.06.2022 29.08.2022 30.06.2022 for part
balance amount paid on 01.09.2022 (June-1, July- payment and 29.08.2022
31, Aug- 28) for balance amount
(iv) Payment is entered in the books of 01.06.2022 01.08.2022 28.06.2022 (i.e. when
account on 28.06.2022 and debited in (June-29, payment is entered in
recipient’s bank account on 30.06.2022 July-31) the books of account of the
recipient)

(v) Payment is entered in the books of 29.06.2022 29.08.2022 26.06.2022 (i.e. when
account on 30.06.2022 and debited in (June-1, July- payment is debited in the
recipient’s bank account on 26.06.2022 31, Aug- 28) recipient’s bank account)
Question 3: Explain TOS in case of Associated Enterprises.
Answer: Associated enterprise
In case of supply by associated enterprises, where the supplier of service is located outside India, the time of
supply shall be the date of entry in the books of account of the recipient of supply or the date of payment,
whichever is earlier.
As per section 2(12), "associated enterprises" shall have the same meaning as assigned to it in section 92A
of the Income-tax Act, 1961.
Question 4: Explain TOS in case of Reverse charge of goods.
Answer: Receipt of goods that are taxable under reverse charge [Section 12(3)]
The time of supply of goods on which GST is payable on reverse charge basis under section 9 of CGST Act
is determined in terms of section 12(3), as follows:
The time of supply for such goods will be the earliest of the following dates:
• Date on which the goods are received, or
• Date on which payment is recorded in the books of account of the entity that receives the goods, or
the date on which it is debited from the entity’s bank account, whichever is earlier, or
• Date immediately following 30 days from the date of issue of invoice (or document by some other
name in lieu of invoice) by the supplier.
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 goods in the books of account of the recipient of supply.
Illustration 7: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
Answer: Here, May 12 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)]. (Here, date of invoice is relevant only for calculating thirty days from that date.)
Illustration 8: Determine the time of supply from the given information.
May 4 - Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days from the date of
issuance of invoice elapse on June 3)
June 12 - Pillar & Co receives the goods, which were held up in transit
July 3 - Payment made for the goods
Answer: Here, June 4, 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)].
 Reverse Charge 291

PRACTICE PROBLEMS
1. State the person liable to pay GST in the following independent cases provided recipient is located in
the taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to a registered
business entity.
Answer:
(a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity
located in the taxable territory is payable under reverse charge, in the given case, GST is payable by
the recipient - business entity.
(b) GST on sponsorship services provided by any person to any body corporate or partnership firm located
in the taxable territory is payable under reverse charge. Since in the given case, services have been
provided to an individual, reverse charge provisions will not be attracted. GST is payable under
forward charge by the supplier – company.
(c) GST on services supplied by Central Government, State Government, Union territory or local authority
by way of renting of immovable property to a person registered under CGST Act, 2017 is payable
under reverse charge. Therefore, in the given case, GST is payable under reverse charge by the
recipient – registered business entity.

2. Vivek Goyal, director of A2Z Pvt. Ltd., has received sitting fee amounting to ₹ 1 lakh from A2Z Pvt.
Ltd for attending the Board meetings. Who is the person liable to pay tax in this case?
Answer:
GST on supply of services by director of a company to the said company located in the taxable territory is
payable on reverse charge basis.
Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., A2Z Pvt. Ltd.

3. Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP. Determine the
person liable to pay tax in this case.
Answer:
In case of services provided by any person by way of sponsorship to any body corporate or partnership
firm, GST is liable to be paid under reverse charge by such body corporate or partnership firm located in
the taxable territory. Further, for the reverse charge purposes, Limited Liability Partnership formed and
registered under the provisions of the Limited Liability Partnership Act, 2008 is also be considered as a
partnership firm. Therefore, in the given case, WE-WIN Cricket Academy is liable to pay GST under
reverse charge.
4. 'Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm, which is
not registered under GST. Determine the person liable to pay tax in this case.
Answer:
In case of services provided by Goods Transport Agency (GTA) in respect of transportation of goods by
road to, inter alia, any partnership firm whether registered or not under any law; GST is liable to be paid
by such partnership firm. Therefore, in the given case, Kapil & Co. is liable to pay GST under reverse
charge.
5. Legal Fees is received by Sushrut, an advocate, from M/s. Tatva Trading Company having turnover of ₹
50 lakh in preceding F. Y. Who is the person liable to pay tax in this case?
Answer:
GST on legal services supplied by an advocate [Mr. Sushrut] to any business entity [M/s. Tatva Trading
Company] located in the taxable territory is payable on reverse charge basis.
 Reverse Charge 292

Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., M/s. Tatva Trading
Company.
6. State the person liable to pay GST in the following independent cases provided recipient is located in
the taxable territory:
(a) Services supplied by an insurance agent to an Insurance Company.
(b) Services supplied by a recovery agent to a car dealer.
(c) Security services (services provided by way of supply of security personnel) provided to a
registered person.
Answer:
(a) GST on services supplied by an insurance agent to any person carrying on insurance business located
in the taxable territory is payable under reverse charge. Therefore, in the given case, GST is payable
under reverse charge by the recipient – Insurance Company.
(b) GST on services supplied by a recovery agent to a banking company or a financial institution or a non-
banking financial company located in the taxable territory is payable under reverse charge. However,
since, in the given case, services are being supplied by a recovery agent to a car dealer, GST is payable
under forward charge by the service provider - recovery agent.
(c) GST on security services (services provided by way of supply of security personnel) provided to a
registered person, located in the taxable territory is payable under reverse charge. Therefore, in the
given case, GST is payable under reverse charge by the recipient – registered person receiving the
services.

Q7. 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.
Answer: Time of supply of services that are taxable under reverse charge is earliest of the following two
dates in terms of section 13:
• 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 supplier’s invoice has to be taken as the time of supply. This fixes 19th April as
the time of supply.
Q8. 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.
Answer: Time of supply of service taxable under reverse charge is the earlier of the following two dates in
terms of section 13:
• 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, that is 17th June, will be treated as the time of supply of service
[Section 13].
 Reverse Charge 293

MULTIPLE CHOICE QUESTIONS

1. GST is payable by the recipient under reverse charge on:
(a) Sponsorship services
(b) Transport of goods by rail
(c) Transport of passengers by air
(d) All of the above
2. GST is payable by recipient of services in the following cases:-
(i)Services provided by way of sponsorship to ABC Ltd.
(ii)Services supplied by a director of Galaxy Ltd. to Mr. Krishna.
(iii)Services by Department of Posts by way of speed post to MNO Ltd.
(iv)Services supplied by a recovering agent to SNSP Bank
(a) (i) & (iii)
(b) (i) & (iv)
(c) (ii) & (iii)
(d) (ii) & (iv)
3. Which of the following statement is not correct?
(a) Reverse charge shall be applicable in case of renting of immovable property by the Govt. to a business
entity who is registered under GST
(b) Reverse charge shall be applicable in case of renting of immovable property by the Govt. to a business
entity who is not registered under GST
(c) Renting of immovable property by the Govt. to a person other than business entity shall be exempt from
GST
(d) None of these
4. Reverse charge shall be applicable
(a) If Govt. has provided security services to a business entity which is registered under GST
(b) If Govt. has provided renting of immovable property services to a business entity which is registered
under GST
(c) If Govt. has provided services in relation to an aircraft or vessel inside or outside the precincts of a port
or airport
(d) (a) & (b)
(e) (a) & (c)
(f) none of these
5. Which of the following statement is not correct?
(a) If an individual advocate has given services to a business entity who is registered, reverse charge shall be
applicable
(b) If an individual advocate has given services to any other advocate, it will be exempt from GST
(c) If an individual advocate has given services to a business entity who is unregistered, it will be exempt
from GST
(d) If an individual advocate has given services to a business entity who is unregistered, reverse charge shall
be applicable
6. ABC Ltd. has sent certain goods through one GTA to XYZ Ltd. and freight is payable by XYZ Ltd.
and both ABC Ltd. and XYZ Ltd. are registered under GST, in this case
(a) normal charge shall be applicable and GTA will collect GST from ABC Ltd.
(b) normal charge shall be applicable and GTA will collect GST from XYZ Ltd.
(c) reverse charge shall be applicable and GST shall be paid by ABC Ltd.
(d) reverse charge shall be applicable and GST shall be paid by XYZ Ltd.
(e) none of these
7. In which case reverse charge is not applicable
(a) Sponsorship services have been provided by ABC Ltd. to XYZ Ltd.
(b) Sponsorship services have been provided by ABC Ltd. to one HUF
 Reverse Charge 294

(c) Sponsorship services have been provided by Mr. A to XYZ Ltd.

(d) None of these
8. In which case reverse charge is not applicable
(a) GTA transported goods and consignor ABC Ltd. and consignee XYZ Ltd. and freight payable by ABC
Ltd.
(b) GTA transported goods and consignor Mr. A and consignee XYZ Ltd. and freight payable by XYZ Ltd.
(c) GTA transported goods and consignor Mr. A and consignee Mr. B and freight payable by Mr. A. Mr. A
is not registered but Mr. B is registered
(d) None of these
9. Which Statement from the following is correct
(i) Reverse charge shall be applicable in respect of any taxable services provided or agreed to be provided by
any person who is located in a non-taxable territory and received by any person located in the taxable
territory.
(ii) Reverse charge shall be applicable in respect of any non- taxable services provided or agreed to be
provided by any person who is located in a non-taxable territory and received by any person located in the
taxable territory.
(iii) Reverse charge shall be applicable in respect of any taxable services provided or agreed to be provided
by any person who is located in a taxable territory and received by any person located in the taxable
territory.
(iv) Reverse charge shall be applicable in respect of any taxable services provided or agreed to be provided
by any person who is located in a taxable territory and received by any person located in the non- taxable
territory.
(a) only (i) is correct
(b) only (i) & (ii) is correct
(c) only (ii) & (iii) is correct
(d) only (ii) & (iv)
(e) all the above is correct.
10. Which Statement from the following is correct
(i) Reverse charge shall be applicable in case of OIDAR services received by an unregistered person.
(ii) Reverse charge shall be applicable in case of OIDAR services received by registered person.
(iii) Reverse charge shall be applicable in case of OIDAR services, service provided by an unregistered
person.
(iv) Reverse charge shall be applicable in case of OIDAR services, service provided by registered person.
(a) only (i) is correct
(b) only (ii) is correct
(c) only (ii) & (iii) is correct
(d) only (ii) & (iv)
(e) all the above is correct.
11. Which Statement from the following is correct
(i) Reverse charge shall be applicable if sponsorship services have been provided to any body corporate or
partnership firm.
(ii) Reverse charge shall be applicable if sponsorship services have been provided to any person.
(iii) Reverse charge shall be applicable if sponsorship services have been provided to an individual.
(iv) Reverse charge shall be applicable if sponsorship services have been provided to HUF.
(a) only (i) is correct
(b) only (ii) is correct
(c) only (iii) & (iv) is correct
(d) only (i) & (iv)
(e) all the above is correct.
(f) (i),(iii) & (iv) is correct
 Reverse Charge 295

12. Mr. A sponsored a dance competition organized by ‘Taal Academy’, a dance school run by an
individual. The dance competition was named as ‘Mr. A’s Dance Show’ by ‘Taal Academy’. Who is
liable to pay GST in this case?
(a) Taal Academy (b) Mr. A
(c) Both (d) None of above
13. ABC Ltd., a carrying and forwarding agency, started its operations on October 1, 2022 and is
registered under GST. It utilized the services of Big Carriers, a goods transport agency, in the month
of November, 2022. GST shall be payable by
(a) ABC Ltd. (b) Big Carriers
(c) Both (a) & (b) (d) None of above
14. ABC, a firm of lawyers rendered legal advice to Mr. B, an architect, and MNO Ltd., an
advertising agency during December, 2022. Who is liable to pay GST in this case if aggregate turnover
of Mr. B and MNO Ltd. are exceeding prescribed limit in the preceding year.
(a) ABC (b) Mr. B only
(c) Both Mr. B & MNO Ltd. (d) MNO Ltd.
15. ABC, a firm of lawyers rendered legal advice to Mr. B, an architect, and MNO Ltd., an
advertising agency during December, 2022. Who is liable to pay GST in this case if aggregate turnover
of Mr. B is ₹15 lakh and MNO Ltd. ₹45 lakh in the preceding year.
(a) ABC (b) Mr. B only
(c) Both Mr. B & MNO Ltd. (d) MNO Ltd.
16. Reverse charge shall be applicable
(a) Services by the Department of Posts.
(b) Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport
(c) Transport of goods or passengers
(d) in respect of services provided by Government or local authority except (a) , (b) & (c)
(e) in respect of services provided by Government or local authority except (a) & (b) only
17. Which Statement from the following is correct
(a) Reverse charge shall be applicable in respect of services provided or agreed to be provided by an
insurance agent to any person carrying on insurance business
(b) Reverse charge shall not be applicable in respect of services provided or agreed to be provided by an
insurance agent to any person carrying on insurance business
(c) Reverse charge shall be applicable in respect of services provided or agreed to be provided by an
insurance agent to any person carrying on any business
(d) Reverse charge shall be applicable in respect of services received by an insurance agent.
18. Which Statement from the following is not correct
(a) Reverse charge shall be applicable in respect of services provided or agreed to be provided by an
insurance agent to any person carrying on insurance business
(b) Reverse charge shall be applicable in respect of services provided by a recovery agent to a banking
company or a financial institution or a non-banking financial company
(c) Reverse charge shall be applicable in respect of services by the members of overseeing committee to
Reserve Bank of India.
(d) Reverse charge shall be applicable in respect of services by Director to any partnership firm.
19. Which Statement from the following is correct
(a) Reverse charge shall be applicable in respect of services supplied by individual Direct Selling Agents
(DSAs) to bank or non-banking financial company (NBFCs).
(b) Reverse charge shall not be applicable in respect of services supplied by Individual Direct Selling Agents
(DSAs) to bank or non-banking financial company (NBFCs).
(c) Reverse charge shall be applicable in respect of services supplied by Direct Selling Agents (a body
corporate) to bank or non-banking financial company (NBFCs).
(d) Reverse charge shall be applicable in respect of services supplied by Direct Selling Agents (LLP) to
bank or non-banking financial company (NBFCs).
 Reverse Charge 296

20. Time of supply of services in case of reverse charge shall be earliest of the following dates:
(i) the date of payment as entered in the books of account of the recipient or the date on which the
payment is debited in his bank account, whichever is earlier.
(ii) the date immediately following _______ days from the date of issue of invoice.
(a) 50 days (b) 30 days (c) 60 days (d) 40 days
21. Which of the following statements is correct
(a) a registered person who is liable to pay tax under reverse charge shall issue an invoice in respect of
goods / services received by him from the supplier who is not registered on the date of receipt of goods /
services.
(b) an unregistered person who is liable to pay tax under reverse charge shall issue an invoice in respect of
goods / services received by him from the supplier who is not registered on the date of receipt of goods /
services.
(c) a registered person who is liable to pay tax under reverse charge shall not issue an invoice in respect of
goods / services received by him from the supplier who is not registered on the date of receipt of goods /
services.
(d) a registered person who is liable to pay tax under normal charge shall issue an invoice in respect of
goods / services received by him from the supplier who is not registered on the date of receipt of goods /
services.
22. A service receiver has received invoice dated 29.06.2022 and made the payment on 10.08.2022 and
reverse charge is applicable, in this case time of supply shall be
(a) 28.08.2022 (b) 29.06.2022 (c) 10.08.2022 (d) none of these
23. A service receiver has received invoice dated 01.06.2022 and made the payment on 10.08.2022 and
reverse charge is applicable, in this case time of supply shall be
(a) 01.08.2022 (b) 10.08.2022 (c) 01.06.2022 (d) none of these
24. Part payment made on 30.06.2022 and balance amount paid on 01.09.2022 and date of issue
invoice 29.06.2022, in this case TOS under reverse charge shall be
(a) 30.06.2022 for part payment and 29.08.2022 for balance payment
(b) 29.06.2022 for part payment and 01.09.2022 for balance payment
(c) 31.08.2022 for part payment and 01.09.2022 for balance payment
(d) none of these
25. What is the time of supply of service in case of reverse charge mechanism?
(a)Date on which payment is made to the supplier
(b) Date immediately following 60 days from the date of issue of invoice
(c) Date of invoice
(d) Earlier of (a) and (b)
26. What is the time of supply of service where services are received from an associated enterprise
located outside India?
(a) Date of entry of services in the books of account of recipient of service
(b) Date of payment
(c) Earlier of (a) & (b)
(d) Date of entry of services in the books of the supplier of service

Answer:
1. (a); 2. (b); 3(b); 4. (d); 5. (d); 6. (d); 7. (b); 8. (c); 9. (a); 10. (b); 11. (a); 12. (a); 13. (a); 14. (c); 15. (d);
16. (d); 17. (a); 18. (d); 19. (a); 20. (c); 21. (a); 22. (c); 23 (a); 24. (a); 25.(d); 26.(c)
 Reverse Charge 297

EXAMINATION QUESTION
JAN 2021
Question 8(a) (5 Marks)
Mr. Anurag, a famous Author is engaged in supply of services by the way of transfer or permitting the use or
enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act,
1957 relating to original literary works to a publisher.
Explain in brief the conditions under which an Author can choose to pay tax under forward charge.
Answer
Mr. Anurag, an author, can choose to pay tax under forward charge provided he fulfills the following
conditions:-
(i) He has taken registration under the GST law.
(ii) He has filed a declaration, in the prescribed form,
that he exercises the option to pay tax on the said service under forward charge and, to comply with all the
provisions of the GST law as they apply to a person liable for paying the tax in relation to the supply of any
goods and/or services and that he shall not withdraw the said option within a period of 1 year from the date
of exercising such option.
(iii) He makes a declaration on the invoice issued by him in prescribed form to the publisher.

NOV 2020
Question 6 (b). (4 Marks)
In the following independent cases, decide, which person is liable to pay GST, if any.
You may assume that recipient is located in the taxable territory. Ignore the Aggregate Turnover and
Exemption available.
'Veer Transport', a registered Goods Transport Agency (GTA) paying IGST @ 12%, transported
goods by road of Dilip & Company, a sole proprietary firm (other than specified person)
which is not registered under GST or any other Law and GTA has charged GST.
Answer:
In case of goods transport agency has charged GST then reverse charge is not applicable.
In the given case, GTA paying tax @ 12% hence reverse charge shall not be applicable and GTA shall be
liable to pay tax.

NOV 2020
Question 6 (b). (4 Marks)
In the following independent cases, decide, which person is liable to pay GST, if any.
You may assume that recipient is located in the taxable territory. Ignore the Aggregate Turnover and
Exemption available.
Mr. Kamal Jain, an unregistered famous author, received ₹20 lakhs of consideration from PQR
Publications Ltd. for supply of services by way of temporary transfer of a copyright covered under
section 13(1)(a) of the Copyright Act, 1957 relating to original literary works of his new book.
Answer:
Reverse charge shall be applicable in respect of any services by an author, music composer, photographer,
artist or the like by way of transfer or permitting the use or enjoyment of a copyright relating to original
literary, dramatic, musical or artistic works to a publisher, music company, producer or the like and recipient
shall be liable to pay tax under reverse charge.
The author has the option to pay GST under normal charge but he shall not withdraw the said option within
a period of 1 year from the date of exercising such option and he makes a declaration in the prescribed form
in annexure -I and also on the invoice issued by him in form GST Inv-I to the publisher.
 Reverse Charge 298

In the given case since in the question it is not mentioned whether author shall give declaration and author is
an unregistered person hence PQR publications shall pay GST under reverse charge.

NOV 2019
Question.6. (b) (4 Marks)
Know & Grow Publishers, a registered dealer in India, paid an advance ₹ 50,000 to Mr. Ganatra, an author,
for the copyright covered under Section 13(1) (a) of the Copyright Act, 1957, of his original literary work on
5-9-2022. It made the balance payment ₹ 1,50,000 on 12-12-2022. You are required to determine the time of
supply, if Mr. Ganatra (opted for reverse charge) raised the invoice on:
(i) 6-10-2022
(ii) 17-12-2022
Answer: As per section 13(3), Time of supply of services in case of reverse charge shall be earlier of the
following:
1. The date of payment or
2. The date immediately following 60 days from the date of issue of invoice.
(i) (a) TOS for ₹ 50,000 when invoice issued on 6th October 2022
In the given case TOS shall be earlier of the following:
1. 05th September 2022
2. 6th December 2022 (Oct -25, Nov – 30, December – 5)
Hence, TOS shall be 5th September 2022.
(i) (b) TOS for ₹ 1,50,000 when invoice is issued on 6th October 2022
In the given case TOS shall be earlier of the following:
1. 12th December 2022
2. 6th December 2022 (Oct -25, Nov – 30, December – 5)
Hence, TOS shall be 6th December 2022.
(ii) (a) TOS for ₹ 50,000 when invoice issued on 17th December 2022
In the given case TOS shall be earlier of the following:
1. 05th September 2022
2. 16th February 2023 (December – 14, January – 31, Feb - 15 )
Hence, TOS shall be 5th September 2022
(ii) (b) TOS for ₹ 1,50,000 when invoice issued on 17th December 2022
In the given case TOS shall be earlier of the following:
1. 12th December 2022
2. 16th February 2023 (December – 14, January – 31, Feb - 15 )
Hence, TOS shall be 12th December 2022.

NOV 2019
Question.6. (8 Marks)
Alfa Institute of Management (AIM), a private college, is registered under GST in the State of Punjab.
AIM provided the following particulars for the month of April 2022:
Sl. Particulars Amount (₹)
No.
i Tuition fee received from students pursing management courses recognised by Punjab 18,00,000
University, established by an Act of State Legislature
ii Tuition Fee received from Students pursuing undergraduate courses recognised by Stan 8,50,000
University, London under Dual Degree programmes
iii Fee received from students of Competitive Exam training academy run by a 5,40,000
Department of AIM
 Reverse Charge 299

iv Mess fees received from Students (Mess is run by AIM on its own) 3,20,000

v Amount paid to Local Municipal Corporation for premises taken on rent for conducting 50,000
coaching classes for Competitive Exams
vi Legal Service availed from Top Care & Co., a Partnership firm of advocates, for the 20,000
Competitive Exam training academy (Intra-state transaction)
Notes:
Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively for both outward and inward supplies.
All the amounts given above are exclusive of taxes wherever applicable.
All the conditions necessary for availing the ITC have been fulfilled wherever applicable.
No opening balance of ITC under any head of tax.
From the information given above, you are required to calculate the Value of taxable Supply and net GST
liability (CGST, SGST or IGST as the case may be) to be paid in cash, if any, by AIM for the month of
April 2022.
Answer:
Computation of value of taxable supply and net GST liability to be paid in cash by AIM for April,
2022
Particulars Amount (₹)
Tuition fee received from students pursuing recognized management courses [Note-1] Nil
Tuition fee received from students pursuing under-graduate courses recognized by 8,50,000
Foreign University [Note-2]
Fee received from students of Competitive Exam Training Academy [ Note-3] 5,40,000
Mess fees received from students [Note-4] Nil
Total value of taxable supply 13,90,000

Particulars CGST (₹) SGST (₹)

GST liability under forward charge @ 9% [Note-5] 1,25,100 1,25,100
Services on which tax is payable under reverse charge:
Rent paid to Local Municipal Corporation [Note-6] 4,500 4,500
Legal services received from Top Care & Co., a partnership firm of advocates1 1,800 1,800
[Note-7]
GST liability under reverse charge payable in cash [A] [Note-8] 6,300 6,300
Output tax payable against which ITC can be set off 1,25,100 1,25,100
Less: ITC of renting immovable property and legal services 6,300 6,300
Output tax payable after set off of ITC [B] 1,18,800 1,18,800
Net GST liability payable in cash [A] + [B] 1,25,100 1,25,100
Notes:-
1. Services provided by an educational institution to its students are exempt. Further, educational institution
means inter alia an institution providing services by way of education as a part of a curriculum for
obtaining a qualification recognised by an Indian law.
It has been assumed that the aggregate turnover of AIM in the preceding financial year exceeds ₹20 lakh.
Therefore, tuition fee received by Punjab University, being an educational institution, is exempt, since it
provides qualification recognised by Indian law.
 Reverse Charge 300

2. Tuition fee received by Stan University is taxable since Stan University is not an educational institution
as qualification provided by it is not recognised by Indian law.
3. Fee received from students of competitive exam training academy is taxable as Department of AIM is
not an educational institution since competitive exam training does not lead to grant of a recognized
qualification.
4. Catering services provided by educational institutions to its students are exempt. It has been assumed
that the mess fees has been charged from the students pursuing the qualification recognised by law.
5. Since all the services provided are intra-State, CGST and SGST @ 9% is charged
6. GST is payable under reverse charge in case of renting of immovable property services supplied by a
local authority to a registered person.
7. GST is payable under reverse charge in case of legal services supplied by a firm of advocates to a
business entity
8. 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. Therefore, tax payable under
reverse charge cannot be set off against the input tax credit and thus, will have to be paid in cash.

NOV 2019
Question.7. (b) (4 Marks)
M/s Parnav Associates, a Partnership Firm, provided recovery agent service to Newtron Credits Ltd., an
NBFC and a registered supplier, on 15th January 2023. Invoice for the same was issued on 7th February,
2023 and the payment was made on 18th April, 2023 by Newtron Credits Ltd, Bank account of company was
debited on 20th April, 2023.
Determine the following:
(i) Person liable to pay GST
(ii) Time of supply of service.
Answer:
(i) In respect of services provided by a recovery agent to a banking company or a financial institution or a
non-banking financial company, reverse charge shall be applicable i.e. the NBFC etc. shall pay tax.
In the given case Newtron Credits Ltd. an NBFC shall be liable to pay GST under reverse charge.
(i) As per section 13(3), Time of supply of services in case of reverse charge shall be earlier of the
following:
1. The date of payment or
2. The date immediately following 60 days from the date of issue of invoice.
In the given reverse charge shall be applicable and earlier of the following shall be the time of supply:
1. 18th April,2023
2. 9th April, 2023 (i.e. Feb – 21, March – 31 April- 8)

MAY 2019
Question 6 (8 Marks)
Mr. Uttam Kumar a registered supplier of service in Kolkata, has provided following information for the
month of October, 2022:
No. Particulars Amount in (₹)
1. Intra-State taxable supply of service 6,40,000
2. Amount received from Kapola Pvt. Ltd., for service provided to company. (He is a 5,00,000
director in Kapola P. Ltd.), being Intra-State transaction.
 Reverse Charge 301

3. Paid legal fee to senior advocate for one legal matter within State, being Intra-State 50,000
transaction.
4. Amount received for service provided by him as a commentator to a local recognized 1,20,000
sports body, being Intra-State transaction
5. Amount received for acting as a coach in recreational activities relating to sports, 30,000
from one local charitable entity registered under section 12AA or 12AB of the
Income Tax Act, 1961, being Intra-State transaction.
Compute the net GST liability (CGST, SGST or IGST) of Mr. Uttam Kumar for the month of October, 2022
Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively.
All the amounts given are exclusive of CGST, SGST and IGST.
Solution:
Computation of Net GST Liability of Mr. Uttam Kumar
Output Tax
Intra-State supply of service
6,40,000
Add: CGST @ 9% 57,600
Add: SGST @ 9% 57,600
Total 7,55,200
Legal fee paid to senior advocate
Reverse charge shall be applicable, Mr. Uttam shall be liable to pay GST under reverse charge and ITC of
the same also be allowed.
50,000
Add: CGST @ 9% 4,500
Add: SGST @ 9% 4,500
Total 59,000
Service provided to local recognized sports body
Service provided to local recognized sports body is not covered under exemption as local sports body is not
recognized sports body hence GST shall be payable.
1,20,000
Add: CGST @ 9% 10,800
Add: SGST @ 9% 10,800
Total 1,41,600
Service provided to local charitable entity
Service provided to local charitable entity is not covered under exemption hence GST shall be payable.
30,000
Add: CGST @ 9% 2,700
Add: SGST @ 9% 2,700
Total 35,400
Computation of Net GST Liability
Particulars CGST ₹
Output Tax
Intra State supply 57,600
Services to local sports body 10,800
Services to Charitable Institution 2,700
Legal service taken from advocate (payable under reverse charge) 4,500
Total payable 75,600
Less: ITC (tax paid under reverse charge) (4,500)
 Reverse Charge 302

Net GST Liability 71,100

Computation of Net GST Liability
Particulars SGST ₹
Output Tax
Intra State supply 57,600
Services to local sports body 10,800
Services to Charitable Institution 2,700
Legal service taken from advocate (payable under reverse charge) 4,500
Total payable 75,600
Less: ITC (tax paid under reverse charge) (4,500)
Net GST Liability 71,100
Note:
Service provided by Mr. Uttam to Kapola Pvt. Ltd. to company as director, in this case company is liable to
pay GST under reverse charge and Mr. Uttam shall not charge GST.

NOV 2018
Question 8 (a) (6 Marks)
Mr. Thiraj, a registered supplier of service in Bangalore (Karnataka State) has provided the following
information for the month of February 2023:
Particulars Amount in (₹)
(i) Intra-state taxable supply of service 5,20,000
(ii) Legal fee paid to a Lawyer located within the State 20,000
(iii) Rent paid to the State Govt. for his office building 30,000
(iv) Received for services towards conduct of exams to Loveall University, 16,000
Pune (recognized by law), being an inter-state transaction.

Compute the net GST liability (CGST, SGST or IGST) of Mr. Thiraj for the month of February 2023.
Rate of CGST, SGST and IGST are 9%, 9% and 18% respectively.
All the amounts given above are exclusive of taxes.
Solution: Computation of Net GST Liability of Mr. Thiraj for the month of February 2023
Output Tax ₹
Intra-state taxable supply of service is a taxable supply 5,20,000
Add: CGST @ 9% 46,800
Add: SGST @ 9% 46,800
Legal fee paid to a Lawyer located within the State taxable under reverse charge and service recipient shall
be liable to pay tax. (Section 9(3) of CGST Act) 20,000
Add: CGST @ 9% 1,800
Add: SGST @ 9% 1,800
(ITC will be available of tax paid under reverse charge)
Rent paid to the State Govt. for his office building taxable under reverse charge and service recipient shall
be liable to pay tax if the service recipient is registered under GST. (Section 9(3) of CGST Act) 30,000
Add: CGST @ 9% 2,700
Add: SGST @ 9% 2,700
(ITC will be available of tax paid under reverse charge)
Received for services towards conduct of exams to Loveall University, Pune (recognized by law) is a
exempt service. Nil
 Reverse Charge 303

Computation of Net Tax Liability CGST

Output tax ( 46,800+1,800+2,700) 51,300
Less: ITC-CGST (4,500)
Net Tax Liability 46,800
SGST
Output tax ( 46,800+1,800+2,700) 51,300
Less: ITC-SGST (4,500)
Net Tax Liability 46,800
NOV 2018
Question 10 (c) (3 Marks)
Decide which person is liable to pay GST in the following independent cases, where the recipient is located
in the taxable territory. Ignore the Aggregate Turnover and Exemption available.
(i) Mr. Raghu provided sponsorship services to WE-WIN Cricket Academy, an LLP.
(ii) 'Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm which is
not registered under GST.
Answer:
(i) As per section 9(3) of CGST Act, reverse charge shall be applicable if sponsorship services is provided to
body corporate or partnership firm but if such services is given to other person then reverse shall not be
applicable, in the given case service is provided to LLP which is also similar to partnership firm and reverse
charge shall be applicable and WE-WIN Cricket Academy shall be liable to pay GST under reverse charge.
(ii) As per section 9(3) of CGST Act, reverse charge shall be applicable in case a Goods Transport Agency
services provided to any partnership firm whether registered or not, in the given case GTA services is
provided to partnership hence Kapil & Co. is liable to pay GST under reverse charge.

NOV 2018
Question 9 (a) (5 Marks)
'M/s Maheshwari Corporation Pvt. Ltd. is a supplier of goods and services at Bangalore, registered in the
State of Karnataka having Turnover of ₹200 lakhs in the last financial year. It has furnished the following
information for the month of June, 2022
Sr. No. Particulars Amount in (₹)
Excluding GST
(1) Services provided by way of Labour Contract for repairing a single residential 1,30,000
unit otherwise than as a part of residential complex (It is an intra state transaction.)
(2) Intra State Sale of Taxable Goods including 50,000 received as advance in April,2022. 2,50,000
The invoice for the entire sale value is issued on 15th June, 2022
(3) Goods Transport Services received from GTA, GTA is paying tax @ 12% (It is an 1,80,000
interstate transaction.)
(4) Goods Purchased from unregistered dealer on 20th June, 2022 80,000
(Interstate purchases are worth, 45,000 and balance purchases was intrastate).
Compute Net GST Liability (CGST, SGST, IGST as the case may be) of M/s Maheshwari Corporation Pvt.
Ltd. for the month of June, 2022 assume the rates of GST, unless otherwise specified, as under:
CGST- 9%, SGST-9%, IGST- 18%
Solution: Computation of Net GST Liability for the month of June 2022 ₹
Output Tax
(1) Services provided by way of Labour Contract for repairing a
single residential unit is a taxable supply 1,30,000
 Reverse Charge 304

Add: CGST @ 9% 11,700

Add: SGST @ 9% 11,700

(2) Intra State Sale of Taxable goods 2,50,000

Add: CGST @ 9% 22,500
Add: SGST @ 9% 22,500

Input Tax
Input Service of GTA Service 1,80,000
Add: IGST @ 12% 21,600
Computation of Net Tax Liability
CGST
Output Tax (11,700+22,500) 34,200
Less: ITC -IGST (21,600)
Net Tax Liability 12,600
SGST
Output Tax (11,700+22,500) 34,200
Less: ITC Nil
Net Tax Liability 34,200
Notes:
1. No Tax shall be payable at the time of advance received for supply of goods and tax shall be paid at the
time of supply or date of invoice.
2. In case of goods purchased from unregistered dealer there is no tax element was charged on the bill and
reverse charge is also suspended for purchase of goods from unregistered dealer.
3. Reverse charge shall not be applicable in case GTA is charging tax on supply of service and credit shall
be allowed to the recipient

MAY 2018
Question 8 (a) (5 Marks)
M/s. Pradyumn Corporation Pvt. Ltd., a registered dealer of Mumbai furnishes you following information
for the month of October, 2022.
S. No Particulars Amount
(₹)
(i) Intra state sale of Taxable goods (out of above ₹ 50,000 was received as advance in 2,00,000
September, 2022)
(ii) Goods purchased from unregistered dealer (purchase on 20th October, 2022) 50,000
(10,000 in case of Inter State & Balance Intra-state)
(iii) Received for services by way of labour contracts for repairing a single residential 50,000
unit otherwise than as a part of residential complex (it is Intra-state transaction)
(iv) Professional fees paid to Ms. Udadhi located in a non-taxable territory (it amounts 50,000
to Interstate transaction)
Compute GST liability (CGST, SGST or IGST, as the case may be) of M/s. Pradyumn Corporation Pvt. Ltd.
for the month of October, 2022. Assume the rates of GST as under
CGST 9%
SGST 9%
IGST 18%
Note: Turnover of M/s. Pradyumn Corporation Pvt. Ltd. was 2 crore in the Previous Financial Year.
Solution: Computation of Net GST payable by M/s Pradyumn Corporation Pvt. Ltd. for the month
of October 2022
Input tax Credit ₹
 Reverse Charge 305

(i) Input tax credit in case of Goods Purchased from Unregistered is not allowed.
(ii) In case of Professional payment to Ms. Udadhi located in non-taxable territory reverse charge shall
be applicable assuming service is rendered in taxable territory and tax credit shall be allowed.
IGST = 50,000 x 18% = 9,000
Output Tax
Intra-State sale of taxable goods
Sale Value 2,00,000
Add: CGST @ 9% 18,000
Add: SGST @ 9% 18,000
Total 2,36,000
Advance received is not taxable in the month of September.
Labour Contract Services
Value 50,000
Add: CGST @ 9% 4,500
Add: SGST @ 9% 4,500
Total 59,000
Computation of GST Liability
CGST ₹
Output tax (18,000+4,500) 22,500
SGST ₹
Output tax (18,000+4,500) 22,500
IGST of ₹9,000 is payable under reverse charge.
Computation of Net Tax
CGST ₹
Output tax (18,000+4,500) 22,500
Less: ITC Import of service (9,000)
Net Tax Payable 13,500
SGST ₹
Output tax (18,000+4,500) 22,500
Net Tax Payable 22,500
IGST of ₹9,000 is payable under reverse charge.

MAY 2018
Question 9 (a) (3 Marks)
On 4th September,2022, V.R. Mehman a famous music composer, received, ₹3 crore of consideration from
Zilmil Music Co. Ltd. for sale of copyright of his original music album. He finished his work & made
available the CD to the music company on 20th July, 2022 & raised the invoice on 24th July, 2022. What
will be the time of supply as per CGST Act, 2017?
Note: Above Service is taxable under reverse charge basis.
Answer: As per section 13(3), Time of supply of services in case of reverse charge shall be earlier of the
following:
1. The date of payment or
2. The date immediately following 60 days from the date of issue of invoice.
 Reverse Charge 306

In the given case TOS shall be earlier of the following:

1. 4th September 2022
2. 24th September 2022 (July -7,august – 31, September – 23)
Hence, TOS shall be 4th September 2022.

MAY 2018
Question 9 (b) (3 Marks)
State with reason, person liable to pay GST in each of following independent cases. Assume recipient is
located in taxable territory.
(i) Rental income received by Tamil Nadu State Government from renting an immovable property to
Mannappa Pvt. Ltd. which is registered under GST.
Answer: Reverse charge shall be applicable in case of supply of renting of immovable property by
Governments or Local Authority provided service recipient is registered under GST. In the given case
service recipient is registered under GST, hence reverse charge shall be applicable.
(ii) Legal Fees received by Mr. Sushrut, a senior advocate, from M/s. Tatva Trading Company having
turnover of ₹50 lakhs in preceding F.Y.
Answer: Legal services received by senior advocate shall be exempt if it is given to business entity which
is unregistered but if it is registered, service shall be taxable and reverse charge shall be applicable.
 Exemption from GST 307

Exemptions From GST

Section 11 CGST Act Notification No.12/2017 CTR dated 28.06.2017
Section 6 of IGST Act Notification No.9/2017 ITR dated 28.06.2017

1. Health Care Services (E-74)

Health care services are exempt from GST and health care services shall include diagnosis or treatment or
care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India.
It will 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.
Services provided by way of transportation of a patient in an ambulance shall also be exempt from GST.
Services by para-medics are also exempt from GST. Paramedics are trained health care professionals, for
example, nursing staff, physiotherapists, technicians, lab assistants etc.
Only services in recognized systems of medicines in India are exempt.
Following systems of medicines are the recognized systems of medicines in India:-
Allopathy, Yoga, Naturopathy, Ayurveda, Homeopathy, Siddha, Unani, any other system of medicine that
may be recognized by Central Government (e.g. Reiki is not recognised)
No exemption shall be allowed to the services provided by a clinical establishment by way of providing
room [other than Intensive Care Unit (ICU)/Critical Care Unit (CCU)/Intensive Cardiac Care Unit
(ICCU)/Neo natal Intensive Care Unit (NICU)] having room charges exceeding Rs. 5000 per day to a person
receiving health care services.
Services by a veterinary clinic in relation to health care of animals or birds is also exempt from GST. (E-46)
Health care services provided by the clinical establishments will include food supplied to the patients; and
such food may be prepared by the canteens run by the hospitals or may be outsourced by the hospitals from
outdoor caterers. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors
are taxable [Circular No. 32/06/2018 GST dated 12.02.2018]. Supply of services other than healthcare
services such as renting of shops, auditoriums in the premises of the clinical establishment, display of
advertisements etc. will be subject to GST.
Illustration 1: Good Health Medical Centre, a clinical establishment, offers the following services:
(i) Reiki healing treatments.
(ii) Plastic surgeries. One such surgery was conducted to repair cleft lip of a new born baby.
(iii) Air ambulance services to transport critically ill patients from distant locations to the Medical Centre.
(iv) Palliative care for terminally ill patients. On request, such care is also provided to patients at their
homes. (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).
(v) Alternative medical treatments by way of yoga.
(vi) Good Health Medical Centre also operates a cord blood bank which provides services in relation to
preservation of stem cells.
(vii) Good Health Medical Centre is of the view that since it is a clinical establishment, all the service
provided by it as well as all the services provided to it are exempt from GST.
You are required to examine the situation in the light of relevant statutory provisions.
Answer:
(i) Not Exempt. Since reiki healing is not a recognized system of medicine.
(ii) Exempt. Plastic surgery conducted to repair a cleft lip will be eligible for exemption as it reconstructs
anatomy or functions of body affected due to congenital defects.
(iii) Exempt. Health care service includes services by way of transportation of the patient to and from a
clinical establishment. Thus, air ambulance service is also exempt.
 Exemption from GST 308

(iv) Exempt. Health care service means any service by way of diagnosis or treatment or care for illness,
injury, deformity, abnormality or pregnancy in any recognized system of medicines in India. It is immaterial
whether such 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 is exempt.
(v) Exempt. Since Yoga is a recognized system of medicine.
(vi) Not Exempt. Services provided by cord blood banks by way of preservation of stem cells or any other
service in relation to such preservation are taxable.
(vii) If services have been provided by Clinical establishment etc., it will be exempt from GST but if
services have been taken by such clinical establishment etc., it will be taxable.
Illustration 2: Well-Being Nursing Home has received the following amounts in the month of February,
2023 in lieu of various services rendered by it in the same month. You are required to determine its GST
liability for February, 2023 from the details furnished below:-
Particulars (₹)(in lakh)
i. Palliative care for terminally ill patients at patient’s home (Palliative care is given
to improve the quality of life of patients who have a serious disease) 30
ii. Services provided by cord blood bank unit of the nursing home 24
iii. Hair transplant services 100
iv. Ambulance services to transport critically ill patients from various locations to nursing home 12
v. Naturopathy treatments. 80
vi. Plastic surgery to restore anatomy of a child affected due to an accident. 30
(Anatomy means study of the structure of human or animal bodies)
vii. Reiki healing treatments. Such treatment is not a recognized system of medicine 120
viii. Mortuary services 10
Note: All the amounts given above are exclusive of tax and Rate of Tax is CGST @ 9% and SGST @ 9%.
Point of supply for the services rendered by Well-Being Nursing Home in the month of February, 2023 fall
in the month of February itself.
Solution:
Computation of GST liability of Well-Being Nursing Home for the month of February, 2023
Particulars (₹)(in lakh)
i. Palliative care for terminally ill patients at patient’s home -
ii. Services provided by cord blood bank 24.000
iii. Hair transplant services 100.000
iv. Ambulance services -
v. Naturopathy treatments -
vi. Plastic surgery to restore anatomy of a child affected due to an accident -
vii. Reiki healing treatments 120.000
viii. Mortuary services -
Value of taxable service 244.000
CGST @ 9% [₹ 244 lakh × 9%] 21.960
SGST @ 9% [₹ 244 lakh × 9%] 21.960

Examination MAY - 2023 (4 Marks)

Question 6(b)
Mr. Shyam Das was admitted to Suraksha Hospital in Mumbai for 2 days in relation to diagnosis of removal
of stones from his kidney. For the said services, Surkasha hospital charged following from Mr. Das :
(i) Room rent ₹7000/- per day for 2 days.
(ii) Operation theatre charges ₹5000/-
(iii) Doctors Consultation Charges ₹8000/-
(iv) Other services ₹4000/-
 Exemption from GST 309

In each of the above scenario explain whether Suraksha Hospital should levy GST or not in line with the
relevant provisions of the GST laws. (4 Marks)
Answer:
Health care services by a clinical establishment are exempt from GST.
However, services provided by a clinical establishment by way of providing room having room charges
exceeding ₹ 5,000 per day to a person receiving health care services are not exempt.
In view of the same, only the room rent of ₹ 14,000 (₹ 7,000 per day × 2 days) is liable to GST.
Other than room rent, all other nature of services provided by Suraksha Hospital are exempt from GST.

2. Agriculture Related Services

Agricultural Activities
Services relating to cultivation of plants and or agricultural produce by way of (E-54)
(a) agricultural operations directly related to production of any agricultural produce including cultivation,
harvesting, threshing, plant protection or testing;
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying,
cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such
like operations which do not alter the essential characteristics of agricultural produce but make it only
marketable for the primary market, e.g. Threshing in case of wheat crop.
(d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
(e) loading, unloading, packing, storage or warehousing of agricultural produce;
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee or Board or services provided by a
commission agent for sale or purchase of agricultural produce.
(h) Carrying out an intermediate production process as job work in relation to cultivation of plants and
rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other
similar products or agricultural produce. [E-55]
"Agricultural Produce Marketing Committee or Board" means any committee or board constituted
under a State law for the time being in force for the purpose of regulating the marketing of agricultural
produce;
Clarification
Processed Tea and coffee
Tea used for making the beverage, such as black tea, green tea, white tea is a processed product made in tea
factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation, packing
etc. on green leaf and is the processed output of the same. Thus, green tea leaves and not tea is the
“agricultural produce” eligible for exemption available for loading, unloading, packing, storage of
agricultural produce. Same is the case with coffee obtained after processing of coffee beans.
Jaggery
Similarly, processing of sugarcane into jaggery changes its essential characteristics. Thus, jaggery is also not
an agricultural produce.
Pulses
Pulses commonly known as dal are obtained after dehusking or splitting or both. The process of dehusking
or splitting is usually not carried out by farmers or at farm level but by the pulse millers. Therefore pulses
(dehusked or split) are also not agricultural produce. However, whole pulse grains such as whole gram,
rajma etc. are covered in the definition of agricultural produce.
Custom milling of paddy into rice
Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process
carried out after the process of cultivation is over and paddy has been harvested. Further, processing of
paddy into rice is not usually carried out by cultivators, but by rice millers. Milling of paddy into rice also
changes its essential characteristics.
 Exemption from GST 310

Therefore, milling of paddy into rice cannot be considered as an intermediate production process in relation
to cultivation of plants for food, fibre or other similar products or agricultural produce.
In view of the above, it is clarified that milling of paddy into rice is not eligible for exemption. [Circular No.
19/19/2017 GST dated 20.11.2017]. However as a special case services by way of loading, unloading,
packing, storage or warehousing of rice has been exempted. [E-24]

Services by way of storage or warehousing of cereals, pulses, fruits and vegetables. (E-24B)

Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and
vegetables which do not change or alter the essential characteristics of the said fruits or vegetables. (E-57)
Services by way of warehousing of minor forest produce. (E-24A)
Services by way of artificial insemination of livestock (other than horses). (E-55A)

Illustration 3: ‘Big Agro Handlers’ furnishes the following details with respect to the activities undertaken
by them in the month of December, 2022:
Sl. No Particulars Amount in ( ₹)
(i) Supply of farm labour 58,000
(ii) Warehousing of biscuits 1,65,000
(iii) Commission on sale of paddy 68,000
(iv) Training of farmers on use of new pesticides and fertilizers developed through 10,000
scientific research
(v) Renting of vacant land to a stud farm 1,31,500
(vi) Testing undertaken for seeds 1,21,500
(vii) Leasing of vacant land to a poultry farm 83,500

Compute the GST Payable by ‘Big Agro Handlers’ for the month of December, 2022.
Assume that the point of supply in respect of all the activities mentioned above falls in the month of
December, 2022 itself and all the amounts mentioned above are exclusive of GST. Rate of CGST @ 9% &
SGST @ 9%.
Solution:
Computation of GST Payable by Big Agro Handlers for December, 2022
Sl. No Particulars Amount in (₹)
(i) Supply of farm labour Nil
(ii) Warehousing of biscuits 1,65,000
(iii) Commission on sale of paddy Nil
(iv) Training of farmers on use of new pesticides and fertilizers developed through Nil
scientific research
(v) Renting of vacant land to a stud farm 1,31,500
(vi) Testing undertaken for seeds Nil
(vii) Leasing of vacant land to a poultry farm Nil
Total 2,96,500
CGST @ 9% 26,685
SGST @ 9% 26,685

Illustration 4:‘Rock Farmer Association’ is engaged in providing services relating to agriculture. It

furnishes the following details with respect to the activities undertaken by them in the month of December,
2022:
Sl. No. Particulars Amount (₹)
(i) Cultivation of ornamental flowers 42,000
(ii) Packing of tomato ketchup 54,000
 Exemption from GST 311

(iii) Warehousing of potato chips 1,65,000

(iv) Sale of tea leaves (agricultural produce) on commission basis 68,000
(v) Packaging of pulses in the agricultural field 42,000
(vi) Training of farmers on use of scientific tools and agro machinery 10,000
(vii) leasing of vacant land to a stud farm 1,63,000
(viii) Grading of wheat according to its quality 42,000
(ix) Testing of samples from plants for pest detection 1,21,500
(x) Rearing of silk worms 83,500

Compute the GST Payable by ‘Rock Farmer Association’ for the month of December, 2022. Assume that
the point of supply in respect of all the activities mentioned above falls in the month of December, 2022
itself and all the amounts mentioned above are exclusive of GST and Rate of SGST @ 9% and CGST @
9%.
Solution:
Computation of GST payable by Rock Farmer Association for December, 2022
Sl. No. Particulars Amount (₹)
(i) Cultivation of ornamental flowers -
(ii) Packing of tomato ketchup 54,000
(iii) Warehousing of potato chips 1,65,000
(iv) Sale of tea leaves (agricultural produce) on commission basis -
(v) Packaging of pulses -
(vi) Training of farmers on use of scientific tools and agro machinery -
(vii) leasing of vacant land to a stud farm 1,63,000
(viii) Grading of wheat according to its quality -
(ix) Testing of samples from plants for pest detection -
(x) Rearing of silk worms -
Total 3,82,000
CGST @ 9% 34,380
SGST @ 9% 34,380

Illustration 5: Mr. X started rendering services w.e.f. 01.04.2022 and registered under GST on 01.04.2022
and has submitted information as given below: (CGST & SGST has been charged separately @ 9% each).

(i) Rendered services on 10.12.2022 to an agricultural farm relating to agricultural operation of

₹40,00,000.
(ii) Renting of agro machinery on 05.06.2022 to an agricultural farm of ₹10,00,000.
(iii) Advertisement to APL Ltd. on 10.10.2022 on T.V. ₹20,00,000.
(iv) Renting of commercial property on 10.03.2023 for ₹25,00,000 to XYZ Ltd.
(v) Rendered service to ABC Ltd. for ₹25,00,000 on 10.03.2023, issued bill on 20.03.2023, received
payment on 01.03.2023.
Compute GST Payable for F.Y. 2022-23.
Solution: Computation of GST Payable

Particulars ₹
Rendered services to an agricultural farm in relating to agricultural operation Exempt
Renting of agro machinery Exempt
Advertisement on T.V 20,00,000
Renting of commercial property 25,00,000
Rendered service to ABC Ltd. 25,00,000
Value of Taxable Supply 70,00,000
CGST Payable ₹70,00,000 x 9% 6,30,000
 Exemption from GST 312

SGST Payable ₹70,00,000 x 9% 6,30,000

Notes: 1. Rendered services to an agricultural farm in relating to agricultural operation is exempt.
2. Renting of agro machinery exempt.
Illustration 6: Dukhiya Das is engaged in providing following services. With the help of information given
below, determine which of the services provided by Dukhiya Das are exempt from GST:
(1) Packaging of the onions purchased from village farmers into small packets of 1 kg each, in Dukhiya Das
warehouse, so that same can be sold in a nearby city mall.
(2) Warehousing of jaggery and tea.
(3) Renting of warehouse for storage of agricultural produce.
Answer:
(1) Entry 54, inter alia, exempts the processes/operations carried out at an agricultural farm on the
agricultural produce which do not alter the essential characteristics of agricultural produce, but make it
marketable only for the primary market. In the given case, though the packaging of onions does not alter
their essential characteristic, it makes them marketable for retail market and not for the primary market and
further, such packaging is being done at the warehouse of Dukhiya Das and not at an agricultural farm.
Hence, said services are not exempt.
(2) Entry 54, inter alia, exempts the warehousing of agricultural produce but jaggery and tea do not qualify
as agricultural produce and it is taxable.
(3) Entry 54, inter alia, exempts the services of loading, unloading, packing, storage or warehousing of
agricultural produce. Thus, warehousing of agricultural produce, per se, is exempt. However, in the given
case, services being provided are not warehousing services but renting of immovable property services. Such
services are not exempt.

3. Education Services
Educational Services (E-66)
(a) Services provided by an educational institution to its students, faculty and staff.
(b) Services provided to an educational institution relating to admission, or conduct of examination.

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 recognised by any law for the
time being in force;
(iii) education as a part of an approved vocational education course

Clarification
Private ITls qualify as an educational institution if the education provided by these ITls is approved as
vocational educational course. It implies that services provided by a private ITI only in respect of designated
trades notified under Apprenticeship Act, 1961 are exempt from GST.
Services other than designated trades are liable to GST.
(c) services to an educational institution, by way of,—
(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;
Educational Institution for the purpose of point (i),(ii),(iii) means an institution providing services by way of
pre-school education and education up to higher secondary school or equivalent.
Example: Service provided by a private transport operator to Scholar Boys Higher Secondary School in
relation to transportation of students to and from the school, shall be exempt from GST.
 Exemption from GST 313

(d) Services received by way of supply of online educational journals or periodicals to an educational
institution other than an institution providing services by way of—
(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;
Example: Delhi University has taken online services of educational journals and periodicals from one
university in USA and paid US dollar 1,00,000, in this case it is exempt from GST but if such services have
been taken by a Pre School, it will be taxable.

(e) 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, faculty and staff to an educational institution providing
services by way of pre-school education and education upto higher secondary school or equivalent. [E-22]
Example: ABC Ltd. a transporter has given one bus on rent to XYZ transporter who has further given it to a
Pre School, in this case services from ABC to XYZ are exempt from GST also services by XYZ to pre
school are exempt.
Clarification
(i) College Hostel Mess services
Educational institutions generally have mess facility for providing food to their students and staff. Such
facility is (i) either run by the institution/ students themselves or (ii) is outsourced to a third person.
If the catering services is one of the services provided by an educational institution to its students, faculty
and staff and the said educational institution is covered by the definition of ‘educational institution’ as given
above, then the same is exempt.
If the catering services, i.e., supply of food or drink in a mess or canteen, is provided by anyone other than
the educational institution, i.e. the institution outsources the activity to an outside contractor, then it is a
supply of service to the concerned educational institution and attracts GST [Circular No. 28/02/2018 GST
dated 08.01.2018].
Note: It may be noted that said services when provided to an educational institution providing pre-school
education or education up to higher secondary school or equivalent are exempt from tax.

(ii) The Central and State Educational Boards shall be treated as ‘Educational Institution’ for the limited
purpose of providing services by way of conduct of examination to the students.
(iii) Fees charged from prospective employers
Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate
houses/MNCs, who come to the institutes for recruiting candidates through campus interviews in relation to
campus recruitments. Such services shall also be liable to tax
(iv) Maritime courses approved by DG Shipping
Maritime Training Institutes and their training courses are approved by the Director General of Shipping
which are duly recognised under the provisions of the Merchant Shipping Act, 1958 read with the Merchant
Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014.
Therefore, Maritime Training Institutes are educational institutions and the courses conducted by them are
exempt [Circular No. 117/36/2019 GST dated 11.10.2019].

(v) Services provided by an educational institution by way of conduct of entrance examination against
consideration in the form of entrance fee is also exempt from GST.

Illustration 7: Sarvshiksha, an Educational Trust, runs a play school, ‘Tiny Tots’ and a higher secondary
school, ‘Pinnacle Academy’. It also runs a coaching centre which provides coaching for IIT JEE entrance
examinations to meritorious students of economically weak background. It also provides coaching classes
for examinations of Certified Public Accountant, USA.
With reference to the provisions of GST, examine the leviability of GST in the above case.
 Exemption from GST 314

Solution: GST will not be leviable on services relating to education rendered by the play school (pre-
school), ‘Tiny Tots’ and the higher secondary school, ‘Pinnacle Academy’ run by Sarvshiksha, the
Educational Trust.
Since, coaching given by private coaching institutes/centres is not a part of a curriculum for obtaining
recognized qualification, the same is not covered under Exemption. Therefore, coaching classes for IIT JEE
entrance examination and CPA examinations will not be covered and thus, will be liable to GST. It is
immaterial that coaching is given to economically weak students or for a national level entrance examination
or an international examination.

Illustration 8: Industrial Training Institute (ITI), Manikpuri runs an approved vocational educational
programme approved by prescribed authority. Revenue raised a demand for GST on the services provided
by ITI Manikpuri.
Examine whether the demand raised by Revenue is correct in law.
Solution : Services by way of education as a part of an approved vocational education course are included in
the Exemption, hence ITI Manikpuri will not be liable to pay GST.
Therefore, the demand raised by Revenue is not correct in law.

Example: ‘Dharam Institute of Technology’ (DIT), a private engineering college in M.P., offers post
graduate engineering programmes. All the engineering courses including the distance learning post graduate
engineering programme offered by DIT are recognised by the law [The All India Council for Technical
Education (AICTE)]. Since DIT imparts education as a part of a curriculum for obtaining a qualification
recognised by the Indian law, the same is an educational institution.
Example: ‘Littleways Public School’ is a school located in Tamil Nadu. The school has two branches – one
is a pre-school and another is a higher secondary school affiliated to CBSE. A pre-school and a higher
secondary school are educational institutions. Thus, Littleways Public School qualifies as an educational
institution.
Example: ‘Kaladrishti ITI, Gorakhpur is engaged in providing skill development courses in other than
designated trades notified under the Apprentices Act, 1961. Since courses offered by Kaladrishti ITI are not
in designated trades notified under the Apprentices Act, 1961, education provided by it is not approved as
vocational educational course as defined above. Resultantly, it doesn’t qualify as an educational institution.
Example: Little Millennium – a pre school in outskirts of Mumbai – has subscribed the online journals on
child development and experiential learning. Services of supply of online educational journals or periodicals
provided, inter alia, to an institution providing services by way of preschool education are not exempt.
Example: SM Transporters has provided services of transportation of students and faculty from their
residence to school and back, to Pathwheels School - a higher secondary school. Services of transportation
of students, faculty and staff provided, inter alia, to an institution providing services by way of education up
to higher secondary school or equivalent are exempt.
Example: Shiksha College, offering degree courses, has to conduct its half yearly examination in
November. For this purpose, it has paid the honorarium to paper setters and examiners (not on the rolls of
Shiksha College) for their services. Further, it availed the printing services for printing the question papers
(paper and content are provided by Shiksha College) for conducting examination. Services provided to an
educational institution relating to admission to, or conduct of examination by, such institution are exempt.
Therefore, services of paper setters and examiners and printing services availed by Shiksha College are
exempt.
Example: Gyaani Public School – a higher secondary school – has hired Suvidha Services Ltd. for security
and housekeeping services in the school. Security and housekeeping services provided within the premises
of, inter alia, a higher secondary school are exempt. Therefore, said services provided by Suvidha Services
Ltd. are exempt.
 Exemption from GST 315

The school subsequently hired Suvidha Services Ltd. for providing the security and housekeeping services at
School’s Annual Day function organised in an auditorium outside the school campus. Security and
housekeeping services provided to Gyaani Public School for School’s Annual Day function organized
outside the school campus will be taxable as only the security and housekeeping services performed within
the premises of the higher secondary school are exempt.
Q. Indiana Engineering College, a recognised educational institution, has conducted an entrance test
examination for various courses run by it and charged entrance fees from the applicants. Determine whether
Indiana Engineering College is liable to pay GST on the same.
Answer: Services provided by an educational institution by way of conduct of entrance examination against
consideration in the form of entrance fee are exempt from GST.
Since in the given case, services provided by Indiana Engineering College - an educational institution - are
by way of conduct of entrance examination against entrance fee, the same is exempt and thus, GST is not
payable in this case.

4. Services by way of training or coaching in – (E-80)

(a) recreational activities relating to arts or culture, by an individual or
(b) sports by charitable entities registered under section 12AA or 12AB of the Income-tax Act.
Training or coaching relating to all forms of arts, culture is covered under this entry, namely, dance, music,
painting, sculpture making, literary activities, theatre, etc. of any school, tradition or language.

5. Legal Services (E-45)

Legal Services
Services provided by-
(a) a partnership firm of Advocates or an individual as an Advocate other than a Senior Advocate, by
way of legal services to-
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes
it eligible for exemption from registration;
(iv) the Central Government, State Government, Union territory, local authority, Governmental Authority or
Government Entity

Example:
(i) Mr. X an Advocate has given services to Mr. Y an advocate, In this case it is exempt from GST.
(ii) Mr. X an Advocate has given services to Mr. Y a business entity with turnover upto prescribed limit in
the preceding year, In this case it is exempt from GST.
(iii) Mr. X an Advocate has given services to Mr. Y a business entity with turnover exceeding prescribed
limit in the preceding year, In this case it is chargeable to GST.(Recipient shall pay tax under reverse
charge)
(b) a Senior Advocate by way of legal services to-
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes
it eligible for exemption from registration.
(iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or
Government Entity
Example:
(i) Mr. X an Senior Advocate has given services to Mr. Y an advocate, In this case it is exempt from GST
provided turnover of Mr. Y is not exceeding prescribed limit in the preceding year otherwise it is taxable
and Mr. Y will pay tax under Reverse Charge. (In this case no special exemption rather advocate receiving
service shall also be treated like business entity)
 Exemption from GST 316

(ii) Mr. X an Senior Advocate has given services to Mr. Y a business entity with turnover upto prescribed
limit in the preceding year, In this case it is exempt from GST.
(iii) Mr. X an Senior Advocate has given services to Mr. Y a business entity with turnover exceeding
prescribed limit in the preceding year, In this case it is chargeable to GST.(Recipient shall pay tax under
reverse charge)

(c) an Arbitral Tribunal to –

(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the preceding financial year as makes
it eligible for exemption from registration;
(iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or
Government Entity.
"business entity" means any person carrying out business. The term business shall have the same meaning
as given u/s 2(17) of CGST Act.
Example of services by Arbitral Tribunal / Advocates
Sl. No. Service Provider Service Receiver Taxable/Exempt Taxability
01. Arbitral Tribunal Mr. A Exempt
02. Arbitral Tribunal ABC Ltd. Exempt
(Turnover ₹8 Lakh in the
preceding year)
03. Arbitral Tribunal ABC Ltd. Taxable Reverse Charge
(Turnover ₹45 Lakh applicable and Service
preceding year) Recipient shall be
liable to pay GST.
04. Mr. A Mr. B Exempt
(An individual (an individual advocate)
advocate)
05. Mr. A Mr. B Exempt
(an individual
advocate)
06. Mr. A ABC Ltd. Exempt
(An individual (Turnover ₹7 Lakh in the
advocate) preceding year)
07. XYZ ABC Ltd. Taxable Reverse Charge
(Partnership firm of (Turnover ₹43 Lakh applicable and Service
Advocates) preceding year) Recipient shall be
liable to pay GST.
Example: Pyarelal & Co. has obtained registration under GST in the preceding financial year. In the current
FY, it sought legal consultancy services for its business from Nyay Advocates – a partnership firm of
advocates. The legal services so received by Pyarelal & Co. are not exempt because its aggregate turnover
exceeds the threshold exemption limit of registration in the preceding financial year. Further, the tax on the
said legal services is payable by Pyarelal & Co. under reverse charge.
Example:
(i) Mr. X an Advocate has given services to Mr. Y an advocate, In this case it is exempt from GST.
(ii) Mr. X an Advocate has given services to Mr. Y a business entity with turnover upto prescribed limit in
the preceding year, In this case it is exempt from GST.
(iii) Mr. X an Advocate has given services to Mr. Y a business entity with turnover exceeding prescribed
limit in the preceding year, In this case it is chargeable to GST.(Recipient shall pay tax under reverse
charge)
 Exemption from GST 317

Example:
(i) Mr. X an Senior Advocate has given services to Mr. Y an advocate, In this case it is exempt from GST
provided turnover of Mr. Y is not exceeding prescribed limit in the preceding year otherwise it is taxable
and Mr. Y will pay tax under Reverse Charge. (In this case no special exemption rather advocate receiving
service shall also be treated like business entity)
(ii) Mr. X an Senior Advocate has given services to Mr. Y a business entity with turnover upto prescribed
limit in the preceding year, In this case it is exempt from GST.
(iii) Mr. X an Senior Advocate has given services to Mr. Y a business entity with turnover exceeding
prescribed limit in the preceding year, In this case it is chargeable to GST.(Recipient shall pay tax under
reverse charge)

6. Services Provided by Government

Services by the Government
Services by the Central Government, State Government, Union territory or local authority shall be exempt
from GST and such services may be:
Services by way of issuance of passport, visa, driving licence, birth certificate or death certificate, Services
by way of registration required under any law, testing, calibration, safety check or certification relating to
protection or safety of workers, consumers or public at large, including fire license, required under any law.
(E-61/47)

The following services of the Government shall be taxable. (E-6)

(a) services by the Department of Posts, however, services by way of post card, inland letter, book post and
ordinary post (envelopes weighing less than 10 grams) shall be exempt from GST.(E-24C)
(b) Services by Ministry of Railways (Indian Railways)
(c) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport.
(d) transport of goods or passengers. or
(e) any service, other than services covered under entries (a) to (c) above, provided to business entities
which are registered under GST e.g. renting of immovable property/advertisement by railways/security
services/ Logistics Services etc. but if amount charged for such services is upto ₹5,000, it will be exempt,
e.g. ABC limited is a business entity registered under GST and it has taken one of the specified services and
paid ₹ 4,000, in this case, no GST is payable. (E-9)
Further if such services are given to business entities which is unregistered, it will be exempt from GST
irrespective of the amount of services but exemption shall not be available for Renting of Immovable
property, e.g. ABC limited is a business entity which is unregistered and it has taken one of the specified
services and paid ₹ 40,000, in this case, no GST is payable. (E-7)
Services provided by the Central Government, State Government, Union territory or local authority to
another Central Government, State Government, Union territory or local authority shall be exempt. (E-8)
Services by an old age home run by Central Government, State Government or an entity registered under
section 12AA or 12AB of the Income-tax Act, 1961 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. (E-9D)
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. (E-34A)
Services provided by the Central Government, State Government, Union territory or local authority by
way of assignment of right to use natural resources to an individual farmer for cultivation of plants
and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or
other similar products. (E-63)
Services provided by the Central Government, State Government, Union territory by way of deputing
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. (E-65)
 Exemption from GST 318

Services by Central Government, State Government or local authority in relation to a function covered
under article 243G/243W of the Constitution. Such functions are given in eleventh/twelfth schedule of
Constitution, eg. Khadi, village and cottage industries, Drinking water, Roads, culverts, bridges, ferries,
waterways and other means of communication, Libraries, Cultural activities, Markets and fairs.
Service by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or
application fee or by whatever name it is called.
Services provided by Govt. by way of tolerating non-performance of a contract by the supplier of
service shall be exempt from GST. Thus, any consideration received by the Government from any person or
supplier for non-performance of contract is exempted from tax. (E-62)
E.g. 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 10th
July, it was agreed by both the parties that M/s. ABC shall complete the construction work and handover the
project on or before 31st December.
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 31st December. As per the contract, the Department asked for
damages/penalty from M/s. ABC. 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.
Leasing Services
Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable
in respect of service by way of granting of long term lease of 30 years, or more) of industrial plots or plots
for development of infrastructure for financial business, provided by the State Government Industrial
Development Corporations or Undertakings or by any other entity having 20% or more ownership of Central
Government, State Government, Union territory to the industrial units or the developers in any industrial or
financial business area.
Explanation - For the purpose of this exemption, the Central Government, State Government or Union
territory shall have 20% or more ownership in the entity directly or through an entity which is wholly owned
by the Central Government, State Government or Union territory.
The leased plots shall be used for the purpose for which they are allotted, that is, for industrial or
financial activity in an industrial or financial business area. (E-41)
7. Service of transportation of passengers, with or without accompanied belongings, by— (E-15/17)
(a) stage carriage other than air- conditioned stage carriage but it is taxable if services have been provided by
ECO u/s 9(5)
(b) railways in a class other than—
(i) first class; or
(ii) an air-conditioned coach;
(c) metro, monorail or tramway;
(d) inland waterways;
(e) non-air conditioned contract carriage other than radio taxi, for transportation of passengers, excluding
tourism, conducted tour, charter or hire. It is always taxable if service have been provided by ECO u/s
9(5).
(f) public transport, other than predominantly for tourism purpose, in a vessel between places located in
India; and
(g) metered cabs or auto rickshaws (including e-rickshaws) but if service is given by ECO covered under
section 9(5), it will be taxable.
(h) air in economy class, embarking from or terminating in an airport located in the State of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in
West Bengal;
 Exemption from GST 319

Normal public ships or other vessels that sail between places located in India would be covered in this entry
even if some of the passengers on board are using the service for tourism because predominantly, such
service is not for tourism purpose. However, services provided by leisure/charter vessels/a cruise ship,
predominant purpose of which is tourism, would not be covered in here even if some of the passengers in
such vessels are not tourists.
Example: Services by way of transportation of passengers [not predominantly for tourism purpose] on a
vessel, from Kolkata to Port Blair (mainland to island) or Port Blair to Rose Island (inter island) is exempt.
Question: Mr. A boarded Rajdhani Express (fully AC train) from Kanpur on January 5, 2023 and
disembarked at New Delhi. He hired a car from a local cab operator for the whole day on a lumpsum
consideration and visited Delhi’s historical monuments. In the night, he took the Metro to International
Airport and boarded a flight to Mumbai. At Mumbai Airport, he used a radio taxi for going to his Hotel. Mr.
A returned to Kanpur from a different train, Pushpak Express in sleeper class.
With reference to the provisions of GST, examine the leviability of GST on the various modes of travel
undertaken by Mr. A.
Solution: In the given case, GST leviability on the various passenger transportation services used by Mr. A
will be determined as under:
(i) Rail travel in AC train – Not covered under exemption list and thus, liable to GST.
(ii) Travel in a car rented for the whole day on a lumpsum consideration – Since travel by only metered cabs
and auto rickshaw is covered in Exemption list, travel in a car rented for the whole day on a lumpsum
consideration will be liable to GST.
(iii) Metro travel – Covered in exemption and hence, not taxable.
(iv) Air travel – Not covered under exemption and thus, liable to GST.
(v) Radio taxi travel – Not covered in exemption and hence taxable.
(vi) Rail travel in sleeper class - Covered in exemption and hence, not taxable.

8. Goods Transportation Services (E-18)

Services by way of transportation of goods-
(a) by road except the services of—
(i) a goods transportation agency;
(ii) a courier agency;
(b) by inland waterways.
Goods transport agency means any agency which provides service in relation to transport of goods by
road and issues consignment note. Individual truck/tempo operators who do not issue any consignment
note are not covered within the meaning of the term GTA. As a result, the services provided by such
individual transporters who do not issue a consignment note will be exempt from GST.
Example: 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.

9. Services provided by a goods transport agency, by way of transport in a goods carriage of – (E-21)
(i) agricultural produce;
(ii) milk, salt and food grain including flour, pulses and rice;
(iii) organic manure;
(iv) newspaper or magazines registered with the Registrar of Newspapers;
(v) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(vi) defence or military equipments.

10. Services by way of transportation by rail or a vessel from one place in India to another of the
following goods – (E-20)
 Exemption from GST 320

(i) agricultural produce;

(ii) milk, salt and food grain including flour, pulses and rice;
(iii) organic manure;
(iv) newspaper or magazines registered with the Registrar of Newspapers;
(v) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(vi) defence or military equipments.
11. Services provided by a GTA to an unregistered individual, unregistered HUF or registered casual
taxable person shall be exempt from GST. (E-21A)
Illustration 9: Answer with respect to applicability of GST in the following cases during the month of June,
2022:
(i) Transport of milk, salt and food grain including flours, pulses and rice and newspaper registered with
the Registrar of Newspapers by a goods transport agency in a goods carriage.
(ii) Transportation of petroleum and petroleum products and household effects by railways.
(iii) Transportation of postal mails or mail bags by a vessel.
Solution:
(i) Exempt. Services provided by a goods transport agency by way of transportation of milk, salt and food
grain including flours, pulses and rice and newspaper registered with the Registrar of Newspapers are
exempt from GST.
(ii) Taxable. Transportation of petroleum and petroleum products and household effects by railways are not
exempt from GST.
(iii) Taxable. Transportation of postal mails or mail bags by a vessel are not exempt from GST.
Illustration 10: 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 of books on a consignment transported in a single goods ₹ 3,000
carriage
C Transportation of chairs for a single consignee in the goods carriage ₹ 600
Solution:
Customer Nature of services Provided Amount Taxability
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.
consignment transported in a
single goods carriage
C Transportation of chairs for a ₹600 GST is payable.
single consignee in the goods
carriage
Question: Babloo Transporters, a Goods Transport Agency, transported relief materials meant for victims of
Kerala floods, a natural disaster, by road from Delhi to Ernakulam, for a company. Babloo Transporters is of
the view that it is not liable to pay GST on the said services provided as said services are exempt.
You are required to advice it on the said issue.
Answer: Services provided by a goods transport agency, by way of transport in a goods carriage of relief
materials meant for victims of, inter alia, natural or man-made disasters, calamities, are exempt from GST.
Therefore, services provided by Babloo Transporters will be exempt from GST.
 Exemption from GST 321

12. Banking and Financial Services (E-27)

Services by way of—
(a) 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);
(b) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange
or amongst banks and such dealers.

Interest: means interest payable in any manner in respect of any moneys borrowed or debt incurred
(including a deposit, claim or other similar right or obligation) but does not include any service fee or other
charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not
been utilized.
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 thus, represent taxable consideration.
13. Services provided by a banking company to Basic Saving Bank Deposit (BSBD) account holders
under Pradhan Mantri Jan Dhan Yojana (PMJDY). (E-27A)
14. Services to an acquiring bank, by any person in relation to settlement of an amount upto ₹ 2,000 in a
single transaction transacted through credit card, debit card, charge card or other payment card service.
“Acquiring bank” means any banking company, financial institution including non-banking financial
company or any other person, who makes the payment to any person who accepts such card. (E- 35)
Illustration 11: M/s. Apna Bank Limited, a scheduled commercial bank, has furnished the following details
for the month of August:
Particulars Amount [₹ 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 saving account holder 01
Compute the value of taxable supply.
Answer:
Computation of value of taxable supply of M/s. Apna Bank Limited for the month of August:
Particulars Amount in
crores (₹)
Housing loan extended to customers Nil
[Since money does not constitute goods, extending housing loan is not a supply.]
Processing fee collected on sanction of loan 20
[Interest does not include processing fee on sanction of the loan. Hence, the same is taxable.]
Commission collected on bank guarantee 30
[Any commission collected over and above interest on loan, advance or deposit are not exempt.]
Interest income on credit card issued by the bank 40
[Services by way of extending loans in so far as the consideration is represented by way of
interest are exempt from tax. However, interest involved in credit card services is specifically
excluded from this exemption entry.]
Interest received on housing loan Nil
[Services by way of extending loans in so far as the consideration is represented by way of
interest are exempt from tax.]
Minimum balance charges collected from current account and saving account holder 01
[Any charges collected over and above interest on loan, advance or deposit are not exempt.]
 Exemption from GST 322

Value of taxable supply 91

Illustration 12: Robinson Bank Ltd. furnishes the following information relating to services provided and
the gross amount received during the month of December, 2022. Compute the value of taxable service and
GST payable: ₹
(i) Amount of commission received for debt collection service 10,00,000.00
(ii) Discount earned on bills discounted 4,50,000.00
(iii) Inter se sale or purchase of foreign currency amongst banks 5,70,000.00
(iv) Charges received on credit card and debit card facilities extended 3,80,000.00
(v) Penal interest recovered from the customers for the delay in repayment of loan 2,60,000.00
(vi) Commission received for service rendered to Government for tax collection 6,00,000.00
(Show the workings with explanation wherever required)
Presume all the above amounts are inclusive of GST and also rate of CGST @ 9% and SGST @ 9%.
Solution: Computation of value of taxable service and GST Payable by Robinson Bank Ltd.

Sl. No Particulars Amount in (₹)

(i) Amount of commission received for debt collection service 10,00,000
(ii) Discount earned on bills discounted Nil
(iii) Inter se sale or purchase of foreign currency amongst banks Nil
(iv) Charges received on credit card and debit card facilities extended 3,80,000
(v) Penal interest recovered from the customers for the delay in repayment of loan Nil
(vi) Commission received for service rendered to Government for tax collection 6,00,000
Total 19,80,000
Value of Taxable Services [ 19,80,000/118 x 100] 16,77,966.10
CGST @ 9% 1,51,016.95
Rounded off 1,51,017.00
SGST @ 9% 1,51,016.95
Rounded off 1,51,017.00
Notes:
1. Debt collection GST is taxable.
2. Discount is covered in exemption.
3. Inter se sale or purchase of foreign currency is covered in the exemption hence no GST.
Illustration 13: Euro Bank Ltd. furnishes the following information relating to services provided and the
gross amount received (excluding GST):
Particulars Amount (₹)
Interest on overdraft 5,00,000
Interest on loans with a collateral security 6,00,000
Interest on corporate deposits 10,00,000
Administrative charges (over and above interest) on loans, advances and deposits 6,00,000
Sale of foreign exchange to general public 15,00,000
Service charges relating to issuance of Certificates of Deposit (CDs) 20,00,000
Compute the value of taxable service and the GST liability of Euro Bank Ltd. considering the rate of CGST
at 9% and SGST at 9%.
Solution: Computation of value of taxable service and GST liability of Euro Bank Ltd.
Particulars Amount (₹)
Interest on overdraft Nil
Interest on loans with a collateral security Nil
Interest on corporate deposits Nil
Administrative charges (over and above interest) on loans, advances and deposits 6,00,000
 Exemption from GST 323

Sale of foreign exchange to general public 15,00,000

Service charges relating to issuance of CD 20,00,000
Value of taxable service 41,00,000
CGST @ 9% [₹41,00,000 × 9%] 3,69,000
SGST @ 9% [₹41,00,000 × 9%] 3,69,000

15. Services related to Charitable and Religious Activities (E-1)

Services provided by a Charitable Trust which is registered under section 12AA/12AB of the Income Tax
Act shall be exempt from GST but only with regard to the following services:
1. Public Health by way of Care or counseling of terminally ill persons or persons with severe physical or
mental disability or persons afflicted with HIV or AIDS or persons addicted to a dependence-forming
substance such as narcotics drugs or alcohol. Public awareness of preventive health, family planning or
prevention of HIV infection;
2. Advancement Of Religion, spirituality or yoga;
3. Advancement of educational programmes/skill development relating to (i) abandoned, orphaned or
homeless children, (ii) physically or mentally abused and traumatized persons, (iii) Prisoners, (iv) persons
over the age of 65 years residing in a rural area.
4. Preservation of environment including watershed, forests & wildlife.
If the Trust has provided any other service, it will be taxable e.g. grant of advertising rights to a person on
the premises of the charitable/religious trust or on publications of the trust, or granting admission to events,
functions, celebrations, shows against admission tickets or fee etc. would attract GST.

Arranging yoga and meditation camp by charitable trusts

Services provided by entity registered under section 12AA or 12AB of the Income-tax Act, 1961 by way of
advancement of religion, spirituality or yoga are exempt.
Residential programmes or camps where the fee charged includes cost of lodging and boarding shall also be
exempt as long as the primary and predominant activity, objective and purpose of such residential
programmes or camps is advancement of religion, spirituality or yoga.
However, if charitable or religious trusts primarily provide accommodation or serve food and drinks against
consideration, such activities will be taxable. Similarly, activities such as holding of fitness camps or classes
such as those in aerobics, dance, music etc. will be taxable.
GST on services provided TO charitable trusts
Services provided to charitable or religious trusts are taxable.

16. Religious ceremony / activities (E-13)

(a) conduct of any religious ceremony;
(b) 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 or 12AB of the Income-tax Act, 1961.
However, nothing contained in entry (b) of this exemption shall apply to-
(i) renting of rooms where charges are ₹ 1,000 or more per day;
(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 or commerce where charges are ₹ 10,000 or more per
month.
17. The services provided by the Haj Committee and Kumaon Mandal Vikas Nigam Limited (KMVN)
in relation to pilgrimage to Mecca and Kailash- Mansarovar respectively are not liable to GST. (E-60)
Example: KMVN supplies numerous services, namely, medical facilities, catering services, security,
accommodation services, etc. to the pilgrims undertaking Kailash-Mansarovar pilgrimage. Such services
provided by KMVN in respect of the religious pilgrimage to Kailash-Mansarovar are covered under entry 60
and thus, are exempt.
 Exemption from GST 324

18. Performance by an Artist (E-78)

Services by an artist by way of a performance 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.
The activities by a performing artist in folk or classical art forms of music, dance, or theatre are exempt if
consideration does not exceed ₹ 1,50,000. However, if consideration from such activities exceeds ₹1,50,000,
entire consideration is subject to GST.
Further, all other activities by an artist in other art forms e.g. western music or dance, modern theatres,
performance of actors in films or television serials would be taxable. Similarly activities of artists in still art
forms e.g. painting, sculpture making etc. are taxable.
However, the exemption shall not apply to service provided by such artist as a brand ambassador. ‘Brand
ambassador’ means a person engaged for promotion or marketing of a brand of goods, service, property or
actionable claim, event or endorsement of name, including a trade name, logo or house mark of any person.
Illustration 14: Determine the GST payable, if any, in each of the following independent cases, assuming
that the rate of GST is 18% and that the service providers are registered:
(a) Bollywood dance performance by a film actor in a film and consideration charged is ₹1,45,000.
(b) Carnatic music performance by a classical singer to promote a brand of readymade garments and
consideration charged is ₹ 1,30,000.
(c) Carnatic music performance by a classical singer in a music concert and consideration charged is
₹1,55,000.
(d) Kathak dance performance by a classical dancer in a cultural programme and consideration charged is
₹1,45,000.
Answer: (a) Bollywood Dance performance by a film actor in a film is not exempt from GST even though
the consideration charged is less than threshold limit of ₹ 1,50,000. The reason for the same is that the dance
performance by an artist is exempt only if it is a performance in folk or classical art forms of dance.
(b) Carnatic music performance by a classical singer to promote a brand of readymade garments is not
exempt from GST even though, the consideration charged is less than threshold limit of ₹ 1,50,000 and it is
a performance in classical art forms of music. The reason for the same is that the said exemption is not
applicable to service provided by such artist as a brand ambassador.
(c) Carnatic music performance by a classical singer in a music concert is not exempt from GST even
though it is a performance in classical art forms of music. The reason for the same is the consideration
charged for the service exceeds ₹ 1,50,000. Consequently, entire consideration charged is subject to GST as
follows:
= ₹ 1,55,000 × 18% = ₹ 27,900
(d) Kathak dance performance by a classical dancer in a cultural programme is exempt from GST as it is a
performance in classical art forms of dance and consideration charged does not exceed ₹ 1,50,000 [i.e.
₹1,45,000].
Question: RXL Pvt. Ltd. manufactures a 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.
Examine whether Ms. Ahana Kapoor will be required to pay any GST?
Answer: 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.
 Exemption from GST 325

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 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.

19. Services by an Unincorporated Body or a Non- Profit Entity

Service by a non- profit entity registered under any law for the time being in force, to its own members as
(a) as a trade union or
(b) up to an amount of ₹ 7,500 per month per member for sourcing of goods or services from a third person
for the common use of its members in a housing society or a residential complex.(E-77)

If any such RWA has given services to its members and amount charged is exceeding ₹7,500 p.m., in that
case GST has to be charged on the entire amount. If RWA is unregistered, no GST shall be charged. If any
person has two flats in the locality, ₹7,500 shall be per flat.
e.g. A particular RWA has turnover upto ₹20 lakh and is unregistered and it is charging ₹10,000 from each
of its member as maintenance charge, in this case it is exempt from GST but if turnover is exceeding ₹20
lakh and RWA is registered, in this case RWA is required to charge GST on entire amount of ₹10,000.
20. Services provided by an unincorporated body or a non-profit entity registered under any law for the
time being in force, engaged in,-
(i) activities relating to the welfare of industrial or agricultural labour or farmers; or
(ii) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education,
social welfare, charitable activities and protection of environment,
to its own members against consideration in the form of membership fee upto an amount of ₹ 1000/- per
member per year. (E-77A)
21. Tour operator service, which is performed partly in India and partly outside India, supplied by a tour
operator to a foreign tourist, to the extent of the value of the tour operator service which is performed
outside India Provided that value of the tour operator service performed outside India shall be such
proportion of the total consideration charged for the entire tour which is equal to the proportion which the
number of days for which the tour is performed outside India has to the total number of days comprising the
tour, or 50% of the total consideration charged for the entire tour, whichever is less:
Provided further that in making the above calculations, any duration of time equal to or exceeding 12 hours
shall be considered as one full day and any duration of time less than 12 hours shall be taken as half a day.
Explanation. — "foreign tourist" means a person not normally resident in India, who enters India for a stay
of not more than six months for legitimate non immigrant purposes.(E-52A)

Illustrations:
A tour operator provides a tour operator service to a foreign tourist as follows:—
(a) 3 days in India, 2 days in Nepal; Consideration Charged for the entire tour: Rs.1,00,000/-
Exemption: Rs. 40,000/- (=Rs.1,00,000/- x 2/5) or, Rs. 50,000/- (= 50% of Rs.1,00,000/-)
whichever is less, i.e., Rs. 40,000/-(i.e., Taxable value: Rs. 60,000/-);
(b) 2 days in India, 3 nights in Nepal; Consideration Charged for the entire tour: Rs. 1,00,000/-
Exemption: Rs. 60,000 (=Rs.1,00,000/- x 3/5) or, Rs. 50,000/- (= 50% of Rs. 1,00,000/-)
whichever is less, i.e., Rs. 50,000/-(i.e., Taxable value: Rs. 50,000/-);
(c) 2.5 days in India, 3 days in Nepal; Consideration charged for the entire tour: Rs. 1,00,000/-
Exemption: Rs. 54,545 (=Rs.1,00,000/- x 3/5.5) or, Rs. 50,000/- (= 50% of Rs.1,00,000/-)
whichever is less, i.e., Rs. 50,000/- (i.e., Taxable value: Rs. 50,000/-).
 Exemption from GST 326

22. Services by way of giving on hire –

(i) to a state transport undertaking (STU), a motor vehicle meant to carry more than 12 passengers.
(ii) to a local authority, an Electrically operated vehicle (EOV) meant to carry more than 12 passengers.
(iii) to a goods transport agency, a means of transportation of goods.
(E-22)
Q. A State Transport Undertaking has hired motor vehicles meant to carry 8 – 10 passengers from Fast Cab
Renting, a motor vehicle renting company. Give your comments as to whether any GST is payable in this
case.
Answer: Services by way of giving on hire, inter alia, to a State Transport Undertaking, a motor vehicle
meant to carry more than 12 passengers is exempt from GST.
Since the motor vehicles given on hire by Fast Cab Renting to the State Transport Undertaking are meant to
carry 8-10 passengers, the same would not be eligible for exemption and would thus, be liable to GST.
Example: 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 of goods [truck in the given case] to a GTA
[Sindhu and Bansal Transport Agency], are exempt from tax.
Example: ST Ltd. has given on hire 5 trucks to Titu Transporters of Delhi (a goods transport agency) for
transporting goods in Central and West Delhi. The hiring charges for the trucks are ₹ 7,500 per truck per
day. Examine whether GST is payable in the given case.
Answer: GST is not payable in case of hiring of trucks to Titu Transporters. Services by way of giving on
hire, inter alia, to a goods transport agency, a means of transportation of goods are exempt.

23. Services provided by an Incubatee

Services provided by an incubatee up to a total turnover of ₹ 50 lakh in a financial year subject to the
following conditions, namely:-
(a) the total turnover had not exceeded ₹ 50 lakh during the preceding financial year; and
(b) a period of 3 years has not elapsed from the date of entering into an agreement as an incubatee. (E- 44)
Incubatee: means an entrepreneur located within the premises of a Technology Business Incubator (TBI)/
Science and Technology Entrepreneurship Park (STEP) recognised by the National Science and Technology
Entrepreneurship Development Board of the Department of Science and Technology, Government of India
(NSTEDB) and who has entered into an agreement with the TBI/STEP to enable himself to develop and
produce hi-tech and innovative products.
Taxable services, provided by a TBI/STEP recognised by NSTEDB or bio- incubators recognised by the
Biotechnology Industry Research Assistance Council, under the Department of Biotechnology, Government
of India (BIRAC). (E-48)

24. Right to Admission to Various Events

Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo. (E-
79)
Services by way of admission to a protected monument so declared under the Ancient Monuments and
Archaeological Sites & Remains Act 1958 or any of the State Acts, for the time being in force. (E-79A)
Services by way of right to admission to-
(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event other than a recognised
sporting event;
(c) recognised sporting event;
(d) planetarium,
 Exemption from GST 327

where the consideration for right to admission is not more than ₹ 500 per person. (E-81)
Recognised sporting event means any sporting event,-
(i) organised by a recognised sports body where the participating team or individual represent any district,
state, zone or country;
(ii) organized
(A) by a national sports federation, or its affiliated federations, where the participating teams or
individuals represent any district, State or zone;
(B) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of
India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics
Bharat;
(C) by Central Civil Services Cultural and Sports Board;
(D) as part of national games, by Indian Olympic Association; or
(E) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme.
Recognised sports body means –
(i) the Indian Olympic Association;
(ii) Sports Authority of India;
(iii) a national sports federation recognised by the Ministry of Sports and Youth Affairs of the Central
Government, and its affiliate federations;
(iv) national sports promotion organisations recognised by the Ministry of Sports and Youth Affairs of the
Central Government;
(v) the International Olympic Association or a federation recognised by the International Olympic
Association; or
(vi) a federation or a body which regulates a sport at international level and its affiliated federations or
bodies regulating a sport in India.

25. Services provided by Specified Bodies

Services by the Employees’ State Insurance Corporation to persons governed under the Employees’ State
Insurance Act, 1948. (E-30)
Services provided by the Employees Provident Fund Organisation to the persons governed under the
Employees Provident Funds and the Miscellaneous Provisions Act, 1952. (E-31)
Services by Coal Mines Provident Fund Organisation to persons governed by the Coal Mines Provident
Fund and Miscellaneous Provisions Act, 1948.(E-31A)
Services by National Pension System (NPS) Trust to its members against consideration in the form of
administrative fee. (E-31B)
26. General Insurance Business Services
Services of general insurance business provided under following schemes –
(a) Hut Insurance Scheme;
(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna;
(c) Scheme for Insurance of Tribals;
(d) Janata Personal Accident Policy and Gramin Accident Policy;
(e) Group Personal Accident Policy for Self-Employed Women;
(f) Agricultural Pumpset and Failed Well Insurance;
(g) premia collected on export credit insurance;
(h) Restructured Weather Based Crop Insurance Scheme (RWCIS), approved by the Government of India
and implemented by the Ministry of Agriculture;
(i) Jan Arogya Bima Policy;
 Exemption from GST 328

(j) Pradhan Mantri Fasal Bima Yojana (PMFBY);

(k) Pilot Scheme on Seed Crop Insurance;
(l) Central Sector Scheme on Cattle Insurance;
(m) Universal Health Insurance Scheme;
(n) Rashtriya Swasthya Bima Yojana;
(o) Coconut Palm Insurance Scheme;
(p) Pradhan Mantri Suraksha BimaYojna;
(q) Niramaya Health Insurance Scheme implemented by the National Trust for the Welfare of Persons with
Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999.
(r) Bangla Shasya Bima
(E-35)
27. Life Insurance Business Services
Services of life insurance business provided by way of annuity under the National Pension System. (E-28)
Services of life insurance business provided by the Army, Naval and Air Force Group Insurance Funds
to members of the Army, Navy and Air Force. (E-29)
Services of life insurance provided by the Naval Group Insurance Fund to the personnel of Coast Guard.
(E-29A)
Services of life insurance provided by the Central Armed Police Forces Group Insurance Funds to their
members. (E-29B)
Services of life insurance business provided under following schemes-
(a) Janashree Bima Yojana;
(b) Aam Aadmi Bima Yojana;
(c) Life micro-insurance product having maximum amount of cover of ₹ 2,00,000;
(d) Varishtha Pension BimaYojana;
(e) Pradhan Mantri Jeevan Jyoti BimaYojana;
(f) Pradhan Mantri Jan DhanYogana;
(g) Pradhan Mantri Vaya Vandan Yojana. (E-36)
Pension schemes
Services by way of collection of contribution under the Atal Pension Yojana. (E-37)
Services by way of collection of contribution under any pension scheme of the State Governments. (E-38)
28. Business Facilitator/Correspondent
Services by the following persons in respective capacities –
(a) business facilitator or a business correspondent to a banking company with respect to accounts in its rural
area branch;
(b) any person as an intermediary to a business facilitator or a business correspondent with respect to
services mentioned in entry (a); or
(c) business facilitator or a business correspondent to an insurance company in a rural area. (E-39)
29. Services provided to Government
Composite supply of goods and services TO Government (E-3A)
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 the Central Government, State Government or
Union territory or local authority by way of any activity:
 in relation to any function entrusted to a Panchayat under article 243G of the Constitution or
 Exemption from GST 329

 in relation to any function entrusted to a Municipality under article 243W of the Constitution.
Example: Work of maintenance of streetlights in a Municipal area to an agency which involves apart from
maintenance, replacement of defunct lights and other spares. In this case, it is a composite supply of goods
and it will be exempt from GST if the value of goods is not more than 25% of the total value of supply.
Service provided by Fair Price Shops to Central Government, State Government or Union territory by
way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against
consideration in the form of commission or margin. (E-11A)
Services provided to the Central Government, State Government, Union territory under any insurance
scheme for which total premium is paid by the Central Government, State Government, Union territory. (E-
40)
Services provided to the Central Government, State Government, Union territory administration under
any training programme for which 75% or more of the total expenditure is borne by the Central
Government, State Government, Union territory administration. (E-72)
Services provided to the Central Government, by way of transport of passengers with or without
accompanied belongings, by air, embarking from or terminating at a RCS (Regional Connectivity Scheme)
airport, against consideration in the form of viability gap funding but exemption shall be allowed only for 3
years from the date of operation of the airport. (E-16)

30. Construction Services

• Services supplied by Electricity Distribution Utilities by way of construction, erection, commissioning,
or installation of infrastructure for extending electricity distribution network upto the tube well of the
farmer or agriculturalist for agricultural use. (E-10A)
• Transmission/distribution of electricity by an electricity transmission / distribution utility. (E-25).
However, in this regard CBIC has clarified that the other services provided by DISCOMS (distribution
companies) to consumer against charges are liable to GST such as,-
i. Application fee for releasing connection of electricity;
ii. Rental Charges against metering equipment;
iii. Testing fee for meters/transformers, capacitors etc.;
iv. Labour charges from customers for shifting of meters or shifting of service lines;
v. charges for duplicate bill [Circular No. 34/8/2018 GST dated 01.03.2018].
• Services by way of pure labour contracts of construction, erection, commissioning, or installation of
original works pertaining to a single residential unit otherwise than as a part of a residential
complex. Further it will be exempt from GST if the supply is given in connection with Housing for All
(Urban) Mission or Pradhan Mantri Awas Yojana (E-11)
31. Sponsorship of Sports Events
Services by way of sponsorship of sporting events organised -
(a) by a national sports federation, or its affiliated federations, where the participating teams or individuals
represent any district, State, zone or Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India,
All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme. (E-53)
32. Skill Development Services
Any services provided by, _
(a) the National Skill Development Corporation set up by the Government of India;
 Exemption from GST 330

(b) a Sector Skill Council approved by the National Skill Development Corporation;
(c) an assessment agency approved by the Sector Skill Council or the National Skill Development
Corporation;
(d) a training partner approved by the National Skill Development Corporation or the Sector Skill Council,
in relation to-
(i) the National Skill Development Programme implemented by the National Skill Development
Corporation; or
(ii) a vocational skill development course under the National Skill Certification and Monetary Reward
Scheme; or
(iii) any other Scheme implemented by the National Skill Development Corporation. (E-69)
Services of assessing bodies empanelled centrally by the Directorate General of Training, Ministry of Skill
Development and Entrepreneurship by way of assessments under the Skill Development Initiative Scheme.
(E-70)
Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya
Grameen Kaushalya Yojana (DDUGKY) implemented by the Ministry of Rural Development,
Government of India by way of offering skill or vocational training courses certified by the National Council
for Vocational Training. (E-71)
33. Services provided to a recognised sports body by-
(a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event
organised by a recognized sports body;
(b) another recognised sports body.
However, services by individuals such as selectors, commentators, curators, technical experts are taxable.
The service of a player to a franchisee which is not a recognized sports body is also taxable. The term
‘recognised sports body’ has been defined earlier in this chapter. (E-68)
Question: Poorva acts as a Team Manager for Indian Sports Authority (ISA), a recognised sports body, for
a tennis tournament organised by a multinational company and received a remuneration of ₹2,00,000.
Determine whether GST is payable on the remuneration received by Poorva.
Answer: Services provided by a team manager to a recognised sports body for participation in a sporting
event are exempt from GST provided said sporting event is organised by a recognized sports body.
In the given case, the services are being provided by a team manager to a recognised sports body, but the
sporting event is not organised by a recognised sports body. Therefore, the services provided by Poorva are
not exempt from GST.
34. Other Exempt Services
Supply of services associated with transit cargo to Nepal and Bhutan (landlocked countries).(E-9B)
Services by way of renting of residential dwelling for use as residence except where the residential dwelling
is rented to a registered person. In case residential building is taken on rent by the proprietor for his personal
use it will be exempt even if the proprietorship concern is registered. (E-12)
Satellite launch services supplied by Indian Space Research Organisation, Antrix Corporation Limited or
New Space India Limited. (E-19C)
Service by way of access to a road or a bridge on payment of toll charges. (E-23)
Services by way of collecting or providing news by an independent journalist, Press Trust of India or United
News of India. (E-49)
Services of public libraries by way of lending of books, publications or any other knowledge-enhancing
content or material. (E-50)
Services by an organiser to any person in respect of a business exhibition held outside India. (E-52)
Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture,
Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination. (E-58)
 Exemption from GST 331

Services by a foreign diplomatic mission located in India. (E-59)

Services by way of granting National Permit to a goods carriage to operate through-out India/ contiguous
States (E-61A)
Services by way of providing information under the RTI Act (Right to Information Act, 2005). (E-65A)
Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories,
urinal or toilets. (E-76)
Services by way of right to admission to the events organized under FIFA U-17 Women's World Cup 2020.
(E-82A)
Services by way of right to admission to the events organised under AFC Women's Asia Cup 2022. (E-82B)
Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries
directly or indirectly related to any of the events under FIFA U-17 Women’s World Cup 2020 to be hosted
in India whenever rescheduled. (E-9AA)
Services provided by and to Asian Football Confederation (AFC) and its subsidiaries directly or indirectly
related to any of the events under AFC Women's Asia Cup 2022 to be hosted in India. (E-9AB)
Services by way of transportation of goods by an aircraft from a place outside India upto the customs station
of clearance in India shall be exempt from GST. (E-19)
Services provided to a Governmental Authority by way of —
(a) water supply;
(b) public health;
(c) sanitation conservancy;
(d) solid waste management; and
(e) slum improvement and upgradation.
Shall be exempt (E-3B)
Exemption vide notification no. 9/2017 – Integrated Tax (Rate)
Import of services shall be exempt in the following cases:
(i) If services have been imported by the Central Government, State Government, Union territory, a local
authority, a governmental authority
(ii) If services have been imported by a charitable trust covered under section 12AA of Income Tax Act
(iii) If services have been imported by an individual in relation to any purpose other than commerce,
industry or any other business or profession.
No exemption shall be allowed in case of OIDAR services.
(E-10)
 Exemption from GST 332

PRACTICE PROBLEMS
Q1. With reference to the position of GST law, determine the applicability of GST in each of the
following independent cases:
(i) External asset management services received by Reserve Bank of India from overseas financial
institutions.
(ii) Service provided by an Indian tour operator to Mr. B, a Japanese National, for a tour conducted in
Europe
(iii) Services provided to a Higher Secondary School affiliated to CBSE Board by an IT company in
relation to development of a software to be used for enhancing the quality of classroom teaching.
Answer:
(i) Exempt. Services received by Reserve Bank of India from outside India in relation to
management of foreign exchange reserves have been exempted from GST. External asset
management services received by Reserve Bank of India from overseas financial institutions is a
specialized financial service in the course of management of foreign exchange reserves.
(ii) Exempt. Services provided by an Indian tour operator to a foreign tourist in relation to a tour
wholly conducted outside India have been exempted from GST.
(iii) Taxable. The following specific services provided TO an educational institution have been
exempted from GST:
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the Government;
(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.
However, the services of a development of software provided to it are not covered under any of the
specific services given above. Thus, the same will be liable to GST.
Q2. Mrs. Kiran has provided you the following details in respect of various services received/availed by her
during December, 2022:-
(i) Deposited ₹ 1,00,000 in her Savings Bank A/c. Interest of ₹ 5,000 was credited in her account on
31.12.2022.
(ii) Availed services of a mobile network operator and received a monthly bill for ₹ 2,000.
(iii) Visited an Orthopaedician (MBBS, MS) as she had severe backache and paid consultancy fee of ₹1,000.
(iv) Availed beauty treatment services from a salon for ₹ 6,000.
Notes:
1. All the amounts given above, are exclusive of GST, wherever applicable.
2. Wherever applicable, GST is to be recovered from the service receiver.
3. Rate of CGST @ 9% & SGST @ 9%.
Compute the amount of GST leviable on services availed/received by Mrs. Kiran.
Solution:
Computation of GST leviable on services received/availed by Mrs. Kiran
Particulars Value of Taxable Service
received (₹)
Amount deposited in the saving bank account and interest earned -
Services of mobile network operator 2,000.00
Visit to an orthopaedician on complaint of severe backache -
Beauty treatment services 6,000.00
Total 8,000.00
CGST @ 9% 720.00
 Exemption from GST 333

SGST @ 9% 720.00
Total 9,440.00
Q3. With reference to the provisions of GST, examine the validity of following statements:
(i) Health care services provided by a Municipality owned hospital are not covered under exemption.
(ii) Services provided to and by Reserve Bank of India are covered in exemption.
(iii) Pisciculture (breeding of fish) is not liable to GST as the same is covered under exemption.
Solution:
(i) Invalid. Services provided by Government and local authorities are covered in exemption.
(ii) Invalid. Services provided by Reserve bank of India, and to Reserve Bank of India both are taxable
services.
(iii) Valid. Services relating to agriculture are covered in exemption. Agriculture means the cultivation of
plants and rearing of all life-forms of animals, except the rearing of horses, for food, fibre, fuel, raw
material or other similar products. Therefore, breeding of fish, being agriculture, would be covered under
exemption and thus, be not liable to GST.
Q4. Following services are provided by various service providers, state whether services are taxable or not?
1. Speed post service provided by post office to Delhi govt.
2. Express parcel post service provided by post office to Rajasthan Ltd.
3. Services provided to RBI
4. Service provided by Delhi Metro Rail Corporation for transport of passengers
5. Services provided by an Indian railway for the transport of passengers in first class AC.
6. Service provided in non taxable territory.
Answer:
S. No. Particulars Taxable / Not Taxable
1. Speed post service provided by post office to Delhi Govt. Taxable
2. Express parcel post service provided by post office to Rajasthan Ltd. Taxable
3. Services provided to RBI Taxable
4. Service provided by Delhi Metro Rail Corporation for transport of Not Taxable
passengers
5. Services provided by an Indian railway for the transport of passengers in Taxable
first class AC
6. Service provided in non taxable territory Not Taxable

Q5. (i) “Not All the Services provided by an Employee to the Employers are outside the ambit (scope) of
GST”. Explain the statement with reference to GST law.
(ii) Discuss whether the following services are liable to Tax
(1) Services provided on contract basis by a person to another
(2) Services provided by a casual worker to Employer who gives wages on daily basis to the workers.
Solution:
(i) As per schedule III service rendered by an employee to the employer shall not be considered to be supply
of service i.e. it is outside the ambit of GST and no GST is payable. However it the employee has rendered
services to the employer which is not in the capacity of employee, it will be taxable e.g. Mr. X an employee
of ABC Ltd. is running one advertisement agency also and services in connection with advertisement have
been rendered to ABC Ltd., such services are taxable.
(ii) (1) If services are provided on contract basis by one person to the other, it will be considered to be
supply of service and liable to GST.
(ii) (2) Services rendered by employee to employer are not supply of service even if the employee is a
temporary employee or a casual worker and no GST is payable.
Q6. Briefly examine whether the following activities are liable to GST as per the provisions of Finance Act,
1994.
 Exemption from GST 334

(a) Mr. Aditya, a singer performs in a bus where passengers drop some coins in his bowl kept, either after
feeling rejoiced or out of compassion. Also, examine would your answer be different in (a) if Mr. Aditya is
called upon Mumbai to perform in an award show for ₹ 50,000.
(b) Mr. Ramu during long drive with his wife Sanju violated traffic rules and was imposed fine of ₹ 1,000.
Solution:
(a) Mr. Aditya is not liable to pay GST as GST is leviable on the services provided or to be provided. Mr.
Aditya has performed an activity without consideration and any activity without consideration does not
come within the ambit of definition of “supply”. In this case passengers are under no obligation to pay any
amount for listening to him nor have they engaged him for his services. (Ambit means scope)
If Mr. Aditya is called upon Mumbai to perform in an award show for ₹50,000, then this activity would
come within the ambit of definition of “supply” as it becomes an activity for a consideration. Resultantly,
this activity would be liable to GST.
(b) GST is not leviable in this case as in order to be supply, an activity has to be carried out for a
consideration. Therefore, fine being the legal consequence of Mr. Ramu’s action is not in the nature of
consideration for an activity.
Q7. XYZ & Co. is a consultancy firm based in New Delhi. It has two branch offices at Mumbai and
Singapore. Services are provided by Mumbai branch to Head Office at New Delhi and by Head Office at
New Delhi to Singapore branch. Explain which of the activities will constitute ‘supply’ under GST tax law.
Solution: Services provided by Mumbai branch to Head Office at New Delhi will be treated as distinct
persons and be considered as ‘supply’ and GST shall be payable.
When services are provided by Head Office at New Delhi to Singapore branch (located in non-taxable
territory), the two establishments are treated as establishments of distinct persons and thus, the services
provided in this case will constitute ‘supply’, however no GST shall be charged because services have been
provided in non-taxable territory.
Q8. Examine the chargeability of GST in each of the following independent cases:-
(i) Mr. Raju, an employee provides his service on contract basis to an associate company of Vikram
Enterprises, the employer.
(ii) ABC Institute is engaged in providing private tuitions to the students of Graduation Level.
All the above activities are being carried out in lieu of specific monetary consideration.
Answer:
(i) As per schedule III service rendered by an employee to the employer shall not be considered to be supply
of service i.e. it is outside the ambit of GST and no GST is payable. However, services provided outside the
ambit of employment for a consideration would be a supply. Since, services provided on contract basis i.e.
principal-to-principal basis are not services provided in the course of employment, services provided on
contract basis by a person to another would be treated as supply of service.
Thus, services provided by Mr. Raju, an employee, on contract basis to the associate company of Vikram
Enterprises, the employer, would be treated as supply of service and charged to GST.
(ii) Providing private tuitions to the students of Graduation Level for a consideration is a supply of service.
Since, private tuitions are not covered in exempted list, they would be chargeable to GST.
Q9. Mr. X has received a sum of ₹ 5,00,000 from his employer on premature termination of his contract of
employment. Mr. X needs your advice as to whether such receipts are liable to GST.
Solution: No, Mr. X need not pay any tax on such amount. Amounts paid by the employer to the employee
for premature termination of a contract of employment are treated as amounts paid in relation to services
provided by the employee to the employer in the course of employment. Hence, amounts so paid would not
be chargeable to GST.
Q10. Examine which of the following independent services are exempt from GST:
(a) Food supplied by the canteen run by a hospital to the in-patients as advised by the doctors.
(b) An RWA, registered under GST, collects the maintenance charges of ₹ 6,500 per month per member.
Answer:
(a) Services by way of health care services by a clinical establishment, an authorised medical practitioner or
para-medics are exempt from GST. Food supplied to the in-patients by a canteen run by the hospital, as
advised by the doctor/nutritionists, is a part of composite supply of healthcare and not separately taxable.
 Exemption from GST 335

(b) Supply of service by a RWA (unincorporated body or a non- profit entity registered under any law) to its
own members by way of reimbursement of charges or share of contribution up to an amount of ₹7500 per
month per member for providing services and goods for the common use of its members in a housing
society/a residential complex are exempt from GST. Hence, in the given case, services provided by the
RWA are exempt from GST since the maintenance charges collected per month per member do not exceed
₹7500.
Q11. 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 any GST is payable on the activities undertaken by him?
Answer:
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.
Q12. 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.
Answer:
(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.
Q13. Keyan Enterprises, an event organizer, provided services to Breathing Wall Ltd. by way of organizing
business exhibition in New Delhi as part of Make in India initiative. Keyan Enterprises claims that it is not
required to pay GST as the services provided by way of organizing business exhibition are exempt from
GST. Examine the technical veracity of the claim of Keyan Enterprises, in the given case.
Answer:
No, the claim made by Keyan Enterprises that it is not required to pay GST is not correct. Services provided
by an organiser to any person in respect of a business exhibition are exempt from GST only when such
business exhibition is held outside India. However, since in the given case, the exhibition is being organized
in India, the services of organization of event by Keyan Enterprises will not be exempt from GST.
Q14. 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 50,000
Amount charged by business correspondent for the services provided to the 1,00,000
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 a recognized sports body 5,20,000
Answer: Computation of value of taxable supply
Particulars (₹)
Fees charged for yoga camp conducted by a charitable trust Nil
[Note-1]
Amount charged by business correspondent for the services provided to the rural branch Nil
of a bank with respect to Savings Bank Accounts [Note-2]
Amount charged by cord blood bank for preservation of stem cells [Note-3] 5,00,000
Service provided by commentator to a recognized sports body [Note-4] 10,20,000
 Exemption from GST 336

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 taxable.
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.
 Exemption from GST 337

MULTIPLE CHOICE QUESTIONS

1. Transportation of passengers by ______________ are exempt from GST.
(a) Railway in first class
(b) Railway in an air-conditioned coach
(c) Metro
(d) All of the above
2. Transportation of _______________ by a GTA in a goods carriage is exempt from GST.
(a) Agricultural produce
(b) Organic manure
(c) Milk
(d) All of the above
3. What of the following services provided to an educational institution – Debo Public School
(providing education upto higher secondary) - are exempt from GST?
(a) Transportation of staff of the school
(b) Cleaning of the school
(c) Services relating to conduct of higher secondary exams
(d) All of the above
4. Transportation of passengers by ______________ are exempt from GST.
(a) air conditioned stage carriage
(b) radio taxi
(c) air, terminating in Nagaland airport
(d) All of the above
5. Which of the following services are exempt under GST?
(a) testing of agricultural produce
(b) supply of farm labour
(c) warehousing of agricultural produce
(d) all of the above
6. Transportation of ____by rail from Chennai to Gujarat are exempt from GST.
(i) pulses
(ii) military equipments
(iii) electric equipments
(iv) biscuits
(a) (i) & (ii)
(b) (i) & (iii)
(c) (ii) & (iv)
(d) all of the above
7. Services by way of warehousing of ---------is taxable under GST.
(i) pulses
(ii) cereals
(iii) fruits
(iv) sugar
8. Banking services provided by Department of post:
(a) Taxable & Reverse Charge Mechanism is applicable
(b) Taxable & Normal Charge is applicable
(c) Exempt from GST
(d) Nil rated
9. Which is a wrong statement?
(a) All services of Department of Post are exempted
(b) All services by State/Central Governments/local authorities in relation to an aircraft or a vessel in a Port
or an Airport are exempted
 Exemption from GST 338

(c) All services by State/Central Governments/local authorities in relation to transport of passengers are
exempted
(d) All the above mentioned
10. Which exemption option is right from the following?
(a) For letting out any immovable property
(b) For letting out any residential dwelling for use as residence
(c) For letting out any residential property irrespective of its use
(d) For none of the above
11. Transportation of passengers exempted if –
(a) It is by air-conditioned stage carriage
(b) It is by air-conditioned contract carriage
(c) It is by non-air-conditioned stage carriage for tourism, charter or hire
(d) None of the above
12. Transportation of passengers is exempted –
(a) In an air-conditioned railway coach
(b) In a vessel for public tourism purpose between places in India
(c) In a metered cab/auto rickshaw / e rickshaw
(d) In all the above mentioned
13. Transportation of goods is not exempted if it is –
(a) by a goods transport agency / courier agency
(b) by inland waterways
(c) by an aircraft from a place outside India upto the customs station of clearance in India
(d) by all the above mentioned
14. Transportation of agricultural produces, milk, salt and food grain including flour, pulses and rice,
'relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap',
newspaper or magazines registered with the Registrar of Newspapers - is exempted –
(a) If it is by a goods transport agency
(b) If it is by a rail - within India
(c) If it is by a vessel - within India
(d) If it is by all of the above
15. Which of the following is exempted –
(a) Services by way of loading, unloading, packing, storage or warehousing of rice
(b) Services by way of loading and unloading of jute
(c) Services by way of packing and storage or warehousing of rubber
(d) None of the above
16. If the aggregate turnover of in FY 2021-22 of M/s ABCD Enterprises, Kanchipuram, Tamil Nadu,
India was ₹18 lakh, exemption is available for the following services rendered to ABCD Enterprises –
(a) Arbitral Tribunal services
(b) Legal services by firm of advocates
(c) Legal services by senior advocate
(d) All of the above
17. Which of the following is not exempted -?
(a) Health care service to human beings by authorized medical practitioners / para medics
(b) Health care services to Animals/Birds
(c) Warehousing of Agriculture Produce
(d) Rearing horses
18. Which of the following are exempted services?
(a) Services by an artist by way of a performance in folk or classical art forms of music/ dance / theatre with
consideration therefor not exceeding ₹ 1 lakh
(b) Services by an artist by way of a performance in folk or classical art forms of music/ dance with
consideration therefor not exceeding ₹ 1.5 lakh
 Exemption from GST 339

(c) Services by an artist by way of a performance in folk or classical art forms of music/ dance / theatre with
consideration therefor not exceeding ₹ 1.5 lakh
(d) Services by an artist as a brand ambassador by way of a performance in folk or classical art forms of
music/ dance / theatre with consideration therefor not exceeding ₹ 1.5 lakh
19. Services by educational institution is exempted if the services are to –
(a) Any common man
(b) Its own students, faculty / staff
(c) Both a & b
(d) None of the above
20. Hair transplant services provided to Mr. A residing in Delhi by Dr. Batra from Delhi and charged
₹40,00,000. GST Payable shall be
(a) Nil
(b) IGST – ₹7,20,000
(c) CGST- ₹3,60,000 & SGST- ₹3,60,000
(d) CGST- ₹7,20,000
21. Ambulance services provided to Mr. A residing in Delhi by Ganga Ram Hospital from Delhi and
charged ₹40,00,000. GST Payable shall be
(a) Nil
(b) IGST – ₹7,20,000
(c) CGST- ₹3,60,000 & SGST- ₹3,60,000
(d) CGST- ₹7,20,000
22. Mortuary services provided to Mr. A residing in Delhi by Gaurav Mortuary services, Punjabi
Bagh from Delhi and charged ₹1,00,000. GST Payable shall be
(a) Nil
(b) IGST – ₹18,000
(c) CGST- ₹9,000 & SGST- ₹9,000
(d) CGST- ₹18,000
23. Educational institution" means an institution providing services by way of-
(a) pre-school education and education up to higher secondary school or equivalent.
(b) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being
in force.
(c) education as a part of an approved vocational education course.
(d) all the above
(e) none of the above
24. Which of the following is exempt from GST.
(i) Legal services provided to a business entity with an aggregate turnover up to prescribed limit in the
preceding financial year.
(ii) Legal services provided to a business entity with an aggregate turnover up to prescribed limit in the
current financial year.
(iii) Legal services provided to a business entity with an aggregate turnover exceeding prescribed limit in the
preceding financial year.
(iv) Legal services provided to a business entity with an aggregate turnover exceeding prescribed limit in the
current financial year.
(a) all the above is exempt.
(b) only (i) is exempt
(c) both (i) & (iii) is exempt
(d) (i),(ii) & (iii) is exempt
(e) none of these is exempt
25. Renting of agro machinery in Delhi to an agricultural farm(in Delhi) of ₹10,00,000. GST Payable
shall be
(a) CGST – ₹1,80,000
(b) SGST - ₹1,80,000
 Exemption from GST 340

(c) CGST- ₹90,000 and SGST- ₹90,000

(d) Nil
26. Post office of Ashok Vihar, Delhi issued post card (less than 10 gram) and collected ₹1,00,000 from
its customer in Delhi, in this case GST Payable shall be
(a) CGST – ₹18,000
(b) SGST - ₹18,000
(c) CGST- ₹9,000 and SGST- ₹9,000
(d) Nil
27. Post office of Ashok Vihar, Delhi rendered speed post services and charged ₹1,00,000 from its
customer in Delhi, in this case GST Payable shall be
(a) CGST – ₹18,000
(b) SGST - ₹18,000
(c) CGST- ₹9,000 and SGST- ₹9,000
(d) Nil
28. Services by way of transportation of _________ by rail shall be taxable
(a) relief materials meant for victims of disasters, calamities, accidents or mishap;
(b) newspaper
(c) computer and laptops
(d) organic manure.
29. Which of the following is exempt from GST.
(i) Services provided to a recognized sports body by an individual as a player, referee, umpire, coach
or team manager for participation in a sporting event organized by a recognized sports body.
(ii) Service of a player to a franchisee which is not a recognized sports body.
(iii) Services by a recognized sports body to another recognized sports body.
(iv) Services by individuals such as selectors, commentators, curators (custodian), technical experts.
(a) all the above is exempt.
(b) only (i) is exempt
(c) only (i) & (iii) is exempt
(d) (i),(ii) & (iii) is exempt
(e) none of these is exempt
(f) only (ii) & (iii) is exempt
30. HDFC Bank Ltd. sold foreign exchange to general of ₹10,00,000 during the month of March, in
this case taxable amount shall be –
(a) Nil
(b) ₹10,00,000
(c) ₹5,00,000
(d) CGST - ₹90,000 & SGST - ₹90,000
31. HDFC Bank Ltd. received commission of ₹10,00,000 for debt collection services provided to
customers during the month of March, in this case taxable amount shall be –
(a) Nil
(b) ₹10,00,000
(c) ₹5,00,000
(d) CGST - ₹90,000 & SGST - ₹90,000
32. Services by way of right to admission in circus is exempt if
(a) consideration for admission is less than ₹500 per person
(b) consideration for admission is more than ₹500 per person
(c) consideration for admission is upto ₹500 per person
(d) None of the above
33. Services by way of right to admission in planetarium is taxable if
(a) consideration for admission is less than ₹500 per person
(b) consideration for admission is more than ₹500 per person
(c) consideration for admission is upto ₹500 per person
 Exemption from GST 341

(d) None of the above

34. Services by way of admission to a museum is exempt if
(a) consideration for admission is less than ₹500 per person
(b) consideration for admission is more than ₹500 per person
(c) consideration for admission is upto ₹500 per person
(d) in all the above cases it is exempt.
35. Mr. X let out one residential building in Delhi for ₹50,00,000 to Mr. B (not a registered person), in
this case GST Payable shall be if rate of GST is 18%
(a) Nil
(b) CGST – ₹4,50,000 & SGST – ₹4,50,000
(c) CGST – ₹9,00,000
(d) SGST – ₹9,00,000
36. Mr. X let out one commercial building in Delhi for ₹50,00,000 to Mr. B, in this case GST Payable
shall be if rate of GST is 18%
(a) Nil
(b) CGST – ₹4,50,000 & SGST – ₹4,50,000
(c) CGST – ₹9,00,000
(d) SGST – ₹9,00,000
37. Which of the following is exempt
(i) Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside
India.
(ii) Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly in India.
(iii) Services provided by a tour operator to a Indian tourist in relation to a tour conducted wholly in India.
(a) only (i) is exempt
(b) all the above is exempt
(c) (ii) & (iii) is exempt
(d) None of the above is exempt
(e) (i) & (iii) is exempt
(f) (i) & (ii) is exempt
38. Which of the following is exempt
(i) Services by an old age home run by Central Government, State Government or an entity registered under
section 12AA of the Income-tax Act, 1961 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.
(ii) Services by an old age home run by Central Government, State Government or an entity registered under
section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years or more) against consideration
upto ₹5,000 per month per member, provided that the consideration charged is inclusive of charges for
boarding, lodging and maintenance.
(iii) Services by an old age home run by Central Government, State Government or an entity registered
under section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years or more) against
consideration upto ₹7,500 per month per member, provided that the consideration charged is inclusive of
charges for boarding, lodging and maintenance.
(iv) Services by an old age home run by Central Government, State Government or an entity registered
under section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years or more) against
consideration upto ₹50,000 per month per member, provided that the consideration charged is inclusive of
charges for boarding, lodging and maintenance.
(a) only (i) is exempt
(b) all the above is exempt
(c) (ii) & (iii) is exempt
(d) (i) & (iii) is exempt
(e) (i) & (ii) is exempt
(f) (i) & (iv) is exempt
 Exemption from GST 342

39. Which of the following is exempt

(i) 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 financial institutions.
(ii) Services supplied by Central Government, State Government, Union territory to their Private Sector
Undertakings by way of guaranteeing the loans taken by Private Sector Undertakings from the financial
institutions.
(iii) Services supplied by Banks to Private Sector Undertakings by way of guaranteeing the loans taken by
Private Sector Undertakings from the financial institutions.
(a) only (i) is exempt
(b) all the above is exempt
(c) (ii) & (iii) is exempt
(d) (i) & (iii) is exempt
(e) (i) & (ii) is exempt
(f) None of the above
40. Which of the following is not exempt
(i) Services by contractor to the contractee in the course of business.
(ii) Services by any court or Tribunal established under any law for the time being in force.
(iii) The functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities.
(iv) The duties performed by any person who holds any post under the provisions of the Constitution.
(a) only (i) is not exempt
(b) all the above is not exempt
(c) (ii) & (iii) is not exempt
(d) (i) & (iii) is not exempt
(e) (i) & (ii) is not exempt
(f) None of the above
Answer:
1 (c); 2. (d); 3. (d); 4. (c); 5. (d); 6. (a); 7. (d); 8 (c); 9. (d); 10 (b); 11 (d); 12. (c); 13 (a); 14 (d); 15 (a); 16
(d); 17 (d); 18. (c); 19. (b); 20. (c); 21. (a); 22. (a); 23. (d); 24. (b); 25. (d); 26. (d); 27. (c); 28. (c);29. (c); 30.
(b); 31. (b); 32. (c); 33. (b); 34. (d); 35. (a);36. (b); 37. (a); 38. (a); 39. (a); 40. (a);
 Exemption from GST 343

EXAMINATION QUESTION
JULY 2021
Question 7(b) (5 Marks)
XYZ Pvt. Ltd. manufactures beauty soap with the brand name ‘Forever beauty’. XYZ Pvt. Ltd. has
organized a concert to promote its brand Ms. Mahima, its brand ambassador, who is leading film actress, has
given a classical dance performance in the said concert. The proceeds of the concert is ₹1,25,000.
(i) Explain with relevant provisions of GST, whether Ms. Mahima will be required to pay any GST.
(ii) What will be the answer if the proceeds of the concert is donated to a charitable organization?
Answer:
(i) Services by an artist by way of a performance in classical art forms of, inter alia, dance, 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. Mahima is the brand ambassador of ‘Forever Beauty’ soap manufactured by XYZ Pvt. Ltd., the
services rendered by her by way of a classical dance performance in the concert organized by XYZ Pvt. Ltd.
to promote its brand will not be eligible for the above-mentioned exemption and thus, be liable to GST.

(ii) Even if the proceeds of the concert will be donated to a charitable organization, she will be liable to
GST.

JAN 2021
Question 6(b) (4 Marks)
Satya Sai Residents Welfare Association, a registered person under GST has 30 members each paying
₹8,000 as maintenance charges per month for sourcing of goods and services from third persons for common
use of its members.
The Association purchased a water pump for ₹ 59,000 (inclusive of GST of ₹ 9,000) and availed input
services for ₹ 23,600 (inclusive of GST of ₹ 3,600) for common use of its members during February 2022.
Compute the total GST payable, if any, by Satya Sai Residents Welfare Association, for February 2022.
GST rate is 18%. All transactions are intra-State.
There is no opening ITC and all conditions for ITC are fulfilled.
Answer
Computation of total GST payable by Satya Sai Residents Welfare Association
Particulars Value GST
(₹) @ 18%
(₹)
Maintenance charges received 2,40,000
[₹ 8,000 × 30 members]
[Services by RWA to its members for sourcing of goods or services from a
third person for the common use of its members in a housing society are
exempt provided the share of contribution per month per member is upto
₹7,500. Otherwise, entire amount is taxable.]
Total GST payable [It has been logically presumed that maintenance 43,200
charges are exclusive of GST.]
 Exemption from GST 344

Note: Residents Welfare Association is entitled to take ITC of GST paid by them on capital goods, goods
and input services, used by it for making supplies to its members and use such ITC for discharge of GST
liability on such supplies where the amount charged for such supplies is more than ₹ 7,500 per month per
member. Thus, Satya Sai Residents Welfare Association can avail ITC of GST paid on water pump
purchased (₹ 9,000) and input services availed (₹ 3,600). Net GST payable in that case will come out
₹30,600.

MAY 2019
Question 6 (a) (6 Marks)
M/s. Apna Bank Limited as Scheduled Commercial Bank has furnished the following details for the month
of August, 2022:
Particulars Amount ₹ 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 saving account 01
holder

Compute the Value of Taxable supply. Give reasons with suitable assumptions.
Solution: Computation of value of taxable service and GST Payable by Apna Bank Limited.
Sl. No Particulars Amount (₹) in
crores
(i) Extended Housing Loan to its customers Nil
(ii) Processing fees collected from its customers on sanction of loan 20
(iii) Commission collected from its customers on bank guarantee 30
(iv) Interest income on credit card issued by the bank 40
(v) Interest received on housing loan extended by the bank Nil
(vi) Minimum balance charges collected from current account and saving account 01
holder
Value of Taxable supply 91
Notes:
1. Interest Income on credit card issued by the bank is not covered under exemption hence GST is payable.
2. Extending Housing loan to its customer is covered under exemption hence no GST is payable.

MAY 2019
Question 10 (a) (4 Marks)
Explain the meaning of consignment note in relation to Goods Transport Agency and state its contents as
per provisions of the CGST Act, 2017.
Answer: Refer answer given in the book.

NOV 2018
Question 10 (b) (3 Marks)
Decide with reason whether the following independent services are exempt under CGST Act, 2017:
(i) M/s Fast Trans, a goods transport agency, transported relief materials meant for victims of Kerala floods
being a natural disaster, by road from Delhi to Ernakulam, for a Limited Co.
 Exemption from GST 345

(ii) Keyan Enterprises, an event organizer, provided services to Breathing Wall Ltd. by way of organizing
business exhibition at Pragati Maidan in New Delhi as part of Make in India initiative.
Answer:
(i) Exempt: Goods transport agency services provided for relief material meant for victims of disaster shall
be exempt from GST.
(ii) Taxable: Services by an organiser to any person in respect of business exhibition held outside India
shall be exempt from GST, in the given case business exhibition services held in India shall be taxable
service.

NOV 2018
Question 7 (a) (6 Marks)
Worldwide Pvt. Ltd (a registered Taxable Person) having the Gross receipt of ₹50 Lakhs in the
previous financial year provides the following information relating to their services for the month of
July, 2022
Particulars Amount in (₹)
(1) Running a boarding school (upto higher secondary) 2,40,000
(2) Fees from prospective employer for campus interview 1,70,000
(3) Education Services for obtaining the qualification recognised by
law of foreign country 3,10,000
(4) Renting of Furnished Flats for Temporary Stay to different persons 1,20,000
(Rent per day is less than 1000 per person).
(5) Conducting Modular Employable Skill Course. Approved by National
Council of Vocational Training 1,40,000
(6) Conducting Private Tuitions 3,00,000
Compute the value of Taxable Supply and the amount of GST Payable. The above receipts doesn't include the
GST Amount. Rate of GST is 18%
Solution: Computation of Value of Taxable Supply and GST payable
Particulars Amount in (₹)
(1) Running a boarding school is an exempted service Nil
(2) Fees from prospective employer for campus interview is taxable 1,70,000
(3) Education Services for obtaining the qualification recognised by law of
foreign country 3,10,000
(4) Renting of Furnished Flats for Temporary Stay to different persons Nil
(Rent per day is less than 1000 per person).
(5) Conducting Modular Employable Skill Course. Approved by National
Council of Vocational Training is an exempted service Nil
(6) Conducting Private Tuitions 3,00,000
Value of Taxable Supply 7,80,000

GST @ 18% 1,40,400

Notes:
(1) Education services for obtaining the qualification recognised by law of Indian country is an exempted
service but in the given case it is recognised by foreign country hence it is taxable.
(2) Renting of furnished flats for temporary stay to different persons is a taxable service if the value of such
supply is more than ₹1000 per day in the given case rent is less than ₹1000 per person hence it is exempted.
 Exemption from GST 346

NOV 2018
Question 8 (a) (5 Marks)
JP Charitable institution, an entity registered under Section 12AA or 12AB of Income Tax Act, 1961 and
registered in GST, has furnished you the following details with respect to the activities undertaken by it
during the month of January, 2023. You are required to compute its Taxable Value of GST from the
information given below, assuming the rate of GST is 18%. Brief reasoning should be part of your answer.
Particulars Amount in (₹)
(Excluding GST)
Membership fees received from members 10,00,000
Amount received for advancement of educational programs relating to abandoned 4,00,000
or orphaned or homeless children
Amount received for renting of commercial property owned by Trust 5,00,000
Amount received for counselling of terminally ill person 3,50,000
Fees charged for Yoga Camp conducted by Trust 2,00,000
Amount received relating to preservation of Forest and Wildlife 6,00,000
Solution:
Computation of value of taxable supply of J P Charitable Institution for the month of January, 2023
Particulars Amount in (₹)
(i) Membership fees received from members 10,00,000
(ii) Amount received for advancement of educational programs relating to abandoned Nil
or orphaned or homeless children
(iii) Amount received for renting of commercial property owned by Trust 5,00,000
(iv) Amount received for counselling of terminally ill person Nil
(v) Fees charged for Yoga Camp conducted by Trust Nil
(vi) Amount received relating to preservation of Forest and Wildlife Nil
Taxable Value 15,00,000
GST @ 18% 2,70,000
Charitable activities provided by an entity registered under section 12AA or 12AB of the Income-tax
Act, 1961 are exempt.
Since JP Charitable Institution is registered under section 12AA or 12AB of the Income-tax Act, 1961 and
activities mentioned at points (ii), (iv), (v) and (vi) are included in charitable activities, the same are
exempt.

IPC NOV 2017

Question 3 (4 Marks )
Decide whether following services are taxable or exempt
Particulars Amt. in (₹)
(i) Freight charges for transportation of goods by vessel-from a place outside India 10,00,000
upto Customs Station of clearance.
(ii) Speed post services provided by Delhi Post Office, where the 3,00,000
Value of each service does not exceed ₹5,000.
(iii) Services provided by a Senior Advocate to a business entity with 2,00,000
a turnover of ₹16,00,000 in the preceding financial year.
(iv) Transportation of passengers with accompanied belongings by a stage carriage 1,00,000
(non - airconditioned).
(v) Services provided by a local authority, to a business entity having a turnover of 2,50,000
₹18,00,000 in the preceding financial year.
 Exemption from GST 347

Solution:
Particulars Amt. in (₹)
(i) Freight charges for transportation of goods by vessel-from a place outside India Taxable under
upto Customs Station of clearance. reverse Charge
(ii) Speed post services provided by Delhi Post Office, where the Taxable
Value of each service does not exceed ₹5,000.
(iii) Services provided by a Senior Advocate to a business entity with Exempt
a turnover of ₹16,00,000 in the preceding financial year.
(iv) Transportation of passengers with accompanied belongings by a stage carriage Exempt
(non - airconditioned).
(v) Services provided by a local authority, to a business entity having a turnover of Exempt
₹18,00,000 in the preceding financial year.
 Accounts and Records 348

ACCOUNTS AND RECORDS

SECTION 35 / 36 (CGST ACT 2017)

Accounts and other records

35. (1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in
the certificate of registration, a true and correct account of—
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed:
Provided that where more than one place of business is specified in the certificate of registration, the
accounts relating to each place of business shall be kept at such places of business:
Provided further that the registered person may keep and maintain such accounts and other particulars in
electronic form in such manner as may be prescribed.
(2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every
transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner,
consignee and other relevant details of the goods in such manner as may be prescribed.
(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents
for such purpose as may be specified therein.
(4) Where the Commissioner considers that any class of taxable persons is not in a position to keep and
maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in
writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed.
(5) [***]
(6) Where the registered person fails to account for the goods or services, the proper officer shall determine
the amount of tax payable on the goods or services or both that are not accounted for, as if such goods or
services or both had been supplied by such person and the provisions of section 73 or section 74, as the case
may be, shall, mutatis mutandis, apply for determination of such tax.

Period of retention of accounts .

36. 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 seventy two months
from the due date of furnishing of annual return for the year pertaining to such accounts and records:
Provided that 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.
 TDS / TCS 349

TDS / TCS
SECTION 51/52 (CGST ACT 2017)
Question 1: Write a note on Tax deduction at source Section 51.
Answer: Tax deduction at source Section 51
GST shall be deducted at source @ 1% CGST and 1% SGST provided total value of supply excluding
amount of GST is exceeding ₹2,50,000. Further tax shall be deducted at source only by the following
persons:-
(a) a department of the Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) any other person notified for this purpose
The tax so deducted shall be deposited within 10 days after the end of the month. As per rule 66, a monthly
statement shall be submitted in form no. GSTR-7 upto 10th of the subsequent month. TDS certificate shall be
issued in form no. GSTR-7A. The person on whose behalf tax shall be deducted shall claim credit in his
electronic cash ledger. If the tax deducted is not paid to the Govt., interest shall be charged u/s 50.
E.g. A department of Govt. has given contract to ABC Ltd. for completion of some work and the company
has submitted a bill of ₹10,00,000 plus CGST ₹90,000 SGST ₹90,000, in this case Govt. department shall
deduct tax 2% of ₹10,00,000 i.e. ₹20,000. While paying GST to the Govt. ABC Ltd. shall deducted ₹10,000
from CGST and ₹10,000 from SGST and balance amount shall be paid. The person shall deduct tax at
source shall submit a monthly return showing details of tax deducted at source.

Question 2: Explain Provisions for Tax Collection at source under GST by ECO.
Answer: Collection of tax at source Section 52.
As per section 24, the person collecting Tax has to take compulsory registration irrespective of the turnover.
He should apply for registration in REG-07.
1. Every electronic commerce operator shall collect an amount @ Two per cent (1% CGST + 1% 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.
2. The amount collected shall be deposited to the Government by the operator within ten days after the end
of the month in which such collection is made and as per rule 67, a statement shall be furnished in form
GSTR-8 within 10 days after the end of the month.
3. Every ECS who collects the amount, as per rule 80, shall furnish an annual statement upto 31st
December following the end of such financial year. (GSTR 9B)
4. The supplier who has supplied the goods or services through the operator shall claim credit, in his
electronic cash ledger, of the amount collected and reflected in the statement of the operator.
Example:
ABC limited has sold goods worth ₹20,00,000 plus GST ₹4,00,000 through Amazon and Amazon is entitled
for a commission of 15%, in this case, Amazon shall collect ₹24,00,000 from the buyer and shall deduct
₹3,00,000 + GST ₹ 60,000. Amazon shall pay balance amount to ABC limited i.e. ₹ 24,00,000-3,60,000
=20,40,000.
ABC limited has to pay GST of ₹ 4,00,000 but ITC of ₹ 60,000 shall be deducted and balance amount shall
be ₹ 3,40,000.
 Place of Supply of Goods or Services or Both 350

PLACE OF SUPPLY
SECTION 7,8,9,10 AND 12 (IGST ACT 2017)

Question 1: Explain Levy and collection of IGST/Charging section of IGST.

Answer: Levy and Collection. Section 5
5(1). There shall be levied a tax called the integrated goods and services tax on all inter-State supplies of
goods / services, except on the supply of alcoholic liquor for human consumption, on the value determined
under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent,
as may be notified by the Government on the recommendations of the Council and collected in such manner
as may be prescribed and shall be paid by the taxable person.
In case of Import also IGST shall be payable.
5(2). The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known
as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified
by the Government on the recommendations of the Council.
5(3). The Government may, on the recommendations of the Council, by notification, specify categories of
supply of goods/services, the tax on which shall be paid on reverse charge basis by the recipient of such
goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person
liable for paying the tax in relation to the supply of such goods / services.
5(4). The Government may, on the recommendations of the Council, by notification, specify a class of
registered persons who shall, in respect of supply of specified categories of goods or services or both
received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of
goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the
person liable for paying the tax in relation to such supply of goods or services or both.
5(5). GST shall be collected by the aggregator and he shall be responsible for making payment to the
Government.
Question 2: Explain Intra-State supply.
Answer: Intra-State supply Section 7/8
If the supply of goods or services is in the same state or union territory, it will be called intra state supply but
if the supply of goods or services is from one state to the other state or from one state to the union territory
or from one union territory to the other union territory or from union territory to some state or it is import or
export, it will be called inter state supply.

8. (1) Subject to the provisions of section 10, supply of goods where the location of the supplier and the
place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply:
Provided that the following supply of goods shall not be treated as intra-State supply, namely:—
(i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
(ii) goods imported into the territory of India till they cross the customs frontiers of India; or
(iii) supplies made to a tourist referred to in section 15.
(2) Subject to the provisions of section 12, supply of services where the location of the supplier and the
place of supply of services are in the same State or same Union territory shall be treated as intra-State
supply:
Provided that the intra-State supply of services shall not include supply of services to or by a Special
Economic Zone developer or a Special Economic Zone unit.
Explanation 1.—For the purposes of this Act, where a person has,—
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside that State or
Union territory; or
 Place of Supply of Goods or Services or Both 351

(iii) an establishment in a State or Union territory and any other establishment registered within that
State or Union territory,
then such establishments shall be treated as establishments of distinct persons.
Explanation 2.—A person carrying on a business through a branch or an agency or a representational office
in any territory shall be treated as having an establishment in that territory.

Question 3: Explain Supplies in territorial waters.

Answer: Supplies in territorial waters Section 9
Notwithstanding anything contained in this Act,—
(a) where the location of the supplier is in the territorial waters, the location of such supplier; or
(b) where the place of supply is in the territorial waters, the place of supply,
shall, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the nearest
point of the appropriate baseline is located.

Question 4: Discuss Place of supply of goods within India.

Answer: Place of supply of goods within India Section 10
Place of supply of goods within India shall be determined in the manner given below:
1. If supply is given to a registered person, place of supply shall be the place of registered person. If supply
is given to an unregistered person and address of such person is recorded in the invoice, place of supply shall
be the location as per the address and if address is not given, place of supply shall be location of the
supplier.
2. If the goods are installed or assembled at the site, the place where it is installed or assembled.
3. If the goods are supplied on board of a conveyance, the place where the goods are taken on board.
4. Where the goods are delivered on direction of the third person, place of supply shall be the principal place
of the business of such third person.

Question 5: Discuss place of supply of services within India.

Answer: Place of supply of services within India Section 12(1)/(2)
Place of supply of services within India shall be determined in the manner given below:
In case supply has been given to a registered person, place of supply shall be the location of such person. If
supply has been given to a person who is not registered and address of such person has been recorded in the
invoice, place of supply shall be the location of the recipient otherwise place of supply shall be the location
of the supplier.
In the following cases place of supply shall be determined in the manner given below:
12(3)(i) If supply of services is in connection with any immovable property, lodging accommodation in a
hotel, inn, guest house, home stay, club etc. or it is by way of accommodation in any immovable property
for organising any marriage or reception etc., place of supply shall be the location of such immovable
property etc.
Provided that if the location of the immovable property or boat or vessel is located or intended to be located
outside India, the place of supply shall be the location of the recipient.
12(4) The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment,
health service including cosmetic and plastic surgery shall be the location where the services are actually
performed.
12(5) 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.
12(6) The place of supply of services provided by way of admission to a cultural, artistic, sporting,
scientific, educational, entertainment event or amusement park or any other place and services ancillary
thereto, shall be the place where the event is actually held or where the park or such other place is located.
12(7) The place of supply of services provided by way of,—
 Place of Supply of Goods or Services or Both 352

(a) organisation 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; or
(b) services ancillary to organisation of any of the events or services referred to in clause (a), or
assigning of sponsorship to such events,—
(i) to a registered person, shall be the location of such person;
(ii) 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.
Explanation.—Where the event is held in more than one State or Union territory and a consolidated amount
is charged for supply of services relating to such event, the place of supply of such services shall be taken as
being in each of the respective States or Union territories 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 basis as may be prescribed.
12(8) The place of supply of services by way of transportation of goods, including by mail or courier to,—
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the location at which such goods are handed over
for their transportation.
12(9) The place of supply of passenger transportation service to,—
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the place where the passenger embarks on the
conveyance for a continuous journey:
Provided that where the right to passage is given for future use and the point of embarkation is not known at
the time of issue of right to passage, the place of supply of such service shall be determined in accordance
with the provisions of sub-section (2).
Explanation.—For the purposes of this sub-section, the return journey shall be treated as a separate journey,
even if the right to passage for onward and return journey is issued at the same time.
12(10) The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a
motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the
journey.
12(11) The place of supply of telecommunication services including data transfer, broadcasting, cable and
direct to home television services to any person shall,—
(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit,
cable or dish antenna, be the location where the telecommunication line, leased circuit or cable
connection or dish antenna is installed for receipt of services;
(b) in case of mobile connection for telecommunication and internet services provided on post-paid
basis, be the location of billing address of the recipient of services on the record of the supplier of
services;
(c) in cases where mobile connection for telecommunication, internet service and direct to home
television services are provided on pre-payment basis through a voucher or any other means,—
(i) through a selling agent or a re-seller or a distributor of subscriber identity module card or
re-charge voucher, be the address of the selling agent or re-seller or distributor as per the
record of the supplier at the time of supply; or
(ii) by any person to the final subscriber, be the location where such pre-payment is received
or such vouchers are sold;
(d) in other cases, be the address of the recipient as per the records of the supplier of services and
where such address is not available, the place of supply shall be location of the supplier of services:
Provided that where the address of the recipient as per the records of the supplier of services is not
available, the place of supply shall be location of the supplier of services:
 Place of Supply of Goods or Services or Both 353

Provided further that if such pre-paid service is availed or the recharge is made through internet banking or
other electronic mode of payment, the location of the recipient of services on the record of the supplier of
services shall be the place of supply of such services.
Explanation.—Where the leased circuit is installed in more than one State or Union territory and a
consolidated amount is charged for supply of services relating to such circuit, the place of supply of such
services shall be taken as being in each of the respective States or Union territories 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 basis as may be prescribed.
12(12) The place of supply of banking and other financial services, including stock broking services to any
person shall be the location of the recipient of services on the records of the supplier of services:
Provided that if the location of recipient of services is not on the records of the supplier, the place of supply
shall be the location of the supplier of services.
12(13) The place of supply of insurance services shall,—
(a) to a registered person, be the location of such person;
(b) to a person other than a registered person, be the location of the recipient of services on the records
of the supplier of services.
12(14) 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 shall be taken as being in each of such States or Union territories and the value of such supplies
specific to each State or Union territory shall be in proportion to the amount attributable to services provided
by way of dissemination in the respective States or Union territories as may be 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 basis as may be prescribed.

"location of the recipient of services" means,— Section 2(14)

(a) where a supply is received at a place of business for which the registration has been obtained,
the location of such place of business;
(b) where a supply is received at a place other than the place of business for which registration has
been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of business or
fixed establishment, the location of the establishment most directly concerned with the receipt of
the supply; and
(d) in absence of such places, the location of the usual place of residence of the recipient;

"location of the supplier of services" means,— Section 2(15)

(a) where a supply is made from a place of business for which the registration has been obtained,
the location of such place of business;
(b) where a supply is made from a place other than the place of business for which registration has
been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or
fixed establishment, the location of the establishment most directly concerned with the provision of
the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;
 Miscellaneous 354

MISCELLANEOUS
Question 1: Explain Constitutional Provisions regarding GST.
Answer: Constitutional Provision
The Constitution of India is the Supreme law in India. The Parliament can make law only with regard to the
matters which are allowed as per the constitution otherwise the law made by parliament shall be called Ultra
vires i.e. it is not enforceable. The constitution consists of a preamble, 25 parts containing 448 articles and
12 Schedules.

India has a three-tier federal structure, comprising the Union Government, the State Governments and the
local Government. The power to levy taxes and duties is distributed among the three tiers of Governments,
in accordance with the provision of the Indian Constitution.

Power to levy taxes emerges from the Constitution of India.

Article 265: No tax shall be levied or collected except by authority of Law.
Article 245: Subject to the provisions of the Constitution, Parliament may make laws for the whole or any
part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the
State.
Article 246: It gives the respective authority to Union and state Governments for levying tax and such
authority is given in Seventh Schedule of Indian Constitution and there are three list in Seventh Schedule.
1. Union List – If any matter is mentioned in Union List, parliament can make law with regard to such
matter. (there are 97 entries)
2. State List – If matter is mentioned in State List, State legislature, can make law with regard to such
matter. (there are 66 entries)
3. Concurrent List – If matter is mentioned in Concurrent List, both of the government can make law with
regard to such matter. (there are 47 entries)
Some of the important entries in the Union List are as given below:
82. Taxes on income other than agricultural income.
83. Duties of customs including export duties.
84. Duties of excise on following goods manufactured or produced in India, namely —
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.
Some of the important entries in State List are as given below:
46. Taxes on agricultural income
51. Duties of excise on alcoholic liquors for human consumption; opium, Indian hemp and other narcotic
drugs.
53. Taxes on the consumption or sale of electricity.
54. Taxes on sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
Gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the
course of international trade or commerce of such goods.

Amendment in the Constitution for the purpose of GST (Constitution (101st Amendment) act, 2016)

Article 246A: Power to make laws with respect to Goods and Services Tax:
 Miscellaneous 355

 This article grants power to Centre and State Governments to make laws with respect to GST
imposed by Centre or such State for Intra state supply.
 Centre has the exclusive power to make laws with respect to GST in case of inter-state supply of
goods / services.
 However, in respect to the following goods, GST shall apply from the date recommended by the
GST Council.
• Petroleum crude
• High speed diesel
• Motor spirit (commonly known as petrol)
• Natural gas
• Aviation turbine fuel

Article 269A: Levy and collection of GST on inter-state supply

 Article 269A stipulates that GST 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.
 Import of goods / services into India will also be deemed to be Inter State supply.

GST Council: Article 279A

 Article 279A of the Constitution empowers the President to constitute a joint forum of the Centre and
States namely, Goods & Services Tax Council (GST Council).
 The provisions relating to GST Council came into force on 12th September, 2016. President
constituted the GST Council on 15th September, 2016.
 The Union Finance minister is the Chairman of this 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 Union Minister of State in charge of revenue or Finance is also its member.
 The function of the Council is to make recommendations to the Union and the States on important
issues like tax rates, exemptions, threshold limits, dispute resolution etc.
 It shall also recommend the date on which GST be levied on petroleum crude, high speed diesel,
motor spirit, natural gas and aviation turbine fuel.

Definitions of ‘Goods and Services Tax’, ‘Services’ and ‘State’ incorporated under Article 366
The term Goods and Services Tax, Services and State have been defined under respective clauses of Article
366 as follows:

 As per article 366(12A), Goods and Services Tax means any tax on supply of goods, or services or
both except taxes on the supply of the alcoholic liquor for human consumption. Consequently, GST
can be levied on supply of all goods and services except alcoholic liquor for human consumption.

 As per article 366(26A), Services means anything other than goods.

 As per article 366 (26B), State, with reference to GST, includes a Union territory with Legislature
i.e. Delhi and Pondicherry.

 As per article 366 (30), Union Territory, Union Territory means any union territory specified in
the first schedule and includes any other territory comprised within the territory of India but not
specified in that schedule.
 Miscellaneous 356

Question 2: Explain Levy and collection of CGST/Charging section of CGST.

Answer: Levy and Collection. Section 9
9(1). There shall be levied a tax called the central goods and services tax on all intra-State supplies of
goods/ services, except on the supply of alcoholic liquor for human consumption, on the value determined
under section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on
the recommendations of the Council and collected in such manner as may be prescribed and shall be paid
by the taxable person.
9(2). The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by
the Government on the recommendations of the Council.

9(3). The Government may, on the recommendations of the Council, by notification, specify categories of
supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient
of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is
the person liable for paying the tax in relation to the supply of such goods or services or both.

9(4) The Government may, on the recommendations of the Council, by notification, specify a class of
registered persons who shall, in respect of supply of specified categories of goods or services or both
received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of
goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the
person liable for paying the tax in relation to such supply of goods or services or both.

At present Government has notified that in case of cement and capital goods, the promotor or builder shall
be liable to pay tax under reverse charge if the goods are purchased from unregistered persons. (Notification
No.24/2019)

Presently, (i) central excise duty is leviable on manufacture/production of tobacco, petroleum crude, diesel,
petrol, ATF and natural gas (ii) State excise duty is leviable on manufacture/production of alcoholic liquor,
opium, Indian hemp and narcotics, and (iii) VAT/CST is leviable on intra-State/inter-State sale of
petroleum crude, diesel, petrol, ATF, natural gas and alcoholic liquor. Petroleum crude, diesel, petrol, ATF,
natural gas are presently not taxable under GST and alcoholic liquor is outside the ambit of GST. Thus,
supply of both these products (petrol/petroleum products and alcoholic liquor) being non-taxable under
GST, will be exempt supplies u/s 2(47).

9(5). GST shall be collected by the aggregator and shall be responsible for making payment to the
Government.

Question 3 : Explain the Statement : GST – A tax on goods and services

Answer:
In general GST is levied on all goods and services but as per section 9(1), GST can not be levied on supply
of alcoholic liquor for human consumption (i.e. State Excise Duty and Sales Tax / VAT / Central Sales Tax
shall be leviable on alcoholic liquor for human consumption. In case of Opium, Indian hemp and other
narcotic drugs, GST as well as State Excise Duty can be levied but Sales Tax / VAT / Central Sales Tax can
not be levied.)

As per section 9(2), GST can not be levied on petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel. (i.e. Central Excise Duty and Sales Tax / VAT /
Central Sales Tax shall be leviable on such product.) GST can be levied w.e.f. from such date as may be
notified by the Govt. on the recommendation of GST council. (in case of Tobacco, GST as well as Central
Excise Duty both can be levied but Sales Tax / VAT / Central Sales Tax can not be levied.)
 Miscellaneous 357

Question 4:What are the States and Union Territory for the purpose of GST.
Answer:
As per section 2(103), There are 28 States in India and are as under:
1. Andhra Pradesh
2. Arunachal Pradesh
3. Assam
4. Bihar
5. Chhattisgarh
6. Goa
7. Gujarat
8. Haryana
9. Himachal Pradesh
10. Jharkhand
11. Karnataka
12. Kerala
13. Madhya Pradesh
14. Maharashtra
15. Manipur
16. Meghalaya
17. Mizoram
18. Nagaland
19. Odisha
20. Punjab
21. Rajasthan
22. Sikkim
23. Tamil Nadu
24. Telangana
25. Tripura
26. Uttar Pradesh
27. Uttarakhand
28. West Bengal
States will include a Union territory also with Legislature i.e. it will include Delhi, Pondicherry and Jammu
and Kashmir
As per Section 2 (114) “Union territory" means the territory of—
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and Diu
(d) Chandigarh;
(e) Ladakh

Explain 5: GSTN. ( Goods and Service Tax Network )

Answer:
The Goods and Service Tax Network (or GSTN) is a non-profit, non-government organization. It will
manage the entire IT system of the GST portal. Private players own a 51% share in the GSTN, and the
government owns the rest. The authorized capital of the GSTN is Rs 10 crore, of which 49% of the shares
are divided equally between the Central and State governments, and the remaining is with private banks. The
GSTN shall control and manager entire GST system though a portal which is called GST Common Portal

Question 6: Explain GST Common Portal.

Answer: GST Common Portal
 Miscellaneous 358

Common GST Electronic Portal - www.gst.gov.in is a website managed by Goods and Services Network
(GSTN) and it has been setup by the Government to establish a uniform interface for the tax payer and a
common and shared IT infrastructure between the Centre and States. The portal is one single common portal
for all GST related services. A common GST system provides linkage to all State/UT Commercial Tax
Departments, Central Tax authorities, Taxpayers, Bank and other stakeholders.
The functions of the GSTN include:
a. facilitating registration;
b. forwarding the returns to Central and State authorities;
c. computation and settlement of IGST;
d. matching of tax payment details with banking network;
e. providing various reports to the Central and the State Governments based on the taxpayer return
information;

Question 7: Explain GST Suvidha Providers(GSPs) / Application Services Provides (ASPs).

Answer: GST Suvidha Providers(GSPs) / Application Services Provides (ASPs)
GSTN has selected certain Information Technology Enabled Services companies to be called GST Suvidha
Providers(GSPs). GSPs develop applications to be used by taxpayers for interacting with the GSTN.
They facilitate the tax payers in uploading invoices as well as filing of returns and act as a single stop shop
for GST related services.
They customize products that address the needs of different segment of users. GSPs may take the help of
Application Services Provides (ASPs) who act as a link between taxpayers and GSPs.

Question 8: Explain what are the taxes to be subsumed in GST.

Answer: Taxes to be subsumed in GST
Central levies to be subsumed
(i) Central Excise Duty & Additional Excise Duty.
(ii) Service Tax.
(iii) Excise Duty under Medicinal and Toilet Preparation Act.
(iv) Countervailing Duty & Special Countervailing Duty. (Countervailing Duty (CVD) was levied in case of
import in lieu of excise duty and Special Countervailing Duty also called Special Addition Duty was levied
in case of import in lieu of sales tax / VAT)
(v) Central Sales Tax (it was levied in case of inter state sales)
(vi) Central surcharges and Cesses in so far as they relate to supply of goods and services.
State levies to be subsumed
(i) State surcharges and Cesses in so far as they relate to supply of goods and services.
(ii) Entertainment Tax (except those levied by local bodies)
(iii) Tax on lottery, betting and gambling.
(iv) Entry tax (All forms) & Purchase tax.
(v) VAT/Sales tax.
(vi) Luxury tax.
(vii) Taxes on advertisements.

Question 9: Explain origin based tax and destination based tax.

Answer: In case of Inter State sale if tax is to be received and consumed by the State from where
movement of Goods has started, It will be called origin based tax i.e. tax shall be received by the supplying
State. If tax is to be received by the state where the goods are received for consumption, it will be called
destination based tax or consumption based tax. Prior to GST it was origin based tax but under GST it is
destination based tax, eg. If goods are sold from Delhi to UP, GST shall be received by UP but prior to GST
Central tax was received by Delhi. It is one of the major change in GST.
 Miscellaneous 359

Question 10: Explain Goods And Services Tax Practitioners.

Answer: Goods And Services Tax Practitioners Section 48
Eligibility Criteria for becoming GST practitioner.
Any person who
(i) is a citizen of India
(ii) is a person of sound mind
(iii) is not adjudged as insolvent
(iv) has not been convicted by a competent court
He should be a Chartered Accountant/ Cost Accountant / Company Secretary or should have any other
qualification prescribed for this purpose.
Procedure for enrollment
A person desirous of becoming GST Practitioner has to submit an application in the form GST PCT-1. The
application shall be scrutinised and GST practitioner certificate shall be granted in the form GST PCT-2. In
case, the application is rejected, proper reasons shall have to be mentioned in the form GST PCT-4.
Activities by GST practitioner
A goods and services tax practitioner can undertake any or all of the following activities on behalf of a
registered person:
(a) furnish details of outward and inward supplies
(b) furnish monthly, quarterly, annual or final return
(c) make deposit for credit into the electronic cash ledger
(d) file a claim for refund and
(e) file an application for amendment or cancellation of registration.
A GST practitioner shall also be allowed to appear as authorised representative before any officer of
department, Appellate Authority or Appellate Tribunal, on behalf of such a registered person who has
authorised him to be his GST practitioner.
Conditions for GST Practitioner
Any registered person may give consent and authorise a GST practitioner in the form GST PCT-5 by listing
the authorised activities in which he intends to authorise the GST practitioner. The registered person
authorising a GST Practitioner shall have to authorise in the standard form Part A of form GST PCT-5 and
the GST practitioner will have to accept the authorisation in Part B of the form GST PCT-5. The GST
practitioner shall be allowed to undertake only such tasks as indicated in the authorisation form GST PCT-5.
The registered person may, at any time, withdraw such authorisation in the prescribed form GST PCT-5.
Responsibility for correctness of particulars
The responsibility for correctness of any particulars furnished in the return or other details filed by the GST
practitioners shall continue to rest with the registered person on whose behalf such return and details are
furnished. Any statement furnished by the GST practitioner shall be made available to the registered person
on the GST Common Portal. For every statement furnished by the GST practitioner, a confirmation shall be
sought from the registered person over email or SMS. The registered person before confirming, should
ensure that the facts mentioned in the return are true and correct before signature. However, failure to
respond to request for confirmation shall be treated as deemed confirmation. The GST practitioner shall
prepare all statements with due diligence and affix his digital signature on the statements prepared by him or
electronically verify using his credentials. If the GST practitioner is found guilty of misconduct, his
enrolment will be liable to be cancelled. A show cause notice would be issued to him in the form GST PCT-
3.

Question 11: Explain Concept of GST/ GST – A Cure for Ills of Existing Indirect Tax.
Answer: The basic concept of GST is as given below:
• GST is a value added tax levied on manufacture, sale and consumption of goods and services.
• GST offers comprehensive and continuous chain of tax credits from the producer upto the retailer level
thereby taxing only the value added at each stage of supply chain.
 Miscellaneous 360

• The supplier at each stage is permitted to avail credit of GST paid on the purchase of goods and/or
services and can set off this credit against the GST payable on the supply of goods and services to be
made by him. Thus, only the final consumer bears the GST charged by the last supplier in the supply
chain.
• Since, only the value added at each stage is taxed under GST, there is no multiple tax or cascading of
taxes under GST system. GST does not differentiate between goods and services and thus, the two are
taxed only once.

Question 12: Explain Seamless flow of credit.

Answer: Seamless flow of credit
Since GST is a destination based consumption tax, revenue of SGST ordinarily accrues to the consuming
States. The Inter - State supplier is allowed to set off the available credit of IGST, CGST and
SGST/UTGST (in that order) against the IGST payable on inter -State supply made by him.
The buyer is allowed to avail the credit of IGST paid on Inter-State purchase made by him. Thus unlike the
earlier scenario where the credit chain used to break in case of inter - State sales on account of non -
VATable CST, under GST regime there is a seamless credit flow in case of inter - State supplies too.

Question 13: Explain Features of Indirect Taxes.

Answer: Features of Indirect Taxes
1. An important source of revenue: Indirect Taxes are a major source of tax revenues for
Governments worldwide and continue to grow as more countries move to consumption oriented tax
regimes. In India, Indirect taxes contribute more than 50% of the total tax revenues of Central and
State Governments.

2. Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes. For example,
GST paid by the supplier of the goods is recovered from the buyer by including the tax in the cost of
the commodity.

3. No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the price of the
commodity, most of the time the tax payer pays the same without actually knowing that he is paying
tax to the Government. Thus, tax payer does not perceive a direct pinch while paying indirect taxes.

4. Inflationary: Tax imposed on commodities and services causes an all-round price spiral. In other
words, indirect taxation directly affects the prices of commodities and services and leads to
inflationary trend.

5. Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base. Majority of the
products or services are subject to indirect taxes.

6. Promotes social welfare: High taxes are imposed on the consumption of harmful products (also
known as ‘sin goods’) such as alcoholic products, tobacco products etc. This not only checks their
consumption but also enables the State to collect substantial revenue.

7. Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich and the poor
have to pay the same rate of indirect taxes on certain commodities of mass consumption. This may
further increase the income disparities between the rich and the poor.

Question 14: Explain what is tax?

Answer: A tax may be defined as a "pecuniary (monetary) burden laid upon individuals or property owners
to support the Government, a payment exacted by legislative authority. A tax "is not a voluntary payment or
donation, but an enforced contribution, exacted pursuant to legislative authority".
 Miscellaneous 361

In simple words, tax is nothing but money that people have to pay to the Government, which is used to
provide public services.

Question 15: Explain Direct tax and Indirect Tax.

Answer: Direct Tax / Indirect Tax
If any particular tax is paid by a person and also its incidence is on that person, it is called direct tax like
income tax e.g. If Mr. X has paid income tax of ₹5,00,000, it will be called direct tax because it is paid by
Mr. X and also its incidence is borne by Mr. X.

If any tax is paid by one person but its incidence is on some other person, it will be called indirect tax like
Central GST, State GST, Integrated GST, UT GST etc.
Its incidence is borne by the consumers who ultimately consume the product or the service, while the
immediate liability to pay the tax may fall upon another person such as a manufacturer or provider of service
or seller of goods e.g. If ABC Ltd. has manufactured a product and it is sold for ₹20,00,000 and CGST plus
SGST of ₹2,00,000 has been recovered, the GST so collected shall be called indirect tax because the
payment was made by a company but it is ultimately borne by the buyer.

Question 16: Define Person

As per section 2 (84), "person" includes—
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons / a body of individuals, whether incorporated or not.
(g) Statutory corporation.
(h) any body corporate;
(i) a co-operative society/other society
(j) a local authority;
(k) Central Government or a State Government;
(l) trust;
(m) every artificial juridical person, not falling within any of the above;

Certain Definitions
As per 2 (5) "agent" means a person, including a factor, broker, commission agent, arhatia, del
credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the
business of supply or receipt of goods or services or both on behalf of another
As per 2(19) "capital goods" means goods, the value of which is capitalised in the books of account of the
person claiming the input tax credit and which are used or intended to be used in the course or furtherance
of business.
As per 2(62) input tax
"input tax" in relation to a registered person, means the central tax, State tax, integrated tax or Union
territory tax charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3)and (4)of section 9;
(c) the tax payable under the provisions of sub-sections (3)and (4)of section 5 of the
Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3)and (4)of section 9 of the
respective State Goods and Services Tax Act; or
 Miscellaneous 362

(e) the tax payable under the provisions of sub-sections (3)and (4)of section 7 of the Union
Territory Goods and Services Tax Act, but does not include the tax paid under the
composition levy;
As per 2(67) "inward supply" in relation to a person, shall mean receipt of goods or services or both
whether by purchase, acquisition or any other means with or without consideration
As per 2(78)"non-taxable supply" means a supply of goods or services or both which is not leviable to tax
under this Act or under the Integrated Goods and Services Tax Act;
As per 2(82) "output tax" in relation to a taxable person, means the tax chargeable under this Act on
taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on
reverse charge basis.
As per 2(88) "principal" means a person on whose behalf an agent carries on the business of supply or
receipt of goods or services or both;
As per 2(90) "principal supply" means 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;
As per 2(94) "registered person" means a person who is registered under section 25 but does not include a
person having a Unique Identity Number
As per 2(107) "taxable person" means a person who is registered or liable to be registered under section
22 or section 24.
As per 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.
 Miscellaneous 363

MULTIPLE CHOICE QUESTIONS

1. Which of the following taxes have been subsumed in GST?
(a) Central Sales Tax
(b) Central Excise Duty
(c) VAT
(d) All of the above
2. List-I of the Constitution contains matters in respect of which ____________ has the exclusive right
to make laws.
(a) Central Government
(b) State
(c) Both Centre and State Governments
(d) None of the above
3. GST is levied on supply of all goods and services except:
(a) Alcoholic liquor for human consumption
(b) Tobacco
(c) Health care services
(d) All of the above
4. On Petroleum Crude, High Speed Diesel, Motor Spirit (commonly known as Petrol), Natural Gas
and Aviation Turbine Fuel:
(a) GST is not levied at all
(b) GST will be levied from a date to be notified on the recommendations of the GST Council
(c) GST is levied, but exempt
(d) None of the above
5. The functions of Goods and Services Network (GSTN) include:
(a) facilitating registration
(b) forwarding the returns to Central and State authorities
(c) computation and settlement of IGST
(d) All of the above
6. Which article of the Constitution outlines the composition and functions of the GST Council?
(a) 270
(b) 279A
(c) 246A
(d) 269A
7. What is the maximum rate of CGST prescribed under CGST Act?
(a) 20%
(b) 28%
(c) 24%
(d) 40%
8. Which of the following taxes levied on intra-State supply?
(a) CGST
(b) SGST/UTGST
(c) Both (a) and (b)
(d) IGST
9. IGST is levied on:
(a) Inter-State supplies
(b) Intra-State Supplies
(c) Both (a) and (b)
(d) None of the above
10. _________________ is levied on the import of goods and/or services.
(a) IGST
(b) CGST and SGST
 Miscellaneous 364

(c) CGST and UTGST

(d) None of the above
11. The maximum rate of IGST can be:
(a) 20%
(b) 30%
(c) 40%
(d) None of the above
12. On supply of which of the following items, GST shall be levied with effect from such date as may
be notified by the Government on the recommendations of the Council:
(a) Petroleum crude
(b) Alcoholic liquor for human consumption
(c) Both (a) and (b)
(d) None of the above
13. Which of the following statement is correct
(a) India has adopted a dual GST which is imposed concurrently by the Centre and States, i.e. Centre and
States simultaneously tax goods and services.
(b) India has adopted a single GST which is imposed concurrently by the Centre and States, i.e. Centre and
States simultaneously tax goods and services.
(c) India has adopted a Triple GST which is imposed concurrently by the Centre and States, i.e. Centre and
States simultaneously tax goods and services.
(d) India has adopted a Multiple GST which is imposed concurrently by the Centre and States, i.e. Centre
and States simultaneously tax goods and services.
14. Taxes subsumed in GST are-
(i) Central Excise Duty & Additional Excise Duty.
(ii) Service Tax.
(iii) Central Sales Tax
(iv) Central surcharges and Cesses in so far as they relate to supply of goods and services.
(a) all the above
(b) only (i) & (ii)
(c) only (ii) & (iii)
(d) None of the above
15. Which of the following statement is correct.
(a) GST is applicable throughout India including J&K.
(b) GST is applicable throughout India excluding J&K.
(c) GST is applicable outside India.
(d) None of the above is correct
16. Union Territory means the territory of
(i) Andaman and Nicobar Island
(ii) Dadra and Nagar Haveli
(iii) Nagaland
(iv) Telangana
(a) all the above
(b) only (i) & (ii)
(c) only (ii) & (iii)
(d) (i), (ii) & (iii)
17. Union Territory means the territory of
(i) Lakshadweep
(ii) Daman and Diu
(iii) Arunachal Pradesh
(iv) Goa
(a) all the above
(b) (i) & (ii)
 Miscellaneous 365

(c) (ii) & (iii)

(d) (i), (ii) & (iii)
(e) (iii) & (iv)
18. Which of the following statement is correct.
(a) India was the first country to implement GST.
(b) France was the first country to implement GST.
(c) China was the first country to implement GST.
(d) Brazil was the first country to implement GST.
(e) Germany was the first country to implement GST.
19. Which of the following statement is correct.
(a) capital goods means goods, the value of which is capitalised in the books of account of the person
claiming the input tax credit and which are used or intended to be used in the course or furtherance of
business.
(b) capital goods means goods, the value of which is not capitalised in the books of account of the person
claiming the input tax credit and which are used or intended to be used in the course or furtherance of
business.
(c) capital goods means goods, the value of which is capitalised in the books of account of the person
claiming the input tax credit and which are used or intended to be used for personal use.
(d) capital goods means goods, the value of which is capitalised in the books of account of the person
claiming the input tax credit and which are not used in the course or furtherance of business.
20. Which of the following statement is correct.
(a) inward supply in relation to a person, shall mean receipt of goods or services or both whether by
purchase, acquisition or any other means with or without consideration
(b) inward supply in relation to a person, shall mean sale of goods or services or both with or without
consideration
(c) inward supply in relation to a person, shall mean transfer of goods or services or both whether by
purchase, acquisition or any other means with or without consideration
(d) inward supply in relation to a person, shall mean receipt of goods only by purchase, acquisition or any
other means with consideration

Answer:
1. (d); 2. (a); 3. (a); 4. (b); 5. (d); 6. (b); 7. (a); 8. (c); 9. (a); 10. (a); 11. (c); 12. (a); 13. (a); 14. (a); 15. (a);
16. (b); 17. (b); 18. (b); 19. (a); 20. (a)
 Miscellaneous 366

EXAMINATION QUESTION
NOV 2018
Question 12 (c) (i) (2 Marks)
List any four Central levies, which are subsumed in GST.
Answer: Refer answer given in the book

NOV 2018
Question 10 (b)(ii) (2 Marks)
Differentiate between direct and indirect Taxes (Give any two points)
Answer:
S. No Direct Tax Indirect Tax
01. The person paying the tax to the Government The person paying the tax to the
directly bears the incidence of the tax Government collects the same from the
ultimate consumer thus incidence of the tax
is bear by another person.
02. Progressive in nature: High rate of taxes for Regressive in nature: All the consumers
people having higher ability to pay equally bear the burden, irrespective of their
ability to pay

MAY 2018
Question 11 (c) (3 Marks)
List any six state levies, which are subsumed in GST.
Answer: Refer answer given in the book
 Examination Questions 367

TAXATION PAPER
MAY – 2023

LWX2
Roll No………………………. Total No. of printed Pages – 15
Total No. of Questions – 8 Maximum Marks – 70
GENERAL INSTRUCTIONS TO CANDIDATES
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Multiple Choice Question (MCQs).
3. Part II comprises questions which require descriptive type answers.
4. Ensure that you receive the question paper relating to both the parts. If you have not received both, bring
it to the notice of the invigilator.
5. Answers to MCQs in Part I are to be marked on the OMR answer sheet given on the Cover Page of
Section A of descriptive type answer book. Answers to questions in Part II are to be written on the same
descriptive type answer book. Answers to MCQs, if written inside the descriptive answer book, will not be
evaluated.
6. OMR answer sheet given on the Cover Page of descriptive answer book will be in English only for all
candidates, including for Hindi medium candidates.
7. The bar coded sticker provided in the attendance register, is to be affixed only on the descriptive
type answer book.
8. You will be allowed to leave the examination hall only after the conclusion of the exam. If you have
completed the paper before time, remain in your seat till the conclusion of the exam.
9. Duration of the examination is 3 hours. You will be required to submit (a) Part I of the question paper
containing MCQs, and (b) the answer book in respect of descriptive type answer book with OMR Cover
Page to the invigilator before leaving the exam hall, after the conclusion of the exam.
10. The invigilator will give you acknowledgement on Page 2 of the admit card, upon receipt of the above-
mentioned items.
11. Candidate found copying or receiving or giving any help or defying instructions of the invigilators will
be expelled from the examination and will also be liable for further punitive action.
PART II
1. Section – A comprises questions 1-4. In Section – A, answer question No.1 which is compulsory and any
2 questions from question Nos. 2-4. All questions in Section – A relate to assessment year 2022-23, unless
otherwise stated.
Section – B comprises questions 5-8. In Section – B, answer question No.5 which is compulsory and any 2
questions from question Nos. 6-8
2. Working notes should form part of the answer.
3. Answers to the questions are to be given only in English except in the case of candidates who have opted
for Hindi Medium. If a candidate has not opted for Hindi Medium, his/her answers in Hindi will not be
evaluated.
4. All questions in Section – B should be answered on the basis of position of GST law as amended by
Finance Act 2022 and significant notification / circulars issued upto 31st October, 2022 .
PART – II
Section - B
Question 5
Jino Enterprises, a partnership firm is a regular taxable person registered in Guwahati, Assam and is engaged
in supply of Air conditioners and its accessories as well as air conditioned repairing services. Details of their
various activities for the month of October 2023 are as follows:
 Examination Questions 368

(i) Intra State supply of Air conditioner to customers in Assam. Freight is separately charged in invoices for
delivery of goods at customer's doorstep
Value of goods 4,00,000
Value of freight charges charged separately in above invoices. 1,00,000
(ii) Intra State supply of repairing services wherein apart from charging service charges, cost of parts/ spares
provided to customers is also charged and consideration for the same is separately mentioned in the
invoices.
Value of services component of invoices 3,00,000
Value of parts / spares component in invoices 50,000
(iii) In order to enhance their sales and to clear the stock of old models of air- conditioner, Jino Enterprises
made combo offers to customers wherein, if a customer purchases an Air-conditioner along with a
stabilizer, the same is offered at a combo price of ₹ 20,000 as against the original price of ₹ 30,000
(Air-conditioner ₹ 22,000 & stabilizer ₹ 8,000) if these are purchased separately. During October, 2023,
Jino Enterprises had made inter-State supply of 10 numbers of such combo products.
(iv) Purchased business class air tickets for intra State travel from Guwahati Airport, Assam to Dibrugarh
Airport, Assam for its executive employees relating to business of the concern. Basic air fare was
₹40,000 and airlines charges GST @ 2.5% CGST, SGST each on basic freight, in case the same is
applicable.
(v) In respect of few of the invoices relating to F.Y. 2022-2023, involving ITC of CGST ₹ 20,000, SGST of
₹ 20,000, IGST ₹ 80,000 was not taken earlier. Jino Enterprises now want to avail credit in respect of
such invoices in the current month.
Additional Information:
(a) All the figures mentioned above are exclusive of taxes.
(b) The rates of GST applicable on various supplies are as follows:
Nature of Supply CGST SGST IGST
Air-Conditioner, Parts and accessories (Except Stabilizers) 6% 6% 12%
Services 9% 9% 18%
Stabilizers 9% 9% 18%
Freight 6% 6% 12%
Calculate the amount of minimum CGST, SGST & IGST tax payable in cash by Jino Enterprises for the
month of October, 2023.
Note: Working Notes (legal provisions) should form part of your answer. (8 Marks)
Answer:
Computation of minimum CGST, SGST and IGST payable in cash by Jino Enterprises for the month
of October, 2023
Output Tax
(i)(a) Intra-State supply of air-conditioners 4,00,000
CGST @ 6% 24,000
SGST @ 6% 24,000
(i)(b) Value of freight charges 1,00,000
CGST @ 6% 6,000
SGST @ 6% 6,000
(ii)(a) Value of services 3,00,000
CGST @ 9% 27,000
SGST @ 9% 27,000
(ii)(b) Value of parts / spares component in invoices 50,000
CGST @ 6% 3,000
SGST @ 6% 3,000
(iii) Inter-State supply of 10 combos of air- conditioners and stabilizers (20,000 x 10) 2,00,000
IGST @ 18% 36,000
 Examination Questions 369

ITC
(iv) Purchase of business class air tickets for travel from Assam 40,000
CGST @ 2.5% 1,000
SGST @ 2.5% 1,000
[Not exempt, since air travel embarking from Assam is not being undertaken in economy class. Further,
ITC is available since service is used in the course/furtherance of business.]
(v) Invoices relating to FY 2022-23 CGST 20,000
SGST 20,000
IGST 80,000
[ITC in respect of any invoice can be taken upto 30th November following the end of FY to which such
invoice relates or furnishing of the relevant annual return, whichever is earlier.]
Computation of Net GST Liability
IGST 36,000
Less: ITC of IGST (36,000)
Net Tax Nil

CGST (24,000 + 6,000 + 27,000 + 3,000) 60,000

Less: ITC of IGST (39,000)
Less: ITC of CGST (21,000)
Net Tax Nil

SGST (24,000 + 6,000 + 27,000 + 3,000) 60,000

Less: ITC of IGST (5,000)
Less: ITC of SGST (21,000)
Net Tax 34,000

Question 6(a)
Mr. Jayesh, a registered supplier of Mumbai, received the following amounts in respect of the various
activities undertaken by him during the month of October, 2023.
(i) Commission received as a recovery agent from a Non-Banking Finance Company (NBFC) 80,000
(ii) Actionable claim received from normal business debtors 10,50,000
(iii) Amount received from ABC Ltd. for performance of classical dance in one program. 1,74,500
(iv) Business assets (old computers) given to a friend free of cost, the market value of all the
computers was ₹51,000,
No input tax credit has been availed on such computers when used for business No amount Charged
(v) Consideration received for one month rent from a registered individual person for
renting of residential dwelling for use as residence. 15,200
Details of Input Services: -
(vi) Paid to an unregistered Goods Transport agency for various consignments of transportation 15,100
of goods by road.
(Each individual consignment in a single carriage was of less than 1,450.)
Notes:
(i) All the amount stated above in both the tables are exclusive of GST, wherever applicable.
(ii) Aggregate turnover of Mr. Jayesh in previous year was ₹42,00,000.
 Examination Questions 370

You are required to Compute Gross value of supplies, on which GST to be paid by Mr. Jayesh for the month
of October, 2023. (6 Marks)
Answer:
Computation of gross value of taxable supply on which GST is to be paid by Mr. Jayesh
(i) Commission received as a recovery agent from Non-Banking Financial Company
[Tax is payable by NBFC under reverse charge.] -
(ii) Actionable claim received from normal business debtors
[No tax is payable as actionable claims other than lottery, betting and gambling are covered
under Schedule III, i.e. they are neither supply of goods nor supply of services.] -
(iii) Amount received from ABC Ltd. for performance of classical dance
[Taxable since consideration for classical dance performance exceeds ₹ 1,50,000.] 1,74,500
(iv) Business assets given free of cost
[Not a supply as it is made without consideration and not covered in Schedule I because
ITC is not availed on the same.] -
(v) Rent from registered individual person
[Tax is payable by the registered individual person under reverse charge] -
(vi) Services from unregistered GTA
[Tax on services provided by unregistered GTA is payable under reverse charge by Mr.
Jayesh being a registered person.] 15,100
Gross value of taxable supply on which GST is to be paid by Mr. Jayesh 1,89,600
Note: Based on the position of law as existing on 31.10.2023.

Question 6(b)
Mr. Shyam Das was admitted to Suraksha Hospital in Mumbai for 2 days in relation to diagnosis of removal
of stones from his kidney. For the said services, Surkasha hospital charged following from Mr. Das :
(i) Room rent ₹7000/- per day for 2 days.
(ii) Operation theatre charges ₹5000/-
(iii) Doctors Consultation Charges ₹8000/-
(iv) Other services ₹4000/-
In each of the above scenario explain whether Suraksha Hospital should levy GST or not in line with the
relevant provisions of the GST laws. (4 Marks)
Answer:
Health care services by a clinical establishment are exempt from GST.
However, services provided by a clinical establishment by way of providing room having room charges
exceeding ₹ 5,000 per day to a person receiving health care services are not exempt.
In view of the same, only the room rent of ₹ 14,000 (₹ 7,000 per day × 2 days) is liable to GST.
Other than room rent, all other nature of services provided by Suraksha Hospital are exempt from GST.

Question 7(a)
Mr. Manik provides the following information regarding his tax & other liabilities under GST Act as per
Electronic Liability Register:
1. Tax due for the month of May 25,000
2. Interest due for the month of May 2,000
3. Penalty due for the month of May 3,000
4. Tax due for the month of June 35,000
5. Liability arising out of demand notice U/s 73 48,000
 Examination Questions 371

Mr. Manik wants to clear his liability of demand notice U/s 73 first.
Discuss the provisions of order of discharge of GST liability U/s 49(8) of CGST Act & advice to Mr. Manik.
(5 Marks)
Answer:
The order of discharge of GST liability under section 49(8) of the CGST Act is as under:
(i) self-assessed tax, interest, penalty, fee or any other amount related to returns of the previous tax periods.
(ii) self-assessed tax, interest, penalty, fee or any other amount related to returns of the current tax period.
(iii) any other amount payable including demand determined under section 73 or section 74,
In view of the above provisions, Mr. Manik cannot clear his liability of demand notice u/s 73 first.
The order of discharge of liability of Mr. Manik will be as under:
1. Tax, interest and penalty for the month of May, ₹ 30,000
2. Tax due for the month of June, ₹ 35,000
3. Liability arising out of demand notice u/s 73, ₹ 48,000

Question 7(b)
(i) Mr. Sumit is a registered dealer in the state of Punjab. In the month of May he decides to apply for
QRMP scheme. As he wants to switch to QRMP scheme he had not filed his returns for the months of May
and June.
Please guide to Mr. Sumit regarding the following:
(A) Conditions and restrictions of QRMP scheme.
(B) Manner of exercising option of QRMP scheme. (3 Marks)
(ii) When goods are transferred by principal to job worker, there is no need to issue e-way bill. (2 Marks)
Comment on the validity of the above statement with reference to GST Laws.
Answer:
(i) (A) Conditions and restrictions of QRMP scheme
Mr. Sumit has to fulfil the following conditions and restrictions for opting for QRMP scheme:
• His aggregate annual turnover (PAN based) is up to ₹ 5 crore in the preceding financial year.
• He has furnished the return for the preceding month, as due on the date of exercising such option.
• He is not required to exercise the option every quarter.

(B) Manner of exercising option of QRMP scheme

Registered person – Mr. Sumit - intending to opt for QRMP scheme for any quarter should indicate his
preference for furnishing of return on a quarterly basis from 1st day of the 2nd month of the preceding
quarter till the last day of the 1st month of the quarter for which the option is being exercised.
(ii) The said statement is not valid.
When goods are transferred by principal to job worker, e-way bill is required to be mandatorily issued:
• in case of intra-State transfer, if consignment value exceeds ₹ 50,000, and
• in case of inter-State transfer, irrespective of the value of the consignment.

Question 8(a)
(i) Who are not eligible to opt for composition scheme for goods under GST Laws?
(ii) GTA services provided to an unregistered person (including unregistered casual taxable person) are
exempt from GST by virtue of Entry 21 A of GST Laws. Discuss the validity of above statement. (5 Marks)
OR
List any 5 (Five) activities/transactions specified under Schedule III of the CGST Act, 2017 which shall be
neither treated as supply of goods nor as supply of services. Detailed explanations is not required. (5 Marks)
 Examination Questions 372

Answer:
(i) The registered person who is not eligible for composition scheme for goods under GST law are as under:
(i) Supplier engaged in making any supply of goods or services which are not leviable to tax.
(ii) Supplier engaged in making any inter-State outward supplies of goods or services.
(iii) Person supplying any services through an electronic commerce operator who is required to collect tax at
source (under section 52).
(iv) Manufacturer of ice cream, panmasala, tobacco, aerated waters, fly ash bricks; fly ash aggregate, fly ash
blocks, bricks of fossil meals or similar siliceous earths, building bricks, earthen or roofing tiles.
(v) Supplier who is either a casual taxable person or a non-resident taxable person
(vi) Supplier of services exceeding an amount which is higher of 10% of the turnover in a State/U.T. in the
preceding financial year or ₹ 5 lakh.

(ii) The said statement is invalid.

Services provided by a GTA to an unregistered person, including an unregistered casual taxable person are
exempt except when provided to a:
(a) factory
(b) society
(c) co-operative society
(d) body corporate
(e) partnership firm
(f) registered casual taxable person

Alternative
Activities or transactions which shall be treated neither as a supply of goods nor a supply of services are as
under:-
(1) Services by an employee to the employer in the course of or in relation to his employment.
(2) Services by any court or Tribunal established under any law for the time being in force.
(3) Functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities.
(4) Duties performed by any person who holds any post in pursuance of the provisions of the Constitution
in that capacity.
(5) Duties performed by any person as a Chairperson or a Member or a Director in a body established by
the Central Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.
(6) Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
(7) Sale of land and, subject to paragraph 5(b) of Schedule II, sale of building. (i.e. in case, where entire
consideration for sale of building received after issuance of completion certificate or after its first
occupation, whichever is earlier).
(8) Actionable claims, other than lottery, betting and gambling.

Question 8(b)
“Rule 86A of the CGST Rules, 2017 provides that in certain specified circumstances, Commissioner on the
basis of reasonable belief may not allow debit of an amount equivalent to such credit in electronic credit
ledger.”
State the grounds (as guided by CBIC) on which the reasons for such belief must be based on. (5 Marks)
Answer:
The reasons for such belief must be based on one or more of the following grounds:
(1) The credit is availed by the registered person on the invoices/debit notes issued by a supplier, who is
found to be non-existent or is found not to be conducting any business from the place declared in
registration.
 Examination Questions 373

(2) The credit is availed by the registered person on invoices/debit notes, without actually receiving any
goods and/or services.
(3) The credit is availed by the registered person on invoices/debit notes, the tax in respect of which has not
been paid to the Government.
(4) The registered person claiming the credit is found to be non-existent or is found not to be conducting
any business from the place declared in registration.
(5) The credit is availed by the registered person without having any invoice/debit note or any other valid
document for it.
 Examination Questions 374

TAXATION PAPER
NOV – 2022
MQF2
Roll No………………………. Total No. of printed Pages – 8
Total No. of Questions – 8 Maximum Marks – 70

GENERAL INSTRUCTIONS TO CANDIDATES

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Multiple Choice Question (MCQs).
3. Part II comprises questions which require descriptive type answers.
4. Ensure that you receive the question paper relating to both the parts. If you have not received both, bring
it to the notice of the invigilator.
5. Answers to MCQs in Part I are to be marked on the OMR answer sheet given on the Cover Page of
Section A of descriptive type answer book. Answers to questions in Part II are to be written on the same
descriptive type answer book. Answers to MCQs, if written inside the descriptive answer book, will not be
evaluated.
6. OMR answer sheet given on the Cover Page of descriptive answer book will be in English only for all
candidates, including for Hindi medium candidates.
7. The bar coded sticker provided in the attendance register, is to be affixed only on the descriptive
type answer book.
8. You will be allowed to leave the examination hall only after the conclusion of the exam. If you have
completed the paper before time, remain in your seat till the conclusion of the exam.
9. Duration of the examination is 3 hours. You will be required to submit (a) Part I of the question paper
containing MCQs, and (b) the answer book in respect of descriptive type answer book with OMR Cover
Page to the invigilator before leaving the exam hall, after the conclusion of the exam.
10. The invigilator will give you acknowledgement on Page 2 of the admit card, upon receipt of the above-
mentioned items.
11. Candidate found copying or receiving or giving any help or defying instructions of the invigilators will
be expelled from the examination and will also be liable for further punitive action.

PART II
1. Section – A comprises questions 1-4. In Section – A, answer question No.1 which is compulsory and any
2 questions from question Nos. 2-4. All questions in Section – A relate to assessment year 2023-24, unless
otherwise stated.
Section – B comprises questions 5-8. In Section – B, answer question No.5 which is compulsory and any 2
questions from question Nos. 6-8
2. Working notes should form part of the answer.
3. Answers to the questions are to be given only in English except in the case of candidates who have opted
for Hindi Medium. If a candidate has not opted for Hindi Medium, his/her answers in Hindi will not be
evaluated.
4. All questions in Section – B should be answered on the basis of position of GST law as amended by
significant notification/circulars issued upto 31st Oct, 2022.

PART II
SECTION – B
5. Ajay Limited, a registered dealer in Patna (Bihar), is engaged in various types of supplies. The
company provided the following details for the month of January 2024:
 Examination Questions 375

Sl Particulars Amounts
No. in ₹
(i) Outward supply of goods made during the month to various non-related
persons :
Particulars Market Value (₹) Transaction As given in
Value (₹) particular
a. In the State of Bihar (Intra- 3,00,000 4,00,000 column
State)
b. To other States (Inter-State) 2,00,000 1,00,000
(ii) Services provided to the State Government of Karnataka for conducting a computer 5,00,000
training programme for its employees. Total expenditure incurred for the said
programme was ₹90,000, of which ₹63,000 was borne by the State Govt. (Inter-State
transaction)
(iii) Stock transfer without consideration to its branch at Gaya (Bihar). Branch has Nil
separate GSTN for convenience of accounting and billing.
Value under Section 15 – ₹20,000. (Intra-State)
(iv) Intra-State inward supply of various services for use in the course or 6,50,000
furtherance of business (30 invoices)
Additional Information :
(a) All the amounts given above are exclusive of taxes.
(b) During the course of arranging and filing documents, the accountant of Ajay Limited observed that an
invoice for ₹30,000 (excluding tax) dated 02.12.2023 was omitted to be recorded in the books of
accounts and no payment was made against the same till the end of January 2024. This invoice was
issued by Mr. Mukesh of Patna, from whom Ajay Limited had taken cars on rental basis. Invoice
included cost of fuel also. (Intra-State transaction)
(c) Rate of GST applicable on various supplies are as follows:

Nature of Supply CGST SGST IGST

Car Rental Service 2.5% 2.5% 5%

All other inward and outward supplies 9% 9% 18%

(d) No opening balance of Input tax credit exists as on the beginning of the month.
(e) Out of the 30 invoices of inward supply received, 6 invoices with taxable value amounting to ₹1,50,000
were e-invoices in which Invoice Reference Number (IRN) was not mentioned. However, all the
invoices were duly reflected in GSTR 2B for the month of January 2023, since the suppliers had filed
their GSTR-1.
(f) Subject to the information given above, conditions necessary for claiming ITC were complied with.

You are required to calculate the amount of net GST liability payable in cash by Ajay Limited for the month
of January 2024. Brief notes for treatment given for each item should form part of your answer.
(8 Marks)
Solution:
Outward intra-State supply of goods made in the State of Bihar 4,00,000
CGST @ 9% 36,000
SGST @ 9% 36,000
Outward supply of goods made to other States 1,00,000
IGST @ 18% 18,000
 Examination Questions 376

Inter-State services provided to State Government of Karnataka for conducting

a computer training programme (Not exempt since the State Government has
borne less than 75% of total expenditure.) 5,00,000
IGST @ 18% 90,000
Intra-State stock transfer to Gaya Branch with separate registration (Supply of
goods between distinct persons without consideration is deemed supply as per Schedule 1) 20,000
CGST @ 9% 1,800
SGST @ 9% 1,800
Computation of input tax credit
Intra-State inward supply of services [₹ 6,50,000 – ₹1,50,000] (ITC cannot be
claimed on the e-invoices without IRN since an e-invoice without IRN is not
treated as valid document for claiming ITC.) 5,00,000
CGST @ 9% 45,000
SGST @ 9% 45,000
Computation of net tax liability
Particulars CGST (₹) SGST (₹) IGST (₹)
Total output tax 37,800 37800 1,08,000
Less: ITC (CGST 45,000) (37,800) (7,200)
Less: ITC (SGST 45,000) (37,800) (7,200)
Net GST Payable Nil Nil 93,600
Note:
Cars taken on rental basis from Mr. Mukesh [Tax on renting of motor car services wherein cost of fuel is
included in consideration provided by a non-body corporate to a body corporate and invoice is issued
charging CGST/SGST @ 2.5% is payable under reverse charge.] Time of supply of such services is 1st
February being earlier of date of payment, or date immediately following 60 days since issue of invoice by
the supplier. Since the time of supply of renting of motor car services in the given case does not fall in
January, tax liability on the same does not arise in said month. Further, ITC on renting of motor car services
received is blocked since the recipient - Ajay Ltd. is not in the same line of business.

6(a). Charm Limited, registered under GST in the State of Jharkhand, manufactures cosmetic products and
appointed Mr. Handsome of Mumbai, who is registered under GST in the State of Maharashtra, as their Del-
credere agent (DCA) to sell their products. Being a DCA, he agrees to raise invoices in his own name and
also guarantees for the realization of payments from customers to Charm Limited.
In order to realize the payments from customers on time, he extends short term transaction based loans to
them and charges interest for the same.
Mr. Handsome provides you the following details of transactions carried out during the month of March
2022:
 Examination Questions 377

Sl. Particulars Amount

No. in ₹
Outward Supply:
i. Goods sold by Mr. Handsome in his DCA capacity (Intra-State transaction) 2,80,000
ii. Interest earned from the above customers for short term credit facility 20,000
provided for timely payment of dues. (Intra-State transaction)
iii. Commission bill raised on Charm Limited (Inter- State transaction) in respect 30,000
of DCA services provided.
Inward Supply :
iv. Inter-State supply of goods received from Charm Limited. Since being a Nil
DCA, no consideration was paid. Value under section 15 – ₹2,00,000
v. Received training in marketing and distribution from Charm Limited as per
DCA agreement, free of cost. Company charges ₹75,000 for such training Nil
when they provide the same to others.

Applicable rate of tax on both inward and outward supplies is 9% each for CGST and SGST and 18% for
IGST. Amount given above are exclusive of taxes wherever applicable. Subject to the information given
above, necessary conditions are complied with for availment of Input Tax Credit.
You are required to calculate the gross GST liability and eligible Input Tax Credit for the month of March
2022 of Mr. Handsome. Brief notes should form part of your answer for treatment of items in Sl. No. (i) to
(v). (6 Marks)
Solution:
Computation of gross GST liability of Mr. Handsome for the month of March 2022

Particulars CGST SGST IGST

(₹) (₹) (₹)
Goods sold by Mr. Handsome in his DCA capacity 2,80,000 27,000 27,000
[3,00,000 [3,00,000
Add: Interest earned for short term credit facility 20,000 × 9%] × 9%]
provided to above Customers
[Interest included in the value of supply of the goods
sold since where DCA is an agent under Schedule - I
of the CGST Act, short term credit facility provided
by DCA to the buyer is subsumed in the supply of
the goods by the DCA to the buyer.]
Commission charged for DCA services 5,400
[Being taxable supply of services.] [30,000 ×
18%]
Gross GST liability 27,000 27,000 5,400
Note: Since the invoice for goods sold is issued by the DCA – Mr. Handsome in his own name, he would
fall under the ambit of an agent under Schedule – I of the CGST Act.
 Examination Questions 378

Computation of eligible ITC for the month of March 2022

Particulars CGST SGST IGST (₹)
(₹) (₹)
Inward supply of goods from Charm Limited free of cost 36,000
[Supply of goods by principal – Charm Limited to the agent – Mr. [2,00,000
Handsome qualifies as supply even though it is made without × 18%]
consideration.]
Training in marketing and distribution received from Charm Limited -- -- --
free of cost
[Since no consideration is charged for the services provided, said
services do not qualify as supply. As no GST is paid on the same, ITC
is not available]
Total ITC available Nil Nil 36,000

(b) Answer the following, after reading the below given two paragraphs :
(i) Briefly discuss the relevant provision
(ii) Decide the correct conclusion and
(iii) Determine the validity of the given advice (Correct / Incorrect)
(I) Raju is engaged in the manufacture of ‘Fly ash Bricks’ in the State of Kerala. He started his activity in
the month of April 2022 and deals only in intra-State. His tax consultant advise him to register under
composition levy under GST as Raju's turnover is expected to be below ₹1 crore for the said financial
year.
(II) Dharun provides service as a business facilitator to Zio Bank Limited by facilitating in opening of
bank accounts to villagers in its rural branches in Punjab and earned a commission of 22 lakh in the
month of April, 2022. So far he is not registered under GST. Dharun’s tax consultant advised him that
he is liable for registration under GST as his gross receipts exceeded 20 lakh. Dharun has no other
receipt / business activity other than the above.
(4 Marks)
Solution:
(I) 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 subject to fulfilment of specified conditions.
One of these conditions is that he must not be engaged in the manufacture of notified goods including
fly ash bricks.
Therefore, in the given case, since Raju is engaged in manufacture of fly ash bricks, he cannot opt for
composition levy even though his aggregate turnover in the preceding financial year is nil.
Thus, the advice given by his tax consultant is not correct.
(II) Services by a business facilitator to a banking company with respect to accounts in its rural area
branch is exempt from GST.
Since in the given case, Dharun is engaged exclusively in providing the exempt services, it is not liable
to obtain registration even though his aggregate turnover exceeds ₹ 20 lakh.
Thus, the advice given by his tax consultant is not correct.
 Examination Questions 379

7.(a) Nesamani started his business activities in the month of February 2022 in the State of Orissa. He
provided the following details.

Particulars Amount
in ₹
(i) Outward supply of Petrol (Intra-State) 4,00,000

(ii) Transfer of exempt goods to his branch in Rajasthan (Inter-State) 2,00,000

(iii) Outward supply of taxable goods by his branch in Uttar Pradesh (Intra-State) 5,00,000
(iv) Outward supply of services on which tax is payable under RCM by the recipient of 6,00,000
services (Intra-State)
(v) Inward supply of services on which tax is payable under RCM (Intra-State) 2,00,000

From the information given above, compute the aggregate turnover of Nesamani and also decide whether he
is required to get registration under GST. Assume that the amounts given above are exclusive of taxes.
(5 Marks)
Solution:
Particulars Amount (₹)
Computation of aggregate turnover of Nesamani
Outward supply of petrol 4,00,000
[Supply of petrol being a non-taxable supply is an exempt supply. Value of exempt supply
is includible in aggregate turnover.]
Inter-State stock transfer of exempt goods 2,00,000
[Supply of taxable/exempt goods between distinct persons is includible.]
Outward supply of taxable goods from Uttar Pradesh branch [Value of outward supplies 5,00,000
under same PAN are includible.]
Outward supply of services taxable under reverse charge [Includible in aggregate turnover.] 6,00,000
Inward supply of services taxable under reverse charge [Excludible from the aggregate --
turnover.]
Aggregate turnover 17,00,000

For a supplier engaged in supply of goods and services from the States of Orissa and Uttar Pradesh, the
threshold limit of aggregate turnover to obtain registration is ₹ 20 lakh. However, a person required to pay
tax under reverse charge has to obtain registration compulsorily irrespective of the quantum of turnover.
Since in the given case, Nesamani is required to pay tax under reverse charge, it is liable to obtain
registration compulsorily irrespective of his quantum of turnover.

(b)(i) Pranesh has deposited a sum of ₹5,000 under the head of 'Fee' column of Cess and ₹4,000 was lying
unutilized under the head of Penalty column of IGST. Both the deposits were made wrongly instead of
depositing under the head of Fee column under SGST.
In the light of the provisions of section 49(10) & 49(11) of the CGST Act, 2017, briefly explain the relevant
provisions as how can Pranesh rectify these errors? (3 Marks)
Solution:
A registered person is allowed to make intra-head or inter-head transfer of amount, as available in electronic
cash ledger, using specified form.
 Examination Questions 380

It can transfer any amount of tax, interest, penalty, fee or others, under one (major or minor) head to another
(major or minor) head, as available in the electronic cash ledger.
Therefore, in the given case, amount of ₹ 5,000 available under minor head ‘fee’ of major head ‘cess’ and
₹4,000 available under minor head ‘penalty’ of major head ‘IGST’ can be transferred to minor head ‘fee’ of
major head ‘SGST’ using specified form.

(ii) M/s Sakura Enterprises made an inter-State supply of taxable goods valued at ₹47,500 and exempt
goods valued at ₹2,000. Rate of IGST for taxable supply was 6%. Determine, with brief reasons, whether e-
way bill generation is mandatory for the above supply made by M/s Sakura Enterprises. (2 Marks)
Solution:
In the given case, consignment value of goods (including GST and excluding value of exempt supply) is
₹50,350 (47,500 × 106%).
Since there is a movement of goods of consignment value exceeding ₹ 50,000, M/s Sakura Enterprises is
mandatorily required to issue e-way bill.

8. (a) Rule 86B restricts the use of Input Tax Credit (ITC) available in the Electronic Credit Ledger for
discharging output tax liability. List down the exceptions to the Rule 86B. (5 Marks)
Solution:
Rule 86B of the CGST Rules, 2017 restricts the use of ITC available in the Electronic Credit Ledger for
discharging output tax liability by a registered person. Exceptions to rule 86B are as follows:
(1) Where the said person/proprietor/karta/managing director/any of its two partners, whole-time
directors, members of Managing Committee of Associations or Board of Trustees, as the case may be,
have paid more than ₹ 1 lakh as income tax in each of the last 2 financial years.
(2) Where the registered person has received a refund of more than ₹ 1 lakh in the preceding FY on
account of unutilised ITC in case of
(i) zero rated supplies made without payment of tax or
(ii) inverted duty structure.
(3) Where the registered person has discharged his liability towards output tax through the electronic cash
ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively,
upto the said month in the current FY.
(4) Where the registered person is Government Department, Public Sector Undertaking, Local authority or
Statutory body. Said restriction may be removed by Commissioner/ authorised officer after required
verifications and safeguards.

Credit Note
(b) List any three situations that warrant issue of Credit Note. Briefly explain the time line to declare such
Credit Note in the GST return. (5 Marks)
Solution:
Situations that warrant the issue of credit note are as follows:
• The supplier has erroneously declared a value which is more than the actual value of the goods or
services 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.
 Examination Questions 381

The details of credit note are declared in the GST return for the month during which such credit note has
been issued but not later than:
(i) 30th November following the end of the financial year in which such supply was made,
or
(ii) the date of furnishing of the relevant annual return,
whichever is earlier.
OR
GSTR-1/IFF
(b) List the details of outward supplies which can be furnished usi.ng Invoice Furnishing Facility
(IFF). Also briefly list the cases where a. registered person is debarred from furnishing details of
outward supplies in GSTR-1 I IFF. (5 Marks)
Solution:
Details of outward supplies which can be furnished using IFF are as follows:
(a) invoice wise details of inter-State and intra-State supplies made to the registered persons;
(b) debit and credit notes, if any, issued during the month for such invoices issued previously.
A registered person, opting for QRMP (Quarterly Return Monthly Payment) scheme is not allowed to
furnish Form GSTR-1/using IFF, if he has not furnished the return in Form GSTR-3B for preceding tax
period.
 Examination Questions 382

TAXATION PAPER
MAY – 2022
JVF2
Roll No………………………. Total No. of printed Pages – 9
Total No. of Questions – 8 Maximum Marks – 70

GENERAL INSTRUCTIONS TO CANDIDATES

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Multiple Choice Question (MCQs).
3. Part II comprises questions which require descriptive type answers.
4. Ensure that you receive the question paper relating to both the parts. If you have not received both, bring
it to the notice of the invigilator.
5. Answers to Questions in Part I are to be marked on the OMR answer sheet given on the Cover Page of
Section A of descriptive type answer book. Answers to questions in Part II are to be written on the same
descriptive type answer book. Answers to MCQs, if written inside the descriptive answer book, will not be
evaluated.
6. OMR answer sheet given on the Cover Page of Section A of descriptive answer book will be in English
only for all candidates, including for Hindi medium candidates.
7. The bar coded sticker provided in the attendance register, is to be affixed only on the descriptive type
answer book.
8. You will be allowed to leave the examination hall only after the conclusion of the exam. If you have
completed the paper before time, remain in your seat till the conclusion of the exam.
9. Duration of the examination is 3 hours. You will be required to submit (a) Part I of the question paper
containing MCQs, and (b) the answer book in respect of descriptive type answer book with OMR Cover
Page to the invigilator before leaving the exam hall, after the conclusion of the exam.
10. The invigilator will give you acknowledgement on Page 2 of the admit card, upon receipt of the above-
mentioned items.
11. Candidate found copying or receiving or giving any help or defying instructions of the invigilators will
be expelled from the examination and will also be liable for further punitive action.

PART II
1. Section – A comprises questions 1-4. In Section – A, answer question No.1 which is compulsory and any
2 questions from question Nos. 2-4. All questions in Section – A relate to assessment year 2023-24, unless
otherwise stated.
Section – B comprises questions 5-8. In Section – B, answer question No.5 which is compulsory and any 2
questions from question Nos. 6-8
2. Working notes should form part of the answer.
3. Answers to the questions are to be given only in English except in the case of candidates who have opted
for Hindi Medium. If a candidate has not opted for Hindi Medium, his/her answers in Hindi will not be
evaluated.
4. All questions in Section – B should be answered on the basis of position of GST law as amended by
significant notification/circulars issued upto 31st October, 2022.
 Examination Questions 383

PART – II
SECTION -B

5. Zeon Ltd., a GST registered supplier located m Ranchi, Jharkhand is engaged in the
manufacturing of Washing Machines & Mixer Grinders. It provides you the details of various
activities undertaken during the month of September, 2022 as follows:

Sl. Particulars Amount

No. (₹)
(i) Outward supplies made during the month -

a. Within the Jharkhand 24,00,000

b. Outside the Jharkhand 5,00,000 29,00,000

(ii) Purchase of raw materials from registered dealers within the Jharkhand which
includes materials worth 2,00,000 purchased from Mr. Krishna, a registered
person who is paying tax under composition scheme.
7,00,000
(iii) Bus purchased from a registered dealer in Tatanagar, Jharkhand. Bus used to 12,00,000
ferry its 25 workers to and from factory.

Assume the rates of GST applicable on various supplies as follows:

Nature of supply CGST SGST IGST

Composition supplies 0.5% 0.5% -

Bus 14% 14% 28%

Raw material 6% 6% 12%

Washing Machines & Mixer Grinders 9% 9% 18%

Opening Balances of Input Tax Credit as on 01/09/2022 were as follows :

CGST (₹) SGST(₹) IGST(₹)

20,000 5,000 95,000

Note: (i) All the figures mentioned above are exclusive of taxes.
(ii) Both Inward & Outward supplies within the State of Jharkhand are to be considered Intra-State
supplies and outside the state of Jharkhand are Inter-State supplies.
(iii) Subject to information given above, all the other conditions necessary for availing lTC have been
fulfilled.
 Examination Questions 384

Calculate the amount of net minimum GST payable in Cash by Zeon Ltd. for the month of September,
2022.
Brief and suitable notes should form part of your answer. (8 Marks)
Solution:
Computation of minimum net GST payable in cash by Zeon Ltd. for the month of September 2022

Particulars CGST (₹) SGST (₹) IGST (₹)

Outward supplies made 2,16,000 2,16,000
within Jharkhand [24,00,000 × 9%] [24,00,000 × 9%]
Outward supplies made 90,000
outside Jharkhand [5,00,000 × 18%]
Total output tax 2,16,000 2,16,000 90,000
Less: Input Tax Credit [Refer - 5,000 (90,000) (IGST)
Working Note below] [IGST (IGST)
credit be first utilized for 2,16,000 (CGST)
payment of IGST liability.
Remaining IGST credit has been 2,03,000 (SGST)
utilized for payment of SGST
liability since the SGST liability
is to be kept at minimum.
After exhausting IGST credit,
CGST and SGST credit to be
utilized. CGST credit to be
utilized for payment of CGST
and SGST credit to be utilized
for the payment of SGST. ITC of
CGST cannot be utilized for
payment of SGST and vice
versa.]
Minimum net GST Nil 8,000 Nil
payable in cash
ITC to be carried forward next 2,000
month
Working Note:
Computation of ITC available
Particulars CGST (₹) SGST (₹) IGST (₹)
Opening balance 20,000 5,000 95,000
Purchase of raw materials from registered 30,000 30,000
dealers within Jharkhand [7,00,000 – [5,00,000 × 6%] [5,00,000 × 6%]
2,00,000]
[ITC on purchases of goods worth
₹ 2,00,000 on which tax has been paid
under composition scheme is blocked.
ITC on remaining purchases worth
₹5,00,000 is available, being supply of
goods used/intended to be used in the
course/furtherance of business.]
 Examination Questions 385

Bus purchased from dealer in Jharkhand 1,68,000 1,68,000

used to ferry 25 workers to and from [12,00,000 × 14%] [12,00,000 × 14%]
factory
[ITC on motor vehicles for transportation
of persons with seating capacity > 13
persons (including the driver) used for
any purpose is allowed.]
Total ITC available 2,18,000 2,03,000 95,000

6. (a) XYZ Pvt. Ltd. provided the following particulars relating to goods sold by it to ABC Pvt. Ltd. :
Particulars Amount (₹)

List price of the goods

(exclusive of taxes and discount) 50,000
Tax levied by the Municipal Authority on the sale of such goods 6,000
Packing charges (not included in the list price above) 2,500
Subsidy received from a NGO, Directly linked to price
(included in the list price above) 3,000
Paid to one of vendors by ABC Pvt. Ltd. in relation to the service provided by
vendor to XYZ Pvt. Ltd.
(not included in the list price above) 2,000
XYZ Pvt. Ltd. offers 2% turnover discount on the list price after reviewing the performance of ABC
Pvt. Ltd. The discount was not known at the time of supply.
ABC Pvt. Ltd. delayed the payment and paid ₹5,000 (Including GST of 18%) as interest to XYZ Pvt.
Ltd.
Determine the value of taxable supply made by XYZ Pvt. Ltd. under GST law. (6 Marks)
Solution:
Computation of value of taxable supply made by XYZ Pvt. Ltd.
Particulars Amount (₹)
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 6,000
[Taxes other than GST, if charged separately, are includible in the value of
supply.]
Packing charges 2,500
[Being incidental expenses, same are includible in the value of supply.]
Subsidy received from NGO Nil
[Since subsidy is received from a non-Government body and directly linked to
the price, the same is includible in the value of supply.]
Payment made by ABC Pvt. Ltd. in relation to service provided by vendor to 2,000
XYZ Pvt Ltd (Note 1).
[Amount that supplier is liable to pay, but incurred by the recipient, is includible
in the value of supply.]
Turnover discount -
[Since discount is not known at the time of supply, it is not deductible from the
value of supply.]
 Examination Questions 386

Interest for delayed payment (rounded off) [Includible in the value of 4,237
supply] [5,000 × 100/118]
Value of taxable supply 64,737
Note:
1. It has been most logically assumed that service provided by the vendor to XYZ Pvt. Ltd. is in relation
to supply of goods by XYZ Pvt. Ltd. to ABC Pvt. Ltd.

(b) Examine whether the following activities would amount to “supply” under GST law?
(i) Glory Ltd. is engaged in manufacturing and selling of cosmetic products. Seva Trust, a charitable
organisation approached Glory Ltd. to provide financial assistance for its charitable activities. Glory
Ltd. donated a sum of ₹2 lakh to Seva Trust with a condition that Seva Trust will place a hoarding at
the entrance of the trust premises displaying picture of products sold by Glory Ltd.
(2 Marks)
(ii) Mr. Swamy of Chennai is working as a manager with ABC Bank.
He consulted M/s. Jacobs and company of London and took its advice for buying a residential house in
Mumbai and paid them consultancy fee of 200 UK Pound for this import of service.
(2 Marks)
Solution:
(i) An activity qualifies as supply under GST only if it is for a consideration and is in course/furtherance of
business. Donations received by the charitable organizations are treated as consideration only when
there’s an obligation on part of the recipient of the donation to do anything.
Since in the given case, the display of products sold by the donor – Glory Ltd. - in charitable
organization’s premises aims at advertising/promotion of its business, it is supply for consideration in
course/furtherance of business and thus, qualifies as supply under GST law.
(ii) Supply includes importation of services, for a consideration whether or not in the course/furtherance of
business. Thus, in the given case, the import of services by Mr. Swamy amounts to supply although it is
not in course/furtherance of business.

7. (a) M/s. Xing Trans of Kolkata engaged in the trading of transmitters. On 20/05/2022, M/s. Xing Trans
have sent 500 units of transmitters for exhibition at Chennai on sale or return basis. Out of the said
500 units, 300 units have been sold on 28/07/2022 at the exhibition. Out of remaining 200 units, 150
units have been brought back to Kolkata on 25/11/2022 and balance 50 units have neither been sold
nor brought back.
Explain the provisions under GST law relating to issue of invoices with exact dates on which tax
invoices needs to be issued by M/s. Xing Trans. (4 Marks)
Solution:
Where the goods being sent for sale or return are removed before the supply takes place, the tax invoice
shall be issued before or at the time of supply or 6 months from the date of removal, whichever is earlier.
In the given case, 500 units of transmitters have been sent for exhibition on sale or return basis out of which
300 units are sold before 6 months from the date of removal. Thus, tax invoice for said 300 units needs to be
issued before or at the time of supply of such goods, i.e. upto 28/07/2022.
Remaining 200 (150+ 50) units have neither been sold nor brought back till the expiry of 6 months from the
date of removal goods, i.e. 20/11/2022. Thus, tax invoice for said 200 units needs to be issued upto
20/11/2022.

(b) “One consolidated e-way bill can be generated for multiple invoices” Comment on the validity of the
above statement with reference to GST law. (3 Marks)
Solution:
The statement is invalid.
 Examination Questions 387

Multiple invoices cannot be clubbed to generate one e-way bill. If multiple invoices are issued by the
supplier to recipient, for movement of such goods, multiple e-way bills have to be generated.
Thus, for each invoice, one e-way bill has to be generated, irrespective of the fact whether same or different
consignors or consignees are involved.
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.

(c) “All taxpayers are required to file GSTR-1 only after the end of the current tax period.”
Comment on the validity of the above statement with reference to GST law. (3 Marks)
Solution:
The statement is partially valid.
A taxpayer cannot file Form GSTR-1 before the end of the current tax period.
However, following are the exceptions to this rule:
a. Casual taxpayers, after the closure of their business
b. Cancellation of GSTIN of a normal taxpayer.
A taxpayer who has applied for cancellation of registration will be allowed to file Form GSTR-1 after
confirming receipt of the application.

8. (a) “Under the GST law, taxes on taxable services supplied by the Central Government or the State
Government to a business entity in India are payable by recipient of services”.
State the exceptions of the above stated statement. (5 Marks)
Solution:
Tax on following services supplied by the Central Government or State Government to a business entity in
India is payable by the supplier of services:
(1) services of renting of immovable property provided to an unregistered business entity.
(2) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency
services provided to a person other than Central Government, State Government or Union territory or local
authority.
(3) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport.
(4) services of transport of goods or passengers.

(b) Mr. B, a registered supplier of Uttar Pradesh is doing the trading of taxable goods. He approaches you
to understand the manner of utilisation of available Input Tax Credit (ITC).
With reference to provisions of payment of tax, state the manner of utilisation of ITC under GST law.
(5 Marks)
Answer: Refer answer given in the book
OR
State any five circumstances under which the proper officer can cancel the registration on his own
under the CGST Act, 2017. (5 Marks)
Answer: Refer answer given in the book
 Examination Questions 388

TAXATION PAPER
DEC – 2021
ETM2
Roll No………………………. Total No. of printed Pages – 6
Total No. of Questions – 8 Maximum Marks – 70
GENERAL INSTRUCTIONS TO CANDIDATES
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Multiple Choice Question (MCQs).
3. Part II comprises questions which require descriptive type answers.
4. Ensure that you receive the question paper relating to both the parts. If you have not received both, bring
it to the notice of the invigilator.
5. Answers to Questions in Part I are to be marked on the OMR answer sheet given on the Cover Page of
Section A of descriptive type answer book. Answers to questions in Part II are to be written on the same
descriptive type answer book. Answers to MCQs, if written inside the descriptive answer book, will not be
evaluated.
6. OMR answer sheet given on the Cover Page of Section A of descriptive answer book will be in English
only for all candidates, including for Hindi medium candidates.
7. The bar coded sticker provided in the attendance register, is to be affixed only on the descriptive type
answer book.
8. You will be allowed to leave the examination hall only after the conclusion of the exam. If you have
completed the paper before time, remain in your seat till the conclusion of the exam.
9. Duration of the examination is 3 hours. You will be required to submit (a) Part I of the question paper
containing MCQs, and (b) the answer book in respect of descriptive type answer book with OMR Cover
Page to the invigilator before leaving the exam hall, after the conclusion of the exam.
10. The invigilator will give you acknowledgement on Page 2 of the admit card, upon receipt of the above-
mentioned items.
11. Candidate found copying or receiving or giving any help or defying instructions of the invigilators will
be expelled from the examination and will also be liable for further punitive action.
PART II
1. Section – A comprises questions 1-4. In Section – A, answer question No.1 which is compulsory and any
2 questions from question Nos. 2-4. All questions in Section – A relate to assessment year 2023-24, unless
otherwise stated.
Section – B comprises questions 5-8. In Section – B, answer question No.5 which is compulsory and any 2
questions from question Nos. 6-8
2. Working notes should form part of the answer.
3. Answers to the questions are to be given only in English except in the case of candidates who have opted
for Hindi Medium. If a candidate has not opted for Hindi Medium, his/her answers in Hindi will not be
evaluated.
4. All questions in Section – B should be answered on the basis of position of GST law as amended by
significant notification/circulars issued upto 31st Oct, 2022.

PART – II
SECTION-B
5. M/s ABC Ltd., a registered supplier in Surat, Gujarat and it has calculated output net GST liability after
adjusting ITC in the books for the month of February 2023:
CGST : ₹3,00,000
SGST : ₹2,50,000
IGST : ₹3,00,000
During the above month, the following additional information provided by M/s ABC Ltd:
 Examination Questions 389

S. No. Particulars Amount

(excluding
GST) ₹
1 The company had given on hire 5 trucks to one of the transporters of 3,75,000
Vadodara (a goods transport agency) for transporting goods for 10 days. The
hiring charges for the trucks were ₹7,500 per truck per day
2 The company sold goods to X & Co. of Delhi on 6th January 2023 with a 5,00,000
condition that interest @ 2% per month will be charged on invoice value if X
& Co. failed to make payment within 30 days of the delivery of the goods.
Goods were delivered and also the invoice was issued on 6th January 2023. X
& Co. paid the consideration for the goods on 20th February along with
applicable interest.
3 The company sought legal consultancy services for it’s business from A & 1,50,000
Advocates, a partnership firm of advocates situated at Bhuj, Gujarat.
4 The company ordered 3,000 packets of tools which are to be delivered by the 5,00,000
supplier of Delhi via 3 lots of 1,000 packets monthly. The supplier raised the
invoice for full quantity in February 2023 and the last lot would be delivered
in April 2023.
5 The company supplied 10,000 packets of tools to one of it’s customer at ₹10/- per packet in
Gujarat in January 2023. Afterwards, the company re-values it at ₹9 per packet in February
2023 and the company issued credit note to the customer for ₹1 per packet.
The rate of GST is 9% CGST, 9% SGST and 18% IGST.
You are required to compute the actual net liability of GST to be paid in cash along with working notes for
the month of February 2023. (8 Marks)
Solution:
Computation of net GST liability of ABC Ltd. to be paid in cash for February 2023

Particulars Value CGST SGST IGST

(₹) (₹) (₹) (₹)
Net output GST liability as given 3,00,000 2,50,000 3,00,000
Add: Trucks given on hire to GTA [Services by 3,75,000 -- -- --
way of giving a means of transportation of
goods on hire to a goods transport agency are
exempt.]
Add: Interest on delayed payment of 15 days 5,900 -- -- 900
(Note 3) (6th February, 2023 to 20th [5,90,000 ×
February,2023) 2% × 15/30]
[Includible in value in terms of section 15 of
the CGST Act, 2017.]
Total output tax liability 3,00,000 2,50,000 3,00,900
Less: ITC in respect of legal services paid 1,50,000 (13,500) (13,500)
as reverse charge is available [1,50,000 [1,50,000
× 9%] × 9%]
Net output tax liability (A) 2,86,500 2,36,500 3,00,900
 Examination Questions 390

Legal consultancy services received (B) [Tax 1,50,000 13,500 13,500

is payable under reverse charge on legal [1,50,000 [1,50,000
services received by a business entity (Note 4) × 9%] × 9%]
from a partnership firm of advocates.
Further, 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)] 3,00,000 2,50,000 3,00,900

Notes:
(1) ITC on goods received in lots is available on receipt of last lot. Hence, ITC on tools received
will not be available in February 2023.
(2) Since discount given by ABC Ltd. on the packets of tools was not known at the time of supply,
it shall not be excluded from its value of supply.
(3) Interest on delayed payment collected is assumed to be inclusive of GST. Further, the invoice
value has been taken as inclusive of GST for computing said penal interest However, it is also
possible to assume the interest to be exclusive of GST and to compute the same by taking the
values as exclusive of GST (i.e. ₹ 5,00,000).
(4) It has been most logically assumed that the aggregate turnover of ABC Ltd. in the preceding
FY was above the threshold limit for registration under GST law.

Educational Services
6. (a) M/s AB Ltd., a registered company of Chennai, Tamil Nadu has provided following services for the
month of October 2023
Particulars Amount
(₹)
Services of transportation of students, faculty and staff from home to college and back 2,50,000
to Commerce College, (a private college) providing degree courses in BBA, MBA,
B.Com., M.Com
Online monthly magazine containing question bank and latest updates in law to students 1,00,000
of PQR Law College offering degree courses in LLB and LLM
Housekeeping services to T Coaching Institute 50,000
Security services to N Higher Secondary School 3,25,000
Services of providing breakfast, lunch and dinner to students of ABC Medical College 5,80,000
offering degree courses recognized by law in medical field
All the above amounts are exclusive of GST.
Compute the taxable supplies of M/s AB Ltd. for the month of October 2023 with necessary explanations.
(6 Marks)
Solution:
Computation of value of taxable supplies of AB Ltd.
Particulars Amount
(₹)
Services of transportation of students, faculty and staff to Commerce College 2,50,000
[Not exempt, since transportation services provided to an educational institution are
exempt only if such institution provides pre-school education or education up to higher
secondary school or equivalent.]
 Examination Questions 391

Online monthly magazine to students of PQR Law College

[Services of supply of online educational journals provided to an educational institution Nil
providing qualification recognized by law are exempt.]
Housekeeping services to T Coaching Institute [Not exempt] 50,000
Security services (Note 1) to N Higher Secondary School Nil
[Security services provided to an educational institution providing education up to higher
secondary school are exempt.]
Services of providing breakfast, lunch and dinner to students of ABC Medical College 5,80,000
[Not exempt, since catering services provided to an educational institution are exempt only
if such institution provides pre-school education or education up to higher secondary
school or equivalent.]
Value of taxable supplies 8,80,000
Note:
1. It has been assumed that security services are performed in N Higher Secondary School.

Registration
(b) Q Ltd. is engaged exclusively in supply of taxable goods from the following states. The particulars of
intra-state supplies for the month of May 2022 are as follows :

STATE TURNOVER (₹)

Madhya Pradesh 5,00,000
Gujarat 14,00,000
Tripura 12,00,000
(i) Q Ltd. seeks to know whether it is liable for registration under GST. Give your explanation.
(ii) Will your answer be different if Q Ltd. supplies only petrol & diesel from Tripura instead of any other
taxable goods? (4 Marks)
Solution:
(i) Registration is required if aggregate turnover has exceeded the threshold exemption limit and if
any person is supplying goods from different states, the lowest exemption limit shall be
considered. In this case the limit of Tripura is ₹10 lakh hence registration is required.
(ii) If the goods supplied from a particular state is fully exempt/ non-taxable in that case as per section
23, turnover from that state shall not be considered. The threshold limit for other states is ₹40 lakhs
hence registration is not required.

Time of Supply/Reverse Charge

7.(a)(i) An order is placed to T & Co., Sholapur on 18th August, 2022 for supply of fabrics to make
garments. Company delivered the fabrics on 4th September, 2022 and after completion of the order issued
the invoice on 15th September, 2022. The payment against the same was received on 30th September, 2022.
Determine the time of supply for the purpose of payment under CGST Act, 2017 with your explanations.
(ii) HM Industries Ltd. engaged the services of a transporter for road transport of a consignment on 20th May
2022. However, the consignment could not be sent immediately on account of a strike in the factory, and
instead was sent on 20th July 2022. Invoice was received from the transporter on 20th June 2022 and payment
was made on 25th August 2022.
What is the time of supply of the transporter’s service? (5 Marks)
Solution:
(i) The time of supply of goods is the date of issue of invoice or the last date when the invoice ought to
have been issued.
 Examination Questions 392

Further, a registered person is required to issue a tax invoice before or at the time of delivery of goods.
Thus, in the given case, time of supply is 4th September, 2022.

(ii) Alternative 1: Assuming reverse charge is applicable

Time of supply of services taxable under reverse charge is earliest of:-
(a) date of making payment, or
(b) 61st day from the date of issue of invoice by supplier.

Thus, in the given case, time of supply is earlier of

(a) 25th August or 20th August 2022 (61st day from 20th June)
Thus, time of supply 20th August 2022

Alternative 2: Assuming forward charges is applicable

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.
Thus, in the given case, time of supply is 20th June, 2022.

(b) M/s PQR Ltd., have filed their GSTR3B return for the month of August, 2022 within the due date i.e.
20.09.2022. It was noticed in October 2022 that tax dues for the month of August, 2022 have been short paid
for by ₹10,000. The shortfall of ₹10,000 was paid through cash ledger and credit ledger amounting to ₹7,500
and ₹2,500 respectively while filing GSTR3B of October 2022 which was filed on 20.11.2022.
(i) Examine and compute the Interest payable if any under the CGST Act, 2017.
(ii) What would be your answer if, GSTR-3B for the month of August 2022 had been filed belatedly on
20.11.2022 and the tax of ₹10,000/- has been paid on 20.11.2022 as above.
Note: Ignore the effect of the leap year. Electronic cash ledger and credit ledger carried sufficient balance
for the above shortfall. (5 Marks)
Solution:
In case of delayed payment of tax, interest is payable @ 18% per annum from the date following the due
date of payment to the actual date of payment of tax.
However, interest is payable only on the short-paid tax which is paid through electronic cash ledger if
return under section 39 is furnished after the due date.
(i) In the given case, PQR Ltd. has furnished the return for August 2022 by the due date. Hence,
interest is payable on the entire amount of short payment of ₹ 10,000, as under:
= ₹ 10,000×18%×61/365 = ₹ 300.82 or 301(rounded off)
(ii) If PQR Ltd. has furnished the return for August 2022 after the due date, interest is payable only on
the short payment which is paid through electronic cash ledger, i.e.
₹ 7,500, as under:
= ₹ 7,500×18%×61/365 = ₹ 225.62 or 226 (rounded off)

Casual Taxable Person

8. (a) Mr. Q, a Casual Taxable Person of Gujarat state is a trader of taxable notified handicraft goods. It
makes supplies to the states of Maharashtra, Rajasthan and Andhra Pradesh. Turnover for October 2022 is
18 Lakhs.
(i) Explain the provisions of registration for Casual Taxable person under GST. Examine whether Mr. Q is
liable for registration or not?
(ii) What will be the answer if Mr. Q makes trading in taxable notified products instead of taxable notified
handicraft goods which involves 75% making on machine and 25% by hand? (5 Marks)
 Examination Questions 393

Solution:
(i) A casual taxable person is required to obtain compulsory registration under GST irrespective of the
quantum of its aggregate turnover.
However, normal threshold limit of ₹ 10 lakh / 20 lakh / 40 lakh shall be applicable to a casual taxable
person who:
(i) is making inter-State taxable supplies of notified handicraft goods and notified hand-made goods,
(ii) has obtained a PAN and
(iii) has generated an e-way bill.
In the given case, since Mr. Q is engaged in supplying notified handicraft goods and its aggregate
turnover does not exceed threshold limit, he will not be liable to registration.
(ii) In case Mr. Q is engaged in trading of notified products which are predominantly made by machine, he
will not be eligible for the exemption from registration under aforesaid provisions and needs to take
compulsory registration.

Tax Invoice / Debit Note / Credit Note

(b) Is Dynamic Quick Response (QR) Code applicable to suppliers who issue invoice to unregistered
persons? If no, list the suppliers to whom Dynamic QR Code is not applicable. (5 Marks)
OR
(i) What is ‘e-invoicing’?
(ii) What is the threshold limit for mandatory issuing of E-invoice for all registered businesses?
(iii) A consignor hands over his goods for transportation on a Friday to the transporter. However, assigned
transporter starts the movement of goods from consigner’s warehouse to its depot located at distance of 600
Km. on Monday.
When will the e-way bill be generated and for how many days it will be valid? (5 Marks)
Solution:
Dynamic QR code is applicable to invoices issued in respect of supplies made to unregistered persons by
a registered supplier provided its aggregate turnover in any preceding financial year from 2017-18
onwards exceeds ₹ 500 crores.
However, it is not applicable to following suppliers issuing invoices to unregistered persons:-
(i) Insurer or banking company or financial institution including NBFC
(ii) GTA supplying services in relation to transportation of goods by road in a goods carriage
(iii) Supplier of passenger transportation service
(iv) Person supplying services by way of admission to exhibition of cinematograph films in multiplex
screens
(v) Supplier of online information and database access or retrieval (OIDAR) services
Alternative
(i) E-invoicing is reporting of business to business (B2B) invoices to GST system for certain notified
category of taxpayers.
(ii) The threshold limit for mandatory issuance of e-invoice for all registered businesses is ₹ 10 crores.
(iii) E-way bill will be generated before commencement of movement of goods by transporter on
Monday.
The validity period of the e-way bill is one day from relevant date upto 200 km and one additional day
for every 200 km or part thereof thereafter.
Thus, validity period in the given case, is 3 days
 Case Studies - Revision Test Paper 394

CASE STUDIES
RTP

RTP NOV-2023

Bali Bells Ltd. (hereinafter referred as Bali Bells), a private limited company registered in Chennai, Tamil
Nadu, provides the following outward supplies in the month of September:
Particulars Amount (₹)
Taxable Exempt
Intra-State outward supplies 40,00,000 15,00,000
Inter-State outward supplies 30,00,000 10,00,000

Bali Bells Ltd. sold land for ₹ 2,00,00,000 (excluding GST) in the month of September. Bali Bells
purchased one heavy steel machinery in the month of September for ₹ 1,00,000 (excluding GST @ 18%).
Bali Bells capitalized the value of machinery along with GST paid on the same in its books of accounts and
claimed depreciation on the full value of machinery as well as on GST amount.
Apart from this, Bali Bells has a tax invoice dated 25th July of last financial year with respect to an inward
supply of ₹ 50,000 (excluding GST @ 18%). The company has not availed ITC on said invoice yet.
Bali Bells distributed some free samples of goods in the month of October to its customers to promote its
sales.
Bali Bells made a supply during November, details of which are as follows-
-Basic price of the product before TCS under Income Tax Act, 1961 – ₹ 45,000
-Tax collected at source under Income-tax Act, 1961 – ₹ 2,500
-It received a subsidy of ₹ 3,500 from Bharat Foundation Pvt. Ltd. for usage of green energy and the
subsidy was linked to the units of energy saved and not aforesaid product.
Bali Bells has not furnished its annual return for the preceding financial year till the end of November and
will furnish it in the month of December of the current financial year.
Assume that there is no other outward or inward supply transaction apart from aforesaid transactions, in the
months of September, October and November. All the amounts given above are exclusive of taxes, unless
otherwise specified.
Based on the facts of the case scenario given above, choose the most appropriate answer to Q. Nos. 1 to 5
below:-

1. Determine the aggregate turnover of Bali Bells for the month of September.
(a) ₹ 2,70,00,000
(b) ₹ 95,00,000
(c) ₹ 2,95,00,000
(d) ₹ 70,00,000
Answer: (b)
2. Bali Bells wants to avail ITC on GST paid on the heavy steel machinery purchased in September. Which
of the following statements is true in this regard?
(a) ITC on the machinery cannot be availed since depreciation has been claimed on the GST paid on the
machinery under Income-tax Act, 1961.
 Case Studies - Revision Test Paper 395

(b) ITC on the machinery shall be allowed to the extent of 50% in the current financial year and balance
50% in the subsequent financial year.
(c) ITC on the machinery shall be allowed in the current financial year only to the extent of the
depreciation claimed on GST paid on machinery.
(d) Full ITC of GST paid on the machinery can be availed in the current year.
Answer: (a)

3. Whether Bali Bells can avail ITC on the free samples of goods distributed in the month of October?
(a) Yes; ITC is available on outward supplies even if made without consideration in the course or
furtherance of business.
(b) No; ITC is not available since supply of samples is without consideration.
(c) No; ITC on free samples is blocked under section 17(5) of the CGST Act, 2017.
(d) No; ITC is not available since supply of free samples is not in course or furtherance of business.
Answer: (c)
4. Bali Bells can claim ITC on inputs received in July of preceding financial year up to___________ of
the current financial year.
(a) 30th November
(b) 25th July
(c) 31st December
(d) 30th September
Answer: (a)
5. Compute the value of supply under section 15 of the CGST Act, 2017 made by Bali Bells in the month
of November?
(a) ₹ 45,000
(b) ₹ 47,500
(c) ₹ 48,500
(d) ₹ 51,000
Answer: (a)

RTP MAY-2023
Manavtaa Trust is a charitable trust registered under section 12AB of the Income-tax Act, 1961. The trust is
well known for its educational, charitable and religious activities. The trust became liable to registration
under GST in the current financial year since it exceeded the threshold limit for registration and thus, got
itself registered in the State of Gujarat in the month of May.
In the month of June, a multinational company, Dhruvtara Ltd., gifted 500 laptops worth ₹ 50 lakh to the
trust free of cost for the charitable purposes, without any intention of seeking any business promotion from
the same. Manavtaa Trust distributed these laptops for free in the same month to the needy students for
facilitating them in their higher studies.
Manavtaa Trust owns a higher secondary school – Manavtaa Higher Secondary School - in Gujarat. In the
month of July, the trust availed security personnel services from ‘Perfect Security Solutions’, Gujarat, a
proprietorship concern, for security of the school premises for a consideration of ₹ 2,00,000. It also received
legal consultancy services from ‘Maya & Co.’ a firm of advocates for the issues relating to the said school
for ₹ 1,20,000, in the same month.
Manavtaa Trust furnished the following information regarding the expenses incurred by it in the month of
August; all transactions being inter-State:
(i) Services received and used for supplying taxable outward supplies – ₹ 3,50,000.
(ii) Catering services received for students of Manavtaa Higher Secondary School – ₹ 2,00,000.
 Case Studies - Revision Test Paper 396

(iii) Buses purchased with seating capacity of 25 persons including driver – ₹ 10,50,000 (Buses were
delivered in the first week of September).

Manavtaa Trust provided the following information in respect of the services provided by it during the
month of August:
(i) It runs an old age home for senior citizens. Nominal monthly charges of ₹ 15,000 for boarding, lodging
and maintenance are charged from each member. Total number of members is 20.
(ii) It rents out a community hall situated within the precincts of a temple managed by it on 15th August for
a religious function in first half for ₹5,000 and for an art exhibition in second half for ₹ 6,000.
(iii) It rents out the rooms in the precincts of said temple to the devotees for a rent of ₹ 950 per room per
day. Total rent collected in August amounts to ₹ 35,000.
All the figures given above are exclusive of taxes wherever applicable. Aggregate turnover of Manavtaa
Trust for the preceding financial year was ₹ 15 lakh. All the conditions necessary for availment of ITC are
fulfilled subject to the information given. Manavtaa Trust intends to avail exemption from GST wherever
applicable.

Based on the information given above, choose the most appropriate answer to the following questions-

1. Which of the following activities of Manavtaa Trust does not amount to supply under the GST law?
(a) Free laptops distributed to the needy students
(b) Boarding, lodging and maintenance of the senior citizens by the old age home run by the trust
(c) Renting of community hall situated within the precincts of the temple managed by the trust
(d) Renting of rooms in the precincts of the temple managed by the trust
Answer: (a)
2. Compute the value of inward supplies on which tax is payable by Manavtaa Trust under reverse charge,
for the month of July.
(a) ₹ 2,00,000
(b) ₹ 3,20,000
(c) ₹ 1,20,000
(d) Nil
Answer: (d)
3. Compute the value of exempt supply made by Manavtaa Trust for the month of August.
(a) ₹ 3,00,000
(b) Nil
(c) ₹ 3,35,000
(d) ₹ 35,000
Answer: (c)
4. Compute the value of taxable supply made by Manavtaa Trust for the month of August.
(a) ₹ 3,00,000
(b) ₹ 11,000
(c) Nil
(d) ₹ 35,000
Answer: (b)
 Case Studies - Revision Test Paper 397

5. Determine the amount of ITC that can be credited to the Electronic Credit Ledger of Manavtaa Trust, in
the month of August.
(a) ₹ 36,000
(b) ₹ 63,000
(c) ₹ 1,89,000
(d) ₹ 2,88,000
Answer: (b)

RTP NOV-2022
M/s. Delight Brothers, a partnership firm, is engaged in restaurant business. It is registered under the
composition levy scheme under section 10(1) and 10(2) of the CGST Act, 2017 for the current financial
year. It’s turnover in the State for the month of April was ₹ 12,00,000.
It received new orders in the month of May to run a mess facility for supplying food at:
i. Vishwas Public School, a higher secondary school;
ii. Knowledge Institute of Technology, an engineering college, approved by AICTE and UGC; and
iii. Frontline Hospital

It also provided catering services to a Coral limited company for their Annual General Meeting. Service was
provided on 3rd July. But invoice was not issued by the firm to the company. However, payment was
received on 25th July for which bank account was credited on 28th July. The turnover of restaurant business
for the current financial year is ₹ 48,00,000.

From the inception of next financial year, M/s. Delight Brothers will close down the restaurant business and
will provide service of repairing of air conditioners.

M/s Delight Brothers undertakes intra-State transactions only.

Based on the information given above, choose the most appropriate answer for the following questions-
1. Compute the tax liability of M/s. Delight Brothers for the month of April?
(a) CGST & SGST of ₹ 6,000 each
(b) CGST & SGST of ₹ 12,000 each
(c) CGST & SGST of ₹ 30,000 each
(d) CGST & SGST of ₹ 60,000 each
Answer: (c)
2. Out of new orders received by the firm in May, which of the following services are exempt from GST?
(i) Service provided to Vishwas Public School
(ii) Service provided to Knowledge Institute of Technology
(iii) Service provided to Frontline Hospital
(a) (i) and (iii)
(b) (ii) and (iii)
(c) only (i)
(d) (i) and (ii)
Answer: (c)
3. Time of supply of catering services provided to a Coral limited company is
(a) 3rd July
(b) 25th July
 Case Studies - Revision Test Paper 398

(c) 28th July

(d) 2nd August
Answer: (a)
4. Which of the following statements is most appropriate in respect of next financial year for M/s Delight
Brothers?
(a) M/s Delight Brothers can continue to avail composition levy scheme under section 10(1) and 10(2) of the
CGST Act, 2017.
(b) M/s Delight Brothers is not eligible to avail composition levy scheme under section 10(1) and 10(2) of
the CGST Act, 2017.
(c) M/s Delight Brothers is not eligible to avail composition levy scheme under section 10(1) and 10(2) of
the CGST Act, 2017, but can avail benefit of composition levy under section 10(2A) of the CGST Act,
2017.
(d) M/s Delight Brothers can neither avail composition levy scheme under section 10(1) and 10(2) of the
CGST Act, 2017 nor under section 10(2A) of the CGST Act, 2017.
Answer: (c)
5. Rate of GST applicable for service of repairing of air conditioners made by M/s Delight Brothers will be
______, assuming that it intends to pay the tax at the minimum rate available?
(a) 1%
(b) 5%
(c) 6%
(d) 12%
Answer: (c)

RTP MAY-2022
Vidhula Impex Ltd. is engaged in supplying sports goods. The company did not opt for registration under
GST. The proper officer under GST, based on enquiry, finds that the concern is liable for registration and he
registers the firm on temporary basis on 15th June, 2020.

After being granted the registration certificate, the company availed the following services for the purpose of
its business-
i. Renting of motor vehicles from Blue Taxi Pvt. Ltd. where GST was charged @ 12%.
ii. Appointed Mr. Rajesh as Technical Director for advisory role in business and the payment was made
based on the contract entered. However, he was not employee of the company.

During the course of its business, the company issued an invoice to a customer and erroneously charged
higher value by ₹ 34,000. Such invoice was issued on 28th February, 2021.

Further, in the month of February 2021, the company also generated an e-way bill for inter-State transport of
goods. However, immediately on generation of the e-way bill, the buyer cancelled the order before it is
dispatched from the factory for delivery.

In the month of March 2021, since the company was incurring heavy losses, it applied for cancellation of
GST registration on 15th March, 2021. The order for cancellation was made on 30th March, 2021 effecting
cancelling the registration with effect from 15th March, 2021.
From the information provided above, choose the most appropriate answer for the following questions (1-5):

1. After the grant of temporary registration, Vidhula Impex Ltd. needs to apply for registration within
____from the date of grant of temporary registration, if no extension of period is to be granted for such
temporary registration.
(a) 30 days
(b) 90 days
 Case Studies - Revision Test Paper 399

(c) 7 days
(d) 15 days
Answer: (b)
2. In case of which of the following services, the company is liable to pay tax under reverse charge?
(a) Renting of Motor Vehicles
(b) Directorship services
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer: (b)
3. Which document is required to be issued by the company in respect of the invoice issued on 28th
February, 2021?
(a) Debit note
(b) Credit note
(c) Bill of supply
(d) Revised Tax invoice
Answer: (b)
4. The Company needs to file its Final return by __________
(a) 30th April, 2021
(b) 30th August, 2021
(c) 15th June, 2021
(d) 30th June, 2021
Answer: (d)
5. Which of the following statements is correct in respect of e-way bill generated for goods in the month of
February for which order was cancelled?
(a) Once generated, e-way bill cannot be cancelled.
(b) E-way bill can be cancelled within 24 hours of generation
(c) E-way bill can be cancelled within 48 hours of generation
(d) E-way bill can be cancelled within 72 hours of generation
Answer: (b)

RTP NOV-2021
MM Charitable Trust is registered under section 12AA of the Income-tax Act, 1961.

The trust conducted a three day residential yoga camp among people on the occasion of International yoga
day for the advancement of yoga and charged ₹ 7,500 per person inclusive of stay and food.

The trust also conducted programmes for the advancement of education of persons aged above 65 years in
metro cities. A nominal fee was charged for the same.

The trust received following donations during the month of September:-

i. Solid Steels Pvt. Ltd. donated a RO water plant to the trust costing ₹ 75,000 and displayed its company
name in the RO system installed at the premises of the trust as “Donated by Solid Steels Private Limited-
trusted by all’.
ii. Mr. Prasanna, a lawyer donated chairs to the trust costing ₹ 25,000 and ‘Love all’ is printed on all chairs
donated by him to the trust.

The following are the details of GST payment made by the firm-
i. GST of ₹ 1,75,000 was paid for the purchase of motor vehicle for transportation of needy persons
(Seating capacity including driver is 13).
ii. GST of ₹ 2,45,000 was paid for works contract services availed from Super Builders for construction of
Trust’s office building.
 Case Studies - Revision Test Paper 400

MM Charitable Trust also owns and manages a gurudwara. It rented the community hall located in the
precincts of the gurudwara for a rent of ₹ 8,500 per day for a marriage function. It also rented the
commercial shop located in the precincts of the gurudwara for a rent of ₹ 10,000 per month per shop.

You can assume that the Trust is registered under GST and all the transactions are intra-State only.
Conditions for availing ITC are fulfilled subject to the above- mentioned information.

Based on the information given above, choose the most appropriate answer for the following questions [1 to
4]-
1. Which of the following activities conducted by trust is exempt from GST?
(a) Advancement of Yoga
(b) Advancement of education
(c) Both (a) and (b)
(d) Neither of the activities
Answer: (a)
2. Determine the value of taxable supply in respect of donations received by the Trust?
(a) ₹ 25,000
(b) ₹ 75,000
(c) ₹ 1,00,000
(d) Nil
Answer: (b)
3. Compute the amount of input tax credit that can be claimed by the Trust?
(a) ₹ 1,75,000
(b) ₹ 2,45,000
(c) ₹ 4,20,000
(d) Nil
Answer: (d)
4. Which of the following statements is/are correct under GST law in respect of gurudwara managed by MM
Charitable Trust?
(a) Renting of community hall is taxable while renting of commercial shop is exempt.
(b) Renting of community hall is exempt while renting of commercial shop is taxable.
(c) Both renting of community hall and renting of commercial shop are taxable.
(d) Both renting of community hall and renting of commercial shop are exempt.
Answer: (b)

RTP MAY-2021
M/s Aditi & Co, a partnership firm registered under GST, is undertaking various Government
projects.
The firm has let out on hire the following vehicles-
i. A motor vehicle to carry more than 15 passengers to a State Government Electricity Department
ii. An electric motor vehicle to carry more than 12 passengers to Local Municipal Corporation
iii. An electric motor vehicle to carry upto 12 passengers to State Transport Undertaking
The firm provided the following additional information for the month of October:
i. Works contract services were availed for construction of immovable property being plant and machinery,
where value of GST component was ₹ 1,10,000.
ii. GST amounting to ₹ 70,000 was paid on account of demand of the Department due to fraud in returns
filed.
iii. Goods valuing ₹ 10,00,000, (GST on the same ₹ 1,00,000) were received 180 days ago (invoice also
issued on the date of receipt of supply) for which payment has been made till date to an extent of ₹ 4,00,000
towards value, ₹ 40,000 towards tax.
 Case Studies - Revision Test Paper 401

The firm made two independent outward supplies in which value of supply was understated in one case by
₹75,000 and overstated by ₹ 45,000 in the other case.
The firm received certain supply of goods from registered persons on which tax was payable under reverse
charge bas is.
All the amounts given above are exclusive of taxes, wherever applicable. All transactions referred to
above are intra-State. All the conditions for availing ITC have been fulfilled subject to the information given
above.
From the information given above, choose the most appropriate answer for Q. 1 to Q. 5 given below:-
1. In respect of vehicles let out on hire by the firm, services that are exempt from GST are
(i) Letting on hire a motor vehicle to State Electricity Department (>15 passengers)
(ii) Letting on hire an electric vehicle to Local Municipality (> 12 passengers)
(iii) Letting on hire an electric vehicle to State Transport Undertaking (<12 passengers)
(a) (i)
(b) (ii)
(c) (i) and (iii)
(d) (ii) and (iii)
Answer: (b)
2. Determine the amount of eligible ITC to be claimed by the firm for the month of October.
(a) ₹ 70,000
(b) ₹ 1,10,000
(c) ₹ 1,80,000
(d) Nil
Answer: (b)
3. Determine the amount of ITC to be added to the output tax liability.
(a) ₹ 40,000
(b) ₹ 60,000
(c) ₹ 1,00,000
(d) Nil
Answer: (b)
4. Which of the following is correct in respect of document to be issued by the firm for understatement and
overstatement of invoice value?
(i) Debit note is to be issued for ₹ 75,000.
(ii) Credit note is to be issued for ₹ 75,000.
(iii) Debit note is to be issued for ₹ 45,000.
(iv) Credit note is to be issued for ₹ 45,000.
(a) i & iii
(b) ii & iii
(c) i & iv
(d) ii & iv
Answer: (c)
5. Which of the following statements is correct in respect of supply of goods received by the firm which are
taxable under reverse charge?
(i) Firm shall issue a payment voucher at the time of making payment to supplier.
(ii) Firm shall issue invoice for supply of goods.
(iii) Firm shall issue receipt voucher at the time of making payment to supplier.
(iv) Firm is not required to issue any document in respect of such supply.
(a) i
(b) i & ii
(c) ii & iii
(d) iv
Answer: (a)
 Case Studies - Revision Test Paper 402

RTP NOV– 2020

PTL Pvt. Ltd. is a retail store of merchandise located in 25 States and/or UTs in the country. For the purpose
of clearance of stock of merchandise and to attract consumers, PTL Pvt. Ltd. launched scheme of “Buy One
Get One Free” for the same type of merchandise, for instance, one shirt to be given free with purchase of
one shirt. For saving cost, PTL Pvt. Ltd. directly purchases merchandise from the manufacturers.
In the month of May, in order to save employee cost, PTL Pvt. Ltd. purchased a tempo traveller worth
₹12,00,000 with seating capacity of 25 persons (including driver) for transportation of its employees.
Further, for ensuring the well-being of its employees, PTL Pvt. Ltd. voluntarily obtained the health
insurance cover of ₹ 2,00,000 for each employee in the same month. The premium of ₹ 1,500 per employee
has been paid by the company for 100 employees.
In the month of July, Mr. Raghav, a customer of the company, filed a law suit in the Court, against the
company for not supplying goods of the value of ₹ 1,00,000. PTL Pvt Ltd. engaged Mr. Ram, an advocate,
to represent it in Court for an agreed consideration of ₹ 25,000. As per the terms of the contract, Mr. Ram
issued an invoice on 5th July. However, consideration was not paid till February next year.
Note - All the amounts given above are excluding taxes and all transactions are intra- State transactions.
Rates of tax are CGST - 9% and SGST – 9%. However, for tempo traveller, the rates of taxes are CGST -
14% and SGST – 14%.
In relation to the above, answer the following questions:
(i) With respect to “Buy One, Get One” offer, which of the following statements is true:
(a) It will not be considered as supply at all since no consideration is involved in one of the items.
(b) Supply of item for which consideration is charged is a supply under section 7 of the CGST Act, 2017
while supply of the other item supplied free of cost is not a supply.
(c) These are two individual supplies where a single price is charged for the entire supply. Since a single
price is charged, the same will always be taxed as a mixed supply.
(d) These are two individual supplies where a single price is charged for the entire supply. Their
taxability will depend upon as to whether the supply is a composite supply or a mixed supply.
Answer: (d)
(ii) Eligible input tax credit for the month of May (i) on the purchase of tempo traveller and (ii) on health
insurance premium paid (assuming that all other conditions, for availing input tax credit have been complied
with) is:
(a) (i) CGST - Nil, SGST - Nil and (ii) CGST - Nil, SGST - Nil
(b) (i) CGST - ₹ 1,68,000, SGST - ₹ 1,68,000 and (ii) CGST - Nil, SGST - Nil
(c) (i) CGST - Nil, SGST - Nil and (ii) CGST - ₹ 18,000, SGST - ₹ 18,000
(d) (i) CGST - ₹ 1,68,000, SGST - ₹1,68,000 and (ii) CGST - ₹ 18,000, SGST - ₹ 18,000
Answer: (b)
Hint: CGST = 12,00,000 x 14% = 1,68,000 , SGST = 12,00,000 x 14% = 1,68,000
- Since seating capacity is more than 13 persons. ITC for tempo traveller is allowed.
- Further as per section 17(5), ITC for life insurance and health insurance is not allowed unless it is
obligatory for employer to provide such insurance.

(iii) Which of the following statements is true in respect of the services of advocate availed by the company?
(a) CGST-₹ 2,250 and SGST- ₹ 2,250 on advocate services are payable by PTL Pvt Ltd. ITC availed
thereon is to be added to its output tax liability with interest as consideration along with tax is not
paid within 180 days of the issuance of invoice.
(b) CGST-₹ 2,250 and SGST- ₹ 2,250 on advocate services are payable by Mr. Ram. ITC availed thereon
is to be added to output tax liability of PTL Pvt Ltd. with interest as consideration along with tax is
not paid within 180 days of the issuance of invoice.
 Case Studies - Revision Test Paper 403

(c) CGST-₹ 2,250 and SGST- ₹ 2,250 on advocate services are payable by PTL Pvt. Ltd. The condition
of payment of consideration along with tax within 180 days of the issuance of invoice does not apply
in the given case.
(d) CGST-₹ 2,250 and SGST- ₹ 2,250 on advocate services are payable by Mr. Ram. The condition of
payment of consideration along with tax within 180 days of the issuance of invoice does not apply in
the given case.
Answer: (c)
Hint: Legal services received shall be payable under reverse charge
CGST = 25,000 x 9% = 2,250, SGST = 25,000 x 9% = 2,250
Mr. Kumar started interior designing practice from the month of January. His turnover up to the month of
March was ₹12,50,000. On 30th June, his turnover exceeded ₹20,00,000 & reached to ₹ 20,05,000. Mr.
Kumar applied for GST registration (as regular taxpayer) on 15th July and registration was granted to him
on 25th July.
On 16th July, he entered into a contract for designing the flat of Mr. Shyam. The service was completed on
22nd July and Mr. Kumar issued invoice on the same day for ₹ 6,00,000. On 5th July, Mr. Kumar purchased
capital goods amounting to ₹ 4,50,000 and from 25th July to 31st July, he availed services amounting to
₹1,75,000 for the purpose of completing the service.
On 1st August, Mr. Kumar got another contract for interior designing from Mr. Ram, which he accepted on
2nd August. The service was completed on 6th August and invoice was issued on 7th August for ₹ 5,00,000.
Payment was received on 29th August.
Note: All values are excluding taxes, unless specifically mentioned. Mr. Kumar makes only intra-State
outward supplies and all purchases are also intra-State. Rates of tax are CGST - 9% and SGST – 9%.
In relation to the above, answer the following questions:
(i) The effective date of registration for Mr. Kumar is-
(a) 30th June
(b) 15th July
(c) 25th July
(d) 16th July
Answer: (a)
Hint: If applicant has submitted application within a period of 30 days, he will be considered to be
registered from the date on which he becomes liable to registration and if application is given after 30 days,
effective date of registration shall be the date of granting registration.
(ii) Mr. Shyam can issue a revised tax invoice till-
(a) 23rd October
(b) 8th September
(c) 25th September
(d) 25th August
Answer: (d)
Hint: A registered person is allowed to issue revised invoice for the invoice already issued from the
effective date of registration till the date of issuance of registration certificate. Further revised invoice should
be issued within one month from the date of issuing of registration certificate.
(iii) Eligible input tax credit available with Mr. Kumar for the month of July is-
(a) CGST ₹ 40,500 & SGST ₹ 40,500
(b) CGST ₹ 15,750 & SGST ₹ 15,750
(c) CGST ₹ 56,250 & SGST ₹ 56,250
(d) CGST ₹ 36,000 & SGST ₹ 36,000
Answer: (c)
Hint: CGST = (1,50,000 x 9% +4,50,000 x 9%) = 56,250
SGST = (1,50,000 x 9% +4,50,000 x 9%) = 56,250
(iv) The time of supply of services provided by Mr. Kumar to Mr. Ram is-
(a) 7th August
 Case Studies - Revision Test Paper 404

(b) 1st August

(c) 29th August
(d) 06th August
Answer: (a)
(v) If instead of opting for regular scheme, Mr. Kumar opts to pay tax under section 10(2A) of the CGST
Act, 2017, the tax liability for the month of July will be-
(a) Nil
(b) CGST ₹ 54,000 & SGST ₹ 54,000
(c) CGST ₹ 18,000 & SGST ₹ 18,000
(d) CGST ₹ 78,150 & SGST ₹ 78,150
Answer: (c)
Hint: CGST = 6,00,000 x 3% = 18,000, SGST = 6,00,000 x 3% = 18,000

RTP MAY 2020

Mr. Mandeep, a registered dealer, is doing building material business in the State of Assam. He availed
architect services for his business from his friend in London free of cost. He also availed designing services
from his brother in London for ₹ 5 Lakhs for his personal purposes.
He availed services which are liable to tax under reverse charge for which date of invoice was 01.09.2022,
payment date as per his books of account and as per his bank account was 15.11.2022 and 18.11.2022
respectively.
His turnover for the current financial year is as follows:
Taxable supply of goods – ₹ 55 Lakhs
Exempt supply of goods – ₹ 16 Lakhs
Inward supply liable to tax under reverse charge – ₹ 8 Lakh
He intends to start providing services also from the next financial year and also to avail composition scheme.
He also wishes to make supplies to the Government.
Based on the information given above, choose the most appropriate answer for the following questions:-
I. In respect of services imported by Mr. Mandeep, which of the following is a correct statement?
i. Architect services for his business from his friend in London free of cost is considered as a supply
ii. Designing services from his brother in London for ₹ 5 Lakh for his personal purposes is considered as
a supply.
iii. Architect services for his business from his friend in London free of cost is not considered as a supply
iv. Designing services from his brother in London for ₹5 Lakh for his personal purposes is not considered
as a supply.
(a) i & ii
(b) i & iv
(c) ii & iii
(d) iii & iv
Answer: I. (c)
II. The time of supply of services, received by him and taxable under reverse charge, is
(a) 01.09.2022
(b) 01.11.2022
(c) 15.11.2022
(d) 18.11.2022
Answer: II. (b)
III. Aggregate turnover of Mr. Mandeep for the given financial year will be,
(a) ₹ 63 Lakhs
(b) ₹ 79 Lakhs
(c) ₹ 71 Lakhs
(d) ₹ 47 Lakhs
Answer: III. (c)
 Case Studies - Revision Test Paper 405

IV. Mr. Mandeep will be eligible for composition scheme in the next financial year, but he can supply
services only upto:
(a) ₹ 5.00 Lakhs
(b) ₹ 6.3 Lakhs
(c) ₹ 7.90 Lakhs
(d) ₹ 7.10 Lakhs
Answer: IV. (d)
V. In case he supplies services to State Government by way of any activity in relation to any function
entrusted to a Municipality under Article 243W of the Constitution, in the next financial year, which of
the following will be exempt?
i. Pure Services
ii. Composite supply of goods and services in which value of supply of goods constitutes not more than
25% of value of said composite supply
iii. Composite supply of goods and services in which value of supply of service constitutes not more than
25% of value of said composite supply
(a) i & iii
(b) ii & iii
(c) i, ii & iii
(d) i & ii
Answer: V. (d)
 Case Studies - Mock Test Paper 406

CASE STUDIES
MTP

MTP-1 NOV 2023

Write the most appropriate answer to each of the following multiple-choice questions by choosing one
of the four options given. All questions are compulsory.
Ms. Chanchala, is a doctor, registered person under GST as a monthly return filer, having in-patient facility
in her hospital.
She availed interior decoration services from her spouse without any consideration being paid. She also
availed IT related services from her sister-in-law without any consideration. Both services were for the
purpose of her profession.
Ms. Chanchala provided treatment of various diseases in her hospital and apart from that she also provided
the following services in her hospital-
(a) Plastic surgery to enhance the beauty of the face
(b) Ambulance service for transportation of patients
(c) Renting of space to run medical store in hospital premises
She is also a consultant in other hospitals and received ₹ 40,00,000 as consultancy fee from the other
hospitals.
Further, she also provides canteen facility and received ₹ 55,000 from in-patients, ₹ 35,000 from patients
who are not admitted and ₹ 25,000 from visitors for the same facility.
She filed GSTR-3B for the month of June with some errors. She filed the Annual return for the said financial
year on 31st October of the next financial year, whereas due date for the said Annual return is 31st December
of the next financial year.
Proper Officer of the department had cancelled the registration certificate of Ms. Chanchala suo-motu on
31st July. Order of cancellation was served on 5th August. However, she applied for revocation of the same
and got her registration restored back.
All the amounts given above are exclusive of taxes, wherever applicable. All the supplies referred above are
intra-State unless specified otherwise.

From the information given above, choose the most appropriate answer for the following questions-

1 Which of the following is a correct statement as per the provisions of CGST Act, 2017?
(i) Service availed from her Spouse is a deemed supply
(ii) Service availed from her Sister-in-Law is a deemed supply
(iii) Service availed from her Spouse is not a deemed supply
(iv) Service availed from her Sister-in-Law is not a deemed supply
(a) (i) and (iv)
(b) (iii) and (iv)
(c) (ii) and (iii)
(d) (i) and (ii)
Answer: (a) (i) and (iv)
2 Compute the taxable value of supply of canteen service provided by Ms. Chanchala?
(a) ₹ 25,000
(b) ₹ 35,000
(c) ₹ 60,000
(d) ₹ 80,000
Answer: (c) ₹ 60,000
3 By which date Ms. Chanchala should have applied for revocation of cancellation of registration
certificate, in case no extension is granted?
(a) 5th August
 Case Studies - Mock Test Paper 407

(b) 20th August

(c) 30th August
(d) 4th September
Answer: (d) 4th September
4 Maximum time permissible for rectification of error committed in monthly return of June is ________
(a) 30th November of the next year
(b) 20th October of the next year
(c) 31st October of the next year
(d) 31st December of the next year
Answer: (a) 30th November of the next year
5 Determine which of the following services provided by Ms. Chanchala and her hospital is exempt from
GST?
(i) Plastic surgery to enhance the beauty of the face
(ii) Ambulance service for transportation of patients
(iii) Renting of space to run medical store in hospital premises
(iv) Consultancy service by Ms. Chanchala in other hospitals
(a) (i), (ii) & (iv)
(b) (i), (ii)
(c) (ii) & (iv)
(d) (i) & (iii) (5 x 2 Marks = 10 Marks)
Answer: (c) (ii) & (iv)

MTP-2 NOV 2023

Write the most appropriate answer to each of the following multiple-choice questions by choosing one
of the four options given. All questions are compulsory.
M/s. Neelkanth & Co., a registered supplier under GST, is dealing in supply of taxable goods in the State of
Karnataka.
The firm had opted for Composition Scheme from April month of last financial year. It’s turnover crossed ₹
1.50 Crores on 9th May of current financial year and had opted for withdrawal of composition scheme on
the said date.
Neelkanth & Co. removed goods on 10th June for delivery to Chandra & Co. on ‘Sale or Return Basis’.
Chandra & Co. accepted the goods vide its confirmation mail dated 15th December.
The firm has paid GST for various items during the month of August. It comprised of the following-
(a) GST paid on input services intended to be used for personal purposes – ₹ 12,000
(b) GST paid on purchase of Motor Vehicle for business use (being a two-wheeler having engine capacity
of 25CC) – ₹ 9,000
(c) GST paid on purchase of computer – ₹ 19,000
(GST portion was included as part of cost to claim depreciation under Income-tax Act, 1961)
During May, Neelkanth and Co. had reversed ITC of ₹ 10,000 for not making payment to Vendors within
the time prescribed under CGST Act, 2017. This pending payment was cleared in the month of August.
Out of purchases made and ITC availed during earlier months, the following information is made available
as on September:
Supplier Name Payment is due for Related ITC
(Number of days) Component
 Case Studies - Mock Test Paper 408

XYZ 165 ₹ 13,000

ABC 199 ₹ 15,000
PQR 99 ₹ 20,000
Neelkanth & Co received accounting services from Raghu & Co., an associated enterprise, located in Sri
Lanka. Raghu & Co. issued invoice for the service on 1st September, which was entered by Neelkanth &
Co. in its book on 10th October. But payment was made on 30th September.
All the supply referred above is intra-State unless specified otherwise. Conditions applicable for availment
of ITC are fulfilled subject to the information given above.
Based on the information provided above, choose the most appropriate answer for the following questions-
1. Neelkanth & Co. needs to furnish a statement containing details of stock of inputs/ inputs held in semi-
finished / finished goods on the withdrawal of composition scheme by ______
(a) 9th May
(b) 23rd May
(c) 8th June
(d) 7th July
Answer: (c) 8th June
2. In respect of the goods sent on sale or return basis, Neelkanth & Co. shall issue the invoice by ________
(a) 10th June
(b) 10th September
(c) 10th December
(d) 15th December
Answer: (c) 10th December
3. Determine the amount of eligible input tax credit that can be availed by Neelkanth & Co for the month of
August?
(a) Nil
(b) ₹ 19,000
(c) ₹ 22,000
(d) ₹ 50,000
Answer: (b) ₹ 19,000
4. Compute the amount of ITC to be reversed for the month of September? Ignore interest liability, if any.
(a) Nil
(b) ₹ 28,000
(c) ₹ 15,000
(d) ₹ 13,000
Answer: (c) ₹ 15,000
5. Time of supply in respect of service imported by Neelkanth & Co from its Associated Enterprise is
___________
(a) 1st September
(b) 30th September
(c) 1st October
(d) 10th October (5 x 2 Marks = 10 Marks)
Answer: (b) 30th September

MTP-1 MAY 2023

Poorva Logistics, a Goods Transport Agency, is registered under GST. It did not exercise the option to itself
pay GST on the services supplied by it in the preceding financial year. It provided goods transport services
(taxable @ 5%) to the following persons in February of preceding financial year-
 Case Studies - Mock Test Paper 409

(a) Kunal Traders, an unregistered partnership firm

(b) Mr. Amar, who is not registered under GST
(c) Small Traders Co-Operative Society registered under Societies Registration Act
In a particular consignment in March of preceding financial year, Poorva Logistics transported the
following-
(a) Defence Equipments
(b) Railway Equipments
(c) Organic Manure
Poorva Logistics exercises the option to itself pay GST on services supplied by it @ 12% from April, of the
current financial year. It provided goods transport services to Bama Steels Pvt. Ltd. on 1 st April and issued
an invoice dated 5th May. Payment was received on 6th May.
Based on the information provided above, choose the most appropriate answer for the following questions -
Question 1 (2 Marks)
Which of the following persons are liable to pay GST under reverse charge in respect of the GTA services
provided by Poorva Logistics in February of the preceding financial year?
(i) Kunal Traders
(ii) Mr. Amar
(iii) Small Traders Co-operative society
(a) i & ii
(b) ii & iii
(c) i & iii
(d) i, ii & iii
Answer: (c) i & iii
Question 2 (2 Marks)
Transportation of _______ by Poorva Logistics is exempt from GST.
(i) Defence Equipments
(ii) Railway Equipments
(iii) Organic Manure
(a) i
(b) i & ii
(c) i & iii
(d) i , ii & iii
Answer: (c) i & iii
Question 3 (2 Marks)
What will be the time of supply in respect of the services provided by Poorva Logistics to Bama Steels Pvt.
Ltd.?
(a) 6th May
(b) 5th May
(c) 30th May
(d) 1st April
Answer: (d) 1st April

MTP-2 MAY 2023

Ms. Riya is engaged in providing various goods and services. She got registered under GST in the month of
April of the current financial year under regular scheme.
She supplied a package to Dhruv Traders consisting of stapler, calculator and charger at a single price of
₹300 in the month of May. Rates of GST for stapler, calculator and charger are 5%, 12% and 18%
respectively.
She received following payments during the month of May:
- earned ₹ 160,000 by performing western music in a cultural event at a Resort
 Case Studies - Mock Test Paper 410

- earned ₹ 50,000 by providing services by way of renting of residential dwelling for use as a boutique
to Supriya, an unregistered person.
- received ₹ 70,000 by way of rent for letting of agro machinery
Ms. Riya made a supply during June, details of which are as follows-
- Basic price of the product before TCS under Income-tax Act, 1961– ₹ 45,000
- Tax collected at source under Income-tax Act, 1961 – ₹ 2,500
- She received a subsidy of ₹ 3,500 from Green Foundation Pvt. Ltd. for usage of green energy and the
subsidy was linked to the units of energy and not aforesaid product.
Ms. Riya provides the following information regarding receipt of inward supplies during July-
- received invoice for goods having GST component of ₹ 30,000. Goods were to be delivered in 5 lots,
out of which first three lots were received in the current month.
- purchased a car having GST component of ₹ 1,50,000 for imparting training on driving such motor
vehicles.
- availed health insurance service for her employees and paid GST of ₹ 7,000 thereon. Health insurance
service is being provided voluntarily by Ms. Riya and not mandated by any law.
All the amounts given above are exclusive of taxes, wherever applicable. Further, all the supplies referred
above are intra-State supplies unless specified otherwise. Conditions necessary for claiming input tax credit
(ITC) have been fulfilled subject to the information given above. The opening balance of input tax credit for
the relevant tax period of Ms. Riya is Nil.
Based on the facts of the case scenario given above, choose the most appropriate answer to Q. Nos. 1 to 4
below:-
Question 1 (2 Marks)
Supply of package made by Ms. Riya to Dhruv Traders is a and is taxable under GST @ __________.
(a) composite supply; 12%
(b) mixed supply; 18%
(c) composite supply; 18%
(d) mixed supply; 12%
Answer: (b) mixed supply; 18%
Question 2 (2 Marks)
Out of payments received by Ms. Riya in month of May, value of exempt supply is _.
(a) ₹ 50,000
(b) ₹ 70,000
(c) ₹ 1,20,000
(d) ₹ 1,60,000
Answer: (b) ₹ 70,000
Question 3 (2 Marks)
Compute the value of supply under section 15 of the CGST Act, 2017 made by Ms Riya in the month of
June.
(a) ₹ 45,000
(b) ₹ 47,500
(c) ₹ 48,500
(d) ₹ 51,000
Answer: (a) ₹ 45,000
Question 4 (2 Marks)
Compute the amount of input tax credit that can be claimed by Ms. Riya in July.
(a) ₹ 30,000
(b) ₹ 37,000
(c) ₹ 1,50,000
(d) ₹ 1,57,000
Answer: (c) ₹ 1,50,000
 Case Studies - Mock Test Paper 411

MTP-1 NOV 2022

Purvi, registered under GST in the State of Madhya Pradesh, is engaged in supplying a bouquet of taxable
goods and services. She has undertaken following activities/transactions in the month of October in the
current financial year:
(i) Donated some money to Divyaprakash Charitable Trust, Madhya Pradesh, in the memory of her late
father. The Divyaprakash Charitable Trust constructed a room in the school run by it from such donation
and wrote “Donated by Miss. Purvi in the memory of her father” on the door of the room so constructed.
(ii) Organized a seminar in Indore which was sponsored by WE-WIN Cricket Academy, an LLP. Purvi
received a sponsorship fee of ₹1,50,000.
(iii) Bindusar Public School intended to distribute gift packages consisting of fountain pen, calculator and
tape dispenser to its students on the occasion of Children’s Day. Therefore, it entered into a contract with
Purvi on 28th October for supply of 2,000 packages at a single price of ₹ 250. Rates of GST for fountain
pen, calculator and tape dispenser are 5%, 12% and 18% respectively.
(iv) Received following payments during the month of October:
- earned ₹ 160,000 by performing at a western music concert in Indore
- earned ₹ 50,000 for renting of space for use as a Textile Emporium
- received ₹ 70,000 for supply of farm labour
(v) Supplied a machinery with a basic price of ₹ 45,000 (before TCS under Income Tax Act, 1961). Tax
collected at source under Income-tax Act, 1961 on said machinery is ₹ 2,500. Further, a subsidy of
₹50,000 is received from Green Foundation Pvt. Ltd for usage of green energy and the subsidy was
linked to energy saved during the month.
All the amounts given above are exclusive of GST, wherever applicable.

Based on the facts of the case scenario given above, choose the most appropriate answer to Q. Nos. 1 to 5
below:-
1. Donation made by Purvi to Divyaprakash Charitable Trust is _______.
(a) exempted from GST by way of a notification
(b) not a supply at all
(c) liable to GST under forward charge
(d) liable to GST under reverse charge
Answer: (b)
Hint: In this case donation has been given i.e. there is no supply of goods or services hence no GST because
there is no supply.
2. Which of the following statements is correct with respect to the sponsorship fee received by Purvi?
(a) Tax on sponsorship services is payable by Purvi under forward charge.
(b) Tax on sponsorship services is payable by WE-WIN Cricket Academy under reverse charge.
(c) Sponsorship services are exempt from GST since services provided to a sports academy are exempt.
(d) Tax on sponsorship services is payable by Purvi under reverse charge.
Answer: (b)
Hint: If any body corporate or partnership firm or LLP has sponsored any programme, in that case reverse
charge is applicable.
3. Determine the nature of supply and the applicable rate of GST for the packages supplied by Purvi to
Bindusar Public School.
(a) composite supply & applicable rate of GST is 12%
(b) mixed supply & applicable rate of GST is 18%
(c) composite supply & applicable rate of GST is 18%
(d) mixed supply & applicable rate of GST is 12%
Answer: (b)
Hint: As per section 8 it is a mixed supply hence highest rate shall be applicable
4. Out of all the payments received by Purvi in the month of October, value of exempt supply amounts to __.
(a) ₹ 4,30,000
(b) ₹ 70,000
 Case Studies - Mock Test Paper 412

(c) ₹ 1,20,000
(d) ₹ 2,20,000
Answer: (b)
Hint: Supply of farm labour is exempt from GST
5. The value of supply of machinery supplied by Purvi is________.
(a) ₹ 45,000
(b) ₹ 47,500
(c) ₹ 48,500
(d) ₹ 51,000 (5 x 2 Marks = 10 Marks)
Answer: (a)
Hint: Value of supply shall be ₹45,000 and TCS collected under Income Tax Act is to be adjusted towards
final tax liability further subsidy has not been adjusted in the price

MTP-2 NOV 2022

Sarabhai & Sarabhai Associates, a partnership firm registered under GST, is engaged in various types of
business activities. It has provided the details of the following activities undertaken by it in the current
financial year:
(i) It supplies taxable goods to Dhanush Enterprises at a price of ₹ 8,00,000 in the month of April, with a
credit period of 1 month for payment. Thereafter, interest @ 12% p.a. is chargeable on the
consideration. The payment is received from Dhanush Enterprises after the lapse of two months from
the date of supply.
(ii) It enters into a contract for supply of 100 office chairs @ ₹ 15,000 with Ashoka Mart on 21st August.
Chairs are removed from the warehouse of Sarabhai & Sarabhai Associates on 5th September along
with the invoice of said date. Ashoka Mart has paid 30% of the total contract value on 21st August;
balance 70% is paid after delivery of chairs on 10th September.
(iii) In the month of October, it provides services by way of transportation of goods in a goods carriage by
road to Fisheries Department of Government of India, registered under GST for the purpose of
deducting tax at source and not for making any taxable supply. Sarabhai & Sarabhai Associates is a
registered goods transport agency and charges ₹1,20,000 for the said services.
(iv) It also provides services of Direct Selling Agent to an NBFC located in Mumbai in the month of
December for ₹ 50,000.
(v) It organises a business exhibition in the month of December for which it receives a sponsorship fee of
₹3,00,000 from Dhara Ltd.
(vi) It provides free gifts to each of its employees valuing ₹ 50,000 at the end of each financial year.
(vii) It avails services of Dhruv Travel Agency for organizing a free vacation for its top performing
employees in the month of December. GST of ₹ 50,000 is paid on the same. In the same month, it also
pays GST of ₹ 20,000 on the membership of Rudraksh Fitness Centre taken for its CEO.
All the amounts given above are exclusive of taxes, wherever applicable. All conditions for availing ITC are
fulfilled subject to the information given above.
Based on the information provided above, choose the most appropriate answer for the following questions-
1. Value of supply made to Dhanush Enterprises, assuming the interest on delayed payment to be exclusive
of GST, is __________.
(a) ₹ 8,00,000
(b) ₹ 8,08,000
(c) ₹ 7,92,000
(d) ₹ 8,16,000
Answer: (b)
2. The time of supply of advance money of ₹ 4,50,000 received for supply of office chairs to Ashoka Mart
is_______. For balance payment of ₹ 10,50,000 received, the time of supply is ________________.
(a) 21st August; 5th September
(b) 5th September; 10th September
 Case Studies - Mock Test Paper 413

(c) 21st August; 10th September

(d) 5th September; 5th September
Answer: (d)
3. Determine the value of outward supplies made by Sarabhai & Sarabhai Associates on which tax is
payable under reverse charge.
(a) ₹ 1,20,000
(b) ₹ 50,000
(c) ₹ 1,70,000
(d) ₹ 3,00,000
Answer: (d)
4. Free gifts of value of ₹ 50,000 provided by Sarabhai & Sarabhai Associates to each of its employee is:
(a) considered as supply of goods.
(b) considered as supply of services.
(c) exempt from GST.
(d) not a supply as per Schedule I of the CGST Act, 2017.
Answer: (d)
5. Sarabhai & Sarabhai Associates is eligible to claim input tax credit of _________ in the month of
December.
(a) ₹ 50,000
(b) ₹ 20,000
(c) ₹ 3,70,000
(d) Nil (5 x 2 Marks = 10 Marks)
Answer: (d)

MTP-1 MAY 2022

1. M/s. Harsimran & Co., a registered supplier under GST, is dealing in supply of taxable goods in the
State of Karnataka.
The firm had opted for Composition Scheme from April month of last financial year. It’s turnover
crossed ₹ 1.50 Crores on 9th May of current financial year and had opted for withdrawal of
composition scheme on the said date.
Harsimran & Co. removed goods on 10th June for delivery to Simran & Co. on ‘Sale or Return Basis’.
Simran & Co. accepted the goods vide its confirmation mail dated 15 th December.
The firm has paid GST for various items during the month of August. It comprised of the following -
(a) GST paid on input services intended to be used for personal purposes – ₹ 12,000
(b) GST paid on purchase of Motor Vehicle for business use (being a two-wheeler having engine
capacity of 25CC) – ₹ 9,000
(c) GST paid on purchase of computer – ₹ 19,000
(GST portion was included as part of cost to claim depreciation under Income-tax Act, 1961)
During May, Harsimran and Co. had reversed ITC of ₹ 10,000 for not making payment to Vendors
within the time prescribed under CGST Act, 2017. This pending payment was cleared in the month of
August.
Out of purchases made and ITC availed during earlier months, the following information is made
available as on September:
Supplier Name Payment is due for Related ITC Component
(Number of days)
XYZ 165 ₹ 13,000
ABC 199 ₹ 15,000
 Case Studies - Mock Test Paper 414

PQR 99 ₹ 20,000
Harsimran & Co received accounting services from Ekam & Co., an associated enterprise, located in
Sri Lanka. Ekam & Co. issued invoice for the service on 1st September, which was entered by
Harsimran & Co. in its book on 10th October. But payment was made on 30th September.

All the supply referred above is intra-State unless specified otherwise. Conditions applicable for
availment of ITC are fulfilled subject to the information given above.
Based on the information provided above, choose the most appropriate answer for the following
questions [1.1 -1.5]-
1.1 Harsimran & Co. needs to furnish a statement containing details of stock of inputs/ inputs held in
semi-finished / finished goods on the withdrawal of composition scheme by ______
(a) 9th May
(b) 23rd May
(c) 8th June
(d) 7th July
Answer: (c) 8th June
1.2 In respect of the goods sent on sale or return basis, Harsimran & Co. shall issue the invoice by
________
(a) 10th June
(b) 10th September
(c) 10th December
(d) 15th December
Answer: (c) 10th December
1.3 Determine the amount of eligible input tax credit that can be availed by Harsimran & Co for the
month of August?
(a) Nil
(b) ₹ 19,000
(c) ₹ 22,000
(d) ₹ 50,000
Answer: (b) ₹ 19,000

1.4 Compute the amount of ITC to be reversed for the month of September? Ignore interest liability, if
any.
(a) Nil
(b) ₹ 28,000
(c) ₹ 15,000
(d) ₹ 13,000
Answer: (c) ₹ 15,000
1.5 Time of supply in respect of service imported by Harsimran & Co from its Associated Enterprise
is ___________
(a) 1st September
(b) 30th September
(c) 1st October
 Case Studies - Mock Test Paper 415

(d) 10th October (5 x 2 Marks = 10 Marks)

Answer: (b) 30th September

MTP-2 MAY 2022

1. Mr. Lala is engaged in supply of tiles and marbles in the State of Telangana. He is not registered under
GST. He commenced his business from the month of July.
He availed godown construction services for business from his brother-in-law who was dependent on him.
He also availed professional consultancy services for the purpose of business from his son who is a
Company Secretary and his son is not dependent on him. Mr. Lala did not pay anything for both the services
as both of them were his relative / family member respectively.
On the basis of advice of his son, Mr. Lala made the supply of tiles within his State only. His turnover
reached to ₹ 7 lakh as on 31st October. However, he planned to expand his business to other States, since he
has received decent orders from other States also.
During the month of December, he received a consignment of tiles from Rajasthan through Prompt Carriers,
a goods transport agency based in the State of Rajasthan. Goods were dispatched by the supplier on ‘to-pay’
basis for freight. Freight charges were ₹ 50,000 and the said GTA pays GST @ 12%. Mr. Lala paid the
invoice amount in the month of December itself. This was an inter-State transaction.
During the month of January, Mr. Lala made his first inter-State supply to Tamil Nadu on 4th January. His
turnover before making such supply was ₹ 15 lakh.
Value of such inter-state supply was ₹ 4,50,000, exclusive of taxes. Payment for the said inter-State supply
was received on 28th February. Invoice was raised by Mr. Lala on 25th January.
All the figures given above are exclusive of taxes wherever applicable.

Based on the information given above, choose the most appropriate answer for the following questions-

1.1 In respect of services availed by Mr. Lala, which of the following is a correct statement?
(a) Godown construction service availed from his brother-in-law free of cost is considered as a deemed
supply
(b) Professional service availed from his son free of cost is considered as a deemed supply
(c) Neither of the services is a deemed supply
(d) Both services are deemed supply
Answer: (b) Professional service availed from his son free of cost is considered as a deemed supply
1.2 Upto which limit of aggregate turnover, Mr Lala can continue to supply goods without registration
within his state, if he does not procure any goods/services on which tax is payable under reverse charge
mechanism?
(a) ₹ 20 lakh
(b) ₹ 40 lakh
(c) ₹ 10 lakh
(d) ₹ 150 lakh
Answer: (a) ₹ 20 lakh
1.3 What is the tax liability for the freight charges?
(a) ₹ 6000 of IGST under reverse charge
(b) ₹ 6000 of IGST under forward charge
(c) ₹3000 each under CGST and SGST under reverse charge
(d) Nil as it is exempt
Answer: (d) Nil as it is exempt
1.4 Which of the following statement is correct with respect to liability of Mr. Lala to register under GST?
(a) Mr. Lala is liable to register in the month of December for receipt of GTA services.
(b) Mr. Lala is liable to register in the month of January for effecting inter-State outward supply of
goods.
(c) Mr. Lala is liable to register only when his turnover exceeds the threshold limit irrespective of
whether he is in receiving any GTA services or is effecting inter-State outward supply.
 Case Studies - Mock Test Paper 416

(d) Mr. Lala is not required to register as it is his first year of business.
Answer: (b) Mr. Lala is liable to register in the month of January for effecting inter-State outward
supply of goods.
1.5 What is the time of supply of goods made by Mr Lala during January?
(a) 4th January
(b) 25th January
(c) 3rd February
(d) 28th February (5 x 2 Marks = 10 Marks)
Answer: (a) 4th January

MTP-1 NOV 2021

Ms. Adisha, a Doctor having in-patient facility in her hospital is a registered person under GST.
She availed interior decoration services from her spouse without any consideration being paid. She also
availed IT related services from her sister-in-law without any consideration. Both services were for the
purpose of her profession.
Ms. Adisha provided treatment of various diseases in her hospital and apart from that she also provided the
following services in her hospital-
(a) Plastic surgery to enhance the beauty of the face
(b) Ambulance service for transportation of patients
(c) Renting of space to run medical store in hospital premises
She is also a consultant in other hospitals and received ₹ 40,00,000 as consultancy fee from the other
hospitals.
Further, she also provides canteen facility and received ₹ 55,000 from in-patients, ₹ 35,000 from patients
who are not admitted and ₹ 25,000 from visitors for the same facility.
She filed GSTR-3B for the month of June with some errors. She filed the Annual return for the said financial
year on 31st October of the next year, whereas due date for the said Annual return is 31st December of the
next year.
Proper Officer of the department cancelled the registration certificate of Ms. Adisha suo-motu on 31st July.
Order of cancellation was served on 5th August. However, she applied for revocation of the same and got her
registration certificate revoked.
All the amounts given above are exclusive of taxes, wherever applicable. All the supply referred above is
intra-State unless specified otherwise.
From the information given above, choose the most appropriate answer for the following questions -
1. Which of the following is a correct statement as per the provisions of CGST Act, 2017?
(i) Service availed from her Spouse is a deemed supply
(ii) Service availed from her Sister-in-Law is a deemed supply
(i) Service availed from her Spouse is not a deemed supply
(iv) Service availed from her Sister-in-Law is not a deemed supply
(a) (i) and (iv)
(b) (iii) and (iv)
(c) (ii) and (iii)
(d) (i) and (ii)
Answer: (a)
2. Compute the taxable value of supply of canteen service provided by Ms. Adisha?
(a) ₹ 25,000
(b) ₹ 35,000
(c) ₹ 60,000
(d) ₹ 80,000
Answer: (c)
3. Ms. Adisha should have applied for revocation of cancellation of registration certificate by
(a) 5th August
(b) 20th August
 Case Studies - Mock Test Paper 417

(c) 30th August

(d) 4th September
Answer: (d)
4. Maximum time permissible for rectification of error committed in monthly return of June is________
(a) 20th July
(b) 20th October of the next year
(c) 31st October of the next year
(d) 31st December of the next year
Answer: (b)
5. Determine which of the following services provided by Ms. Adisha and her hospital is exempt from GST?
(i) Plastic surgery to enhance the beauty of the face
(ii) Ambulance service for transportation of patients
(iii) Renting of space to run medical store in hospital premises
(iv) Consultancy service by Ms. Adisha in other hospitals
(a) (i), (ii) & (iv)
(b) (i), (ii)
(c) (ii) & (iv)
(d) (i) & (iii) (5 x 2 Marks = 10 Marks)
Answer: (c)

MTP-2 NOV 2021

Mr. Kumar started interior designing practice from the month of January. His turnover up to the month of
March was ₹ 12,50,000. On 30th June, his turnover exceeded ₹ 20,00,000 & reached to ₹ 20,05,000. Mr.
Kumar applied for GST registration (as regular taxpayer) on 15th July and registration was granted to him
on 25th July.
On 16th July, he entered into a contract for designing the flat of Mr. Shyam. The service was completed on
22nd July and Mr. Kumar issued invoice on the same day for ₹ 6,00,000. On 5th July, Mr. Kumar purchased
capital goods amounting to ₹ 4,50,000 and from 25th July to 31st July, he availed services amounting to
₹1,75,000 for the purpose of completing the service.
On 1st August, Mr. Kumar got another contract for interior designing from Mr. Ram, which he accepted on
2nd August. The service was completed on 6th August and invoice was issued on 7th August for ₹ 5,00,000.
Payment was received on 29th August.
All values are excluding taxes, unless specifically mentioned. Mr. Kumar makes only intra-State outward
supplies and all purchases are also intra-State. Rates of tax are CGST - 9% and SGST – 9%.
In relation to the above, answer the following questions:

1. The effective date of registration for Mr. Kumar is-

(a) 30th June
(b) 15th July
(c) 25th July
(d) 16th July
Answer: (a)
2. Mr. Kumar can issue a revised tax invoice till-
(a) 23rd October
(b) 8th September
(c) 25th September
(d) 25th August
Answer: (d)
3. Eligible input tax credit available with Mr. Kumar for the month of July is-
(a) CGST ₹ 40,500 & SGST ₹ 40,500
(b) CGST ₹ 15,750 & SGST ₹ 15,750
(c) CGST ₹ 56,250 & SGST ₹ 56,250
 Case Studies - Mock Test Paper 418

(d) CGST ₹ 36,000 & SGST ₹ 36,000

Answer: (c)
4. The time of supply of services provided by Mr. Kumar to Mr. Ram is-
(a) 7th August
(b) 1st August
(c) 29th August
(d) 6th August
Answer: (a)
5. If instead of opting for regular scheme, Mr. Kumar opts to pay tax under section 10(2A) of the
CGST Act, 2017, the tax liability for the month of July will be-
(a) CGST Nil and SGST Nil
(b) CGST ₹ 54,000 & SGST ₹ 54,000
(c) CGST ₹ 18,000 & SGST ₹ 18,000
(d) CGST ₹ 78,150 & SGST ₹ 78,150 (5 x 2 Marks = 10 Marks)
Answer: (c)

MTP-1 MAY 2021

Write the most appropriate answer to each of the following multiple choice questions by choosing one
of the four options given. All questions are compulsory.
Each MCQ under Question No. 1 carries 2 Marks each
1. Explore Logistics, a Goods Transport Agency registered under GST provided GTA services (taxable @
5%) to the following persons-
(a) Sahil Traders, an unregistered Partnership firm.
(b) Mr. Aadi, a casual taxable person, who is not registered under GST.
(c) Small Traders co-operative society registered under Societies Registration Act.
In a particular consignment, Explore Logistics transported the following-
(a) Defence Equipments
(b) Railway Equipments
(c) Organic Manure
Explore Logistics opted to charge GST @ 12% from October. It provided GTA Services to Mahajan Steels
Pvt. Ltd. on 1st October and issued an invoice dated 5th November. Payment was received on 6th
November.
It provided both inter-State and intra-State service to various registered as well as unregistered persons.
Based on the information provided above, choose the most appropriate answer for the following questions
1.1 to 1.5-
1.1 Which of the following persons are liable to pay GST on reverse charge in respect of the GTA services
(taxable @ 5%) provided by Explore Logistics
i Sahil Traders
ii Mr. Aadi
iii Small Traders Co-operative society
(a) i & ii
(b) ii & iii
(c) i & iii
(d) i, ii & iii
Answer: (c) i & ii
1.2 Out of items transported by Explore Logistics, which of the following is/ are exempt from GST?
i. Defence Equipments
ii. Railway Equipments
iii. Organic Manure
(a) i
(b) i & ii
 Case Studies - Mock Test Paper 419

(c) i & iii

(d) i , ii & iii
Answer: (c) i & iii
1.3 What will be the time of supply in respect of the services provided by Explore Logistics to Mahajan
Steels Pvt. Ltd.?
(a) 6th November
(b) 5th November
(c) 30th November
(d) 1st October
Answer: (d) 1st October
1.4 Which of the following statements is correct in respect of services provided by Explore Logistics to
Mahajan Steels Pvt. Ltd.
(a) Mahajan Steels Pvt. Ltd. is liable to pay GST
(b) Explore Logistics is liable to pay GST
(c) Service provided by Explore Logistics to Mahajan Steels Pvt. Ltd. is exempt under GST
(d) Mahajan Steels Pvt. Ltd. is liable to pay 50% GST and remaining 50% will be paid by Explore Logistics
Answer: (b) Explore Logistics is liable to pay GST
1.5 In respect of which of the following supplies, Explore Logistics has to provide invoice-wise details in
GSTR-1?
i. Inter-State supplies to registered person with invoice value not exceeding ₹ 2,50,000
ii. Inter-State supplies to unregistered person with invoice value not exceeding ₹ 2,50,000
iii. Inter-State supplies to unregistered person with invoice value exceeding ₹ 2,50,000
iv. Intra-State supplies to registered person with invoice value not exceeding ₹ 2,50,000
(a) i & iv
(b) i & ii
(c) ii & iii
(d) i, iii & iv (5 x 2 Marks = 10 Marks)
Answer: (d) i, iii & iv

MTP-2 MAY 2021

Write the most appropriate answer to each of the following multiple choice questions by choosing one
of the four options given. All questions are compulsory.
Each MCQ under Question No. 1 carries 2 Marks each
1. Ms. Anjali is engaged in supply of services. She is registered under GST and has opted to pay tax under
composition scheme for service provider under section 10(2A) of the CGST Act. The turnover for the
quarter ending June was ₹ 12,00,000.
During July, she crossed the aggregate turnover of ₹ 50 lakh and opted out of composition scheme.
She also started trading of goods in July.
She supplied an order to Breathe Well LLP on ex-factory basis, the details of which are as follows-
i. Basic price of the product – ₹ 53,000
ii. Outward freight – ₹ 12,000
iii. Packing Charges – ₹ 5,000
iv. Discount given on receiving payment – ₹ 2,000
(not included in invoice)
For supplies, provided to Breathe Well LLP, she received half of the amount as advance on 22nd July. The
goods were dispatched from her factory on 25th July and delivered on 28th July. She raised the invoice on
30th July and the balance payment was also received on the same date.
Ms. Anjali received 25 invoices from various suppliers involving GST of ₹ 1,50,000 for the month of July.
While filing GSTR-3B for the said month on 20th August, she found that only 20 invoices involving GST of
₹1,00,000 were uploaded by the suppliers.
Ms. Anjali supplied goods to the following persons-
 Case Studies - Mock Test Paper 420

Sl. No. Recipient Value of Supply

1 Mr. Pawan - an unregistered person ₹ 150
2 Mr. Umesh, a registered person ₹ 110
3 Rains Trust, an unregistered entity ₹ 250
None of the above persons requires a tax invoice.
All the amounts given above are exclusive of taxes, wherever applicable. All the supply referred above is
intra-State unless specified otherwise. Conditions applicable for availment of ITC are fulfilled subject to the
information given above.
Based on the information provided above, choose the most appropriate answer for the following questions
1.1 to 1.5-
1.1 Compute the tax liability for the quarter ending June under CGST and SGST?
(a) ₹ 30,000 each
(b) ₹ 12,000 each
(c) ₹ 6,000 each
(d) ₹ 36,000 each
Answer: (d) ₹ 36,000 each
1.2 Compute the value of Supply made by Ms. Anjali to Breathe Wall LLP?
(a) ₹ 56,000
(b) ₹ 58,000
(c) ₹ 68,000
(d) ₹ 75,000
Answer: (b) ₹ 58,000
1.3 Determine the amount of ITC that can be claimed by Ms. Anjali for the month of July?
(a) ₹ 1,00,000
(b) ₹ 1,10,000
(c) ₹ 1,20,000
(d) ₹ 1,50,000
Answer: (c) ₹ 1,20,000
1.4 Determine the time of supply made to Breathe Wall LLP?
(a) 22nd July
(b) 25th July
(c) 28th July
(d) 30th July
Answer: (b) 25th July
1.5 Ms. Anjali need not issue invoice to which of the following persons?
(a) Mr. Pawan
(b) Mr. Pawan and Umesh
(c) Mr. Pawan and Rains Trust
(d) Need not issue invoice to all the three persons (5 x 2 Marks = 10 Marks)
Answer: (a) Mr. Pawan

MTP - NOV 2020 (3 x 2 Marks = 6 Marks)

M/s. Shanky Consultants, a partnership firm registered in Delhi, renders following services during the year:
(i) Security services: ₹ 2,00,00,000/ to registered business entities
(ii) Manpower services (Accountants): ₹ 5,00,000/-
(iii) Auditing services: ₹ 1,00,00,000/-
Other Information
(i) Shanky Consultants also paid sponsorship fees of ₹ 70,000/- at seminar organized by a private NGO (a
partnership firm) in Delhi.
 Case Studies - Mock Test Paper 421

(ii) Shanky Consultant pays rent amounting to ₹ 6,00,000/- for a building owned by MCD.
(iii) Assume all services are taxable at 18% and all transactions to be intra-State supplies.
Based on the above information, answer the following questions:
(i) What is the aggregate turnover of Shanky Consultants?
(a) ₹ 3,05,00,000/-
(b) ₹ 3,05,70,000/-
(c) ₹ 1,05,00,000/-
(d) ₹ 1,05,70,000/-
Answer: (a)
Aggregate turnover of Shanky consultants
Security services 2,00,00,000
Manpower services 5,00,000
Auditing services 1,00,00,000
Total 3,05,00,000
(ii) GST liability paid under reverse charge by Shanky Consultants is?
(a) CGST: ₹ 60,300/-, SGST: ₹ 60,300/-
(b) CGST: ₹ 6,300/-, SGST: ₹ 6,300/-
(c) CGST: ₹ 54,000/-, SGST: ₹ 54,000/-
(d) None of the above
Answer: (a)
GST liability under reverse charge
Sponsorship fees and payment of Rent to MCD is covered under reverse charge.
Sponsorship fees 70,000
Rent of immovable property 6,00,000
Total 6,70,000
CGST @ 9% 60,300
SGST @ 9% 60,300
(iii) State which of the following statement is true in respect of security services provided by Shanky
Consultants to registered business entities:
(a) Shanky Consultants shall issue GST compliant tax invoice.
(b) Shanky Consultants shall issue bill of supply stating “Tax to be paid by service recipient under
reverse charge”.
(c) Shanky Consultants can issue any document in lieu of tax invoice.
(d) Shanky Consultants shall issue receipt voucher every time Shanky Consultants receives payment.
Answer: (a)
 Not Covered in Syllabus 422

NOT COVERED IN
SYLLABUS
FROM THIS PAGE
ONWARDS
Question 1: Explain accounting treatment of GST. (not covered in syllabus rather it is only for self
reading)
Answer:
At the time of purchase input GST paid shall be debited to GST credit receivable account and at the time of
sale GST charged as output tax shall be credited to GST payable account and unutilized GST receivable
amount shall be shown in the balance sheet, eg. ABC limited purchased goods for ₹ 10,00,000 plus GST ₹
1,00,000 and sold the goods for ₹ 12,00,000 plus GST ₹ 1,20,000 in this case accounting entries shall be –

1. GST Goods Purchase A/c Dr. ₹10,00,000

GST Credit Receivable A/c Dr. ₹ 1,00,000
To Bank A/c ₹ 11,00,000

2. The dealer passes the following entry to record the goods sold and GST collected thereon:
Bank A/c Dr. ₹13,20,000
To GST Goods Sales A/c ₹12,00,000
To GST Payable A/c ₹ 1,20,000

3. The dealer passes the following entry to record the liability for GST payable met by using the balance in
the GST Credit Receivable Account and balance by bank:
GST Payable A/c Dr. ₹1,20,000
To GST Credit Receivable A/c ₹ 1,00,000
To Bank ₹ 20,000
4. Balances in GST credit Receivable A/c are disclosed in the balances sheet as on March 31, 2023 as
below:
Extracts from the Balance Sheet
Assets Amounts (₹)
Current Assets
Short term Loans and Advances
GST Credit Receivable A/c -
(GST credit receivable etc. which is expected to be realized within the next twelve months from the Balance
Sheet date.)
 Classification 423

CLASSIFICATION OF GOODS AND SERVICES

Question: Write a Note on Classification of Goods and Services under GST.
Answer: Classification Of Goods And Services Under GST Harmonised System Of Nomenclature
(HSN)
All goods are divided in 98 broad categories which are called chapters and all services are covered in
chapter 99.
1. Live Animals
2. Meat and edible meat offal
3. Fish and crustaceans, molluscs and other aquatic invertebrates
4. Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or
included
5. Products of animal origin, not elsewhere specified or included
6. Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage
7. Edible vegetables and certain roots and tubers
8. Edible fruit and nuts; peel of citrus fruit or melons
9. Coffee, tea, mate and spices
10. Cereals
11. Products of the milling industry; malt; starches; inulin; wheat gluten.
12. Oil seeds and oleaginous fruits, miscellaneous grains, seeds and fruit; industrial or
medicinal plants; straw and fodder.
13. Lac; gums , resins and other vegetable saps and extracts.
14. Vegetable plaiting materials; vegetable products, not elsewhere specified or included.
15. Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable
waxes
16. Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates
17. Sugar and sugar confectionery.
18. Cocoa and cocoa preparations
19. Preparations of cereals, flour, starch or milk; pastry cooks' products
20. Preparations of vegetables, fruit, nuts or other parts of plants.
21. Miscellaneous edible preparations
22. Beverages, vinegar and spirits
23. Residues and wastes from the food industries; prepared animal fodder
24. Tobacco and manufactured tobacco substitutes
25. Salt; sulphur; earths and stone; plastering materials, lime and cement
26. Ores, slag and ash
27. Mineral fuels, mineral oils and products of their distillation; bituminous substances, mineral waxes
28. Inorganic chemicals; organic or inorganic compounds of precious metals, of rare earth metals, of radio-
active elements or of isotopes
29. Organic chemicals
30. Pharmaceutical products
31. Fertilizers
32. Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter,
paints and varnishes; putty and other mastics; inks
33. Essential oils and resinoids; perfumery, cosmetics or toilet preparations
34. Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes,
prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes,
“dental waxes” and dental preparations with a basis of plaster
35. Albuminoidal substances; modified starches; glues; enzymes
36. Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations
37. Photographic or cinematographic goods
38. Miscellaneous chemical products
 Classification 424

39. Plastics and articles thereof

40. Rubber and articles thereof
41. Raw Hides and Skins (other than Fur skins) and Leather
42. Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of
animal gut (other than silk-worm gut)
43. Furskins and artificial fur; manufacturers thereof
44. Wood and articles of wood, wood charcoal
45. Cork and articles of cork
46. Manufactures of straw, of esparto or of other plaiting materials; Basket-ware and wickerwork
47. Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard
48. Paper and paperboard; articles of paper pulp, of paper or of paperboard
49. Printed books, newspapers, pictures and other products of the printing industry, manuscripts, typescripts
and plans
50. Silk
51. Wool, fine or coarse animal hair; horse hair yarn and woven fabric
52. Cotton
53. Other vegetable textile fibres; paper yarn, woven fabrics of paper yarns
54. Man-made filaments; strip and the like of man-made textile materials
55. Man-made staple fibres
56. Wadding, felt and non-wovens; special yarns; twine, cordage, ropes and cables and articles thereof
57. Carpets and other textile floor coverings
58. Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery
59. Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial
use.
60. Knitted or crocheted fabrics
61. Articles of apparel and clothing accessories, knitted or crocheted
62. Articles of apparel and clothing accessories, not knitted or crocheted
63. Other made up textile articles, sets, worn clothing and worn textile articles; rags
64. Footwear gaiters and the like; parts of such articles
65. Headgear and parts thereof
66. Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof
67. Prepared feathers and down and articles made of feather or of down - artificial flowers; articles of human
hair
68. Articles of stone, plaster, cement, asbestos, mica or similar materials
69. Ceramic products
70. Glass and glassware
71. Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious
metal, and articles thereof; imitation jewellery; coin.
72. Iron and steel
73. Articles of iron or steel
74. Copper and articles thereof
75. Nickel and articles thereof
76. Aluminium and articles thereof
77. [***]
78. Lead and articles thereof
79. Zinc and articles thereof
80. Tin and articles thereof
81. Other base metals; cermets; articles thereof
82. Tools, implements, cutlery, spoons and forks of base metal; parts thereof of base metal
83. Miscellaneous articles of base metal
84. Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof
85. Electrical machinery and equipment and parts thereof; sound recorders and re-producers, television
 Classification 425

image and sound recorders and reproducers, and parts and accessories of such articles
86. Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and
fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all
kinds
87. Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof
88. Aircraft; spacecraft and parts thereof
89. Ships, boats and floating structures
90. Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments
and apparatus; parts and accessories thereof
91. Clocks and watches and parts thereof
92. Musical instruments; parts and accessories of such articles
93. Arms and ammunition; parts and accessories thereof
94. Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and
lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the
like; prefabricated buildings
95. Toys, games and sports requisites; parts and accessories thereof
96. Miscellaneous manufactured articles
97. Works of art, collectors’ pieces and antiques
98. Project imports; laboratory chemicals; passengers’ baggage, personal importations by air or post; ship
Stores.
99. All Services.
 Classification 426

CHAPTER 42
ARTICLES OF LEATHER; SADDLERY AND HARNESS; TRAVEL GOODS, HANDBAGS AND
SIMILAR CONTAINERS; ARTICLES OF ANIMAL GUT (OTHER THAN SILK-WORM GUT)
Notes:
1. For the purposes of this Chapter, the term "leather" includes chamois (including combination
chamois) leather, patent leather, patent laminated leather and metallised leather.
2. This Chapter does not cover :
(a) sterile surgical catgut or similar sterile suture materials (heading 3006);
(b) articles of apparel or clothing accessories (except gloves, mittens and mitts), lined with furskin or
artificial fur or to which furskin or artificial fur is attached on the outside except as mere
trimming (heading 4303 or 4304);
(c) made up articles of netting (5608);
(d) articles of Chapter 64;
(e) headgear or parts thereof of Chapter 65;
(f) whips, rigid-crops or articles of heading 6602;
(g) cuff-links, bracelets or other imitation jewellery (heading 7117);
(h) fittings or trimmings for harness, such as stirrups, bits, horse, brassess and buckles, separately
presented (generally Section XV);
(ij) strings, skins for drums or the like, or other parts of musical instruments (heading 9209);
(k) articles of Chapter 94 (for example, furniture, lamps and lighting fittings);
(l) articles of Chapter 95 (for example, toys, games, sports requisites); or
(m) buttons, press-fasteners, snap-fasteners, press-studs, button moulds or other parts of these articles,
button blanks, of heading 9606.
3. (A) In addition to the provisions of Note 2 above, heading 4202 does not cover :
(a) bags made of sheeting of plastics, whether or not printed, with handles, not designed for
prolonged use (heading 3923);
(b) articles of plaiting materials (heading 4602).
(B) Articles of headings 4202 and 4203 which have parts of precious metal or metal clad with
precious metal, of natural or cultured pearls, of precious or semi-precious stones (natural,
synthetic or reconstructed) remain classified in those headings even if such parts constitute more
than minor fittings or minor ornamentation, provided that these parts do not give the articles their
essential character. If, on the other hand, the parts give the articles their essential character, the
articles are to be classified in Chapter 71.
4. For the purposes of heading 4203, the expression "articles of apparel and clothing accessories"
applies, inter alia, to gloves, mittens and mitts (including those for sport or for protection),
aprons and other protective clothing, braces, belts, bandoliers and wrist straps, but excluding
watch straps (heading 9113).
Tariff Item Description of goods Unit CGST SGST/UTGST IGST
(1) (2) (3) (4) (5) (6)
4201 00 00 Saddlery and harness for any kg. 14% 14% 28%
animal (including traces, leads,
knee pads, muzzles, saddle cloths,
saddle bags, dog coats and the
like), of any material
4202 Trunks, suit-cases, vanity-cases, 18% IGST/9% CGST/9% SGST or
executive-cases, brief-cases, UTGST : 4202 : School satchels and
school satchels, spectacle cases, bags other than of leather or
binocular cases, camera cases, composition leather
musical instrument cases, gun 18% IGST/9% CGST/9% SGST or
cases, holsters and similar UTGST : 4202 12 10 : Toilet cases
containers; travelling-bags,
insulated food or beverages bags, 18% IGST/9% CGST/9% SGST or
 Classification 427

toilet bags, rucksacks, handbags, UTGST : 4202 22 10 : Hand bags and

shopping-bags, wallets, purses, shopping bags, of artificial plastic
map-cases, cigarette-cases, material
tobacco-pouches, tool bags, sports 18% IGST/9% CGST/9% SGST or
bags, bottle-cases, jewellery UTGST : 4202 22 20 : Hand bags and
boxes, powder-boxes, cutlery shopping bags, of cotton
cases and similar containers, of 18% IGST/9% CGST/9% SGST or
leather or of composition leather, UTGST : 4202 22 30 : Hand bags and
of sheeting of plastics, of textile shopping bags, of jute
materials, of vulcanised fibre or
of paperboard, or wholly or 18% IGST/9% CGST/9% SGST or
mainly covered with such UTGST : 4202 22 40 : Vanity bags
materials or with paper 18% IGST/9% CGST/9% SGST or
- Trunks, suit-cases, vanity-cases, UTGST : 4202 29 10 : Handbags of
executive-cases, brief-cases, school other materials excluding wicker work
satchels and similar containers : or basket work
4202 11 -- With outer surface of leather or of 28% IGST/14% CGST/14% SGST or
composition leather: UTGST : 4202 : Trunks, suit-cases,
4202 11 10 --- Travel goods (trunks, suit-cases, u vanity-cases, executive-cases, brief-
sports bags and other similar items ) cases, school satchels, spectacle cases,
of leather binocular cases, camera cases, musical
4202 11 20 --- Toilet-bags and cases, of leather u instrument cases, gun cases, holsters
4202 11 30 --- Satchels u and similar containers; travelling bags,
4202 11 40 --- Brief-cases u insulated food or beverages bags, toilet
4202 11 50 --- Executive-cases u bags, rucksacks, handbags, shopping
4202 11 60 --- Vanity-cases u bags, wallets, purses, map-cases,
4202 11 70 --- Attache-cases u cigarette-cases, tobacco- pouches, tool
4202 11 90 --- Other u bags, sports bags, bottle-cases,
4202 12 -- With outer surface of plastic or of jewellery boxes, powder-boxes, cutlery
textile materials : cases and similar containers, of leather,
4202 12 10 --- Toilet-cases u of sheeting of plastics, of textile
4202 12 20 --- Plastic moulded suit-cases u materials, of vulcanised fibre or of
4202 12 30 --- Plastic moulded brief-cases u paperboard, or wholly or mainly
4202 12 40 --- Satchels u covered with such materials or with
4202 12 50 --- Other travel-goods u paper [other than School satchels and
4202 12 60 --- Brief-cases u bags other than of leather or
4202 12 70 --- Executive-cases other than plastic u composition leather, Toilet cases, Hand
moulded bags and shopping bags, of artificial
4202 12 80 --- Vanity-cases u plastic material, of cotton, or of jute,
4202 12 90 --- Other u Vanity bags, Handbags of other
4202 19 -- Other: materials excluding wicker work or
4202 19 10 --- Travel goods (trunks, suit-cases, u basket work]
sports bags, and other similar items)
of leather
4202 19 20 --- Toilet-cases u
4202 19 30 --- Satchels u
4202 19 40 --- Brief-cases (other than plastic u
moulded)
4202 19 50 --- Executive-cases u
4202 19 60 --- Vanity-cases u
4202 19 90 --- Other u
- Hand-bags, whether or not with
 Classification 428

shoulder strap, including those

without handle:
4202 21 -- With outer surface of leather or of
composition leather:
4202 21 10 --- Hand-bags for ladies u
4202 21 20 --- Vanity-bags u
4202 21 90 --- Other u
4202 22 -- With outer surface of sheeting of
plastics or of textile materials:
4202 22 10 --- Hand-bags and shopping bags, of u
artificial plastic material
4202 22 20 --- Hand-bags and shopping bags, of u
cotton
4202 22 30 --- Hand-bags and shopping bags, of u
Jute
4202 22 40 --- Vanity-bags u
4202 22 90 --- Other u
4202 29 -- Other :
4202 29 10 --- Hand bags of other materials u
excluding wicker-work or basket
work
4202 29 90 --- Other u
- Articles of a kind normally carried
in the pocket or in the handbag :
4202 31 -- With outer surface of leather or of
composition leather:
4202 31 10 --- Jewellery box u
4202 31 20 --- Wallets and purses, of leather u
4202 31 90 --- Other u
4202 32 -- With outer surface of sheeting of
plastics or of textile materials :
4202 32 10 --- Jewellery box u
4202 32 90 --- Other u
4202 39 -- Other:
4202 39 10 --- Jewellery box u
4202 39 90 --- Other u
- Other:
4202 91 00 -- With outer surface of leather or of u
composition leather
4202 92 00 -- With outer surface of sheeting of u
plastics or of textile materials
4202 99 00 -- Other u
4203 Articles of apparel and clothing
accessories, of leather or of
composition leather
4203 10 - Articles of apparel:
4203 10 10 --- Jackets and jerseys kg. 14% 14% 28%
4203 10 90 --- Other kg. 14% 14% 28%
- Gloves, mittens and mitts :
4203 21 -- Specially designed for use in sports
:
4203 21 10 --- Gloves kg. 6% 6% 12%
 Classification 429

4203 21 20 --- Mittens and mitts kg. 14% 14% 28%

4203 29 -- Other:
4203 29 10 --- Gloves for use in industry kg. 14% 14% 28%
4203 29 20 --- Other gloves kg. 14% 14% 28%
4203 29 30 --- Mittens and mitts kg. 14% 14% 28%
4203 30 00 - Belts and bandoliers kg. 14% 14% 28%
4203 40 - Other clothing accessories:
4203 40 10 --- Aprons kg. 14% 14% 28%
4203 40 20 --- Semi-chrome grain garments kg. 14% 14% 28%
4203 40 90 --- Other kg. 14% 14% 28%
4204 [***]
4205 Other articles of leather or of
composition leather
4205 00 - Other articles of leather or of
composition leather:
--- Straps other than for machinery or
harness :
4205 00 11 ---- Welt kg. 14% 14% 28%
4205 00 19 ---- Other kg. 14% 14% 28%
4205 00 20 --- Leather sofa cover kg. 14% 14% 28%
4205 00 90 --- Other kg. 14% 14% 28%
4206 Articles of gut (other than silk-
worm gut), of goldbeater's skin,
of bladders or of tendons
4206 00 10 --- For rackets kg. 14% 14% 28%
4206 00 90 --- Other kg. 14% 14% 28%
CASE LAWS/DEPARTMENTAL CLARIFICATIONS
Name of product Heading Citation
No.
Belt waist of webbing cloth 63.07 MKU Pvt. Ltd. v. CCE 2013 (295) ELT 488 (CESTAT)
Transmission Belts of Nylon and 4201.90 NTB International (P.) Ltd. v. CCE 2015 (319) ELT
Leather 545 (SC)
Composite transmission belts made 42.01 Kamal Kacholia v. CCE 2004 (174) ELT 87 (CEGAT)
of nylon and leather
Suitcase even if having external 4201.10 Safari Industries (India) Ltd. v. CCE 2000 (115) ELT
locking arrangement 137 (CEGAT)
Unsterilised Absorbable Catgut 4201.90 Johnson & Johnson Ltd. v. CCE 2003 (154) ELT 729
Sutures (CEGAT)
 Constitutional Provisions 430

[FIRST SCHEDULE
[Articles 1 and 4]
I. THE STATES

1. Andhra Pradesh
2. Assam
3. Bihar
4. Gujarat
5. Kerala
6. Madhya Pradesh
7. Tamil Nadu
8. Maharashtra
9. Karnataka
10.Odisha
11. Punjab
12. Rajasthan
13. Uttar Pradesh
14. West Bengal
15. Nagaland
16. Haryana
17. Himachal Pradesh
18. Manipur
19. Tripura
20. Meghalaya
21. Sikkim
22. Mizoram
23. Arunachal Pradesh
24. Goa
25. Chhattisgarh
26. Uttarakhand
27. Jharkhand
28. Telangana

II. THE UNION TERRITORIES

1. Delhi
2. The Andaman and Nicobar
Islands
3. Lakshadweep
4. Dadra and Nagar Haveli and
Daman and Diu
5. Puducherry
6. Chandigarh
7. Jammu and Kashmir
8. Ladakh
 Constitutional Provisions 431

243G. Powers, authority and responsibilities of Panchayats –

Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats
with such powers and authority and may be necessary to enable them to function as institutions of self
government and such law may contain provisions for the devolution of powers and responsibilities upon
Panchayats, at the appropriate level, subject to such conditions as may be specified therein, with respect to
(a) the preparation of plans for economic development and social justice;
(b) the implementation of schemes for economic development and social justice as may be entrusted to them
including those in relation to the matters listed in the Eleventh Schedule

ELEVENTH SCHEDULE
(Article 243G)
1. Agriculture, including agricultural extension.
2. Land improvement, implementation of land reforms, land consolidation and soil
conservation.
3. Minor irrigation, water management and watershed development.
4. Animal husbandry, dairying and poultry.
5. Fisheries.
6. Social forestry and farm forestry.
7. Minor forest produce.
8. Small scale industries, including food processing industries.
9. Khadi, village and cottage industries.
10. Rural housing.
11. Drinking water.
12. Fuel and fodder.
13. Roads, culverts, bridges, ferries, waterways and other means of communication.
14. Rural electrification, including distribution of electricity.
15. Non-conventional energy sources.
16. Poverty alleviation programme.
17. Education, including primary and secondary schools
18. Technical training and vocational education.
19. Adult and non-formal education.
20. Libraries.
21. Cultural activities.
22. Markets and fairs.
23. Health and sanitation, including hospitals, primary health centres and dispensaries.
24. Family welfare.
25. Women and child development.
26. Social welfare, including welfare of the handicapped and mentally retarded.
27. Welfare of the weaker sections, and in particular, of the Scheduled Castes and the
Scheduled Tribes.
28. Public distribution system.
29. Maintenance of community assets.

243W. Powers, authority and responsibilities of Municipalities, etc-

Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow-
(a) The Municipalities with such powers and authority as may be necessary to enable them to
function as institutions of self-government and such law may contain provisions for the
devolution of powers and responsibilities upon Municipalities, subject to such conditions as
may be specified therein, with respect to
(i) The preparation of plans for economic development and social justice;
(ii) The performance of functions and the implementation of schemes as may be entrusted to
them including those in relation to the matters listed in the Twelfth Schedule;
 Constitutional Provisions 432

(b) the Committees with such powers and authority as may be necessary to enable them to carry
out the responsibilities conferred upon them including those in relation to the matters listed in
the Twelfth Schedule.

TWELFTH SCHEDULE
(Article 243W)
1. Urban planning including town planning.
2. Planning of land- use and construction of buildings.
3. Planning for economic and social development.
4. Roads and bridges.
5. Water supply for domestic, industrial and commercial purposes.
6. Public health, sanitation conservancy and solid waste management.
7. Fire services.
8. Urban forestry, protection of the environment and promotion of ecological aspects.
9. Safeguarding the interests of weaker sections of society, including the handicapped and
mentally retarded.
10. Slum improvement and upgradation.
11. Urban poverty alleviation.
12. Provision of urban amenities and facilities such as parks, gardens, playgrounds.
13. Promotion of cultural, educational and aesthetic aspects.
14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums.
15. Cattle pounds; prevention of cruelty to animals.
16. Vital statistics including registration of births and deaths.
17. Public amenities including street lighting, parking lots, bus stops and public conveniences.
18. Regulation of slaughter houses and tanneries.