GST Practice Test-1 Answer Sheet

(A No. 1 To8)
)))
Answer 1:
1) Provision of Law:

As per section 10(1) of CGST Act, a registered person can opt to pay tax under composition scheme,
if aggregate turnover in preceding financial year was not exceeding ₹ 1.5 crore in other than 8
special category states.

 This scheme can be availed by a supplier making intrastate supply of goods and restaurant
service.
 A person who opts to pay tax u/s 10(1) may supply services in current financial year, upto
 10 % of turnover in a State or UT in the preceding financial year or
 ₹ 5 Lakhs whichever is higher
2) Facts of Question & Conclusion:-
i. In the given case, M/s United Electronics can opt for composition scheme u/s 10(1) & 10(2)
for the current financial year as its aggregate turnover is ₹ 120 lakhs which is not exceeding
₹ 1.5 crore in the preceding financial year and it is not engaged in inter-state outward
supplies.
ii. M/s United Electronics can supply repair and maintenance services up to value of ₹ 12 lakhs
[i.e 10% or ₹ 120 Lakh or ₹ 5 lakh, whichever is higher] in the current financial year.

Answer 2:
Provision Of Law:- As per reverse charge notification, if services are supplied by director of a
company to the said company located in the taxable territory, then GST is payable on reverse charge
basis by recipient u/s 9(3) of CGST Act 2017

Discussion & Conclusion:-

i) Sitting fee paid to director:-

 Here, Narayan Limited (i.e Company) paid sitting fee ₹ 25,000 to its director-Arpan
Singhania.
 Thus, Narayan Limited is liable to pay GST under reverse charge.
ii) Salary paid to director:-
 As per CBIC circular, if director’s remuneration is declared as salaries in books of company
& subjected to TDS u/s 192 of income-tax Act, then that is not taxable under GST because
it is the consideration for services by an employee to employer in the course of
employment as per schedule III. It is not a supply.
 Therefore, the salary received by Arpan singhania of ₹ 1.5 Lakh is not liable to GST.
iii) Services provided by Tapasya & Associates:-
In this case, the fact that Arpan Singhania is a partner in Tapasya & Associates and also a
director in Narayan Limited does not have any impact on the taxability of professional
services supplied by Tapasya & Associates to Narayan Limited.
Therefore, Tapasya & Associates (i.e. the supplier) is liable to pay GST on such services
under forward charge. [This service is not covered under RCM]

Answer 3:

CA Pooja Datte 7887875075 Swapnil Patni Classes 1

 GST Practice Test-1 Answer Sheet
(A No. 1 To8)
)))
i) As per section 7(2) read schedule III of CGST Act, services of funeral including transportation
of the deceased shall be treated neither as a supply of goods nor a supply of services. Thus,
there is no levy of GST on such activity as it is out of scope of supply.
ii) As per section 7(2) read Schedule III of CGST Act, sale of land shall be treated neither as a
supply of goods nor a supply of services. Thus, there is no levy of GST on such activity as it is
out of scope supply.
(a) As per section 7(2) read Schedule III of CGST Act, if consideration is received after
completion certificate or first occupancy whichever is earlier
(b) Schedule II states that where the entire/part consideration has been received before
issuance of completion certificate or after its first occupation, Whichever is earlier, then
it is a supply and treated as service.

Answer 4:
(a) Section 7(1)(a) of the CGST Act, states that supply

- must be made for a consideration except the activities specified in Schedule I and

- must be in the course or furtherance of business.

In the given case, since, both these elements are missing, donation of clothes and toys to children
living in slum area would not amount to supply u/s 7 of CGST Act.

(b) i) Provision Of Law:-

Section 7(1)(c) read with Schedule I of CGST Act, states that If services are imported by a person
from a related person located outside India without consideration & that too in the course or
furtherance of business, then it is treated as supply.

 Members of the same family are deemed to be "related persons".

 Further, brother is treated member of same family only when he is wholly or mainly
dependent on the said person.

Discussion & Conclusion

 In the given case, Raman has received free of cost legal services from his brother who is a
well-known lawyer settled in London and is not wholly/mainly dependent on Raman.
 So, Raman & his brother are not related as they are not treated as family.
 Further, Roman has taken legal advice from him in personal matter & not in course or
furtherance of business.
 Thus, the services provided by Raman's brother to him would not be treated as supply u/s 7
of the CGST Act read with para 4 of Schedule 1

ii) No, if Raman has taken advice for his business unit, services provided by Raman's brother to him
would still not be treated as supply. This is because, though services are provided in course or
furtherance of business but it is not received from related person as discussed in answer i)

Answer 5:
(i) Provision Of Law:- As per section 2(74) of CGST Act, “Mixed supply”-
 Consist of two or more individual supplies of goods &/or services,
 They can be supplied independently, still together by the taxable person,

CA Pooja Datte 7887875075 Swapnil Patni Classes 2

 GST Practice Test-1 Answer Sheet
(A No. 1 To8)
)))
 Supplied for a single price &
 Is not naturally bundled i.e. it is not a composite supply
(ii) Discussion & Conclusion:-
 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 of any other (i.e. not naturally bundled) & also a single price is
charged for the package
 Further, as per section 8(b), 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 I treated as supply of chocolates as it
attracts the highest rate of tax & the rate of GST applicable on the package of ₹
6,00,000(20,000x ₹ 30) is 18%

Answer 6:
(a) Supply of services
(b) Supply of services
(c) Supply of services
(d) Supply of Goods
(e) Supply of Goods

Answer 7
a) Yes Bank Ltd – RCM u/s 9(3) of CGST Act.

Answer 8
1) Provision Of Law:
(i) As per section 10(1) of CGST Act, a registered person can opt to pay tax under
composition scheme, if aggregate turnover in preceding financial year was not
exceeding ₹ 1.5 crore in other than 8 special category states.
(ii) As per provisions of section 10, composition scheme shall be applied uniformly
across PAN.
2) Discussion & Conclusion:-
(i) In the given question the ATD which is calculated all India PAN basis is ₹ 85 Lakhs of
preceding financial year so, Mr. X is eligible for composition scheme.
(ii) Mr. X wants to opt for composition scheme only for showroom 1 which is not
possible either both showrooms will have to opt for composition or both shall be
outside composition

CA Pooja Datte 7887875075 Swapnil Patni Classes 3